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Accounting Policies of GEE Ltd. Company
Mar 31, 2024
NOTE-1: CORPORATE INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES
Gee Limited is a Public Limited Company incorporated in India and listed with Bombay stock Exchange.The Company is engaged in the business of manufacturing of Welding Electrodes, Copper Coated Wires, Flux Cored Wires and Welding Fluxes. The manufacturing activities are located in Maharashtra and West Bengal. It caters to local as well as export market.
The registered office of the Company is Plot No. E-1, Road No. 7, Wagle Industrial Estate,Thane (West) - 400604
B. BASIS OF PREPARATION & PRESENTATION OF FINANCIAL STATEMENT
i. STATEMENT OF COMPLIANCE:
The financial statements of the company are prepared in accordance with Indian Accounting Standards (âInd AS") notified under Section 133 of the Companies Act, 2013 (the Act) read with Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III).
The Board of Directors have approved the financial statements for the year ended 31st March,2024 and authorised for issue on 30th May,2024.
ii. BASIS OF MEASUREMENT
The Company maintains accounts on accrual basis following the historical cost convention, except for followings:
0 Certain Financial Assets and Liabilities is measured at Fair value/ Amortized cost (refer accounting policy regarding financial instruments);
0 Defined Benefit Plans - Plan assets measured at fair value.
iii. FUNCTIONAL AND PRESENTATION CURRENCY
The Financial Statements are presented in Indian Rupee (INR), which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates. All amounts disclosed in financial statements and notes have been rounded off to the nearest lakhs (with two places of decimal) as per the requirements of Schedule III, unless otherwise stated.
iv. USE OF ESTIMATES AND JUDGMENTS
The preparation of financial statements in conformity with Ind AS requires judgments, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues 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.
v. PRESENTATION OF FINANCIAL STATEMENTS
The Balance Sheet, the Statement of Profit and Loss and the Statement of change in equity are prepared and presented in the format prescribed in the Schedule III to the Companies Act, 2013 (âthe Act"). The Statement of Cash Flows has been prepared and presented as per the requirements of Ind AS 7 âStatement of Cash flows'') The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as prescribed in the Schedule III to the Act, are presented by way of notes forming part of the financial statements along with the other notes required to be disclosed under the notified Indian Accounting Standards and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended).
vi. OPERATING CYCLE FOR CURRENT AND NON-CURRENT CLASSIFICATION
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013 and Ind AS 1.The Company has ascertained its operating cycle as twelve months for the purpose of current and non-current classification of assets and liabilities.
An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
vii. FAIR VALUE MEASUREMENT
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
External valuers are involved for valuation of significant assets & liabilities. Involvement of external valuers is decided by the management of the company considering the requirements of Ind AS and selection criteria include market knowledge, reputation, independence and whether professional standards are maintained.
viii. RECENT ACCOUNTING DEVELOPMENTS
(A) The Company has adopted, with effect from 01 April 2022, the following new and revised standards, and interpretations. Their adoption has not had any impact on the amounts reported in the financial statements.
1. Amendment to Ind AS 37 regarding costs that an entity needs to include when assessing whether a contract is onerous or loss-making.
2. Amendment to Ind AS 109 Financial Instrument regarding inclusion of fees in the ''10 per cent'' test for derecognition of financial liabilities.
3. Amendment to Ind AS 103 Business Combination, Reference to the Conceptual Framework for Financial Reporting.
(B) Standards notified but not yet effective
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 dated 31 March 2023, effective from 01 April 2023, resulting in certain amendments as mentioned below:
1. Ind AS 1 Presentation of financial statements: The amendment requires disclosure of material accounting policies rather than significant accounting policies;
2. Ind AS 12 Income Taxes: The amendment clarifies application of initial recognition exemption to transactions such as leases and decommissioning obligations;
3. Ind AS 8 Accounting Policies, Change in Accounting Estimates and Errors: The amendment replaces definition of ''change in accounting estimates'' with the definition of ''accounting estimates''
These amendments are not expected to have any impact in the financial statements of the Company.
C. SIGNIFICANT ACCOUNTING POLICIES
A summary ofthe significant accounting policies applied in the preparation ofthe financial statements are as given below. These accounting policies have been applied consistently to all the periods presented in the financial statements.
Raw material, packing material, work in process, stores, tools and dies and finished goods are valued at cost or net realisable value, whichever is lower.
Cost of raw material, packing material and stores, tools and dies comprises of cost of purchases. Cost of work in process and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Cost of inventories also includes all other costs incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on first-in-first-out basis. Costs of purchased inventory are determined after deducting rebates and discounts.
Net realisable 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.
For the purpose of presentation in the Statement of cash flows, cash and cash equivalents include cash in hand, demand deposits with banks and financial institutions and other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with prevailing income tax law.
Current 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 substantively enacted, at the time of reporting.
Current taxes are recognized in statement of profit or loss, except when they relate to items recognized in other comprehensive income or equity, in which case the tax is recognized in other comprehensive income or equity. Income tax assets and liabilities are presented separately in the Balance Sheet except where there is a right of set-off within fiscal jurisdictions and an intention to settle such balances on a net basis.
Deferred tax is provided using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Balance Sheet at the reporting date.
Deferred tax assets and liabilities are measured based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date and are expected to apply in the year when the related deferred tax asset is expected to realise or the deferred tax liability is expected to settle.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are set off if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxation authority.
iv. FOREIGN CURRENCY TRANSACTIONS Functional and presentation currency
Items included in the financial statement of the Company are measured using the currency of the primary economic environment in which the entity operates (''the functional currency''). The financial statements are presented in Indian Rupees (INR) currency, which is the Company''s functional and presentation currency.
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Realised gains and losses on settlement of foreign currency transactions are recognized in the Statement of Profit and Loss. Foreign currency denominated monetary assets and liabilities at the year-end are translated at the year-end exchange rates, and the resultant exchange difference is recognized in the Statement of Profit and Loss. Non-monetary foreign currency items are carried at cost
v. PROPERTY, PLANT AND EQUIPMENT
Freehold Land is carried at historical cost. All other items of property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation and impairment losses. The cost comprises of the purchase price or construction cost (including non-creditable/non-refundable taxes), any costs directly attributable to bringing the property, plant and equipment into the location and condition necessary for it to be capable of operating in the manner intended by management, the initial estimate of any decommissioning obligation, if any, and, for assets
that necessarily take a substantial period of time to get ready for their intended use, finance costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
Subsequent expenditures related to an item of property, plant and equipment are added to its gross book value or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with them will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred.
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 or disposal. 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 in the year in which the asset is derecognized.
Depreciation method, estimated useful life and residual value
Depreciation on property, plant and equipment is provided using the Straight-Line Method (SLM) so as to expense the cost less residual values over their estimated useful lives as prescribed under Part C of Schedule II to the Companies Act, 2013 except in case of following assets, wherein based on internal assessment and technical evaluation a different useful life has been determined:
⢠Depreciation of leasehold land is provided using straight line method over the remaining period of lease of land.
Property, plant and equipment which are added or disposed of during the year, depreciation is provided on pro-rata basis.
In line with the provisions of Schedule II of the Companies Act 2013, the Company depreciates significant components having different useful lives as compared to the main asset, based on the individual useful life of the components. Useful life for such components is assessed based on the historical experience and internal technical inputs.
The residual values are not more than 5% of the original cost of the asset. The assets'' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss with other gains/losses.
Intangible assets comprise of computer software and is stated at acquisition cost, net of accumulated amortization and accumulated impairment loss, if any.
Intangible assets are amortised over the useful life of assets, not exceeding 10 years.
Computer Software is amortised over a period of three years.
The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.
All assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset''s fair value less cost of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or group of assets (cash generating units). Non-financial assets that suffered impairment earlier are reviewed for possible reversal of the impairment at the end of each reporting period.
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and wherever applicable borrowing costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized.costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized.
Trade receivables are recognized initially at fair value and subsequently measured at amortised cost net of any expected credit losses, if any.
Assets are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. A sale is considered highly probable and is expected to qualify for recognition as a completed sale within one year from the date of classification. They are measured at the lower of their carrying amount and fair value less costs to sell except for assets such as deferred tax assets, assets arising from employee benefits financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognized for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset (or disposal group) is recognized at the date of derecognition.
Assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of assets held for sale continue to be recognized.
Assets classified as held for sale are presented separately from the other assets in the balance sheet under âOther Current Assets."The liabilities for assets held for sale are presented separately from other liabilities in the balance sheet.
xi. FINANCIAL ASSETSInitial recognition and measurement
All financial assets are recognized initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset, except in the case of financial assets not recorded at fair value through profit or loss.Transaction costs of financial assets carried at fair value through profit or loss are expensed through the Statement of Profit and Loss.
Classification and Subsequent Measurement:
For purposes of subsequent measurement, financial assets are classified in four categories: o Measured at Amortized Cost;
o Measured at Fair Value Through Other Comprehensive Income (FVTOCI); o Measured at Fair Value Through Profit or Loss (FVTPL); and
o Equity Instruments designated at Fair Value through Other Comprehensive Income (FVTOCI).
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
o Measured at Amortized Cost: A debt instrument is measured at the amortized cost if both the following conditions are met:
¦ The asset is held within a business model whose objective is achieved by both collecting 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 (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 or loss. The losses arising from impairment are recognized in the profit or loss.
This category generally applies to trade receivables, cash and bank balances, loans and other financial assets of the company.
o Measured at FVTOCI ; A debt instrument is measured at the FVTOCI if both the following conditions are met:
¦ The objective of the business model is achieved by both collecting contractual cash flows and selling the financial assets; and
¦ The asset''s contractual cash flows represent SPPI.
Debt instruments meeting these criteria are measured initially at fair value plus transaction costs. They are subsequently measured at fair value with any gains or losses arising on remeasurement recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains or losses. Interest calculated using the effective interest method is recognized in the statement of profit and loss in investment income.
o Measured at FVTPL: FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as FVTPL. In addition, the company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss. Equity instruments which are, held for trading are classified as at FVTPL.
o Equity Instruments designated at FVTOCI: For equity instruments, which has not been classified as FVTPL as above, the company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable. In case the company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment.
The Company derecognizes a financial asset on trade date only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
Impairment of Financial Assets:
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS - 109 requires expected credit losses to be measured through a loss allowance. The company recognizes impairment loss for trade receivables that do not constitute a financing transaction using expected credit loss model, which involves use of a provision matrix constructed on the basis of historical credit loss experience. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
xii. FINANCIAL LIABILITIES Classification as liability or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Initial recognition and measurement
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the amortised cost unless at initial recognition, they are classified as fair value through profit or loss.
Financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognized in the Statement of Profit and Loss.
A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss or other gains/losses.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for atleast 12 months after the reporting period.
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
Other borrowing costs are expensed in the period in which they are incurred.
These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortised cost using the effective interest method.
Provisions for legal claims, warranties, discounts and returns 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.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class obligations may be small.
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. The increase in the provision due to the passage of time is recognized as interest expense.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.
Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits. Contingent Assets are not recognized though are disclosed, where an inflow of economic benefits is probable.
xix. REVENUE RECOGNITION Sale of goods
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue is reduced for customer discounts, rebates granted, other similar allowances, goods and services tax (GST) and duties collected on behalf of third parties.
Revenue is measured based on transaction price, which is the fair value of the consideration received or receivable, stated net of discounts, returns and value added tax. Transaction price is recognized based on the price specified in the contract, net of the estimated sales incentives/ discounts. Accumulated experience is used to estimate and provide for the discounts/ right of return, using the expected value method.
A refund liability is recognized for expected returns in relation to sales made corresponding assets are recognized for the products expected to be returned.
In respect of sale of goods and services where the company participates in tenders, the control of the goods is transferred on dispatch and revenue is recognized in accordance with the terms of the tender. For contracts accepted through tendering process and where separate warranty terms are prescribed, these obligations are not deemed to be separate performance obligations and therefore estimated and included in the total costs of the products. Where required, amounts are recognized separately accordingly in line with IND AS 37 - Provisions, Contingent Liabilities and Contingent Assets.
Incomes in respect of duty drawback in respect of exports made during the year are accounted on accrual basis
Interest income is recognized in statement of profit and loss using effective interest method. Dividend income is recognized when the Company''s right to receive dividend is established.
Insurance claims are accounted on acceptance basis. All other claims/entitlements are accounted on the merits of each case or on realization. xx RETIREMENT AND OTHER EMPLOYEE BENEFITS Short term employee benefits
Liabilities for salaries, wages and performance incentives including non- monetary benefits that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognized 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. The liabilities are presented as current employee benefits obligations in the Balance Sheet.
Long term employee benefits Defined contribution plans
The Company has Defined Contribution Plans for its employees such as Provident Fund, Employee''s State Insurance, etc. and contribution to these plans are charged to the Statement of Profit and Loss as incurred, as the Company has no further obligation beyond making the contributions.
Gratuity: The liability or asset recognized 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 less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries 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 and the fair value of plan assets.This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.
xxi. LEASESCompany as a lessee
The Company''s lease asset classes primarily consist of leases for Land. The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a right-of-use asset (âROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short term leases) and leases of low value assets. For these short term and leases of low value assets, the Company recognises the lease payments as an operating expense on a straight line basis over the term of the lease.
The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives.They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made.
A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments.The remeasurement normally also adjusts the leased assets.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
Company as a lessor Finance Lease
Leases which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item are classified and accounted for as finance lease. Lease rental receipts are apportioned between the finance income and capital repayment based on the implicit rate of return. Contingent rents are recognized as revenue in the period in which they are earned.
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease except where scheduled increase in rent compensates the Company with expected inflationary costs.
xxii. OFFSETTING FINANCIAL INSTRUMENTS
Financial assets and liabilities are offset and the net amount reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
Basic earnings per share is calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of diluted potential equity shares.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM).
The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Director and Finance Director of the Company.
The Company is engaged in the business of manufacturing welding consumables, copper coated wires, flux cored wires and welding fluxes and is organizationally managed in two units - one in Maharashtra and one in West Bengal.The Company''s business comprises of only one segment.
It has customers in India as well as outside India. Thus, the Company has only one business segment but different geographical reporting segment i.e., Domestic and International.
xxv. DIVIDEND TO EQUITY SHAREHOLDERS
Dividend to equity shareholders is recognized as a liability and deducted from shareholders'' equity, in the period in which the dividends are approved by the equity shareholders in the general meeting.
Cash flows are reported using the indirect method whereby profit/loss is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments.The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
2. SIGNIFICANT JUDGEMENTS AND KEY SOURCES OF ESTIMATION IN APPLYING ACCOUNTING POLICIES
Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances. Information about Significant judgments and Key sources of estimation made in applying accounting policies that have the most significant effects on the amounts recognized in the financial statements is included in the following notes:
⢠Recognition of Deferred Tax Assets: The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized. In addition, significant judgment is required in assessing the impact of any legal or economic limits.
⢠Classification of Leases: The Company has exercised judgement in determining the lease term as the noncancellable term of the lease, together with the impact of options to extend or terminate the lease if it is reasonably certain to be exercised. Where the rate implicit in the lease is not readily available, an incremental borrowing rate is applied. This incremental borrowing rate reflects the rate of interest that the lessee would have to pay to borrow over a similar term, with a similar security, the funds necessary to obtain an asset of a similar nature and value to the right of-use asset in a similar economic environment. Determination of the incremental borrowing rate requires estimation."
⢠Defined Benefit Obligation (DBO): Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, medical cost trends, anticipation of future salary increases and the inflation rate.The Company considers that the assumptions used to measure its obligations are appropriate. However, any changes in these assumptions may have a material impact on the resulting calculations.
⢠Provisions and Contingencies: The assessments undertaken in recognising provisions and contingencies have been made in accordance with Indian Accounting Standards (Ind AS) 37, ''Provisions, Contingent Liabilities and Contingent Assets''. The evaluation of the likelihood of the contingent events is applied best judgment by management regarding the probability of exposure to potential loss.
⢠Impairment of Financial Assets: The Company reviews its carrying value of investments carried at amortized cost annually, or more frequently when there is indication of impairment. If recoverable amount is less than its carrying amount, the impairment loss is accounted for.
⢠Allowances for Doubtful Debts: The Company makes allowances for doubtful debts through appropriate estimations of irrecoverable amount.The identification of doubtful debts requires use of judgment and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of the trade and other receivables and doubtful debts expenses in the period in which such estimate has been changed.
⢠Fair value measurement of financial Instruments: When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The input to these models are taken from observable markets where possible, but where this not feasible, a degree of judgments'' is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility.
Mar 31, 2023
SIGNIFICANT ACCOUNTING POLICIES
A. Corporate Information:
Gee Limited is a Public Limited Company incorporated in India and listed with Bombay stock Exchange.The Company is engaged in the business of
manufacturing of Welding Electrodes, Copper Coated Wires, Flux Cored Wires and Welding Fluxes. The manufacturing activities are located in
Maharashtra and West Bengal.lt caters to localas well asexport market.
The registered officeofthe Company is Plot No.E-1,Road No.7,Wagle Industrial Estate,Thane (West) -400604.
B. BASIS OF PREPARATION & PRESENTATION OF FINANCIAL STATEMENT
I. STATEMENT OF COMPLIANCE:
The financial statements of the company are prepared in accordance with Indian Accounting Standards ("Ind AS") notified under Section 133
of the Companies Act, 2013 (the Act) read with Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant
provisionsoftheActand presentation requirements of Division II of Schedule III to the Companies Act,2013,(lnd AS compliant Schedule III).
The Board of Directors have approved thefinancial statements fbrthe yearended 31st March,2023and authorised for issue on 25''" November,
2023.
ii. BASIS OF MEASUREMENT
The Company maintains accounts on accrual basis following the historical cost convention,except forfollowings:
> Certain Financial AssetsandLiabilitiesismeasuredatFairvalue/ Amortized cost (refer accounting policy regardingfinancial instruments);
> Defined Benefit Plans - Plan assets measured at fair value.
Hi. FUNCTIONAL AND PRESENTATION CURRENCY
The Financial Statements are presented in Indian Rupee (INR), which is the functional currency of the Company and the currency of the primary
economic environment in which the Company operates. All amounts disclosed in financial statements and notes have been rounded off to the
nearest lakhs (with two placesofdecimal) as per the requirements ofSchedule III,unless otherwise stated.
iv. USEOF ESTIMATES AND JUDGMENTS
The preparation of financial statements in conformity with Ind AS requires judgments, estimates and assumptions to be made that affect the
reported amount of assets and liabilities, disclosure of contingent liabilities on the date of thefinancial statements and the reported amount of
revenues 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.
v. PRESENTATION OF FINANCIALSTATEMENTS
The Balance Sheet, the Statement of Profit and Loss and the Statement of change in equity are prepared and presented in the format prescribed in
the Schedule III to the Companies Act,2013 (âthe Act").The Statement of Cash Flows has been prepared and presented as per the requirements of
ind AS 7 "Statement of Cash flows"The disclosure requirements with respect to items in the Balance Sheet and Statement of Profit and Loss, as
prescribed in the Schedule III to the Act,are presented by way of notes forming part of the financial statements along with the other notes required
to be disclosed under the notified Indian Accounting Standards and the SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015
(as amended).
vi. OPERATING CYCLE FOR CURRENT AND NON-CURRENT CLASSIFICATION
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the
Schedule III to the Companies Act,2013 and Ind AS 1 .The Company has ascertained its operating cycle as twelve months for the purpose of current
and non-current classification of assets and liabilities.
An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months afterthe reporting period,or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting
period
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle
¦ It is held primarily forthe purposeof trading
⢠It is due to be settled within twelve months after the reporting period,or
¦ Thereisnounconditionalrighttodeferthesettlementoftheliabilityforatieasttwelvemonthsafterthe reporting period
The Company classifies all other liabilities as non-current.Deferred taxassets and liabilitiesare classified as non-current assets and liabilities.
vii. FAIR VALUE MEASUREMENT
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date.Thefairvalue measurement is based on the presumption thatthe transaction to sell the asset or transferthe liability takes
place either:
⢠In the principal marketforthe asset or liability,or
¦ In the absence of a principal market,in the most advantageous marketforthe asset or liability
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in theireconomic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the
asset in its highest and best use or by selling ittoanother market participantthat would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair
value,maximizing the useof relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
Level 2-Valuation techniques forwhich the lowest level input that is significant to the fairvalue measurement isdirectly orindirectly observable.
Level 3 - Valuation techniquesfor which the lowest level input that is significant to the fairvalue measurement is unobservable.
External valuers are involved for valuation of significant assets & liabilities. Involvement of external valuers is decided by the management of the
company considering the requirements of Ind AS and selection criteria include market knowledge, reputation, independence and whether
professional standards are maintained.
viii. RECENT ACCOUNTING DEVELOPMENTS
(A) The Company has adopted, with effect from 01 April 2022,the following new and revised standards, and interpretations.Their adoption has
not had any impact on the amounts reported in the financial statements.
1. AmendmenttolndAS37regardingcoststhatanentityneedstoincludewhenassessingwhetheracontractisonerousor loss-making.
2. Amendment to Ind AS 109 Financial Instrument regarding inclusion of fees in the ''10 per cent'' test for derecognition of financial
liabilities.
3. Amendmentto Ind AS 103 BusinessCombination,ReferencetotheConceptualFrameworkfor Financial Reporting,
(B) Standards notified but notyet effective
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 dated 31 March 2023,
effective from 01 April 2023,resulting in certain amendments as mentioned below:
1. Ind AS 1 Presentation of financial statements:The amendment requires disclosure of material accounting policies ratherthan significant
accounting policies;
2. Ind AS 12 Income Taxes: The amendment clarifies application of initial recognition exemption to transactions such as leases and
decommissioning obligations;
3. Ind AS 8 Accounting Policies,Change in Accounting Estimates and Errors:The amendment replaces definition of''change in accounting
estimates''with the definition of''accounting estimates''
These amendments are not expected to have any impact in the financial statements of the Company.
C SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the financial statements are as given below.These
accounting policies have been applied consistently toall the periods presented in the financial statements.
I. INVENTORIES
Raw material, packing material, work in process,stores,tools and dies and finished goods are valued at cost or net realisable value, whichever
is lower.
Cost of raw material, packing material and stores, tools and dies comprises of cost of purchases. Cost of work in process and finished goods
comprises direct materials,direct labour and an appropriate proportion of variable and fixed overhead expenditure,the latter being allocated
on the basis of normal operating capacity. Cost of inventories also includes all other costs incurred in bringing the inventories to their present
location and condition. Costs are assigned to individual items of inventory on first-in-first-out basis. Costs of purchased inventory are
determined after deducting rebatesand discounts.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completionand the estimated
costs necessary to make the sale.
ii. CASH AND CASH EQUIVALENTS
For the purpose of presentation in the Statement of cash flows,cash and cash equivalents include cash in hand,demand deposits with banks
and financial institutions and other short-term highly liquid investments with original maturities of three months or less that are readily
convertible to known amountsof cash and which are subject to an insignificant risk of changes in value.
iii. INCOMETAX
Tax expense for the period,comprising current tax and deferred tax,are included in the determination of the net profit or loss for the period.
Current tax is measured at the amount expected to be paid to the tax authorities in accordance with prevailing income tax law.
Current tax
Currenttaxassets 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 tocomputetheamount are those thatare enacted orsubstantively enacted,at the timeof reporting.
Current taxes are recognized in statement of profit or loss, except when they relate to items recognized in other comprehensive income or
equity, in which case the tax is recognized in other comprehensive income or equity. Income tax assets and liabilities are presented separately
in the Balance Sheet except where there isa rightofset-off within fiscal jurisdictionsand an intention to settlesuchbalanceson a net basis.
Deferred taxes
Deferred tax is provided using the liability method on temporary differencesarising between the tax bases of assets and liabilities and their
carrying amounts in the Balance Sheet at the reporting date.
Deferred tax assets and liabilities are measured based on tax rates (and tax laws) that have been enacted or substantively enacted at the
reporting date and are expected to apply in the year when the related deferred tax asset is expected to realise or the deferred tax liability is
expected to settle.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or
in equity). Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in
equity.
Deferred tax assets and deferred tax liabilities are set off if a legally enforceable right exists to set off current tax assets against current tax
liabilitiesand the deferred taxes relate to the same taxation authority.
iv. FOREIGN CURRENCYTRANSACTIONS
Functional and presentation currency
Items included in the financial statement of the Company are measured using the currency of the primary economic environment in which the
entity operates (''the functional currency'').The financial statements are presented in Indian Rupees (INR) currency, which is the Company''s
functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Realised
gains and losses on settlement of foreign currency transactions are recognized in the Statement of Profit and Loss. Foreign currency
denominated monetary assets and liabilities at the year-end are translated at the year-end exchange rates, and the resultant exchange
difference is recognized in theStatement of Profit and Loss.Non-monetary foreign currency itemsare carried at cost
v. PROPERTY, PLANT AND EQUIPMENT
Freehold Land is carried at historical cost. All other items of property, plant and equipment are stated at cost of acquisition or construction less
accumulated depreciation and impairment losses. The cost comprises of the purchase price or construction cost (including non-
creditable/non-refundable taxes), any costs directly attributable to bringing the property, plant and equipment into the location and
condition necessary for it to be capable of operating in the manner intended by management, the initial estimate of any decommissioning
obligation,if any,and,for assets that necessarily takea substantial period of time to get ready fortheir intended use,finance costs.The purchase
priceor construction cost isthe aggregate amount paid and the fairvalue of any other consideration given to acquire theasset.
Subsequent expenditures related toan item of property,plant and equipment areadded to its gross bookvalueor recognized asa separate asset,
as appropriate,only when it is probable that future economic benefits associated with them will flow to the Company and thecostofthe item can
be measured reliably. All other repairs and maintenanceare charged to profit and loss during the reporting period in which they are incurred.
An item of property, plant and equipmentand any significant part initially recognized is derecognized upon disposal or when no future economic
benefits are expected from its use or disposal. 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 in the year in which the asset is
derecognized.
Depredation method, estimated useful life and residual value
Depreciation on property, plant and equipment is provided using the Straight-Line Method (SLM) so as to expense the cost less residual values
over their estimated useful lives as prescribed under Part C of Schedule II to the Companies Act, 2013 except in case of following assets, wherein
based on internal assessment and technical evaluation a different useful life has been determined:
¦ Depreciation of leasehold land is provided using straight line method overthe remaining period of lease of land.
Property,plantand equipment whichare added or disposed ofduringtheyear, depreciation is provided on pro-rata basis.
In line with the provisions of Schedule II of the Companies Act 2013, the Company depreciates significant components having different useful
lives as compared to the main asset, based on the individual useful life of the components. Useful life for such components is assessed based on
the historical experience and internal technical inputs.
The residual values are not more than 5% of the original cost of the asset.The assets''residual valuesand useful lives are reviewed,and adjusted if
appropriate, at theend of each reporting period.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss with other
gains/losses.
vi. Intangible assets
Intangible assets comprise of computer softwareand is stated at acquisition cost, net ofaccumulatedamortizationand accumulated impairment
loss, if any.
Amortization
Intangibleassetsareamortised overthe useful life ofassets,not exceeding 10years.
ComputerSoftwareisamortisedoveraperiodofthree years.
The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in the
estimate being accounted for on a prospective basis.
vii. Impairmentofassets
All assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognized for the amount by which the asset''s carrying amount exceeds its recoverable amount.The recoverable amount is
the higher of an assetâs fairvalue less cost of disposal and value in use.For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or group of
assets (cash generating units). Non-financial assets that suffered impairment earlier are reviewed for possible reversal of the impairment at the
end of each reporting period.
viii. INVESTMENT PROPERTY
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as
investment property.lnvestment property is measured initially at its cost,induding related transaction costs and whereverapplicable borrowing
costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated
with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are
expensed when incurred.When part ofan investment property is replaced,the carrying amount of the replaced part is derecognized.
ix. TRADE RECEIVABLES
Trade receivables are recognized initially at fair value and subsequently measured at amortised cost net of any expected credit
losses,ifany.
x. ASSETS HELD FOR SALE
Assets are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through
continuing use.A sale is considered highly probableand is expected toqualify for recognition asacompleted sale withinoneyearfrom the date of
classification.They are measured at the lower of their carrying amount and fair value less costs to sell except for assets such as deferred tax assets,
assets arising from employee benefits financial assets and contractual rights under insurance contracts, which are specifically exempt from this
requirement. An impairment loss is recognized for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is
recognized for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously
recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset (or disposal group) is recognized atthe date of
derecognition.
Assetsarenotdepreciatedoramortisedwhiietheyareclassifiedasheldforsale.lnterestandotherexpensesattributabletothe liabilities of assets
held for sale continue to be recognized.
Assets classified as held for saleare presented separately from theother assets in the balancesheetunder"Other Current Assets.''The liabilities for
assets held for sale are presented separately from other liabilities in the balance sheet,
xi. FINANCIAL ASSETS
Initial recognition and measurement
All financial assets are recognized initially atfairvalue plus transaction costs that are attributable to theacquisition of thefinancial asset, except in
the case of financial assets not recorded at fair value through profit or loss.Transaction costs of financial assets carried at fair value through profit
or loss are expensed through the Statement of Profit and Loss.
Classification and Subsequent Measurement:
For purposes ofsubsequentmeasurement,financialassetsaredassified in fourcategories:
o MeasuredatAmortizedCost;
o Measured at FairValueThroughOtherComprehensive Income (FVTOCI);
o MeasuredatFairValueThroughProfitorLoss(FVTPL);and
o Equity Instruments designated at FairValuethrough Other Comprehensive income (FVTOCI).
Financial assets arenot reclassified subsequent to their initial recognition,except if and in the period the Company changes its business model for
managing financial assets.
o Measured at Amortized Cost: A debt instrument is measured attheamortized cost if both thefollowing conditionsare met:
¦ Theasset is held within a business model whose objective isachieved by both collecting 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
(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 accountany discount or premiumon acquisition and fees or costs that arean integral
part of the EIR.The EIR amortization is included in finance income in the statement of profit or loss.The losses arising from impairment
are recognized inthe profit or loss.
This category generallyapplies to trade receivables,cash and bank balances,loansandotherfinancial assets ofthe company.
o Measured at FYTOChAdebt instrument is measured atthe FVTOCI if both thefollowing conditionsare met:
¦ The objective ofthe business model is achieved by both collecting contractual cash flows and selling thefinancial assets;and
* The asset''s contractual cash flows represent SPPI.
Debt instruments meeting these criteria are measured initially atfairvalue plus transaction costs.They are subsequently measured atfairvalue
with any gains or losses arising on remeasurement recognized in other comprehensive income,exceptfor impairment gains or iossesand foreign
exchange gains or losses. Interest calculated using the effective interest method is recognized in the statement of profit and loss in investment
income.
o Measured at FVTPL: FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for
categorization as at amortized cost or as FVTOCI, is classified as FVTPL. In addition, the company may elect to designate a debt instrument, which
otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. Debt instruments included within the FVTPL category are measured at fair value
with all changes recognized in the statement of profit and loss. Equity instruments which are,held fortrading are classified as at FVTPL.
o Equity Instruments designated at FVTOCI: For equity instruments, which has not been classified as FVTPL as above,the company may
make an irrevocable election to present in other comprehensive income subsequent changes in the fair value.The company makes such election
on an instrument-by-instrument basis.The classification is made on initial recognition and is irrevocable. In case 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 00. There is no
recycling oftheamounts from OCItoP&L,evenon saleofinvestment.
Derecognition:
The Company derecognizes a financial asset on trade date only when the contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity.
Impairment of financial Assets*
The Company assesses at each date of balance sheet whether afinancial asset or a groupof financial assets is impaired. Ind AS-
109 requires expected credit losses to be measured through a loss allowance. The company recognizes impairment loss for
trade receivables that do not constitute a financing transaction using expected credit loss model, which involves use of a
provision matrix constructed on the basis of historical credit loss experience. For all other financial assets, expected credit
losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time
expected credit losses if the credit riskon thefinancial asset has increased significantly since initial recognition.
xii. FINANCIAL LIABILITIES
Classification as liability or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual
arrangements entered intoand the definitionsofa financial liability and an equity instrument.
Initial recognition and measurement
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.
Financial liabilities are initially measured at the amortised cost unless at initial recognition, they are classified as fair value
through profit or loss.
Subseouent measurement
Financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities
carried at fair value through profit or loss are measured at fair value with all changes in fair value recognized in the Statement
ofProfitandLoss.
Derecognition
A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.
xiii. BORROWINGS
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in
profit or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to
another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in
profit or loss or other gains/losses.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability
for atleast 12 months after the reporting period.
xiv. BORROWING COSTS
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are
capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets
thatnecessarilytakeasubstantialperiodoftimetogetreadyfortheirintendeduseorsale.
Investment incomeearned on the temporary investment of specific borrowings pending theirexpenditu re on qualifying assets isdeducted from
the borrowing costseligiblefor capitalization.
Other borrowing costs are expensed inthe period in which theyareincurred.
xv. TRADEANDOTHERPAYABLES
These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid.Trade and other
payables are presented as current liabilities unless payment is not due within 12 months after the reporting period.They are recognized initially at their fair value
and subsequently measured at amortised cost using the effective interest method.
Mar 31, 2018
Note 1: Significant Accounting Policies
1.1 Basis of preparation and presentation of financial statements
The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) read with Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) (Amendment) Rules 2016.
The financial statements up to year ended 31st March,2017 were prepared in accordance with the Accounting Standards notified under Companies (Accounting Standard) Rules,2006 (as amended) and other relevant provisions of the Act.
These financial statements are the first financial statements of the Company prepared in accordance with Ind AS for the year ended 31st March, 2018 (Refer noteno.2 for information on Ind AS adoption).
The Ministry of corporate affairs (MCA) has notified a road map to implement Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) (Amendment) Rules, 2016. As per the said road map, the Company is required to apply the Ind AS starting from the financial year beginning 1st April,2017. Accordingly the first Ind AS financial statements shall be for the financial year2017-18 with comparables for the financial year 2016-17.
The financial statements have been prepared under historical cost convention basis except for the following:
- certain financial assets and liabilities (including derivative instruments) and contingent consideration that are required to be measured at fair value through profit or loss, are measured at fair value
1.2 Current versus Non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to refer the settlement of the liability for at least twelve months after the reporting period The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
For this purpose, the Company has ascertained the operating cycle as the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
1.3 Foreign currency translation
Functional and presentation currency
Items included in the financial statement of the Company are measured using the currency of the primary economic environment in which the entity operates (''the functional currency'').The financial statements are presented in Indian Rupees (INR) currency, which is the Company''s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Realised gains and losses on settlement of foreign currency transactions are recognised in the Statement of Profit and Loss. Foreign currency denominated monetary assets and liabilities at the year-end are translated at the year-end exchange rates, and the resultant exchange difference is recognised in the Statement of Profit and Loss. Non-monetary foreign currency items are carried at cost
1.4 Property, plant and equipment
Freehold Land is carried at historical cost. All other items of property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation and impairment losses. The cost comprises of the purchase price or construction cost (including non-creditable/non-refundable taxes),any costs directly attributable to bringing the property, plant and equipment into the location and condition necessary for it to be capable of operating in the manner intended by management, the initial estimate of any decommissioning obligation, if any, and, for assets that necessarily take a substantial period of time to get ready fort heir intended use, finance costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
Subsequent expenditures related to an item of property, plant and equipment are added to its gross book value or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with them will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. 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 in the year in which the asset is derecognised.
Transition to Ind AS:
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1st April,2017 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
Depreciation method, estimated useful life and residual value
Depreciation on property, plant and equipment is provided using the Straight Line Method (SLM) so as to expense the cost less residual values over their estimated useful lives as prescribed under Part C of Schedule II to the Companies Act,2013 except in case of following assets, wherein based on internal assessment and technical evaluation a different useful life has been determined:
- Depreciation of leasehold land is provided upto 31st March, 1994. No depreciation has been charged on leasehold land in subsequent years
Property, plant and equipment which are added or disposed off during the year, depreciation is provided on pro-rata basis.
In line with the provisions of Schedule II of theCompaniesAct2013,theCompany depreciates significant components having different useful lives as compared to the main asset, based on the individual useful life of the components. Useful life for such components is assessed based on the historical experience and internal technical inputs.
The residual values are not more than 5% of the original cost of the asset. The assets'' residual values are useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss with other gains/losses.
1.5 Intangible assets
Intangible asset comprise of computer software and is stated at acquisition cost, net of accumulated amortisation and accumulated impairment loss, if any.
Amortisation
Intangible assets are amortised over the useful life of assets, not exceeding 10years.
Computer Software is amortised over a period of three years.
The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in the estimate being accounted for on a prospective basis.
1.6 Impairment of assets
All assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset''s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of anasset''s fair value less cost of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or group of assets (cash generating units). Non-financial assets that suffered impairment earlier are reviewed for possible reversal of the impairment at the end of each reporting period
1.7 Investment property
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.
Transition to IndAS
On transition to Ind AS, the Company has elected to continue with the carrying value of its investment property recognised as at 1st April 2017 measured as per the previous GAAP and use that carrying value as deemed cost of investment properties.
1.8 Inventories
Raw material, packing material, work in process, stores, tools and dies and finished goods are valued at cost or net realisable value, whichever is lower.
Cost of raw material, packing material and stores, tools and dies comprises of cost of purchases. Cost of work in process and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Cost of inventories also includes all other costs incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on first-in-first-out basis. Costs of purchased inventory are determined after deducting rebates and discounts.
Net realisable 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.
1.9 Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost net of any expected credit losses, if any.
1.10 Cash and cash equivalents
For the purpose of presentation in the Statement of cash flows, cash and cash equivalents include cash in hand, demand deposits with banks and financial institutions and other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
1.11 Assets held for sale
Assets are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. A sale is considered highly probable and is expected to qualify for recognition as a completed sale within one year from the date of classification. They are measured at the lower of their carrying amount and fair value less costs to sell except for assets such as deferred tax assets, assets arising from employee benefits financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.
Assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of assets held for sale continue to be recognized.
Assets classified as held for sale are presented separately from the other assets in the balance sheet under "Other Current Assets". The liabilities for assets held for sale are presented separately from other liabilities in the balance sheet.
1.12 Financial assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset, except in the case of financial assets not recorded at fair value through profit or loss. Transaction costs of financial assets carried at fair value through profit or loss are expensed through the Statement of Profit and Loss.
Subsequent measurement
For purposes of subsequent measurement, the Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
- those measured at amortised cost
Derecognition
A financial asset is derecognised only when:
- the rights to receive cash flows from the financial asset have expired, or
- the Company has transferred its rights to receive cash flows from the financial asset or has assumed an obligation to pay the received cash flows to one or more recipient
1.13 Financial Liabilities
Classification as liability or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Initial recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the amortised cost unless at initial recognition, they are classified as fair value through profit or loss.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.
Derecognition
A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires.
1.14 Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss or other gains/losses.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for atleast 12 months after the reporting period.
1.15 Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready fort heir intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
Other borrowing costs are expensed in the period in which they are incurred.
1.16 Trade and other payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.
1.17 Provisions
Provisions for legal claims, warranties, discounts and returns 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.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class obligations may be small.
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. The increase in the provision due to the passage of time is recognised as interest expense.
1.18 Contingent liability
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.
1.19 Revenue Recognition
Sale of goods
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue is inclusive of excise duty (up to the applicable date), reduced for customer discounts, rebates granted, other similar allowances, sales taxes/value added taxes (up to the applicable date),goods and services tax(GST) and duties collected on behalf of third parties.
The Company recognises revenue when the Company has transferred the significant risks and rewards of ownership of the goods to the buyer which generally coincides when the goods are dispatched in accordance with the terms of sale, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the Company.
Export benefit duty drawback
Incomes in respect of duty drawback in respect of exports made during the year are accounted on accrual basis Interest and dividend income
Interest income is recognised in statement of profit and loss using effective interest method. Dividend income is recognised when the Company''s right to receive dividend is established.
Claims
Insurance claims are accounted on acceptance basis.AII other claims/entitlements are accounted on the merits of each case or on realization.
1.20 Retirement and other employee benefits Short term employee benefits
Liabilities for salaries, wages and performance incentives including non- monetary benefits that are expected to be settled wholly within twelve months after the end of the period in which the employees render the related service are recognised in respect of employees'' services upto the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefits obligations in the Balance Sheet.
Long-term employee benefits
Defined contribution plans
The Company has Defined Contribution Plans for its employees such as Provident Fund, Employee''s State Insurance, etc. and contribution to these plans are charged to the Statement of Profit and Loss as incurred, as the Company has no further obligation beyond making the contributions.
Defined benefit plans
Gratuity: 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 less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries 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 and thefair value of plan assets. This cost is included in employee benefit expense 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. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
1.21 Income tax
Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period. Current taxis measured at the amount expected to be paid to the tax authorities in accordance with prevailing income tax law.
Current tax
Current 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 substantively enacted, at the time of reporting.
Current taxes are recognised in statement of profit or loss, except when they relate to items recognised in other comprehensive income or equity, in which case the tax is recognised in other comprehensive income or equity. Income tax assets and liabilities are presented separately in the Balance Sheet except where there isa right of set-off within fiscal jurisdictions and an intention to settle such balances on a net basis.
Deferred taxes
Deferred tax is provided using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Balance Sheet at the reporting date.
Deferred tax assets and liabilities are measured based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date and are expected to apply in the year when the related deferred tax asset is expected to realise or the deferred tax liability is expected to settle.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are set off if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxation authority.
1.22 Leases
As a lessee
Lease of property, plant and equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease''s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the statement of profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of profit or 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 lessor''s expected inflationary cost increases.
1.23 Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- ln the absence of a principal market, in the most advantageous market for the asset or liability
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of anon-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 -Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2-Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3-Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
1.24 Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
1.25 Earnings per share
Basic earning per share is calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of diluted potential equity shares.
1.26 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM).The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Managing Di rector and Finance Director of the Company.
The Company is engaged in the business of manufacturing welding consumables, copper coated wires, flux cored wires and welding fluxes and is organizationally managed in two units - one in Maharashtra and one in West Bengal. The Company''s business comprises of only one segment.lt has customers in India as well as outside India. Thus the Company has only one business segment but different geographical reporting segment i.e. Domestic and International.
1.27 Dividend to Equity Shareholders
Dividend to equity shareholders is recognised as a liability and deducted from shareholders'' equity, in the period in which the dividends are approved by the equity shareholders in the general meeting.
1.28 Statement of Cash Flows
Cash flows are reported using the indirect method whereby profit/loss is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
1.29 Contributed Equity
Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
1.30 Critical accounting estimates and judgements
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The areas involving critical estimates or judgements are:
- Estimation of current tax expense and payable
- Estimated fair value of unlisted securities
- Estimated useful life of intangible asset
- Estimation of defined benefit obligation
- Estimation of provision and contingent liabilities
- Recognition of deferred tax liability
Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events hat may have a financial impact on the group and that are believed to be reasonable under the circumstances.
Mar 31, 2016
Corporate Information:
The Company is engaged in the business of manufacturing of Welding electrodes, Copper coated wires, flux cored wires and welding fluxes. The manufacturing activities are located in Kalyan & Kolkata.
The Company is a Public Limited Company.
Basis of Preparation of Finandal Statements
The Financial statements of the Company have been prepared on accrual basis under historical cost convention, in accordance with Generally Accepted Accounting Principles in India (Indian GAAP) to comply with Accounting Standards specified in Section 133 of the Companies Act,2013 read with Rule 7 of the Companies (Accounts) Rules 2014 and the relevant provisions of the Companies Act, 2013. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to the existing accounting standard ora more appropriate presentation of the financial statements requires a change in the accounting policy hitherto in use.
Use of Estimates
The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statement and the reported amount of revenue and expenses during the reporting periods. Difference between the actual results and estimates are recognized in the period in which the results are known /materialized. The management believes that the estimates used in the preparation of financial statements are prudent and reasonable.
Fixed Assets
Fixed assets are stated at cost of acquisition except certain items, which have been shown at revalue amount. Direct costs are capitalized until assets are ready to be put to use and are stated net of modvat / convert.
The cost of assets not ready for use as at the balance sheet date is disclosed under capital work- in-progress.
Intangible assets are recognized only if it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably.
Leased Assets
i. Assets taken on finance lease, including taken on hire purchase arrangements, wherein the Company has an option to acquire the asset, are accounted for as fixed assets in accordance with the Accounting Standard 19on"LeasesT(AS 19).
ii. Assets taken on lease under which the less or effectively retains all the risk and rewards of ownership are classified as operating lease. Lease payments under operating leases are recognized as expenses on accrual basis in accordance with the respective lease agreement.
iii. The cost of improvements to lease properties are capitalized and disclosed appropriately.
Depredation
Assets are depreciated /amortized on pro-rata on straight line basis over the useful lives of the assets, as prescribed under Schedule II of the Companies Act,2013 with effect from 1â April,2014 except as under:
a) Depreciation on leasehold land is provided upto313.1994.No depreciation has been charged on leasehold land in subsequent years.
b) Depreciation on Leasehold land, buildings and plant & machinery subject to revaluation, is calculated on the respective revalue amounts, over the balance useful life as determined by the valuation experts.
c) For assets whose remaining useful life arson âApril 2014 is nil( the carrying amount of such asset after deducting the residual value is charged fully to the Statement of profit and loss.
Depreciation is charged on a proportionate basis for all assets purchased and sold during the periodâs individual assets costing less than Rs.5,000are depreciated in full in the period of purchase.
Impairment of Assets:
In compliance with Accounting Standard (AS) 28-"Impairment of Assets? the Company assesses at each Balance Sheet date whether there is any indication that an asset is impaired where the carrying amount of the asset exceeds its recoverable value. If any such indication exists, then an impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.
Investments
Long term investments are stated at cost less provision for diminution other than temporary, if any. Current investments are valued at lower of cost and market value
Inventories
Inventories are valued at lower of cost and net realisable value, cost being ascertained on the following basis:
a) Raw materials ,stores, spares, consumable tools and components: on First in First out(FIFO)formula.
b) Work-in- process, finished / trading goods include cost of conversion and other costs incurred in bringing the inventories to their present location and conditions.
c) Cost includes taxes and duties and is net of credits under Cenvat/VAT.
The inventory comprising of raw material & finished goods is physically verified by the management as at the end of the year.
Foreign Currency Transactions
Foreign currency transactions are recorded at the rates prevailing on the date of the transaction. Monetary assets and liabilities in foreign currency are translated at year end rates. Exchange differences arising on the settlement of transactions and translation of monetary items are recognized as income or expense.
Revenue recognition
a) Revenue from sale of products is recognized on dispatch or appropriation of goods in accordance with the terms of sale and is net of sales tax/Vat and applicable discounts.
b) Materials returned/rejected are accounted for in the year of return/rejection.
c) Export entitlements and other Government grants, if any recognized in the accounts on receipt after the consideration of certainty of their receipt.
d) Dividend income is recognised when the right to receive the dividend is established.
e) Insurance claims are accounted on acceptance/certainty of recovery.
Borrowing Cost
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognized as an expense in the period in which they are incurred.
Employee benefits
a) Short-term employee benefit obligations are estimated and provided for.
b) Post employment benefits and other long term employee benefits Defined contribution plans:
Company''s contribution to Provident fund, employee state insurance and other funds are determined under the relevant schemes and /or statute and charged to revenue.
Defined Benefit plans:
Company''s liability towards gratuity and other retirement benefits are actuarially determined at each balance sheet date and provided with Life Insurance Corporation of India.
Taxes, Duties, etc
Excise duty has been accounted for in respect of goods cleared and provision has also been made for goods lying in stock at the year-end. This accounting treatment has no impact on the profit for the year.
Taxation
Provision for taxation is made on the basis of estimated taxable income for current accounting year in accordance with Income Tax Act, 1961.
Deferred Tax is recognized on timing differences; being the difference between taxable income and accounting income that originate in one period and are capable of reversing in one or more subsequent periods.
Earnings per Share
Basic earnings per share is calculated by dividing the net profit after-tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period unless issued at later date. The number of shares and potentially dilutive equity shares are adjusted for stock splits.
Derivative Transactions- Equity & Commodities Futures and option
Gains are recognized only on settlement /expiry of derivative instruments. All open positions are marked to market and unrealized losses are provided for. Unrealized gains, if any, on marked to market are not recognized.
Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a result of an obligating event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or present obligation in respect of which the likelihood of outflow of resources is remote, no provision or discourse is made.
Mar 31, 2015
The Company is engaged in the business of manufacturing of Welding
electrodes, Copper coated wires, flux cored wires and welding fluxes.
The manufacturing activities are located in Kalyan & Kolkata.
The company is a Public Limited Company.
Basis of Preparation of Financial Statements
The Financial statements of the Company have been prepared on accrual
basis under historical cost convention, in accordance with Generally
Accepted Accounting Principles in India (Indian GAAP) to comply with
Accounting Standards specified in Section 133 of the Companies Act,
2013 read with Rule 7 of the Companies (Accounts) Rules 2014 and the
relevant provisions of the Companies Act, 2013. Accounting policies
have been consistently applied except where a newly issued accounting
standard is initially adopted or a revision to the existing accounting
standard or a moreappropriate presentation of the financial statements
requiresa change in the accounting policy hitherto in use.
Use of Estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statement and the reported
amount of revenue and expenses during the reporting periods. Difference
between the actual results and estimates are recognized in the period
in which the results are known / materialized.The management believes
that the estimates used in the preparation offinancial statements are
prudent and reasonable.
Fixed Assets
Fixed assets are stated at cost of acquisition except certain items,
which have been shown at revalued amount. Direct costs are capitalized
until assets are ready to be put to use and are stated net of
modvat/cenvat.
Thecost of assets not ready for use as at the balance sheet date is
disclosed under capital work-in-progress.
Intangible assets are recognized only if it is probable that thefuture
economic benefits that are attributable to the assets will flow to the
enterprise and the cost of the assets can be measured reliably.
Leased Assets
i. Assets taken on finance lease, including taken on hire purchase
arrangements, wherein the Company has an option to acquire the
asset,are accounted for as fixed assets in accordance with the
Accounting Standard 19 on"leases"(AS 19).
ii. Assets taken on lease under which the lessor effectively retains
all the riskand rewards of ownership are classified as operating
lease.Lease payments under operating leases are recognized as expenses
on accrual basis in accordance with the respective lease agreement.
iii. The cost of improvements to lease properties are capitalized and
disclosed appropriately.
Depreciation
Assets are depreciated / amortized on pro rata on straight line basis
over the useful lives of the assets, as prescribed under Schedule II of
the Companies Act,2013 with effect from 1st April,2014except as under:
a) Depreciation on leasehold land is provided upto 31.3.1994.No
depreciation has been charged on leasehold land in subsequent years.
b) Depreciation on Leasehold land, buildings and plant & machinery
subject to revaluation, is calculated on the respective revalued
amounts, over the balance useful life as determined by the valuation
experts.
c) For assets whose remaining useful life as on 1st April 2014 is nil,
the carrying amount of such asset after deducting the residual value is
charged fully to the Statement of profit and loss.
Depreciation is charged on a proportionate basis for all assets
purchased and sold during the period. Individual assets costing less
than Rs.5,000are depreciated in full in the period of purchase.
Impairment of Assets:
In compliance with Accounting Standard (AS) 28 -"Impairment of Assets,"
the Company assesses at each Balance Sheet date whether there is any
indication that an asset is impaired where the carrying amount of the
asset exceeds its recoverable value. If any such indication exists,
then an impairment loss is charged to the Statement of Profit and Loss
in the year in which an asset is identified as impaired. The impairment
loss recognized in prior accounting periods is reversed ift here has
been a change in the estimate of recoverable amount.
Investments
Long term investments are stated at cost less provision for diminution
other than temporary, if any.Current investments are valued at lower of
cost and market value
Inventories
Inventories are valued at lower of cost and net realisable value,cost
being ascertained on the following basis:
a) Raw materials,stores,spares,consumable tools and components:on First
in First out (FIFO) formula.
b) Work-in-process,finished /trading goods include cost of conversion
and other costs incurred in bringing the inventoriesto their present
location and conditions.
c) Cost includes taxes and duties and is net of credits under
Cenvat/VAT.
Revenue recognition
a) Revenue from sale of products is recognized on dispatch or
appropriation of goods in accordance with the terms of sale and is net
of sales Tax/Vat and applicable discounts.
b) Materials returned/rejected are accounted for in the year of
return/rejection.
c) Export entitlements and other Government grants, if any recognized
in the accounts on receipt after the consideration of certainty of
their receipt.
d) Dividend income is recognised when the right to receive the dividend
is established.
e) Insurance claims are accounted on acceptance/certainty of recovery.
Borrowing Cost
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are recognized as an expense in the period in which
they are incurred.
Employee benefits
a) Short term employee benefi tobligations are estimated and provided
for.
b) Post employment benefitsand other long term employee benefits
Defined contribution plans:
Company's contribution to Provident fund, employee state insurance and
other funds are determined under the relevant schemes and/or statute
and charged to revenue.
Defined Benefit plans:
Company's liability towards gratuity and other retirement benefits are
actuarially determined at each balance sheet date and provided with
Life InsuranceCorporation of India.
Taxes, Duties, etc.
Excise duty has been accounted for in respect of goods cleared and
provision has also been made for goods lying in stock at the
year-end.This accounting treatment has no impact on the profit for the
year.
Taxation
Provision for taxation is made on the basis of estimated taxable income
for current accounting year in accordance with IncomeTax Act, 1961.
DeferredTax is recognized on timing differences;being the difference
between taxable income and accounting income that originate in one
period and are capableof reversing in one or more subsequent periods.
Earnings perShare
Basicearnings per share is calculated by dividing the net profit after
tax for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
The number of shares used in computing diluted earnings per share
comprises the weighted average shares considered for deriving basic
earnings per share, and also the weighted average number of equity
shares that could have been issued on the conversion of all dilutive
potential equity shares. Dilutive potential equity shares are deemed
converted as of the beginning of the period, unless issued at a later
date. The number of shares and potentially dilutive equity shares are
adjusted for stock splits.
Derivative Transactions - Equity & Commodities Futures and options
Gains are recognized only on settlement/expiry of derivative
instruments.
All open positions are marked to market and unrealized losses are
provided for.Unrealized gains,if any,on marked to market are not
recognized.
Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a
result of an obligating event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote.no provision or disclosure is made.
Mar 31, 2014
ACCOUNTING CONVENTION
The financial statements are prepared under historical cost convention
on the accrual basis of accounting in accordance with the generally
accepted accounting principles in India and provisions of the Companies
Act, 1956 read with the Companies (Accounting Standard) Rules, 2006
notified under section 211 (3c) of the Companies Act, 1956, except so
far as they relate to insurance claims which are accounted on
acceptance or certainty of recovery.
Presentation and disclosure of financial statements
The Company has prepared and presented financial statements in Revised
Schedule VI. The adoption of revised schedule VI does not impact
recognition and measurement principles followed for preparation of the
financial statements. However it has significant impact on presentation
and disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
Use of Estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reported balance of
assets and liabilities as of the date of the financial statements and
reported amounts of income and expenses during the period. Management
believes that the estimates used in the preparation of financial
statements are prudent and reasonable. Actual results could differ from
the estimates.
Fixed Assets and depreciation
Fixed assets are stated at the cost of acquisition except certain
items, which have been shown at revalued amount. Direct costs are
capitalized until assets are ready to be put to use and are stated net
of modvat / cenvat.
The cost of assets not ready for use as at the balance sheet date is
disclosed under capital work-in-progress.
In compliance with Accounting Standard (AS) 28 - "Impairment of Assets"
the Company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired. If any such indication
exists, the recoverable amount of the asset is estimated. An impairment
loss is recognized whenever the carrying amount of an asset exceeds its
recoverable amount.
Assets are depreciated /amortised, as below, on straight line basis:
a) Depreciation on leasehold land is provided upto 31.3.1994. No
depreciation has been charged on leasehold land in subsequent years.
b) Leasehold land, buildings and plant & machinery subject to
revaluation, is calculated on the respective revalued amounts, over the
balance useful life as determined by the valuation experts.
c) Assets acquired upto 31-3-1987, at the rates specified in the Income
Tax Rules prevalent in the respective years. Buildings, plant &
machinery and other assets, acquired after 1.4.1987, at the rates
specified in Schedule XIV to the Companies Act, 1956.
d) Depreciation is charged on a proportionate basis for all assets
purchased and sold during the period. Individual assets costing less
than Rs. 5,000 are depreciated in full in the period of purchase.
Leased Assets
i. Assets taken on finance lease, including taken on hire purchase
arrangements, wherein the Company has an option to acquire the asset,
are accounted for as fixed assets in accordance with the Accounting
Standard 19 on "Leases" (AS 19).
ii. Assets taken on lease under which the lessor effectively retains
all the risk and rewards of ownership are classified as operating
lease. Lease payments under operating leases are recognized as expenses
on accrual basis in accordance with the respective lease agreement.
iii. The cost of improvements to lease properties are capitalized and
disclosed appropriately.
Intangible assets
Intangible assets are recognized only if it is probable that the future
economic benefits that are attributable to the assets will flow to the
enterprise and the cost of the assets can be measured reliably.
Investments
Long term investments are stated at cost less provision for diminution
other than temporary, if any. Current investments are valued at lower
of cost and market value.
Inventories
Inventories are valued at lower of cost and net realisable value, cost
being ascertained on the following basis:
a) Raw materials, stores, spares, consumable tools and components: on
First in First out (FIFO) formula.
b) Work-in-process, finished / trading goods include cost of conversion
and other costs incurred in bringing the inventories to their present
location and conditions.
c) Cost includes taxes and duties and is net of credits under
Cenvat/VAT.
Foreign Currency Transactions
Foreign currency transactions are recorded at the rates prevailing on
the date of the transaction. Monetary assets and liabilities in foreign
currency are translated at year end rates. Exchange differences arising
on the settlement of transactions and translation of monetary items are
recognized as income or expense.
Revenue recognition
a) Revenue from sale of products is recognized on dispatch or
appropriation of goods in accordance with the terms of sale and is net
of sales tax/Vat and applicable discounts.
b) Materials returned/rejected are accounted for in the year of
return/rejection.
c) Export entitlements and other Government grants, if any recognized
in the accounts on receipt after the consideration of certainty of
their receipt.
d) Dividend income is recognised when the right to receive the dividend
is established.
Borrowing Cost
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets ere 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.
Employee benefits
a) Short term employee benefit obligations are estimated and provided
for.
b) Post employment benefits and other long term employee benefits
Defined contribution plans:
Company''s contribution to Provident fund, employee state insurance and
other funds are determined under the relevant schemes and/or statute
and charged to revenue.
Defined Benefit plans:
Company''s liability towards gratuity and other retirement benefits are
actuarially determined at each balance sheet date and provided with
Life Insurance Corporation of India.
Taxes, Duties, etc.
Excise duty has been accounted for in respect of goods cleared and
provision has also been made for goods lying in stock at the year-end.
This accounting treatment has no impact on the profit for the year.
Taxation
Provision for taxation is made on the basis of estimated taxable income
for current accounting year in accordance with Income Tax Act, 1961.
Deferred Tax is recognized on timing differences; being the difference
between taxable income and accounting income that originate in one
period and are capable of reversing in one or more subsequent periods.
Earnings per Share
Basic earnings per share is calculated by dividing the net profit after
tax for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
The number of shares used in computing diluted earnings per share
comprises the weighted average shares considered for deriving basic
earnings per share, and also the weighted average number of equity
shares that could have been issued on the conversion of all dilutive
potential equity shares. Dilutive potential equity shares are deemed
converted as of the beginning of the period, unless issued at a later
date. The number of shares and potentially dilutive equity shares are
adjusted for stock splits.
Derivative Transactions - Equity & Commodities Futures and options
Gains are recognized only on settlement/ expiry of derivative
instruments.
All open positions are marked to market and unrealized losses are
provided for. Unrealizedgains,ifany,on marked to market are not
recognized.
Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a
result of an obligating event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Mar 31, 2013
ACCOUNTINGCONVENTION
The financial statements are prepared under historical cost convention
on the accrual basis of accounting in accordance with the generally
accepted accounting principles in India and provisions of the Companies
Act'''' 1956 read with the Companies (Accounting Standard) Rules'''' 2006
notified under section 211 (3c) of the Companies Act'''' 1956''''except so
far as they relate to insurance claims which are accounted on
acceptance or certainty of recovery.
Presentation and disclosure of financial statements
The Company has prepared and presented financial statements in Revised
Schedule Vl.The adoption of revised schedule VI does not impact
recognition and measurement principles followed for preparation of the
financial statements. However it has significant impact on presentation
and disclosures made in the financial statements.The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the currentyear.
Use of Estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reported balance of
assets and liabilities as of the date of the financial statements and
reported amounts of income and expenses during the period.Management
believes that the estimates used in the preparation of financial
statements are prudent and reasonable. Actual results could differfrom
the estimates.
Fixed Assets and depreciation
Fixed assets are stated at the cost of acquisition except certain
items'''' which have been shown at revalued amount. Direct costs are
capitalized until assets are ready to be putto useand are stated net of
modvat/cenvat.
The cost of assets not ready for use as at the balance sheet date is
disclosed under capital work-in-progress.
In compliance with Accounting Standard (AS) 28 -"Impairment of
Assets"the Company assesses at each Balance Sheet date whether there is
any indication that any asset may be impaired.lf any such indication
exists''''the recoverable amount of the asset is estimated. An impairment
loss is recognized wheneverthe carrying amount of an asset exceeds its
recoverable amount.
Assets are depreciated /amortised''''as below''''on straight line basis:
a) Depreciation on leasehold land is provided
upto31.3.1994.Nodepreciation has been charged on leasehold land in
subsequentyears.
b) Leasehold land'''' buildings and plant & machinery subject to
revaluation'''' is calculated on the respective revalued amounts'''' over the
balance useful life as determined by the valuation experts.
c) Assets acquired upto 31-3-1987'''' at the rates specified in the Income
Tax Rules prevalent in the respective years. Buildings'''' plant &
machinery and other assets''''acquired after 1.4.1987''''at the rates
specified in Schedule XIV to the Companies Act'''' 1956.
d) Depreciation is charged on a proportionate basis for all assets
purchased and sold during the period.lndividual assets costing less
than Rs.5''''000are depreciated in full in the period of purchase.
Leased Assets
i. Assets taken on finance lease'''' including taken on hire purchase
arrangements'''' wherein the Company has an option to acquire the asset''''
are accounted for as fixed assets in accordance with the Accounting
Standard 19 on "Leases" (AS 19).
ii. Assets taken on lease under which the lessor effectively retains
all the risk and rewards of ownership are classified as operating
lease. Lease payments under operating leases are recognized as expenses
on accrual basis in accordance with the respective lease agreement.
iii. The cost of improvements to lease properties are capitalized and
disclosed appropriately. Intangibleassets
Intangible assets are recognized only if it is probable that the future
economic benefits that are attributable to the assets will flow to the
enterprise and the costoftheassetscan be measured reliably.
Investments
Long term investments are stated at cost less provision for diminution
other than temporary'''' if any. Current investments are valued at lower
of cost and marketvalue.
Inventories
Inventories are valued at lower of cost and net realisable value''''cost
being ascertained on the following basis:
a) Raw materials''''stores''''spares''''consumable tools and components:on First
in First out (FIFO) formula.
b) Work-in-process'''' finished / trading goods include cost of conversion
and other costs incurred in bringing the inventories to their present
location and conditions.
c) Cost includes taxes and duties and is net of credits under Cenvat /
VAT.
Foreign Currency Transactions
Foreign currency transactions are recorded at the rates prevailing on
the date of the transaction. Monetary assets and liabilities in foreign
currency are translated at year end rates. Exchange differences arising
on the settlement of transactions and translation of monetary items are
recognized as income or expense.
Revenue recognition
a) Revenue from sale of products is recognized on dispatch or
appropriation of goods in accordance with the terms of sale and is net
of sales tax/Vat and applicable discounts.
b) Materials returned/rejected are accounted for in the year of
return/rejection.
c) Export entitlementsandotherGovernmentgrants''''if any recognized in the
accounts on receipt after the consideration of certainty of their
receipt.
d) Dividend income is recognised when the right to receive the dividend
is established.
Borrowing Cost
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets.A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
Employee benefits
a) Short term employee benefit obligations are estimated and provided
for.
b) Post employment benefits and other long term employee benefits
Defined contribution plans:
Company''s contribution to Provident fund''''employee state insurance and
other funds are determined under the relevant schemes and / or statute
and charged to revenue.
Defined Benefit plans:
Company''s liability towards gratuity and other retirement benefits are
actuarially determined at each balance sheet date and provided with
Life
Insurance Corporation of India.
Taxes'''' Duties'''' etc.
Excise duty has been accounted for in respect of goods cleared and
provision has also been made for goods lying in stock at the
year-end.This accounting treatment has no impact on the profit
fortheyear.
Taxation
Provision for taxation is made on the basis of estimated taxable income
for current accounting year in accordance with Income Tax Act'''' 1961.
Deferred Tax is recognized on timing differences; being the difference
between taxable income and accounting income that originate in one
period and are capable of reversing in one or more subsequent periods.
Earnings perShare
Basic earnings per share iscalculated by dividing the net profit after
tax for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
The number of shares used in computing diluted earnings per share
comprises the weighted average shares considered for deriving basic
earnings per share'''' and also the weighted average number of equity
shares that could have been issued on the conversion of all dilutive
potential equity shares. Dilutive potential equity shares are deemed
converted as of the beginning of the period'''' unless issued at a later
date.The number of shares and potentially dilutive equity shares are
adjusted for stock splits.
Derivative Transactions-Equity & Commodities Futures and options
Gainsare recognized only on settlement/expiry of derivative
instruments.
All open positionsare marked to market and unrealized lossesare
provided for.Unrealizedgains''''ifany''''on marked to market are not
recognized.
Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a
result of an obligating event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may'''' but probably
will not'''' require an outflow of resources. Where there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote''''no provision or disclosure is made.
Mar 31, 2012
ACCOUNTING CONVENTION
The financial statements are prepared under historical cost convention
on the accrual basis of accounting in accordance with the generally
accepted accounting principles in India and provisions of the Companies
Act, 1956 read with the Companies (Accounting Standard) Rules, 2006
notified under section 211 (3c) of the Companies Act, 1956, except so
far as they relate to insurance claims which are accounted on
acceptance or certainty of recovery.
Presentation and disclosure of financial statements
The Company has prepared and presented financial statements in Revised
Schedule VI.The adoption of revised schedule VI does not impact
recognition and measurement principles followed for preparation of the
financial statements. However it has significant impact on presentation
and disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
Use of Estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reported balance of
assets and liabilities as of the date of the financial statements and
reported amounts of income and expenses during the period. Management
believes that the estimates used in the preparation of financial
statements are prudent and reasonable. Actual results could differ from
the estimates.
Fixed Assets and depreciation
Fixed assets are stated at the cost of acquisition except certain
items, which have been shown at revalued amount. Direct costs are
capitalized until assets are ready to be put to use and are stated net
of modvat /cenvat.
The cost of assets not ready for use as at the balance sheet date is
disclosed under capital work-in-progress.
In compliance with Accounting Standard (AS) 28 - "Impairment of Assets"
the Company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired. If any such indication
exists, the recoverable amount of the asset is estimated. An impairment
loss is recognized whenever the carrying amount of an asset exceeds its
recoverable amount.
Assets are depreciated /amortized, as below, on straight line basis:
a) Depreciation on leasehold land is provided up to
31.3.1994.Nodepreciation has been charged on leasehold land in
subsequent years.
b) Leasehold land, buildings and plant & machinery subject to
revaluation, is calculated on the respective revalued amounts, over the
balance useful life as determined by the valuation experts.
c) Assets acquired up to 31-3-1987, at the rates specified in the Income
Tax Rules prevalent in the respective years. Buildings, plant &
machinery and other assets, acquired after 1.4.1987,at the rates
specified in Schedule XIV to the Companies Act, 1956.
d) Depreciation is charged on a proportionate basis for all assets
purchased and sold during the period. Individual assets costing less
than Rs. 5,000 are depreciated in full in the period of purchase.
Leased Assets
i. Assets taken on finance lease, including taken on hire purchase
arrangements, wherein the Company has an option to acquire the asset, a re
accounted for as fixed assets in accordance with the Accounting
Standard 19 on "Leases"(AS 19).
ii. Assets taken on lease under which the less or effectively retains
all the risk and rewards of ownership are classified as operating
lease. Lease payments under operating leases are recognized as expenses
on accrual basis in accordance with the respective lease agreement.
iii. The cost of improvements to lease properties are capitalized and
disclosed appropriately.
Intangible assets
Intangible assets are recognized only if it is probable that the future
economic benefits that are attributable to the assets will flow to the
enterprise and the cost of the assets can be measured reliably.
Investments
Long term investments are stated at cost less provision for diminution
other than temporary, if any. Current investments are valued at lower
of cost and market value.
Inventories
Inventories are valued at lower of cost and net realizable value, cost
being ascertained on the following basis:
a) Raw materials, ,spares, consumable tools and components: on First in
First out (FIFO) formula.
b) Work-in-process, finished / trading goods include cost of conversion
and other costs incurred in bringing the inventories to their present
location and conditions.
c) Cost includes taxes and duties and is net of credits under
Cenvat/VAT.
Foreign Currency Transactions
Foreign currency transactions are recorded at the rates prevailing on
the date of the transaction. Monetary assets and liabilities in foreign
currency are translated at year end rates. Exchange differences arising
on the settlement of transactions and translation of monetary items are
recognized as income or expense.
Revenue recognition
a) Revenue from sale of products is recognized on dispatch or
appropriation of goods in accordance with the terms of sale and is net
of sales tax/Vat and applicable discounts.
b) Materials returned/rejected are accounted for in the year of
return/rejection.
c) Export entitlements and other Government grants, if any recognized
in the accounts on receipt after the consideration of certainty of
their receipt.
d) Dividend income is recognized when the right to receive the dividend
is established.
Borrowing Cost
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part ofthe 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.
Employee benefits
a) Short term employee benefit obligations are estimated and provided
for.
b) Post employment benefits and other long term employee benefits
Defined contribution plans:
Company's contribution to Provident fund, employee state insurance and
other funds are determined under the relevant schemes and / or statute
and charged to revenue.
Defined Benefit plans:
Company's liability towards gratuity and other retirement benefits are
actuarially determined at each balance sheet date and provided with
Life Insurance Corporation of India.
Taxes, Duties, etc.
Excise duty has been accounted for in respect of goods cleared and
provision has also been made for goods lying in stock at the
year-end. This accounting treatment has no impact on the profit for the
year.
Taxation
Provision for taxation is made on the basis of estimated taxable income
for current accounting year in accordance with Income Tax Act, 1961.
Deferred Tax is recognized on timing differences; being the difference
between taxable income and accounting income that originate in one
period and are capable of reversing in one or more subsequent periods.
Earnings per Share
Basic earnings per share is calculated by dividing the net profit after
Tax for the year at attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
The number of shares used in computing diluted earnings per share
comprises the weighted average shares considered for deriving basic
earnings per share, and also the weighted average number of equity
shares that could have been issued on the conversion of all dilutive
potential equity shares. Dilutive potential equity shares are deemed
converted as of the beginning of the period, unless issued at a later
date. The number of shares and potentially dilutive equity shares are
adjusted for stock splits.
Derivative Transactions - Equity & Commodities Futures and options
Gainsarerecognized only unsettlement/expiry of derivative instruments.
All open positions are marked to market and unrealized losses are
provided for. Unrealized gains, if any, on marked to market are not
recognized.
Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a
result of an obligating event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Mar 31, 2011
Accounting Convention
The financial statements are prepared under historical cost convention
on the accrual basis of accounting in accordance with the generally
accepted principles in India and provisions of the Companies Act, 1956
read with the Companies (Accounting Standard) Rules, 2006 except so far
as they relate to insurance claims which are accounted on acceptance or
certainty of recovery.
Use of Estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reported balance of
assets and liabilities as of the date of the financial statements and
reported amounts of income and expenses during the period. Management
believes that the estimates used in the preparation of financial
statements are prudent and reasonable. Actual results could differ from
the estimates.
Fixed Assets and Depreciation
Fixed assets are stated at the cost of acquisition except certain
items, which have been shown at revalued amount. Direct costs are
capitalized until assets are ready to be put to use and are stated net
of modvat / cenvat.
Advances paid towards acquisition of fixed assets and the cost of
assets not ready for use as at the balance sheet date are disclosed
under capital work-in-progress.
In compliance with Accounting Standard (AS) 28 - "Impairment of
Assets", the Company assesses at each Balance Sheet date whether there
is any indication that any asset may be impaired. If any such
indication exists, the recoverable amount of the asset is estimated. An
impairment loss is recognized whenever the carrying amount of an asset
exceeds its recoverable amount.
Assets are depreciated /amortised, as below, on straight line basis:
a) Depreciation on leasehold land is provided upto 31.3.1994. No
depreciation has been charged on leasehold land in subsequent years.
b) Leasehold land, buildings and plant & machinery subject to
revaluation, is calculated on the respective revalued amounts, over the
balance useful life as determined by the valuation experts.
c) Assets acquired upto 31-3-1987, at the rates specified in the Income
Tax Rules prevalent in the respective years. Buildings, plant &
machinery and other assets, acquired after 1.4.1987, at the rates
specified in Schedule XIV to the Companies Act, 1956.
d) Depreciation is charged on a proportionate basis for all assets
purchased and sold during the period. Individual assets costing less
than Rs. 5,000 are depreciated in full in the period of purchase.
Investments
Long term investments are stated at cost less provision for diminution
other than temporary, if any. Current investments are valued at lower
of cost and market value.
Inventories
Inventories are valued at lower of cost and net realisable value, cost
being ascertained on the following basis:
a) Raw materials, stores, spares, consumable tools and components: on
First in First out (FIFO) formula.
b) Work-in-process, finished / trading goods include cost of conversion
and other costs incurred in bringing the inventories to their present
location and conditions.
c) Cost includes taxes and duties and is net of credits under Cenvat
/VAT.
Foreign Currency Transactions
Foreign currency transactions are recorded at the rates prevailing on
the date of the transaction. Monetary assets and liabilities in foreign
currency are translated at year end rates. Exchange differences arising
on the settlement of transactions and translation of monetary items are
recognized as income or expense.
Revenue Recognition
a) Revenue from sale of products is recognized on dispatch or
appropriation of goods in accordance with the terms of sale and is net
of sales tax/Vat and applicable discounts.
b) Materials returned/rejected are accounted for in the year of
return/rejection.
c) Export entitlements and other Government grants, if any recognized
in the accounts on receipt after the consideration of certainty of
their receipt.
d) Derivative transactions are considered as off Balance Sheet items
and cash flows arising there from are recognized in the accounts on
their respective settlement as per terms of contract.
e) Dividend income is recognized when the right to receive the dividend
is established.
Borrowing Cost
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
Employee Benefits
a) Short term employee benefit obligations are estimated and provided
for.
b) Post employment benefits and other long term employee benefits:
Defined Contribution plans:
Company's contribution to Provident fund, employee state insurance and
other funds are determined under the relevant schemes and / or statute
and charged to revenue.
Defined Benefit plans:
Company's liability towards gratuity and other retirement benefits are
actuarially determined at each balance sheet date and provided with
Life Insurance Corporation of India.
Taxes, Duties, etc.
Excise duty has been accounted for in respect of goods cleared and
provision has also been made for goods lying in stock at the
year-end.This accounting treatment has no impact on the profit for the
year.
Taxation
Provision for taxation is made on the basis of estimated taxable income
for current accounting year in accordance with Income Tax Act, 1961.
Deferred Tax is recognized on timing differences; being the difference
between taxable income and accounting income that originate in one
period and are capable of reversing in one or more subsequent periods.
Earnings per Share
Basic earning per share is calculated by dividing the net profit for
the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the year.
The number of shares used in computing diluted earnings per share
comprises the weighted average shares considered for deriving basic
earnings per share, and also the weighted average number of equity
shares that could have been issued on the conversion of all dilutive
potential equity shares. Dilutive potential equity shares are deemed
converted as of the beginning of the period, unless issued at a later
date. The number of shares and potentially dilutive equity shares are
adjusted for stock splits.
Provisions and Contingent Liabilities
The Company creates a provision when there is a present obligation as a
result of an obligating event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
Mar 31, 2010
Accounting Convention
The financial statements are prepared under historical cost convention
on the accrual basis of accounting in accordance with the generally
accepted principles in India and provisions of the Companies Act, 1956
read with the Companies (Accounting Standard) Rules, 2006 except so far
as they relate to insurance claims which are accounted on acceptance or
certainty of recovery.
Use of Estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires the management to
make estimates and assumptions that affect the reported balance of
assets and liabilities as of the date of the financial statements and
reported amounts of income and expenses during the period. Management
believes that the estimates used in the preparation of financial
statements are prudent and reasonable. Actual results could differ from
the estimates.
Fixed Assets and Depreciation
Fixed assets are stated at the cost of acquisition except certain
items, which have been shown at revalued amount. Direct costs are
capitalized until assets are ready to be put to use and are stated net
of modvat / cenvat.
Advances paid towards acquisition of fixed assets and the cost of
assets not ready for use as at the balance sheet date are disclosed
under capital work-in-progress.
Consideration is given at each balance sheet date to determine whether
there is any indication of impairment of the carrying amount of the
companys fixed assets. If any indication exists, an assets
recoverable amount is estimated. An impairment loss is recognized
whenever the carrying amount of an asset exceeds its recoverable
amount. Recoverable amount is the greater of the net selling price and
value in use. The Company follows Accounting Standard 28 pronounced by
The Institute of Chartered Accountants of India for accounting
impairment loss of assets.
Assets are depreciated / amortised, as below, on straight line basis:
a) Depreciation on leasehold land is provided upto 31.3.1 994. No
depreciation has been charged on leasehold land in subsequent years.
b) Leasehold land, buildings and plant & machinery subject to
revaluation, is calculated on the respective revalued amounts, over the
balance useful life as determined by the valuation experts.
c) Assets acquired upto 31-3-1987, at the rates specified in the Income
Tax Rules prevalent in the respective years. Buildings, plant &
machinery and other assets, acquired after 1.4.1987, at the rates
specified in Schedule XIV to the Companies Act, 1956.
d) Depreciation is charged on a proportionate basis for all assets
purchased and sold during the period. Individual assets costing less
than Rs. 5,000 are depreciated in full in the period of purchase.
Investments
Long term investments are stated at cost less provision for diminution
other than temporary, if any. Current investments are valued at lower
of cost and market value.
Inventories
Inventories are valued at lower of cost and net realisable value, cost
being ascertained on the following basis:
a) Raw materials, stores, spares, consumable tools and components: on
First in First out (FIFO) formula.
b) Work-in-process, finished / trading goods include cost of conversion
and other costs incurred in bringing the inventories to their present
location and conditions.
c) Cost includes taxes and duties and is net of credits under
Cenvat/VAT.
Foreign Currency Transactions
Foreign currency transactions are recorded at the rates prevailing on
the date of the transaction. Monetary assets and liabilities in foreign
currency are translated at year end rates. Exchange differences arising
on the settlement of transactions and translation of monetary items are
recognized as income or expense.
Revenue Recognition
a) Revenue from sale of products is recognized on dispatch or
appropriation of goods in accordance with the terms of sale and is net
of sales tax/Vat and applicable discounts.
b) Materials returned/rejected are accounted for in the year of
return/rejection.
c) Export entitlements and other Government grants, if any recognized
in the accounts on receipt after the consideration of certainty of
their receipt.
d) Derivative transactions are considered as off Balance Sheet items
and cash flows arising there from are recognized in the accounts on
their respective settlement as per terms of contract.
e) Dividend income is recognised when the right to receive the dividend
is established.
Borrowing Cost
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
Employee Benefits
a) Short term employee benefit obligations are estimated and provided
for.
b) Post employment benefits and other long term employee benefits:
Defined Contribution plans:
Companys contribution to Provident fund, employee state insurance and
other funds are determined under the relevant
schemes and / or statute and charged to revenue.
Defined Benefit plans:
Companys liability towards gratuity and other retirement benefits are
actuarially determined at each balance sheet date and
provided with Life Insurance Corporation of India.
Taxes, Duties, etc.
Excise duty has been accounted for in respect of goods cleared and
provision has also been made for goods lying in stock at the year-end.
This accounting treatment has no impact on the profit for the year.
Taxation
Provision for taxation is made on the basis of estimated taxable income
for current accounting year in accordance with Income Tax Act, 1961.
Deferred Tax is recognized on timing differences; being the difference
between taxable income and accounting income that originate in one
period and are capable of reversing in one or more subsequent periods.
Earnings per Share
Basic earning per share is calculated by dividing the net profit for
the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the year.
The number of shares used in computing diluted earnings per share
comprises the weighted average shares considered for deriving basic
earnings per share, and also the weighted average number of equity
shares that could have been issued on the conversion of all dilutive
potential equity shares. Dilutive potential equity shares are deemed
converted as of the beginning of the period, unless issued at a later
date. The number of shares and potentially dilutive equity shares are
adjusted for stock splits.
Provisions and Contingent Liabilities
The Company creates a provision when there is a present obligation as a
result of an obligating event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation in respect of which the likelihood
of outflow of resources is remote, no provision or disclosure is made.
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