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Accounting Policies of Ganesha Ecosphere Ltd. Company
Mar 31, 2025
2.0 Summary of Material Accounting Policies
a) Basis of preparation
(i) Compliance with Indian Accounting
Standards
These Standalone financial statements have
been prepared in accordance with the Indian
Accounting Standards (''IND AS'') as notified
by Ministry of Corporate Affairs pursuant to
Section 133 of the Companies Act, 2013 read
with the Companies (Indian Accounting
Standards) Rules, 2015, as amended, and
other relevant provisions of the Act and
guidelines issued by the Securities and
Exchange Board of India (SEBI).
The accounting policies have been applied
consistently to all the periods presented in
the financial statements.
(ii) Historical cost convention
The financial statements have been
prepared on an accrual basis under
historical cost convention with the exception
of certain financial assets and liabilities that
are required to be carried at fair values at
the end of each reporting period by Ind AS.
(iii) Current versus non-current classification
All the assets and liabilities have been
classified as current or non-current as per
the Company''s normal operating cycle
and other criterion set out in Schedule III
to the Companies Act, 2013. Based on the
nature of products and the time between
the acquisition of assets for processing and
their realization in cash and cash equivalent,
the Company has ascertained its operating
cycle to be 12 months for the purpose of
current and non-current classification of
assets and liabilities.
(iv) Rounding of amounts
All amounts disclosed in the financial
statements and notes have been rounded
off to the nearest Lakh as per the requirement
of Schedule III to the Companies Act, 2013,
unless otherwise stated.
b) Use of estimates and judgements
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make
estimates and assumptions, based upon the
best knowledge of current events and actions
that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities
as at the date of financial statements and the
reported amounts of incomes and expenses
during the reported period. Actual results may
differ from those estimates. Any difference
between the actual results and the estimates
are recognized in the period in which the results
are known/ materialised.
c) Foreign currency translation
(i) Functional and presentation currency
The financial statements are presented
in Indian rupee (t), which is Company''s
functional and presentation currency.
(ii) Transactions and balances
Transactions in foreign currencies are
recognised at the prevailing exchange rates
on the transaction dates. Realised gains
and losses on settlement of foreign currency
transactions are recognized in the statement
of profit and loss.
Monetary foreign currency assets and
liabilities at the year-end are translated
at the year-end exchange rates and
the resultant exchange differences are
recognized in the statement of profit and
loss. Exchange differences, in respect of
foreign currency borrowings taken for
acquiring qualifying assets included in
property, plant and equipment, to the extent
it is an adjustment to interest cost, has been
capitalized. Additionally, exchange gains or
losses on foreign currency borrowings taken
prior to April 1, 2017 which are related to the
acquisition of qualifying assets are adjusted
in the carrying cost of such assets.
d) Revenue recognition
The Company derives revenues primarily from
sale of manufactured goods, traded goods and
related services.
The specific criterion for each of the Company''s
activities has been stated below:
(i) Sale of goods
Revenue is recognized upon transfer of
control of promised goods to customers
(i.e. when performance obligation is
satisfied) for an amount that reflects the
consideration which the Company expects
to receive in exchange for those products.
The Company does not expect to have any
contracts where the period between the
transfer of promised goods to the customer
and payment by the customer exceeds
one year. As a consequence, it does not
adjust any of the transaction prices for the
value of money.
Revenue is measured based on transaction
price, which is the consideration, adjusted
for trade discounts such as cash discounts,
volume discounts or any other price
concession as may be agreed with the
customers. Revenues also excludes Goods
and Services Tax (GST) or any other tax
collected from customers.
(ii) Job work receipts
Revenue from job work is recognized at the
time of dispatch of material.
(iii) Export incentives
Export incentives under various schemes
are accounted for in the year of export.
(iv) Recycling credits income
I ncome is recognized in the year in which
the certificate is issued or when there is
virtual certainty to realize the credits in
subsequent period.
(v) Interest income
Interest income is recognized on time
proportion accrual basis using the
applicable/ effective interest rate.
(vi) Insurance claims
Insurance claims are accounted only
when there is reasonable certainty of
its ultimate collection. Insurance claim
receivable is recognized as a separate
asset, but only when the ultimate recovery
is reasonably certain.
(vii) Dividend income on preference shares
Dividend income on investment in
preference shares of subsidiary company
is recognized on a time proportion accrual
basis using the applicable coupon rate.
e) Government grants
Government grant/subsidies are measured
at amounts receivable from the government
and are recognized as income when there is a
reasonable assurance that the subsidy will be
received, amount is fairly ascertainable and
all attached conditions will be complied with.
When the subsidy relates to an expense item, it
is recognized as income on a systematic basis
over the periods that the related costs, which are
intended to be compensated, are expensed and
it is classified under other operating income.
Government grants relating to the purchase
of property, plant and equipment are included
in non-current liabilities as deferred income
and are credited to the statement of profit and
loss on a straight line basis over the expected
lives of related assets and are presented
within other income.
Export Promotion Capital Goods (''EPCG'')
scheme allows import of certain capital goods
at zero/ concessional duty subject to an export
obligation for the duty saved. The duty saved
on capital goods under EPCG scheme is treated
as a Government grant and is recognised as
income spread equally over the expected useful
life of the related asset.
In case of interest free/ concessional loan
provided by Government, the loan or assistance
is initially recognised and measured at fair
value and the Government grant is measured
as the difference between the initial fair value
of the loan and the proceeds received. The loan
or assistance is subsequently measured as
per the accounting policy applicable to
financial liabilities.
f) Taxes
(i) Current income-tax
Current income-tax assets and liabilities
are measured at the amount expected to
be recovered from or paid to the taxation
authorities. The tax rates and tax laws used
to compute the amount are those that are
enacted or substantially enacted, at the
reporting date.
(ii) Deferred income-tax
Deferred income-tax is provided in full, using
the liability method on temporary differences
arising between the tax bases of assets and
liabilities and their carrying amount in the
financial statements. Deferred income-tax is
determined using tax rates (and laws) that
have been enacted or substantially enacted
by the end of the reporting period and are
expected to apply when the related deferred
income-tax assets are realised or the
deferred income-tax liabilities are settled.
Deferred tax assets are recognised for
all deductible temporary differences and
unused tax losses, only if, it is probable
that future taxable amounts will be
available to utilise those temporary
differences and losses.
Deferred tax assets and liabilities are offset
when there is a legally enforceable right
to off set current tax assets and liabilities.
Current tax assets and tax liabilities are
off set where the Company has a legally
enforceable right to offset and intends either
to settle on a net basis, or to realize the asset
and settle the liability simultaneously.
Current and deferred tax is recognized in the
statement of profit and loss, except to the
extent that it relates to items recognised in
other comprehensive income or directly in
equity. In this case, the tax is also recognised
in other comprehensive income or directly
in equity, respectively.
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 utilised. Unrecognised deferred tax
assets are re-assessed at each reporting
date and are recognised to the extent that
it has become probable that future taxable
profits will allow the deferred tax assets
to be recovered.
g) Non-current assets held for sale
The Company classifies non-current assets
as held for sale if their carrying amounts
will be recovered principally through a sale
transaction rather than through continuing use
and a sale is considered as highly probable.
Non-current assets held for sale are measured
at the lower of their carrying amount and the
fair value less costs to sell. Asset classified as
held for sale are presented separately in the
Balance Sheet. Property, plant and equipment
and intangible assets once classified as held for
sale are not depreciated or amortised.
h) Property, plant and equipment (including
Capital work-in-progress)
Freehold land is carried at cost. All other items
of property, plant and equipment are stated
at cost less depreciation and impairment, if
any. Cost includes all expenditure necessary
to bring the asset to its working condition for
its intended use.
Subsequent costs are included in the asset''s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with
the item will flow to the Company and the cost of
the item can be measured reliably. The carrying
amount of any component accounted for as a
separate asset is derecognised when replaced.
All other repairs and maintenance are charged
to the statement of profit and loss during the
reporting period in which they are incurred.
Property, plant and equipment which are not
ready for their intended use are disclosed under
capital work-in-progress. Expenditure during
construction period (including borrowing cost
relating to borrowed funds for construction or
acquisition of property, plant and equipment)
incurred on projects/ assets, including trial
run expenses (net of revenue) are treated as
pre-operative expenses, pending allocation
to the assets, and are included under capital
work-in-progress. These expenses are
apportioned to related property, plant and
equipment on commencement of commercial
production. Capital work-in-progress is stated
at the amount expended up to the date of
the balance sheet.
Depreciation methods, estimated useful lives
and residual value
Depreciation on property, plant and equipment
is provided on Written Down Value Method
(''WDV'') except in respect of buildings and plant &
equipment of Kanpur Unit and Temra (Bilaspur)
Unit, where depreciation is provided on Straight
Line Method (''SLM'').
The Company depreciates its property, plant
and equipment over the useful life in the
manner prescribed in Schedule II to the Act,
and management believes that the useful life of
assets are same as those prescribed in Schedule
II to the Act, except for certain plant & equipment,
wherein based on technical evaluation, useful
life has been estimated to be different from that
prescribed in Schedule II to the Act.
Residual value of tangible assets is considered to be
not more than 5% of the cost of the asset.
An item of property, plant and equipment and any
significant part initially recognized is derecognized
upon disposal or when no future economic benefits
are expected from its use. Any gain or loss arising
on derecognition of the asset (calculated as the
difference between the net disposal proceeds
and the carrying amount of the asset) is included
in the statement of profit and loss when the asset
is derecognised.
The residual values, useful lives and methods of
depreciation of property, plant and equipment are
reviewed at each financial year end and adjusted
prospectively, if appropriate.
i) Intangible assets
Intangible assets are stated at cost less
accumulated amortization and impairments,
if any. Cost includes all expenditure necessary
to bring the asset to its working condition for its
intended use. Intangible assets which are not
ready for their intended use are disclosed as
intangible assets under development and are
stated at the amount expended up to the date
of the balance sheet.
The Company amortizes computer software
and technical know-how using the straight line
method over the period of 5 years.
The amortization period and the amortization
method for an intangible asset are reviewed
at each financial year end and adjusted
prospectively, if appropriate.
j) Borrowings
Borrowings are initially recognised at net of
transaction costs incurred and measured
at amortised cost. Any difference between
the proceeds (net of transaction costs) and
the redemption amount is recognized in the
statement of profit and loss over the period of the
borrowings using the effective interest method.
k) Borrowing costs
I nterest and other borrowing costs attributable
to qualifying assets, which takes substantial
period of time to get ready for its intended use,
are capitalized. All other interest and borrowing
costs are charged to the statement of profit
and loss. Borrowing cost also includes exchange
differences to the extent regarded as an
adjustment to the borrowing costs.
l) Lease
The Company assesses at contract inception
whether a contract is, or contains a lease. That is,
if the contract conveys the right to control the
use of an identified asset for a period of time in
exchange for a consideration.
Company as a lessee
The Company applies a single recognition
and measurement approach for all leases,
except for short-term leases (that do not
contain purchase option) and leases of low
value assets. The Company recognizes lease
liabilities to make lease payments and right-of-
use assets representing the right to use the
underlying assets.
(i) Right-of-use Assets (ROU Assets)
The Company recognizes right-of-use
assets at the commencement date of
the lease (i.e., the date on which the
underlying asset is available for use).
Right-of-use assets are measured at
cost, less any accumulated depreciation/
amortization and impairment losses, and
adjusted for any re-measurement of lease
liabilities. The cost of right-of-use assets
includes the amount of lease liabilities
recognized, initial direct costs incurred
and lease payments made at or before
the commencement date less any lease
incentives received. Right-of-use assets are
depreciated/ amortized on a straight-line
basis over the shorter of the lease term
and estimated useful lives of the assets,
as estimated by the management.
Leasehold land has been amortized over the
lease term of 90 years.
(ii) Lease liabilities
At the commencement date of the lease,
the Company recognizes lease liabilities
measured at the present value of lease
payments to be made over the lease term.
The lease payments include fixed payment
less any lease incentives receivable,
variable lease payments that depend on
an index or a rate and amounts expected
to be paid under residual value guarantees.
Variable lease payments that do not
depend on an index or a rate are recognized
as expense (unless they are incurred to
produce inventories) in the period in which
the event or condition that triggers the
payment occurs. In calculating the present
value of lease payments, the Company uses
its incremental borrowing rate at the lease
commencement date because the interest
rate is implicit in the lease not readily
determinable. After the commencement
date, the amount of lease liabilities is
increased to reflect the accretion of interest
and reduced for the lease payments
made. In addition, the carrying amount of
lease liabilities is re-measured if there is a
modification, a change in the lease term, a
change in the lease payments or a change
in the assessment of an option to purchase
the underlying asset.
(iii) Short-term leases and leases of low-value
assets
The lease payments on short-term
leases and lease of low-value assets are
recognized as expense on a straight-line
basis over the lease term.
m) Inventories
(i) Measurement of Inventory
Inventories of raw material, stores & spares,
work-in-progress, finished goods and
stock-in-trade (including goods-in-transit)
are stated at cost or net realizable value,
whichever is lower. Waste & scrap is valued
at net realizable value.
(ii) Cost of Inventories
Cost comprises all cost of purchase, cost
of conversion and other costs incurred in
bringing the inventories to their present
location and condition.
The cost of purchase of inventories
comprise the purchase price, import duties
and other non-recoverable taxes, and
transport, handling and other costs directly
attributable to the acquisition of inventory
items. Trade discounts, rebates and other
similar items are deducted in determining
the costs of purchase.
The cost of conversion of inventories
include costs directly related to the units
of production and a systematic allocation
of fixed and variable production overheads
that are incurred in converting material into
finished goods.
Cost of inventories is ascertained on the
''weighted average'' basis except stock-in¬
trade, where cost is ascertained on first-in¬
first-out (FIFO) basis.
(iii) Net realizable value
Net realizable value is the estimated selling
price in the ordinary course of business less
the estimated costs of completion and the
estimated costs necessary to make the sale.
Net realizable value is ascertained for each
item of inventories with reference to the
selling prices of related finished products.
Estimate of net realizable value of finished
goods and stock-in-trade are based on
the most reliable evidence, available at the
time the estimates are made, of the amount
the inventories are expected to realize.
These estimates take into consideration
fluctuations of price or cost directly
relating to events occurring after the end
of the period to the extent that such events
confirm conditions existing at the end of the
period. Materials and other supplies held for
use in the production of the inventories are
not written down below cost if the finished
products in which they will be used are
expected to be sold at or above cost.
Amount of write down of the inventories
below cost is recognized as an expense as
and when the event occurs.
n) Impairment of non-financial assets
The Company assesses, at each reporting date,
whether there is an indication that an asset may
be impaired. If any indication exists, the Company
estimates the asset''s recoverable amount.
An asset''s recoverable amount is the higher of
an asset''s fair value less costs of disposal and
its value in use. When the carrying amount of an
asset exceeds its recoverable amount, the asset
is considered impaired and is written down to its
recoverable amount.
Impairment losses, if any, are recognized in
the statement of profit and loss. Non-financial
assets that suffered an impairment are reviewed
for possible reversal of impairment at the end of
each reporting period.
Mar 31, 2024
2.0 Summary of Material Accounting Policies
a) Basis of preparation
(i) Compliance with Indian Accounting Standards
These Standalone financial statements have been prepared in accordance with the Indian Accounting Standards (âIND ASâ) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other relevant provisions of the Act and guidelines issued by the Securities and Exchange Board of India (SEBI).
The accounting policies have been applied consistently to all the periods presented in the financial statements.
(ii) Historical cost convention
The financial statements have been prepared on an accrual basis under historical cost convention with the exception of certain financial assets and liabilities that are required to be carried at fair values at the end of each reporting period by Ind AS.
(iii) Current versus non-current classification
All the assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criterion set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be 12 months for the purpose of current and noncurrent classification of assets and liabilities.
(iv) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest Lakh as per the requirement of Schedule III to the Companies Act, 2013, unless otherwise stated.
b) Use of estimates and judgements
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions, based upon the best knowledge of current events and actions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and the reported amounts of incomes and expenses during the reported period. Actual results may differ from those estimates. Any difference between the actual results and the estimates are recognized in the period in which the results are known/ materialised.
c) Foreign currency translation
(i) Functional and presentation currency
The financial statements are presented in Indian rupee (âHâ), which is Companyâs functional and presentation currency.
(ii) Transactions and balances
Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction dates. Realised gains and losses on settlement of foreign currency transactions are recognized in the statement of profit and loss.
Monetary foreign currency assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognized in the statement of profit and loss. Exchange differences, in respect of foreign currency borrowings taken for acquiring qualifying assets included in property, plant and equipment, to the extent it is an adjustment to interest cost, has been capitalized. Additionally, exchange gains or losses on foreign currency borrowings taken prior to April 1, 2017 which are related to the acquisition of qualifying assets are adjusted in the carrying cost of such assets.
d) Revenue recognition
The Company derives revenues primarily from sale of manufactured goods, traded goods and related services.
The specific criterion for each of the Companyâs activities has been stated below:
(i) Sale of goods
Revenue is recognized upon transfer of control of promised goods to customers (i.e. when performance obligation is satisfied) for an amount that reflects the consideration which the Company expects to receive in exchange for
those products. The Company does not expect to have any contracts where the period between the transfer of promised goods to the customer and payment by the customer exceeds one year. As a consequence, it does not adjust any of the transaction prices for the value of money.
Revenue is measured based on transaction price, which is the consideration, adjusted for trade discounts such as cash discounts, volume discounts or any other price concession as may be agreed with the customers. Revenues also excludes Goods and Services Tax (GST) or any other tax collected from customers.
(ii) Job work receipts
Revenue from job work is recognized at the time of dispatch of material.
(iii) Export incentives
Export incentives under various schemes are accounted for in the year of export.
(iv) Recycling credits income
Income is recognized in the year in which the certificate is issued or when there is virtual certainty to realize the credits in subsequent period.
(v) Interest income
Interest income is recognized on time proportion accrual basis using the applicable/ effective interest rate.
(vi) Insurance claims
Insurance claims are accounted only when there is reasonable certainty of its ultimate collection. Insurance claim receivable is recognized as a separate asset, but only when the ultimate recovery is reasonably certain.
(vii) Dividend income on preference shares
Dividend income on investment in preference shares of subsidiary company is recognized on a time proportion accrual basis using the applicable coupon rate.
e) Government grants
Government grant/subsidies are measured at amounts receivable from the government and are recognized as income when there is a reasonable assurance that the subsidy will be received, amount is fairly ascertainable and all attached conditions will be complied with. When the subsidy relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, which are intended to be compensated, are expensed and it is classified under other operating income.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to the statement of profit and loss on a straight line basis over the expected lives of related assets and are presented within other income.
Export Promotion Capital Goods (âEPCGâ) scheme allows import of certain capital goods at zero/ concessional duty subject to an export obligation for the duty saved. The duty saved on capital goods under EPCG scheme is treated as a Government grant and is recognised as income spread equally over the expected useful life of the related asset.
In case of interest free/ concessional loan provided by Government, the loan or assistance is initially recognised and measured at fair value and the Government grant is measured as the difference between the initial fair value of the loan and the proceeds received. The loan or assistance is subsequently measured as per the accounting policy applicable to financial liabilities.
f) Taxes
(i) Current income-tax
Current income-tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, at the reporting date.
(ii) Deferred income-tax
Deferred income-tax is provided in full, using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amount in the financial statements. Deferred income-tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income-tax assets are realised or the deferred income-tax liabilities are settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, only if, it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to off set current tax assets and liabilities. Current tax assets and tax liabilities are off set where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognized in the statement of profit and loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
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 utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax assets to be recovered.
g) Non-current assets held for sale
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use and a sale is considered as highly probable. Non-current assets held for sale are measured at the lower of their carrying amount and the fair value less costs to sell. Asset classified as held for sale are presented separately in the Balance Sheet. Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.
h) Property, plant and equipment (including Capital work-in-progress)
Freehold land is carried at cost. All other items of property, plant and equipment are stated at cost less depreciation and impairment, if any. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the statement of profit and loss during the reporting period in which they are incurred.
Property, plant and equipment which are not ready for their intended use are disclosed under capital work-in-progress. Expenditure during construction period (including borrowing cost relating to borrowed funds for construction or acquisition of property, plant and equipment) incurred on projects/ assets, including trial run expenses (net of revenue) are treated as pre-operative expenses, pending allocation to the assets, and are included under capital work-in-progress. These expenses are apportioned to related property, plant and equipment on commencement of commercial production. Capital work-inprogress is stated at the amount expended up to the date of the balance sheet.
Depreciation methods, estimated useful lives and residual value
Depreciation on property, plant and equipment is provided on Written Down Value Method (âWDVâ) except in respect of buildings and plant & equipment of Kanpur Unit and Temra (Bilaspur) Unit (excluding Rooftop Solar Panels, which are depreciated on WDV method) where depreciation is provided on Straight Line Method (âSLMâ).
The Company depreciates its property, plant and equipment over the useful life in the manner prescribed in Schedule II to the Act, and management believes that the useful life of assets are same as those prescribed in Schedule II to the Act, except for certain plant & equipment, wherein based on technical evaluation, useful life has been estimated to be different from that prescribed in Schedule II to the Act.
Residual value of tangible assets is considered to be not more than 5% of the cost of the asset.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
The residual values, useful lives and methods of
depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
i) Intangible assets
Intangible assets are stated at cost less accumulated
amortization and impairments, if any. Cost includes all
expenditure necessary to bring the asset to its working condition for its intended use. Intangible assets which are not ready for their intended use are disclosed as intangible assets under development and are stated at the amount expended up to the date of the balance sheet.
The Company amortizes computer software and technical know-how using the straight line method over the period of 5 years.
The amortization period and the amortization method for an intangible asset are reviewed at each financial year end and adjusted prospectively, if appropriate.
j) Borrowings
Borrowings are initially recognised at net of transaction costs incurred and measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in the statement of profit and loss over the period of the borrowings using the effective interest method.
k) Borrowing costs
Interest and other borrowing costs attributable to qualifying assets, which takes substantial period of time to get ready for its intended use, are capitalized. All other interest and borrowing costs are charged to the statement of profit and loss. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
l) Lease
The Company assesses at contract inception whether a contract is, or contains a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for a consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases (that do not contain purchase option) and leases of low value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
(i) Right-of-use Assets (ROU Assets)
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date on which the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation/ amortization and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated/ amortized on a straight-line basis over the shorter of the lease term and estimated useful lives of the assets, as estimated by the management. Leasehold land has been amortized over the lease term of 90 years.
(ii) Lease liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payment less any lease incentives receivable, variable lease payments that depend on an index or a rate and amounts expected to be paid under residual value guarantees. Variable lease payments that do not depend on an index or a rate are recognized as expense (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate is implicit in the lease not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments
made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the underlying asset.
(iii) Short-term leases and leases of low-value assets
The lease payments on short-term leases and lease of low-value assets are recognized as expense on a straightline basis over the lease term.
m) Inventories
(i) Measurement of Inventory
Inventories of raw material, stores & spares, work-inprogress, finished goods and stock-in-trade (including goods-in-transit) are stated at cost or net realizable value, whichever is lower. Waste & scrap is valued at net realizable value.
(ii) Cost of Inventories
Cost comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.
The cost of purchase of inventories comprise the purchase price, import duties and other non-recoverable taxes, and transport, handling and other costs directly attributable to the acquisition of inventory items. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase.
The cost of conversion of inventories include costs directly related to the units of production and a systematic allocation of fixed and variable production overheads that are incurred in converting material into finished goods.
Cost of inventories is ascertained on the ''weighted average'' basis except stock-in-trade, where cost is ascertained on first-in-first-out (FIFO) basis.
iii) Net realizable value
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Net realizable value is ascertained for each item of inventories with reference to the selling prices of related finished products. Estimate of net realizable value of finished goods and stock-in-trade are based on the most reliable evidence, available at the time the estimates are made, of the amount the inventories are expected to realize. These estimates take into consideration fluctuations of price or cost directly relating to events
occurring after the end of the period to the extent that such events confirm conditions existing at the end of the period. Materials and other supplies held for use in the production of the inventories are not written down below cost if the finished products in which they will be used are expected to be sold at or above cost.
Amount of write down of the inventories below cost is recognized as an expense as and when the event occurs.
n) Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs fair value less costs of disposal and its value in use. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
Impairment losses, if any, are recognized in the statement of profit and loss. Non-financial assets that suffered an impairment are reviewed for possible reversal of impairment at the end of each reporting period.
Mar 31, 2023
1.0 Corporate information
Ganesha Ecosphere Limited (âthe Companyâ) is a public limited company, incorporated and domiciled in India, listed on the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited. The address of the registered office is Raipur (Rania), Kalpi Road, Distt. Kanpur Dehat (U.P.). The Company is a leading PET Waste recycling company in India and is mainly engaged in the manufacturing of Recycled Polyester Staple Fibre (RPSF), Spun Yarn and Dyed Texturised Yarn.
2.0 Significant Accounting Policies
a) Basis of preparation
(i) Compliance with Indian Accounting Standards
These financial statements have been prepared in accordance with the Indian Accounting Standards (âIND ASâ) as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.
The accounting policies have been applied consistently to all the periods presented in the financial statements.
(ii) Historical cost convention
The financial statements have been prepared on an accrual basis under historical cost convention with the exception of certain financial assets and liabilities that are required to be carried at fair values at the end of each reporting period by Ind AS.
(iii) Current versus non-current classification
All the assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criterion set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be 12 months for the purpose of current and non-current classification of assets and liabilities.
(iv) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest Lakh as per the requirement of Schedule III to the Companies Act, 2013, unless otherwise stated.
b) Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions, based upon the best knowledge of current events and actions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and the reported amounts of incomes and expenses during the reported period. Actual results may differ from those estimates. Any difference between the actual results and the estimates are recognized in the period in which the results are known/ materialised.
c) Foreign currency translation
(i) Functional and presentation currency
The financial statements are presented in Indian rupee (âHâ), which is Companyâs functional and presentation currency.
(ii) Transactions and balances
Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction dates. Realised gains and losses on settlement of foreign currency transactions are recognized in the statement of profit and loss.
Monetary foreign currency assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognized in the statement of profit and loss. Exchange differences, in respect of foreign currency borrowings taken for acquiring qualifying assets included in property, plant and equipment, to the extent it is an adjustment to interest cost, has been capitalized. Additionally, exchange gains or losses on foreign currency borrowings taken prior to April 1, 2017 which are related to the acquisition of qualifying assets are adjusted in the carrying cost of such assets.
d) Revenue recognition
The Company derives revenues primarily from sale of manufactured goods, traded goods and related services.
The specific criterion for each of the Companyâs activities has been stated below:
(i) Sale of goods
Revenue is recognized upon transfer of control of promised goods to customers (i.e. when performance
obligation is satisfied) for an amount that reflects the consideration which the Company expects to receive in exchange for those products. The Company does not expect to have any contracts where the period between the transfer of promised goods to the customer and payment by the customer exceeds one year. As a consequence, it does not adjust any of the transaction prices for the value of money.
Revenue is measured based on transaction price, which is the consideration, adjusted for trade discounts such as cash discounts, volume discounts or any other price concession as may be agreed with the customers. Revenues also excludes Goods and Services Tax (GST) or any other tax collected from customers.
(ii) Job work receipts
Revenue from job work is recognized at the time of dispatch of material.
(iii) Export incentives
Export incentives under various schemes are accounted for in the year of export.
(iv) Recycling certification income
Income is recognized in the year in which the certificate is issued.
(v) Interest income
Interest income is recognized on time proportion accrual basis using the applicable/ effective interest rate.
(vi) Insurance claims
Insurance claims are accounted only when there is reasonable certainty of its ultimate collection. Insurance claim receivable is recognized as a separate asset, but only when the ultimate recovery is reasonably certain.
(vii) Dividend income on preference shares
Dividend income on investment in preference shares of subsidiary company is recognized on a time proportion accrual basis using the applicable coupon rate.
e) Government grants
Grants from the Government are recognised at their fair value when there is reasonable assurance that the grant will be received and the Company will comply with all the attached conditions.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to the statement of profit and loss on a straight line basis over the expected lives of related assets and are presented within other income. Government grants relating to an expense item is recognised as income on a systematic basis over the periods and it is classified under other operating income.
Export Promotion Capital Goods (âEPCGâ) scheme allows import of certain capital goods at zero/ concessional duty subject to an export obligation for the duty saved. The duty saved on capital goods under EPCG scheme is treated as a Government grant and is recognised as income spread equally over the expected useful life of the related asset.
In case of interest free/ concessional loan provided by Government, the loan or assistance is initially recognised and measured at fair value and the Government grant is measured as the difference between the initial fair value of the loan and the proceeds received. The loan or assistance is subsequently measured as per the accounting policy applicable to financial liabilities.
f) Taxes
(i) Current income-tax
Current income-tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, at the reporting date.
(ii) Deferred income-tax
Deferred income-tax is provided in full, using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amount in the financial statements. Deferred income-tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income-tax assets are realised or the deferred income-tax liabilities are settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, only if, it is probable that future taxable amounts will be
available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to off set current tax assets and liabilities. Current tax assets and tax liabilities are off set where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognized in the statement of profit and loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
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 utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax assets to be recovered.
g) Non-current assets held for sale
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use and a sale is considered as highly probable. Noncurrent assets held for sale are measured at the lower of their carrying amount and the fair value less costs to sell. Asset classified as held for sale are presented separately in the Balance Sheet. Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.
h) Property, plant and equipment
Freehold land is carried at cost. All other items of property, plant and equipment are stated at cost less depreciation and impairment, if any. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the statement of profit and loss during the reporting period in which they are incurred.
Property, plant and equipment which are not ready for their intended use are disclosed under capital work-in-progress. Expenditure during construction period (including borrowing cost relating to borrowed funds for construction or acquisition of property, plant and equipment) incurred on projects/ assets, including trial run expenses (net of revenue) are treated as pre-operative expenses, pending allocation to the assets, and are included under capital work-in-progress. These expenses are apportioned to related property, plant and equipment on commencement of commercial production. Capital work-in-progress is stated at the amount expended up to the date of the balance sheet.
Depreciation methods, estimated useful lives and residual value
Depreciation on property, plant and equipment is provided on Written Down Value Method (âWDVâ) except in respect of buildings and plant & equipment of Kanpur Unit and Temra (Bilaspur) Unit (excluding Rooftop Solar Panels, which are depreciated on WDV method) where depreciation is provided on Straight Line Method (âSLMâ).
The Company depreciates its property, plant and equipment over the useful life in the manner prescribed in Schedule II to the Act, and management believes that the useful life of assets are same as those prescribed in Schedule II to the Act, except for certain plant & equipment, wherein based on technical evaluation, useful life has been estimated to be different from that prescribed in Schedule II to the Act.
|
Useful life considered for calculation of depreciation for various assets class are as follows: |
|
|
Assets |
Useful life |
|
Buildings |
30 - 60 years |
|
Roads (capitalised under buildings) |
10 years |
|
Continuous process plant (plant & equipment) |
18 years |
|
Rooftop solar panels (part of plant & equipment) |
10 years |
|
Other plant & equipment |
5-15 years |
|
Furniture and fixtures |
5-10 years |
|
Office equipment (including computers, computers equipment and servers) |
3-10 years |
|
Vehicles |
8-10 years |
Residual value of tangible assets is considered to be not more than 5% of the cost of the asset.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
i) Intangible assets
Intangible assets are stated at cost less accumulated amortization and impairments, if any. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use. Intangible assets which are not ready for their intended use are disclosed as intangible assets under development and are stated at the amount expended up to the date of the balance sheet.
The Company amortizes computer software and technical know-how using the straight line method over the period of 5 years.
The amortization period and the amortization method for an intangible asset are reviewed at each financial year end and adjusted prospectively, if appropriate.
j) Borrowings
Borrowings are initially recognised at net of transaction costs incurred and measured at amortised cost. Any difference between the proceeds (net of transaction
costs) and the redemption amount is recognized in the statement of profit and loss over the period of the borrowings using the effective interest method.
k) Borrowing costs
Interest and other borrowing costs attributable to qualifying assets, which takes substantial period of time to get ready for its intended use, are capitalized. All other interest and borrowing costs are charged to the statement of profit and loss. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
l) Lease
The Company assesses at contract inception whether a contract is, or contains a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for a consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for shortterm leases (that do not contain purchase option) and leases of low value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
(i) Right-of-use Assets (ROU Assets)
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date on which the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation/ amortization and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities
recognized, initial direct costs incurred and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated/ amortized on a straightline basis over the shorter of the lease term and estimated useful lives of the assets, as estimated by the management. Leasehold land has been amortized over the lease term of 90 years.
(ii) Lease liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payment less any lease incentives receivable, variable lease payments that depend on an index or a rate and amounts expected to be paid under residual value guarantees. Variable lease payments that do not depend on an index or a rate are recognized as expense (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate is implicit in the lease not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the underlying asset.
(iii) Short-term leases and leases of low-value assets
The lease payments on short-term leases and lease of low-value assets are recognized as expense on a straight-line basis over the lease term.
m) Inventories
(i) Measurement of Inventory
Inventories of raw material, stores & spares, work-in-progress, finished goods and stock-in-trade (including goods-in-transit) are stated at cost or net realizable value, whichever is lower. Waste & scrap is valued at net realizable value.
(ii) Cost of Inventories
Cost comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.
The cost of purchase of inventories comprise the purchase price, import duties and other nonrecoverable taxes, and transport, handling and other costs directly attributable to the acquisition of inventory items. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase.
The cost of conversion of inventories include costs directly related to the units of production and a systematic allocation of fixed and variable production overheads that are incurred in converting material into finished goods.
Cost of inventories is ascertained on the âweighted averageâ basis except stock-in-trade, where cost is ascertained on first-in-first-out (FIFO) basis.
(iii) Net realizable value
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Net realizable value is ascertained for each item of inventories with reference to the selling prices of related finished products. Estimate of net realizable value of finished goods and stock-in-trade are based on the most reliable evidence, available at the time the estimates are made, of the amount the inventories are expected to realize. These estimates take into consideration fluctuations of price or cost directly relating to events occurring after the end of the period to the extent that such events confirm conditions existing at the end of the period. Materials and other supplies held for use in the production of the inventories are not written down below cost if the finished products in which they will be used are expected to be sold at or above cost.
Amount of write down of the inventories below cost is recognized as an expense as and when the event occurs.
n) Impairment of non-financial assets
The Company assesses, at each reporting date, whether
there is an indication that an asset may be impaired. If
any indication exists, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs fair value less costs of disposal and its value in use. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
Impairment losses, if any, are recognized in the statement of profit and loss. Non-financial assets that suffered an impairment are reviewed for possible reversal of impairment at the end of each reporting period.
o) Provisions and contingent liabilities
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.
Provisions are measured at the present value of managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or where any present obligation cannot be measured in terms of future outflow of resources or where a reliable estimate of the obligation cannot be made. The Company does not recognize a contingent liability but discloses its existence in the financial statements unless the probability of outflow of resource is remote.
Provisions and contingent liabilities are reviewed at each balance sheet date.
p) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including nonmonetary benefits, that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service, are recognized in respect of employeesâ services up to the end of the reporting period and are measured at
the amounts expected to be paid when the liabilities are settled.
(ii) Other long-term employee benefit
The liabilities for earned leave, that are not expected to be settled wholly within 12 months, are 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 benefits are discounted using the market yields at the end of the reporting period on Government bonds that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in the statement of profit and loss.
(iii) Post-employment obligations
The Company operates the following postemployment schemes:
(a) defined benefit plans such as gratuity; and
(b) defined contribution plans such as provident fund, family pension fund and employeeâs state insurance
(a) Gratuity obligations
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated annually by independent actuary using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on Government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation. This cost is included in employee benefits expenses in the statement of profit and loss.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised
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) Defined contribution plans
Defined contribution plans such as contributions to provident fund, family pension fund and employeeâs state insurance are made to the funds administered by the Government of India, and are recognized as an expense when employees have rendered service entitling them to the contributions.
q) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash at banks and on hand, bank overdrafts and short-term deposits with an original maturities of three months or less, which are subject to an insignificant risk of changes in value.
r) Investment in subsidiaries
Non-current investment in equity shares of subsidiaries is recognized at cost, unless there are indications of a permanent diminution in the value of investment, as per Ind AS 27. Non-current investments in preference shares and compulsory convertible debentures of subsidiaries is recognized at fair value through profit and loss.
s) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(i) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortized cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.
In order for a financial asset to be classified and measured at amortized cost or fair value through OCI, it needs to give rise to cash flows that are âsolely payments of principal and interest (SPPI)â on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at
fair value through profit or loss, irrespective of the business model.
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed to statement of profit and loss. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the trade date, i.e., the date on which the Company commits to purchase or sell the asset.
Subsequent measurement
Subsequent measurement of financial assets depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. For the purposes of subsequent measurement, financial assets are classified in four categories:
¦ Financial assets at amortized cost (debt instruments)
¦ Financial assets at fair value through other comprehensive income (FVTOCI) with recycling of cumulative gains and losses (debt instruments)
¦ Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments); and
¦ Financial assets at fair value through profit or loss
Financial assets at amortized cost (debt instruments)
A âfinancial assetâ is measured at the amortized cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit and loss. The losses arising from impairment are recognized in the statement of profit and loss.
Financial assets at FVTOCI (debt instrument)
A âfinancial assetâ is classified as at the FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The assetâs contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the equity to the statement of profit and loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Financial assets designated at fair value through OCI (equity instruments)
In the case of equity instruments which are not held for trading and where the Company has taken irrevocable election to present the subsequent changes in fair value in other comprehensive income, these elected investments are initially measured at fair value plus transaction costs and subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in the âEquity instruments through other comprehensive incomeâ under the head âOther Equityâ. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments. The Company makes such election on an instrument -byinstrument basis.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Dividends are recognized as other income in the statement of profit and loss when the right of payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.
A financial asset is held for trading if:
¦ it has been acquired principally for the purpose of selling it in the near term; or
¦ on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
¦ it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
Financial assets at FVTPL (equity instruments)
Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognized in the statement of profit and loss.
In case of equity instruments which are held for trading are initially measured at fair value plus transaction costs and subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in statement of profit and loss.
This category includes derivative instruments and listed equity investments which the Company had not irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are recognized in the statement of profit and loss when the right of payment has been established.
Investment in Subsidiaries
Investment in subsidiaries is carried at cost in the separate financial statements.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized when:
¦ The rights to receive cash flows from the asset have expired, or
¦ The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
The Company applies the expected credit loss model for recognizing impairment loss on financial assets measured at amortized cost, debt instruments at FVTOCI, trade receivables and other contractual rights to receive cash or other financial asset.
Expected credit losses are the 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 (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time
expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
For trade receivables, the Company follows âsimplified approach for recognition of impairment lossâ. The application of simplified approach does not require the Company to track changes in credit risk.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward looking information.
(ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives. All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Companyâs financial liabilities include trade and other payables, loans and borrowings including derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss (FVTPL) include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109 âFinancial instrumentsâ.
Gains or losses on liabilities held for trading are recognized in the statement of profit and loss.
Financial liabilities at amortized cost (Loans and borrowings)
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in statement of profit and loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss. This category generally applies to borrowings.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another financial liability from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet
if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
t) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the year.
(ii) Diluted earnings per share
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders of the Company and weighted average number of equity shares outstanding during the year are adjusted for the effect of all potentially dilutive equity shares.
u) Recent pronouncements
The Ministry of Corporate Affairs (âMCAâ) has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 (the âRulesâ), vide notification dated March 31, 2023, which amends existing standards, and are effective from April 1, 2023. The Rules predominantly amends Ind AS 1, Presentation of financial statements and Ind AS 12, Income taxes, whereas the other amendments notified by these rules are primarily in the nature of clarifications only. The Company does not expect the amendment to have any significant impact in the current or future reporting periods and on foreseeable future transactions.
Mar 31, 2018
1. Significant Accounting Policies
a) Basis of preparation
(i) Compliance with Indian Accounting Standards
These financial statements have been prepared in accordance with the Indian Accounting Standards (''Ind AS'') notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended.
These financial statements for the year ended March 31, 2018 are the first financial statements with comparatives, prepared by the Company under Ind AS. For all previous periods up to and including the year ended March 31, 2017, the Company had prepared its financial statements in accordance with accounting standards notified under Section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (''Indian GAAP''). Refer note 26 for an explanation of how the transition from Indian GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.
(ii) Historical cost convention
The financial statements have been prepared on a historical cost basis, except certain financial assets and liabilities (including derivative financial instruments such as forward contracts and assets held for sale) measured at fair Value.
(iii) Current versus non-current classification
All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criterion set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained its operating cycle to be 12 months for the purpose of current and non-current classification of assets and liabilities.
(iv) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest Lakhs as per the requirement of Schedule III of the Companies Act, 2013, unless otherwise stated.
b) Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions, based upon the best knowledge of current events and actions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of financial statements and the reported amounts of incomes and expenses during the reported period. Actual results may differ from those estimates. Any difference between the actual results and the estimates are recognized in the period in which the results are known/ materialised.
c) Foreign currency translation
(i) Functional and presentation currency
The financial statements are presented in Indian rupee (''H.''), which is Company''s functional and presentation currency.
(ii) Transactions and balances
Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction dates. Realised gains and losses on settlement of foreign currency transactions are recognised in the statement of profit and loss.
Monetary foreign currency assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognised in the statement of profit and loss. Exchange differences, in respect of foreign currency borrowings taken for acquiring qualifying assets included in property, plant and equipment, to the extent it is an adjustment to interest cost, has been capitalized. Additionally, exchange gains or losses on foreign currency borrowings taken prior to April 1, 2017 which are related to the acquisition of qualifying assets are adjusted in the carrying cost of such assets.
d) Revenue recognition
Revenue is measured at the value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty and are net of returns, trade allowances, rebates, discounts and value added tax/ goods and services tax.
The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and specific criteria have been met for each of the Company''s activities as described below:
(i) Sale of goods
Revenue from the sale of goods is recognised when significant risk and rewards of ownership are transferred to the customer. In case of domestic customer, sales take place on delivery of goods. In case of export customer, sales take place when goods are shipped on board based on bill of lading.
(ii) Job work receipts
Revenue from job work is recognised at the time of dispatch of material.
(iii) Export incentives
Export incentives under various schemes are accounted in the year of export.
(iv) Interest income
Interest income is recognized on time proportion accrual basis using the applicable/ effective interest rate.
(v) Insurance claims
Insurance claims are accounted only when there is reasonable certainty of its ultimate collection. Insurance claim receivable is recognised as a separate asset, but only when the claim receivable is virtually certain.
e) Government grants
Grants from the Government are recognised at their fair value when there is reasonable assurance that the grant will be received and the Company will comply with all the attached conditions.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to statement of profit and loss on a straight line basis over the expected lives of related assets and are presented within other income. Government grants relating to an expense item is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed and are netted off from the related expense. However, where the grant pertains to expenses already incurred in earlier years, it is disclosed in other income.
Export Promotion Capital Goods (''EPCG'') Scheme allows import of certain capital goods at zero/ concessional duty subject to an export obligation for the duty saved. The duty saved on capital goods under EPCG scheme is treated as a Government grant and is recognised as income spread equally over the expected useful life of the related asset.
In case of interest free/ concessional loan provided by Government, the loan or assistance is initially recognised and measured at fair value and the Government grant is measured as the difference between the initial fair value of the loan and the proceeds received. The loan or assistance is subsequently measured as per the accounting policy applicable to financial liabilities.
f) Taxes
(i) Current income-tax
Current income-tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, at the reporting date.
(ii) Deferred income-tax
Deferred income-tax is provided in full, using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amount in the financial statements. Deferred income-tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are excepted to apply when the related deferred income-tax assets are realised or the deferred income-tax liabilities are settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, only if, it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities. Current tax assets and tax liabilities are off set where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognised in the statement of profit and loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
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 utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax assets to be recovered.
(iii) Minimum alternate tax (''MAT'')
MAT Credit is recognised as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income-tax during the specified period. Such asset is reviewed at each balance sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income-tax during the specified period.
g) Non-current assets held for sale
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use and a sale is considered as highly probable. Non-current assets held for sale are measured at the lower of their carrying amount and the fair value less costs to sell. Asset classified as held for sale are presented separately in the balance sheet. Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.
h) Property, plant and equipment
The Company has elected for the one time transition exemption of considering the carrying cost on the transition date i.e. April 1, 2016 as the deemed cost under Ind AS. Hence regarded thereafter as historical cost.
Freehold land is carried at cost. All other items of property, plant and equipment are stated at cost less depreciation and impairment, if any. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the statement of profit and loss during the reporting period in which they are incurred.
Property, plant and equipment which are not ready for their intended use are disclosed under capital work-in-progress. Expenditure during construction period (including borrowing cost relating to borrowed funds for construction or acquisition of property, plant and equipment) incurred on projects/ assets, including trial run expenses (net of revenue) are treated as pre-operative expenses, pending allocation to the assets, and are included under capital work-in-progress. These expenses are apportioned to related property, plant and equipment on commencement of commercial production. Capital work-in-progress is stated at the amount expended up to the date of the balance sheet.
Depreciation methods, estimated useful lives and residual value
Depreciation on property, plant and equipment is provided on Written Down Value Method (''WDV'') except in respect of buildings and plant & equipment of Kanpur Unit and Temra Unit (located at Bilaspur) where depreciation is provided on Straight Line Method (''SLM'').
The Company depreciates its property, plant and equipment over the useful life in the manner prescribed in Schedule II to the Act, and management believes that the useful life of assets are same as those prescribed in Schedule II to the Act, except for certain plant & equipment being continuous process plants, required and designed to operate for 24 hours a day, where the useful life has been estimated, based on independent technical evaluation, as 18 years, which is different from that prescribed in Schedule II to the Act.
Assets individually costing Rs.0.10 Lakhs or less are fully depreciated within the year of acquisition. Residual value of tangible assets is considered to be not more than 5% of the cost.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
i) Intangible assets
Intangible assets are stated at cost less accumulated amortization and impairments, if any. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use. Intangible assets which are not ready for their intended use are disclosed as intangible assets under development and are stated at the amount expended up to the date of the balance sheet.
The Company amortizes computer software and technical know-how using the straight line method over the period of 5 years.
The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end and adjusted prospectively, if appropriate.
j) Borrowings
Borrowings are initially recognised at net of transaction costs incurred and measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the statement of profit and loss over the period of the borrowings using the effective interest method.
k) Borrowing costs
Interest and other borrowing costs attributable to qualifying assets, which takes substantial period of time to get ready for its intended use, are capitalized. All Other interest and borrowing costs are charged to the statement of profit and loss. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
l) Leases
Operating lease
As a lessee
Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by lessor are classified as operating leases. Payments under operating lease are recorded in the statement of profit and loss on a straight line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases.
Initial premium paid on leasehold land is amortized on straight line basis over the period of lease.
m) Inventories
Items of inventories are valued at the lower of cost and net realisable value after providing for obsolescence, if any. Cost comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of inventories is ascertained on the ''weighted average'' basis. Inventory of finished goods and work-in-progress is valued on full absorption cost incurred in bringing the inventories to their present location and condition. Goods-in-transit are stated at cost. Wastes and scraps are valued at net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
n) Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s fair value less costs of disposal and its value in use. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
Impairment losses, if any, are recognized in the statement of profit and loss. Non-financial assets that suffered an impairment are reviewed for possible reversal of impairment at the end of each reporting period.
o) Provisions and contingent liabilities
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Contingent liabilities are disclosed in respect of possible obligations that arise from past events but their existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or where any present obligation cannot be measured in terms of future outflow of resources or where a reliable estimate of the obligation cannot be made. The Company does not recognise a contingent liability but discloses its existence in the financial statements unless the probability of outflow of resource is remote.
Provisions and contingent liabilities are reviewed at each balance sheet date.
p) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service, are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
(ii) Other long-term employee benefit
The liabilities for earned leave, that are not expected to be settled wholly within 12 months, are 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 benefits are discounted using the market yields at the end of the reporting period on Government bonds that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in the statement of profit and loss.
(iii) Post-employment obligations
The Company operates the following post-employment schemes:
(a) defined benefit plans such as gratuity; and
(b) defined contribution plans such as provident fund, family pension fund and employee''s state insurance
(a) Gratuity obligations
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated annually by independent actuary using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on Government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation. This cost is included in employee benefits expenses in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised 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) Defined Contribution Plans
Defined contribution plans such as contributions to provident fund, family pension fund and employee''s state insurance are made to the funds administered by the Government of India, and are recognized as an expense when employees have rendered service entitling them to the contributions.
q) Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash at banks and on hand, bank overdrafts and short-term deposits with an original maturities of three months or less, which are subject to an insignificant risk of changes in value.
r) Financial instruments
i. Recognition and initial measurement
The Company initially recognises financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are measured at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities that are not measured at fair value through profit or loss are added to the fair value on initial recognition. Purchase and sale of financial assets are accounted for using the trade date accounting.
ii. Classification and subsequent measurement Financial assets
a. Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset 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.
b. Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if 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 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.
c. Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss.
Financial liabilities
Financial liabilities are subsequently carried at amortised cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
iii. Derecognition Financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the right to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and a new financial liability with modified terms is recognised in the statement of profit and loss.
iv. Impairment of financial assets
The Company assesses impairment based on expected credit losses (''ECL'') model at an amount equal to 12 months expected credit losses, or Lifetime expected credit losses depending upon whether there has been a significant increase in credit risk since initial recognition.
However, for trade receivables, the Company does not track the changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
v. Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or realise the asset and settle the liability simultaneously.
s) Derivative financial instruments
The Company uses derivative financial instruments, such as forward contracts, to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to the statement of profit and loss.
t) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the year.
(ii) Diluted earnings per share
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders of the Company and weighted average number of equity shares outstanding during the year are adjusted for the effect of all potentially dilutive equity shares.
u) Recent accounting pronouncements Amendments to Ind AS 115, ''Revenue from Contracts with Customers'':
In March 2018, the Ministry of Corporate Affairs has notified the Companies (Indian Accounting Standards) Amended Rules, 2018 (''amended rules''). As per the amended rules, Ind AS 115, ''Revenue from Contracts with Customers'' supersedes Ind AS 11, ''Construction Contracts'' and Ind AS 18, ''Revenue'' and is applicable for all accounting periods commencing on or after April 1, 2018.
Ind AS 115 introduces a new framework of five step model for the analysis of revenue transactions. The model specifies that revenue should be recognised when an entity transfer control of goods or services to a customer at the amount to which the entity expects to be entitled. Further, the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers.
The standard permits two possible methods of transition:
Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors.
Cumulative catch-up approach - Under this approach, the standard will be applied retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application.
The Company is evaluating the requirement of the amendment and the impact on the Ind AS Financial Statements. The effect on adoption of Ind AS 115 is expected to be insignificant.
Amendments to Annexure B to Ind AS 21, ''Foreign Currency Transactions and Advance Consideration'':
The amended rules, containing Appendix B to Ind AS 21, ''Foreign Currency Transactions and Advance Consideration'', clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company is evaluating the requirement of the amendment and the impact on the Ind AS Financial Statements. The effect on adoption of amended Ind AS 21 is expected to be insignificant.
Mar 31, 2014
1.1 Basis of Preparation of Financial Statements:
The financial statements have been prepared in compliance with all
material aspects with the notified Accounting Standards by Companies
(Accounting Standards) Rules, 2006 and the relevant provisions of the
Companies Act, 1956.
Financial statements are prepared in accordance with the generally
accepted accounting principles, as adopted consistently, and are based
on historical cost and items of income and expenditure are recognized
on accrual basis.
All the assets and liabilities have been classified as current or non
current as per the Company''s normal operating cycle and other criterion
set out in Schedule VI to the Companies Act, 1956. Based on the nature
of products and the time between the acquisition of assets for
processing and their realization in cash and cash equivalent, the
Company has ascertained its operating cycle to be less than 12 months.
1.2 Use of Estimates:
The preparation of financial statements requires management to make
estimates and assumptions, based upon the best knowledge of current
events and actions that may affect the reported amounts of assets and
liabilities and disclosures relating to contingent liabilities as at
the date of financial statements and the reported amounts of incomes
and expenses during the reporting period. Difference between the actual
results and estimates are recognized in the period in which the results
are known/ materialized.
1.3 Revenue Recognition:
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of goods is recognized on transfer of significant risks and
rewards of ownership which is generally on the dispatch of goods.
Revenue from operations is disclosed inclusive of excise duty and net
of sales tax / VAT, discounts and returns.
Benefits on account of entitlement to import goods free of duty, Duty
Draw back Scheme, Focus Product Scheme, etc. are accounted for in the
year of exports made and are included in revenue from operations.
1.4 Fixed Assets:
Fixed assets are stated at cost, net of Cenvat and VAT input credit
availed, less accumulated depreciation, amortization and impairment
loss, if any, except freehold land which is carried at cost. Cost
includes all expenditure necessary to bring the asset to its working
condition for its intended use.
Foreign currency exchange differences to the extent covered under AS-11
are capitalized as per the policy stated in note 1.8. Expenditure
during construction period (including borrowing cost relating to
borrowed funds for construction or acquisition of fixed assets)
incurred on projects/ assets, including trial run expenses (net of
revenue) are treated as Pre-operative expenses, pending allocation to
the assets, and are included under "Capital work-in-progress." These
expenses are apportioned to related fixed assets on commencement of
commercial production. Capital work-in-progress is stated at the amount
expended up to the date of Balance Sheet.
The carrying amounts of fixed assets are reviewed at each balance sheet
date to assess if they are recorded in excess of their recoverable
amounts and where carrying values exceed their estimated recoverable
amount, assets are written down to their recoverable amount.
1.5 Intangible Assets:
Intangible assets are stated at cost less accumulated amortization.
Technical Knowhow and Software are amortized over a period of five
years. Amortization is done on straight line basis.
1.6 Depreciation/Amortization:
Depreciation on fixed assets is provided on "Written Down Value Method
(WDV)" at the rates and in the manner specified in Schedule XIV to
the Companies Act, 1956, except in respect of Building and Plant &
Machinery at Kanpur Unit and Spinning Division at Bilaspur where
depreciation is provided on "Straight Line Method (SLM)".
In respect of power line payments made to Electricity Authorities,
useful life is estimated at five years and expenditure is amortized
accordingly on "Straight Line Method".
Continuous process plants, as specified in Schedule XIV to the
Companies Act, 1956, are identified based on technical assessment and
are depreciated at the specified rate. Individual assets, whose actual
cost does not exceed H5,000, are depreciated fully within the year of
acquisition.
Premium on Leasehold land is amortized over the period of the Lease.
1.7 Borrowing Costs:
Interest and other borrowing costs that are attributable to acquisition
or construction of qualifying assets are capitalized as part of the
cost of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. Other
interests and borrowing costs are charged to Revenue.
1.8 Foreign Currency Transactions:
Transactions denominated in foreign currency are recorded at the
exchange rate prevailing on the date of transaction or that
approximates the actual rate at the date of the transaction.
Monetary items denominated in foreign currencies, which are outstanding
as at the year-end and not covered by forward contracts, are restated
at year end rates. Resultant gain or loss, other than in relation to
acquisition of fixed assets, is charged to revenue during the year. In
case of items covered by forward exchange contracts, the difference
between the forward rate and the exchange rate at the inception of the
forward exchange contracts is recognized as income/expense over the
life of the contract. The exchange differences arising on such forward
exchange contracts are recognized as income or expense along with the
exchange differences on the underlying assets/liabilities. Profit or
loss on cancellations/renewals of forward contracts is recognized
during the year. Non-monetary foreign currency items are carried at
cost.
In accordance with Accounting Standard (AS) 11, "Accounting for the
effects of changes in foreign exchange rates", exchange difference
arising in respect of long term foreign exchange liabilities, where
they relate to acquisition of depreciable fixed assets, are adjusted to
the carrying cost of such assets and are depreciated over the balance
useful life of the asset.
1.9 Inventories:
Items of Inventories are valued at lower of cost and net realizable
value after providing for obsolescence, if any. Cost of inventories is
ascertained on the ''weighted average'' basis. Inventory of Finished
goods* and Work in progress is valued on full absorption cost in
bringing the inventories to their present location and condition. Waste
& Scrap are valued at net realizable value.
(*Excise duty, wherever applicable, is included in finished goods
inventory valuation.)
1.10 Lease Rentals:
Rental charges in respect of assets acquired under finance leases prior
to 1st April, 2001 are amortized over the useful economic life of the
asset and excess of lease rentals paid over the amount accrued are
treated as prepaid lease rentals. No leased assets, except leasehold
land, were acquired on or after 1st April, 2001.
1.11 Employee Benefits:
Defined contribution plans such as contributions to Provident Fund,
Family Pension Fund and Employee''s State Insurance are made to the
funds administered by the Govt. of India, and are recognized as an
expense when employees have rendered service entitling them to the
contributions. Defined benefit plans such as leave encashment and
gratuity are determined using the Projected Unit Credit Method, on the
basis of actuarial valuation carried out by independent actuaries at
each balance sheet date. Actuarial gains and losses are recognized in
the Statement of Profit and Loss in the year in which they arise.
1.12 Taxation:
Tax expense comprises Current and Deferred Tax.
Current Income Tax is measured at the amount expected to be paid to the
tax authorities in accordance with the provisions of the Income Tax
Act, 1961.
Deferred income tax reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. Deferred charge or
credit resulting from timing difference is measured based on the
current tax rates and tax laws that have been enacted or substantively
enacted as on the Balance Sheet date. Deferred tax assets are
recognized and carried forward to the extent there is a reasonable
certainty that these assets can be realized in future against future
taxable income.
Deferred tax assets/liabilities are reviewed at each Balance Sheet
date.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when
and to the extent there is convincing reasons that the company will pay
normal income tax during the specified period. MAT credit entitlement
is reviewed at each balance sheet date.
1.13 Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that an outflow of resources will be required
to settle the obligations. Contingent Liabilities are not recognized
but are disclosed in the notes. Contingent Assets are neither
recognized nor disclosed in the financial statements.
1.14 Earnings per Share:
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
1.15 Government Grants:
Grants received against specific fixed assets are adjusted to cost of
assets and those in the nature of promoter''s contribution are credited
to Capital Reserve. Revenue Grants are recognized in the Statement of
Profit and Loss on a systematic basis to match them with related costs.
1.16 Application of Securities Premium Account:
Premium payable on redemption of Preference Shares are charged, first
against available balance in Securities Premium Account.
2.3 Equity shares are having par value of H10/-per share. Each
Shareholder is eligible for one vote per share. Equity shareholders are
having the right of dividend, proposed by the Board of Directors
subject to the approval of shareholders except in case of interim
dividend.
In the event of liquidation, the equity shareholders are eligible to
receive the remaining assets of the Company, after distribution of all
preferential amounts, in proportion to their holding.
2.4 Preference Shareholders do not have the voting rights but are
having the preferential rights over equity shareholders, for getting
the fixed dividend on cumulative basis and also redemption of Capital
in the event of liquidation. Preference Shares of Series I have been
redeemed at a premium of H200/- each on 30.09.2013 along with accrued
dividend.
2.6 The Company has neither issued shares for a consideration other
than cash/ bonus shares nor bought back any shares during immediately
preceding 5 years.
4.2 During the year, 1,015,000 Share Warrants were issued convertible
into equal number of Equity Shares of H10/- each at a premium of H54/-
per share.
Nature of Security and Terms of Repayment:
a) Rupee Term Loans from Banks & Financial Institution:
i) Rupee Term Loans and Foreign Currency Loan from Banks & FI,
including Buyers credit from Banks, aggregating to H1,277,966,749
(Previous Year H1,029,670,446) are secured by way of first charge, on
pari-passu basis among lending banks & FI, over entire fixed assets
(present & future) (except the assets exclusively charged/ hypothecated
against specific loan) including equitable mortgage of entire
properties of the Company. These loans are further secured by way of
extension of first charge on pari-passu basis, on current assets of the
Company and personal guarantees of executive directors and others.
These loans are repayable in monthly/ quarterly installments as per
following maturity profile:
ii) Corporate term loan from bank of H Nil (Previous Year H17,500,000)
is secured by way of extension of first charge, on pari-passu basis
with other working capital lending banks, over entire current assets
(present and future) of the company. Corporate loan is further secured
by way of extension of first pari-passu charge over fixed assets,
excluding assets specifically charged/ hypothecated for specific loan,
of the company and personal guarantees of executive directors and
others.
c) Repayment of Non Convertible Debentures of H33,750,000 (Previous
Year H45,000,000) has been guaranteed by executive directors and others
personally as well as by pledge of shares owned by them. These
debentures are to be redeemed during April, 2015 along with premium.
a) Working capital loans from Banks except Buyers'' Credit arrangement
of H96,379,566/- (Previous Year H55,824,266/-) are secured by
hypothecation of current assets of the Company both present and future,
ranking pari-passu inter-se. These loans are further secured by way of
extension of pari-passu 1st charge on fixed assets (except the assets
exclusively charged/ hypothecated against specific loan) of the Company
and also guaranteed by the Executive Directors and others.
b) Buyers'' credit arrangement of H96,379,566/- (Previous Year
H55,824,266/-) from banks is secured by way of pledge of fixed deposit
receipts.
Pursuant to the Companies (Accounting Standards) Amendment Rules, 2011,
Company has exercised the option of capitalizing the exchange
differences arising on foreign currency long term loans for purchase of
depreciable capital assets, in respect of accounting periods commencing
from 1st April, 2011, which were hitherto recognized as income or
expense in the period in which they arose. Accordingly, loss on
account of foreign exchange fluctuations amounting to H1,611,426
(Previous Year H6,553,599) has been adjusted with the cost of capital
assets, to be depreciated over the balance useful life of respective
assets.
Mar 31, 2013
1.1 Basis of Preparation of Financial Statements:
The financial statements have been prepared in compliance with all
material aspects with the notified Accounting Standards by Companies
(Accounting Standards) Rules, 2006 and the relevant provisions of the
Companies Act, 1956.
Financial statements are prepared in accordance with the generally
accepted accounting principles, as adopted consistently, and are based
on historical cost and items of income and expenditure are recognized
on accrual basis except those with significant uncertainties.
All the assets and liabilities have been classified as current or non
current as per the Company''s normal operating cycle and other criterion
set out in Schedule VI to the Companies Act, 1956. Based on the nature
of products and the time between the acquisition of assets for
processing and their realization in cash and cash equivalent, the
Company has ascertained its operating cycle to be less than 12 months.
1.2 Use of Estimates:
The preparation of financial statements requires management to make
estimates and assumptions, based upon the best knowledge of current
events and actions that may affect the reported amounts of assets and
liabilities and disclosures relating to contingent liabilities as at
the date of financial statements and the reported amounts of incomes
and expenses during the reporting period. Difference between the actual
results and estimates are recognized in the period in which the results
are known/ materialized.
1.3 Revenue Recognition:
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of goods is recognized on transfer of significant risks and
rewards of ownership which is generally on the dispatch of goods.
Revenue from operations is disclosed inclusive of excise duty and net
of sales tax / VAT, discounts and returns. Benefits on account of
entitlement to import goods free of duty are accounted for in the year
of exports made and are included in revenue from operations.
1.4 Fixed Assets:
Fixed assets are stated at cost, net of Cenvat and VAT input credit
availed, less accumulated depreciation, amortization and impairment
loss, if any, except freehold land which is carried at cost. Cost
includes all expenditure necessary to bring the asset to its working
condition for its intended use.
Foreign currency exchange differences to the extent covered under AS-11
are capitalized as per the policy stated in note 1.8.
Expenditure during construction period (including financing cost
relating to borrowed funds for construction or acquisition of fixed
assets) incurred on projects/ assets, including trial run expenses (net
of revenue) are treated as Pre-operative expenses, pending allocation
to the assets, and are included under "Capital work-in-progress." These
expenses are apportioned to related fixed assets on commencement of
commercial production. Capital work-in-progress is stated at the amount
expended up to the date of Balance Sheet.
The carrying amounts of fixed assets are reviewed at each balance sheet
date to assess if they are recorded in excess of their recoverable
amounts and where carrying values exceed their estimated recoverable
amount, assets are written down to their recoverable amount.
1.5 Intangible Assets:
Intangible assets are stated at cost less accumulated amortization.
Technical Knowhow and Software are amortized over a period of five
years. Amortization is done on straight line basis.
1.6 Depreciation/Amortization:
Depreciation on fixed assets is provided on "Written Down Value Method
(WDV)" at the rates and in the manner specified in Schedule XIV to the
Companies Act, 1956, except in respect of Building and Plant &
Machinery at Kanpur Unit where depreciation is provided on "Straight
Line Method (SLM)".
In respect of power line payments made to Electricity Authorities,
useful life is estimated at five years and expenditure is amortized
accordingly on "Straight Line Method".
Continuous process plants, as specified in Schedule XIV to the
Companies Act, 1956, are identified based on technical assessment and
are depreciated at the specified rate. Individual assets, whose actual
cost does not exceed Rs.5000, are depreciated fully within the year of
acquisition.
Premium on Leasehold land is amortized over the period of the Lease.
1.7 Borrowing Costs:
Borrowing costs that are attributable to acquisition or construction of
qualifying assets are capitalized as part of the cost of such assets. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use. All other borrowing costs are
charged to Statement of Profit and Loss.
1.8 Foreign Currency Transactions:
Transactions denominated in foreign currency are recorded at the
exchange rate prevailing on the date of transaction or that
approximates the actual rate at the date of the transaction.
Monetary items denominated in foreign currencies, which are outstanding
as at the year-end and not covered by forward contracts, are restated
at year end rates. Resultant gain or loss, other than in relation to
acquisition of fixed assets, is charged to revenue during the year. In
case of items covered by forward exchange contracts, the difference
between the forward rate and the exchange rate at the inception of the
forward exchange contracts is recognized as income/expense over the
life of the contract. The exchange differences arising on such forward
exchange contracts are recognized as income or expense along with the
exchange differences on the underlying assets/liabilities. Profit or
loss on cancellations/renewals of forward contracts is recognized
during the year. Non-monetary foreign currency items are carried at
cost.
In accordance with Accounting Standard (AS) 11, "Accounting for the
effects of changes in foreign exchange rates", exchange difference
arising in respect of long term foreign exchange liabilities, where
they relate to acquisition of depreciable fixed assets, are adjusted to
the carrying cost of such assets and are depreciated over the balance
useful life of the asset.
1.9 Inventories:
Items of Inventories are valued at lower of cost and net realizable
value. Cost of inventories is ascertained on the ''weighted average''
basis. Inventory of Finished goods* and Work in progress is valued on
full absorption cost in bringing the inventories to their present
location and condition. Waste & Scrap are valued at net realizable
value.
(*Excise duty, wherever applicable, is included in finished goods
inventory valuation.)
1.10 Lease Rentals:
Rental charges in respect of assets acquired under finance leases prior
to 1st April, 2001 are amortized over the useful economic life of the
asset and excess of lease rentals paid over the amount accrued are
treated as prepaid lease rentals. No leased assets, except leasehold
land, were acquired on or after 1st April, 2001.
1.11 Employee Benefits:
Defined contribution plans such as contributions to Provident Fund,
Family Pension Fund and Employee''s State Insurance are made to the
funds administered by the Govt. of India, and are recognized as an
expense when employees have rendered service entitling them to the
contributions. Defined benefit plans such as leave encashment and
gratuity are determined using the Projected Unit Credit Method, on the
basis of actuarial valuation carried out by independent actuaries at
each balance sheet date. Actuarial gains and losses are recognized in
the Statement of Profit and Loss in the year in which they arise.
1.12 Taxation:
Tax expense comprises Current and Deferred Tax.
Current Income Tax is measured at the amount expected to be paid to the
tax authorities in accordance with the provisions of the Income Tax
Act, 1961.
Deferred income tax reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. Deferred charge or
credit resulting from timing difference is measured based on the
current tax rates and tax laws that have been enacted or substantively
enacted as on the Balance Sheet date. Deferred tax assets are
recognized and carried forward to the extent there is a reasonable
certainty that these assets can be realized in future against future
taxable income.
Deferred tax assets/liabilities are reviewed at each Balance Sheet
date.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when
and to the extent there is convincing reasons that the company will pay
normal income tax during the specified period. MAT credit entitlement
is reviewed at each balance sheet date.
1.13 Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that an outflow of resources will be required
to settle the obligations. Contingent Liabilities are not recognized
but are disclosed in the notes. Contingent Assets are neither
recognized nor disclosed in the financial statements.
1.14 Earnings per Share:
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
1.15 Government Grants:
Grants in the nature of promoter''s contribution are credited to Capital
Reserve. Revenue Grants are recognized in the Statement of Profit and
Loss on a systematic basis to match them with related costs.
Mar 31, 2012
1.1 Basis of Preparation of Financial Statements:
The financial statements have been prepared in compliance with all
material aspects with the notified Accounting Standards by Companies
(Accounting Standards) Rules, 2006 and the relevant provisions of the
Companies Act, 1956.
Financial statements are prepared in accordance with the generally
accepted accounting principles, as adopted consistently, and are based
on historical cost and items of income and expenditure are recognized
on accrual basis except those with significant uncertainties.
All the assets and liabilities have been classified as current or non
current as per the Company's normal operating cycle and other criterion
set out in Schedule VI to the Companies Act, 1956. Based on the nature
of products and the time between the acquisition of assets for
processing and their realization in cash and cash equivalent, the
Company has ascertained its operating cycle to be less than 12 months.
1.2 Use of Estimates:
The preparation of financial statements requires management to make
estimates and assumptions, based upon the best knowledge of current
events and actions that may affect the reported amounts of assets and
liabilities and disclosures relating to contingent liabilities as at
the date of financial statements and the reported amounts of incomes
and expenses during the reporting period. Difference between the actual
results and estimates are recognized in the period in which the results
are known/ materialized.
1.3 Revenue Recognition:
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of goods is recognized on transfer of significant risks and
rewards of ownership which is generally on the dispatch of goods.
Revenue from operations is disclosed inclusive of excise duty and net
of sales tax / VAT, discounts and returns.
Benefits on account of entitlement to import goods free of duty are
accounted for in the year of exports made and are included in revenue
from operations.
1.4 Fixed Assets:
Fixed assets are stated at cost, net of Cenvat and VAT input credit
availed, less accumulated depreciation, amortization and impairment
loss, if any, except freehold land which is carried at cost. Cost
includes all expenditure necessary to bring the asset to its working
condition for its intended use.
Foreign currency exchange differences to the extent covered under AS-11
are capitalized as per the policy stated in note 1.8.
Expenditure during construction period (including financing cost
relating to borrowed funds for construction or acquisition of fixed
assets) incurred on projects/ assets, including trial run expenses (net
of revenue) are treated as Pre-operative expenses, pending allocation
to the assets, and are included under "Capital work-in-progress." These
expenses are apportioned to related fixed assets on commencement of
commercial production. Capital work-in-progress is stated at the amount
expended up to the date of Balance Sheet.
The carrying amounts of fixed assets are reviewed at each balance sheet
date to assess if they are recorded in excess of their recoverable
amounts and where carrying values exceed their estimated recoverable
amount, assets are written down to their recoverable amount.
1.5. Intangible Assets:
Intangible assets are stated at cost less accumulated amortization.
Technical Knowhow and Software are amortized over a period of five
years. Amortization is done on straight line basis.
1.6 Depreciation/Amortization:
Depreciation on fixed assets is provided on "Straight Line Method
(SLM)" at the rates and in the manner specified in Schedule XIV to the
Companies Act, 1956, except in respect of Vehicles, Furniture/ Fixtures
and Office Equipments at Kanpur Unit where depreciation is provided on
"Written Down Value Method (WDV)"; in respect of entire fixed assets of
Rudrapur and Bilaspur Units where depreciation is provided on "Written
Down Value Method (WDV)''. In respect of power line payments made to
Electricity Authorities, useful life is estimated at five years and
expenditure is amortized accordingly on "Straight Line Method".
Continuous process plants, as specified in Schedule XIV to the
Companies Act, 1956, are identified based on technical assessment and
are depreciated at the specified rate. Individual assets, whose actual
cost does not exceed Rs. 5000, are depreciated fully within the year of
acquisition.
Premium on Leasehold land is amortized over the period of the Lease.
1.7 Borrowing Costs:
Borrowing costs that are attributable to acquisition or construction of
qualifying assets are capitalized as part of the cost of such assets. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use. All other borrowing costs are
charged to Statement of Profit and Loss.
1.8 Foreign Currency Transactions:
Transactions denominated in foreign currency are recorded at the
exchange rate prevailing on the date of transaction or that
approximates the actual rate at the date of the transaction.
Monetary items denominated in foreign currencies, which are outstanding
as at the year-end and not covered by forward contracts, are restated
at year end rates. Resultant gain or loss, other than in relation to
acquisition of fixed assets, is charged to revenue during the year. In
case of items covered by forward exchange contracts, the difference
between the forward rate and the exchange rate at the inception of the
forward exchange contracts is recognized as income/expense over the
life of the contract. The exchange differences arising on such forward
exchange contracts are recognized as income or expense along with the
exchange differences on the underlying assets/liabilities. Profit or
loss on cancellations/renewals of forward contracts is recognized
during the year. Non-monetary foreign currency items are carried at
cost.
In accordance with Accounting Standard (AS) 11, "Accounting for the
effects of changes in foreign exchange rates", exchange difference
arising in respect of long term foreign exchange liabilities, where
they relate to acquisition of depreciable fixed assets, are adjusted to
the carrying cost of such assets and are depreciated over the balance
useful life of the asset.
1.9 Inventories:
Items of Inventories are valued at lower of cost and net realizable
value. Cost of inventories is ascertained on the 'weighted average'
basis. Inventory of Finished goods* and Work in progress is valued on
full absorption cost in bringing the inventories to their present
location and condition. Waste Et Scrap are valued at net realizable
value.
(*Excise duty, wherever applicable, is included in finished goods
inventory valuation.)
1.10Lease Rentals:
Rental charges in respect of assets acquired under finance leases prior
to 1'st April 2001 are amortized over the useful economic life of the
asset and excess of lease rentals paid over the amount accrued are
treated as prepaid lease rentals. No leased assets, except leasehold
land, were acquired on or after 1'st April 2001.
1.11 Employee Benefits:
Defined contribution plans such as contributions to Provident Fund,
Family Pension Fund and Employee's State Insurance are made to the
funds administered by the Govt, of India, and are recognized as an
expense when employees have rendered service entitling them to the
contributions. Defined benefit plans such as leave encashment and
gratuity are determined using the Projected Unit Credit Method, on the
basis of actuarial valuation carried out by independent actuaries at
each balance sheet date. Actuarial gains and losses are recognized in
the Statement of Profit and Loss in the year in which they arise.
1.12Taxation:
Tax expense comprises Current and Deferred Tax.
Current Income Tax is measured at the amount expected to be paid to the
tax authorities in accordance with the provisions of the Income Tax
Act, 1961.
Deferred income tax reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years. Deferred charge or
credit resulting from timing difference is measured based on the
current tax rates and tax laws that have been enacted or substantively
enacted as on the Balance Sheet date. Deferred tax assets are
recognized and carried forward to the extent there is a reasonable
certainty that these assets can be realized in future against future
taxable income.
Deferred tax assets/liabilities are reviewed at each Balance Sheet
date.
Minimum Alternate Tax (MAT) credit is recognized as an asset only when
and to the extent there is convincing reasons that the company will pay
normal income tax during the specified period. MAT credit entitlement
is reviewed at each balance sheet date.
1.13Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources
will be required to settle the obligations. Contingent Liabilities are
not recognized but are disclosed in the notes. Contingent Assets are
neither recognized nor disclosed in the financial statements.
1.14 Earnings per Share:
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
1.15 Government Grants:
Grants in the nature of promoter's contribution are credited to Capital
Reserve. Revenue Grants are recognized in the Statement of Profit and
Loss on a systematic basis to match them with related costs.
Mar 31, 2010
A. System of Accounting:
The financial statements have been prepared under the historical cost
convention, in accordance with the generally accepted accounting
principles and the provisions of the Companies Act, 1956, as adopted
consistently by the Company.
The Company, generally, follows mercantile system of accounting and
recognizes significant items of income and expenditure on accrual basis
except those with significant uncertainties.
b. Revenue Recognition:
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. In case of sale of goods, revenue is recognized, net
of Value Added Tax, when the significant risks and rewards of ownership
of goods have been passed to the buyer, which generally coincides with
delivery.
Benefits on account of entitlement to import goods free of duty are
accounted for in the year of exports made and are included in Sales.
c. Fixed Assets:
Fixed assets are stated at cost comprising of its purchase price and
directly attributable cost of bringing the asset to working condition
for its intended use less accumulated depreciation and amortization.
The carrying amounts of fixed assets are reviewed at each balance sheet
date to assess if they are recorded in excess of their recoverable
amounts and where carrying values exceed their estimated recoverable
amount, assets are written down to their recoverable amount.
Revenue expenses incurred in connection with project implementation and
expansion of existing units in so far as such expenses (net of income)
relate to the period prior to the commencement of commercial production
are treated as project cost and allocated to the relevant fixed assets
on a pro-rata basis.
d. Intangible Assets:
Intangible assets are stated at cost less accumulated amortization.
Technical Know how and Computer Softwares are amortized over a period
of five years. Amortization is done on straight line basis.
e. Depreciation/Amortization:
Depreciation on fixed assets is provided on straight line method (SLM)
at the rates and in the manner prescribed in Schedule XIV to the
Companies Act, 1956, except: in respect of vehicles at Kanpur Unit
where depreciation is provided on written down value method (WDV); in
respect of fixed assets of Rudrapur and Bilaspur Units where
depreciation is provided on written down value method (WDV); in respect
of power line payments made to Electricity Authorities, useful life has
been estimated as five years. Continuous process plants as defined
therein have been taken on technical assessment and depreciation is
provided accordingly. Individual assets, whose actual cost does not
exceed Rs. 5000, are depreciated fully within the year of acquisition.
Cost of Leasehold land is amortized over the period of the Lease.
f. Valuation of Inventories:
Inventories are valued at lower of cost, computed on a weighted average
basis, and net realizable value. Finished goods and Goods-in-process
include cost of conversion and other costs (full absorption cost) in
bringing the inventories to their present location and condition. Waste
& Scrap are valued at net realizable value.
g. Lease Rentals:
Rental charges in respect of assets acquired under finance leases prior
to 1st April 2001 are amortized over the useful economic life of the
asset and excess of lease rentals paid over the amount accrued are
treated as prepaid lease rentals. No leased assets, except leasehold
land, were acquired on or after 1st April 2001.
h. Foreign Currency Transactions: -
Transactions denominated in foreign currency are recorded at the
exchange rate prevailing on the date of transactions. Exchange
differences arising on foreign exchange transactions settled during the
period are recognized in the Profit & Loss Account of the period.
Monetary assets and liabilities in foreign currency which are
outstanding as at the year-end and not covered by forward contracts,
are translated at the year-end at the closing exchange rate and the
resultant exchange differences are recognized in the Profit & Loss
Account. Non-monetary foreign currency items are carried at cost.
In respect of forward exchange contracts, the difference between the
forward rate and the exchange rate at the inception of the forward
exchange contracts is recognized as income/expense over the life of the
contract. Exchange differences on forward exchange contracts are
recognized as income or expense along with the exchange differences on
the underlying assets/liabilities. Profit or loss on
cancellations/renewals of forward contracts is recognized during the
year.
i. Employee Benefits:
Short Term Employee benefits (benefits which are payable within twelve
months after the end of the period in which the employees render
service) are measured at cost. Long term employee benefits (benefits
which are payable after the end of twelve months from the end of the
month in which the employee render service) and post employment
benefits (Benefits which are payable after completion of employment)
are measured on a discounted benefits by the Projected Unit Credit
method on the basis of annual third party actuarial valuations.
Contribution to Provident Fund, Family Pension Fund and Employees State
Insurance, a defined contribution plan are made to the funds
administered by the Govt. of India, and are recognized as an expense
when employees have rendered service entitling them to the
contributions. The cost of providing leave encashment and gratuity,
defined benefit plans, are determined using the Projected Unit Credit
Method, on the basis of actuarial valuation carried out by third party
actuaries at each balance sheet date. Actuarial gains and losses are
recognized immediately in the Profit and Loss Account.
j. Borrowing Costs:
Borrowing costs that are attributable to acquisition or construction of
qualifying assets are capitalized as part of the cost of such assets. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to revenue.
k. Taxation:
Tax expense comprises Current, Deferred and Fringe Benefit Tax.
Current Income Tax and Fringe Benefit Tax are measured at the amount
expected to be paid to the tax authorities in accordance with the
Income Tax Act, 1961.
Deferred tax charge or credit resulting from timing difference is
recognized using current tax rates and tax laws that have been enacted
or substantively enacted as on the Balance Sheet date.
Deferred tax assets are recognized and carried forward to the extent
there is a reasonable certainty that these assets can be realized in
future.
Deferred tax assets/liabilities are reviewed at each Balance Sheet
date.
l. Provisions and Contingent Liabilities:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes
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Stocks To Buy Today, Dec 17: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Wednesday -
Stocks To Buy Today, Dec 16: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Tuesday -
India Stock Market Weekly Review: Nifty and Sensex Fall as Caution Spreads -
Stocks To Buy Today, Dec 15: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Monday
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Stocks To Buy Today, Dec 12: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Friday -
Market Outlook 2026: Kotak Securities Sees Nifty 50 at 30,000; THESE 4 Sectors Lead Rally, Gold To Stay Strong -
Stocks To Buy Today, Dec 10: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Wednesday -
D-Street Bleeds For 2nd Day! Sensex Slumps 678 Pts; Nifty Cracks 25,800; Why Stock Market Is Falling Today? -
Stocks To Buy Today, Dec 9: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Tuesday -
Stocks To Buy Today, Dec 8: Top 4 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Monday -
Stock Market Alert! Major Pre-Open Session Change From Dec 8: Full Timings, Rules & All You Need To Know -
Bank Nifty Surges: RBI’s 25 bps Rate Cut Triggers Strong Upside in Major Banking Stocks -
Closing Bell: Sensex Ends 158 pts Higher, Nifty Climbs Above 26,000; Hero MotoCorp, HAL Up 2% Each -
Stocks To Buy Today, Dec 4: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Thursday
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