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Accounting Policies of Gloster Ltd. Company
Mar 31, 2025
Note: 2 Material Accounting Policies
This note provides a list of the Material accounting policies adopted
in the preparation of these standalone financial statements. These
policies have been consistently applied to all the years presented,
unless otherwise stated.
2.1 Basis of Preparation
(i) Compliance with Ind AS
These standalone financial statements have been
prepared to comply in all material aspects with Indian
Accounting Standards (Ind AS) notified under Section 133
of the Companies Act, 2013 (the Act) [Companies (Indian
Accounting Standards) Rules, 2015] read with the National
Company Law Tribunal (NCLT), Kolkata order dated 19th
January 2018 as stated in note 2.4 below and other relevant
provisions of the Act.
(ii) Classification of current and non-current
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 Ind AS 1 - "Presentation of
Financial Statements" and Schedule Ill to the Companies
Act, 2013. Based on the nature of products and the time
between the acquisition of assets for processing and their
realization in cash and cash equivalents, the Company
has ascertained its operating cycle as 12 months for the
purpose of current/ non current classification of assets and
liabilities.
(iii) Historical cost convention
These financial statements have been prepared in
accordance with the generally accepted accounting
principles in India under the historical cost convention,
except for the following:
- certain financial assets and liabilities (including
derivative instruments) those are measured at fair
value.
- defined benefit plans - plan assets measured at fair
value.
2.2 Use of estimates
The preparation of financial statements in conformity with
the Ind AS specified under Section 133 of the Act, read with
Companies (Indian Accounting Standards) Rules, 2015, as
amended requires the management to make judgments,
estimates and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities and the disclosure
of contingent liabilities, at the end of the reporting period.
Although these estimates are based on management''s best
knowledge of current events and actions, uncertainty about
these assumptions and estimates could result in outcomes
requiring a material adjustment to the carrying amounts of
assets and liabilities in future periods.
2.3 Property, Plant and Equipment and Depreciation
a) Freehold land is carried at historical cost. All other items of
Property, Plant and Equipment are stated at historical cost
less depreciation. Historical cost includes expenditure that
is directly attributable to the acquisition of the items.
b) Subsequent costs are included in the asset''s carrying
amount or recognized as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the Company and
the cost of the item can be measured reliably. The carrying
amount of any component accounted for as a separate
asset is derecognized when replaced. All other repairs and
maintenance are charged to Statement of Profit and Loss
during the reporting period in which they are incurred.
c) On transition to Ind AS, the Company has elected to
continue with the carrying value of its Property, Plant and
Equipment measured at the previous GAAP and use that
carrying value as the deemed cost of Property, Plant and
Equipment.
d) Depreciation is provided on straight line method to
allocate the cost of assets, net of their residual values,
over the estimated useful lives of the assets. Pursuant to
Notification of Schedule II of the Companies Act, 2013
becoming effective, the Company has adopted the useful
lives as per the lives specified for the respective Property,
Plant & Equipment in the Schedule II of the Companies Act,
2013. No depreciation is provided on freehold land.
e) Gains and losses on disposal of Property, Plant and
Equipment is recognized in the Statement of Profit and
Loss.
f) An impairment loss is recognized where applicable when
the carrying amount of Property, Plant and Equipment
exceeds its recoverable amount.
2.4 Goodwill, Other Intangible assets and amortization
a) Intangible assets are stated at cost of acquisition including
duties, taxes and expenses incidental to acquisition and
installation, net of accumulated depreciation. Recognition
of costs as an asset is ceased when the asset is complete
and available for its intended use.
b) On transition to Ind AS, the Company has elected to
continue with the carrying value of its intangible assets
measured at the previous GAAP and use that carrying
value as the deemed cost of intangible assets.
c) Intangible assets comprising of Trademark and computer
software are amortized on straight line method over a
period of twenty years and five years respectively.
d) Goodwill acquired on account of amalgamation is being
amortized in the Statement of Profit and Loss in line with
National Company Law Tribunal, Kolkata ("NCLT") order
dated 19 January 2018 on the basis of management''s
estimate useful life of 20 years.
e) Gains and Losses on disposal of Intangible assets is
recognized in the Statement of Profit and Loss.
2.5 Impairment of assets
Assessment is done at each balance sheet date as to whether
there is any indication that an asset (Property, Plant and
Equipment and other assets) may be impaired. If any such
indication exists, an estimate of the recoverable amount of
the asset/ cash generating unit is made. Assets whose carrying
value exceeds their recoverable amount are written down to
their recoverable amount. Recoverable amount is higher of an
asset''s or cash generating unit''s net selling price and its value
in use. Assessment is also done at each balance sheet date
as to whether there is any indication that an impairment loss
recognized for an asset in prior accounting periods may no
longer exist or may have decreased/ increased. An impairment
loss is recognised in the Statement of Profit and Loss as and
when the carrying value of an asset exceeds its recoverable
amount. Where an impairment loss subsequently reverses, the
carrying value of the asset is increased to the revised estimate
of its recoverable amount so that the increased carrying value
does not exceed the carrying value that would have been
determined had no impairment loss been recognised for the
asset (or cash generating unit) in prior years. A reversal of an
impairment loss is recognised in the Statement of Profit and
Loss immediately.
2.6 Investments in subsidiaries
Investments in subsidiaries are carried at cost less accumulated
impairment losses, if any. Where an indication of impairment
exists, the carrying amount of the investment is assessed
and written down immediately to its recoverable amount.
On disposal of investments in subsidiaries, the difference
between net disposal proceeds and the carrying amounts are
recognised in the Statement of Profit and Loss.
The Company considered potential indicators of impairment
for its investment in subsidiaries. The recoverable value of the
investments is higher of the value in use (VIU) of the underlying
business or fair value less cost to sell. The Company has used
the fair value method for computing the recoverable value.
The outcome of the assessment as on March 31, 2025 did not
results in recognition of any impairment for investment held in
subsidiaries
2.7 Financial assets
The financial assets are classified in the following categories:
a) financial assets measured at amortised cost,
b) financial assets measured at fair value through Profit and
Loss (FVTPL), and
c) financial assets measured at fair value through other
comprehensive income (FVOCI).
The classification of financial assets depends on the Company''s
business model for managing financial assets and the contractual
terms of the cash flow. For assets measured at fair value, gains
and losses will either be recorded in profit or loss or other
comprehensive income. For investments in equity instruments
that are not held for trading, this will depend on whether the
Company has made an irrevocable election at the time of initial
recognition to account for the equity investment at FVOCI. The
Company reclassifies debt investments when and only when its
business model for managing those assets changes.
Regular purchases and sales of financial assets are recognised on
trade-date, being the date on which the Company commits to
purchase or sale the financial asset.
At initial recognition, the financial assets (excluding trade
receivables which do not contain a significant financing
component) are measured at its fair value plus transaction costs
that are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at FVTPL are
expensed in the profit or loss. Financial assets are not reclassified
subsequent to their recognition except if and in the period the
Company changes its business model for arranging financial
assets.
Financial assets measured at amortised cost
Assets that are held for collection of contractual cash
flows where those cash flows represent solely payments of
principal and interest are measured at amortised cost. After
initial measurement, such financial assets are subsequently
measured at amortised cost using the effective interest rate
method. Interest income from these financial assets is included
in Other Income using the effective interest rate method. Any
gain or loss arising on derecognition is recognised directly in
profit or loss and presented in other gains/ (losses). The losses
arising from impairment are recognised in the Statement of
Profit and Loss.
Financial instruments measured at FVTPL
Assets that do not meet the criteria for amortised cost or FVOCI
are measured at fair value through Profit and Loss. Financial
instruments included within FVTPL category are measured
initially as well as at each reporting period at fair value pl us
transaction costs as applicable. Fair value movements are
recorded in Statement of Profit and Loss. Investments in units
of mutual funds, alternate investment funds (AIF) other than
equity (not held for trading) and debentures are accounted for
at fair value and the changes in fair value are recognised in the
Statement of Profit and Loss.
Financial assets at FVOCI
Financial assets are measured at FVOCI if these financial
assets are held within a business model whose objective
is achieved by both collecting contractual cash flows and
selling financial assets and the contractual terms of the
financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal
amount outstanding. Movements in the carrying amount are
taken through OCI, except for the recognition of impairment
gains or losses, interest income and foreign exchange gains
and losses which are recognised in Profit and Loss. When the
financial asset is derecognised, the cumulative gain or loss
previously recognised in OCI is reclassified from equity to
retained earnings. Interest income from these financial assets
is included in other income using the effective interest rate
method. Foreign exchange gains and losses are presented in
other gains/ (losses) and impairment expenses are presented
as separate line item in Statement of Profit and Loss.
Equity instruments
The Company measures all equity investments at fair value.
The Company''s management has elected to present fair value
gains and losses on equity investments in other comprehensive
income, and accordingly there is no subsequent reclassification
of fair value gains and losses to profit or loss on de-recognition.
Dividends from such investments are recognised in profit or
loss as other income when the Company''s right to receive
payments is established.
Changes in the fair value of financial assets at fair value through
OCI are recognised in changes in fair value of FVOCI equity
instrument. [Impairment losses (and reversal of impairment
losses) on equity investments measured at FVOCI are not
reported separately from other changes in fair value.]
De-recognition of financial asset
The Company de-recognises a financial asset when the
contractual rights to the cash flows from the financial assets
expire or it transfers the financial assets and such transfer
qualifies for derecognition under Ind AS 109:"Financial
Instruments".
Where the entity has transferred an asset, the Company
evaluates whether it has transferred substantially all risks and
rewards of ownership of the financial asset. In such cases,
the financial asset is derecognised. Where the entity has not
transferred substantially all risks and rewards of ownership of
the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset
nor retains substantially all risks and rewards of ownership
of the financial asset, the financial asset is derecognised if
the Company has not retained control of the financial asset.
Where the Company retains control of the financial asset, the
asset is continued to be recognised to the extent of continuing
involvement in the financial asset.
Impairment of financial assets
The Company assesses on a forward looking basis the expected
credit losses associated with its assets carried at amortised cost.
The impairment methodology applied depends on whether
there has been a significant increase in credit risk. Except for
Trade Receivables, where in the simplified approach of lifetime
expected credit losses is recognised from initial recognition
of the receivables as required by Ind AS 109: "Financial
Instruments". Impairment loss allowance recognised /reversed
during the year is charged/written back to Statement of Profit
and Loss.
2.8 Financial Liabilities
Borrowings
Borrowings are initially recognized at fair value, net oftransaction
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. Fees paid on the establishment of
loan facilities are recognized as transaction cost of the loan
to the extent that it is probable that some or all of the facility
will be drawn down. In this case, the fee is deferred until the
draw down occurs. To the extent there is no evidence that it
is probable that some or all of the facility will be drawn down,
the fee is capitalised as a prepayment for liquidity services and
amortised over the period of the facility to which it relates.
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 as other gains/(losses).
Borrowings are classified as current liabilities unless the
Company has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
Where there is a breach of a material provision of a long-term
loan arrangement on or before the end of the reporting period
with the effect that the liability becomes payable on demand
on the reporting date, the entity does not classify the liability
as current, if the lender agreed, after the reporting period and
before the approval of the financial statements for issue, not to
demand payment as a consequence of the breach. A financial
liability (or a part of -financial liability) is de-recognised from
Company''s balance sheet when obligation specified in the
contract is discharged or cancelled or expired.
2.9 Inventories
Raw materials, Stores and Spares parts and components are
valued at cost (cost being determined on weighted average
basis) or at net realizable value, whichever is lower. Semi¬
finished goods and work-in-progress are valued at raw
materials cost plus labour and overheads apportioned on an
estimated basis depending upon the stages of completion or
at net realizable value, whichever is lower. Finished goods are
valued at cost or at net realizable value, whichever is lower.
Cost includes all direct cost and applicable manufacturing
and administrative overheads. Net realizable value is the
estimated selling price in the ordinary course of business,
less the estimated cost of completion and the estimated cost
necessary to make the sale.
2.10 Employee Benefit
a) Defined Contribution Plans
Payments to defined contribution plans are charged as an
expense as they fall due. Payments made to state managed
retirement benefit schemes are dealt with as payments
to defined contribution schemes where the Company''s
obligations under the schemes are equivalent to those
arising in a defined contribution benefit scheme.
b) Defined Benefit Plans
For defined benefit retirement schemes the cost of
providing benefits is determined using the Projected Unit
Credit Method, with actuarial valuation being carried out at
each balance sheet date. Re-measurement gains and losses
of the net defined benefit liability/ (asset) are recognised
immediately in other comprehensive income. The service
cost and net interest on the net defined benefit liability/
(asset) is treated as a net expense within employment
costs. Past service cost is recognised as an expense when
the plan amendment or curtailment occurs or when any
related restructuring costs or termination benefits are
recognised, whichever is earlier. The retirement benefit
obligation recognised in the balance sheet represents the
present value of the defined-benefit obligation as reduced
by the fair value plan assets.
c) Compensated Absences
Accrued liability in respect of leave encashment benefit
on retirement is accounted for on the basis of actuarial
valuation as at the year end and charged in the Statement
of Profit and Loss every year. Compensated absences
benefits comprising of entitlement to accumulation of Sick
Leave is provided for based on actuarial valuation at the
end of the year. Actuarial gains and losses are recognized
immediately in the Statement of Profit and Loss.
Accumulated Compensated Absences, which are expected
to be availed or encashed or contributed within the 12
months from the end of the year are treated as short term
employee benefits and the balance/ expected to availed or
encashed or contributed beyond 12 months from the year
end are treated as long term liability.
d) Other Short Term Employee Benefits
Short Term Employee Benefits are recognized as an
expense as per the Company''s schemes based on expected
obligation on an undiscounted basis.
2.11 Revenue Recognition
Revenue from contracts with customers are recognised
when the control over the goods or services promised in
the contract are transferred to the customer. The amount
of revenue recognised depicts the transfer of promised
goods and services to customers for an amount that reflects
the consideration to which the Company is entitled to in
exchange for the goods and services. Revenue from sale of
products is recognised when the control over such goods
have been transferred, being when the goods are delivered
to the customers. Delivery occurs when the products
have been shipped or delivered to the specific location as
the case may be, risks of loss have been transferred to the
customers, and either the customer has accepted the goods
in accordance with the sales contract or the acceptance
provisions have lapsed or the Company has objective
evidence that all criteria for acceptance have been satisfied.
Revenue from these sales are recognized based on the
price specified in the contract, which is fixed. No element
of Significant financing is deemed present as the sales are
made against the receipt of advance or with an agreed
credit period (in a very few cases) of upto 90 days, which
is consistent with the market practices. A receivable is
recognised when the goods are delivered as this is the point
in time that the consideration is unconditional because only
passage of time is required before payment is done.
2.12 Other Income
Interest income from financial assets at fair value through profit or
loss is disclosed as interest income within other income. Interest
income on financial assets at amortised cost and financial assets
at FVOCI is calculated using the effective interest method and is
recognised in the Statement of Profit and Loss as part of other
income.
Interest income is calculated by applying the effective interest
rate to the gross carrying amount of a financial asset except
for financial assets that subsequently become credit-impaired.
For credit impaired financial assets, the effective interest rate is
applied to the net carrying amount of the financial asset (after
deduction of the loss allowance). Dividends are received from
financial assets at fair value through profit or loss and at FVOCI.
Dividend income is recognised when the right to receive
dividend is established.
Export incentives are accounted as income in the Statement of
Profit and Loss when no Significant uncertainty exists regarding
the collectability.
2.13 Derivative Instruments
The Company uses derivative financial instruments such
as foreign exchange contracts to hedge its exposure to
movements in foreign exchange rates relating to the
underlying transactions. Derivatives are initially recognised
at fair value on the date a derivative contract is entered into
and are subsequently re-measured to their fair value and
resulting gain or loss is recognized in the Statement of Profit
and Loss at the end of each reporting period. Any profit
or loss arising on cancellation of derivative instruments is
recognized as income or expense for the period.
2.14 Taxation
The income tax expense or credit for the period is the tax
payable on the current period''s taxable income based on
the applicable income tax rate adjusted by changes in
deferred tax assets and liabilities attributable to temporary
differences.
Current tax is determined as the amount of tax payable in
respect of taxable income for the year based on the basis
of the tax laws enacted or substantively enacted at the
end of the reporting period. Management periodically
evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to
interpretation and considers whether it is probable that a
taxation authority will accept an uncertain tax treatment.
The Company measures its tax balances either based on the
most likely amount or the expected value, depending on
which method provides a better prediction of the resolution
of the uncertainty. Deferred income tax is provided in full
using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Deferred
income tax is determined using tax rates (and laws) that have
been enacted or substantially enacted by the end of the
reporting period and are expected to apply when the related
deferred income tax asset is realised or the deferred income
tax liability is settled. Deferred tax assets are recognised for
all deductible temporary differences and unused tax losses
only if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to
offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously. Current
and deferred tax is recognised in profit or loss, except
to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the
tax is also recognised in other comprehensive income or
directly in equity, respectively.
2.15 Borrowing Cost
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 capitalisation. Other borrowing
costs are expensed in the period in which they are incurred.
Mar 31, 2024
Note: 1 Corporate Information
Gloster Limited is a public company within the meaning of Companies Act, 2013. The Company is a leading manufacturer & exporter of all types of Jute & Jute allied products, Woven & Non-Woven Jute Geotextiles, Treated Fabric-Rot Proof, Fire Retardant, Jute products for Interior Decoration & Packaging of Industrial & Agricultural Produce. The Company also produces Jute & Cotton Shopping Bags & Made Ups. Gloster exports Jute goods to various countries spread over the World. The registered office of the Company is situated at 21, Strand Road, Kolkata - 700 001 and the Company''s manufacturing facilities are located at Bauria on the banks of Holy Ganges in West Bengal. The equity shares of the Company are listed on BSE Ltd, National Stock Exchange of India Limited and The Calcutta Stock Exchange Limited. The financial statements for the year ended 31 March 2024 were approved and authorised for issue with the resolution of the Board of Directors on May 30, 2024.
Note: 2 Material Accounting Policies
This note provides a list of the Material accounting policies adopted in the preparation of these standalone financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of Preparation
(i) Compliance with Ind AS
These standalone financial statements have been prepared to comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] read with the National Company Law Tribunal (NCLT), Kolkata order dated 19th January 2018 as stated in note 2.4 below and other relevant provisions of the Act.
(ii) Classification of current and non-current
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 Ind AS 1 - "Presentation of Financial Statements" and Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current / noncurrent classification of assets and liabilities.
(iii) Historical cost convention
These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention, except for the following:
- certain financial assets and liabilities (including derivative instruments) those are measured at fair value;
- defined benefit plans - plan assets measured at fair value.
2.2 Use of estimates
The preparation of financial statements in conformity with the Ind
AS specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period.
Although these estimates are based on management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in outcomes requiring a material adjustment to the carrying amounts of assets and liabilities in future periods.
2.3 Property, Plant and Equipment and Depreciation
a) Freehold land is carried at historical cost. All other items of Property, Plant and Equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
b) Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to Statement of Profit and Loss during the reporting period in which they are incurred.
c) On transition to Ind AS, the Company has elected to continue with the carrying value of its Property, Plant and Equipment measured at the previous GAAP and use that carrying value as the deemed cost of Property, Plant and Equipment.
d) Depreciation is provided on straight line method to allocate the cost of assets, net of their residual values, over the estimated useful lives of the assets. Pursuant to Notification of Schedule II of the Companies Act, 2013 becoming effective, the Company has adopted the useful lives as per the lives specified for the respective Property, Plant & Equipment in the Schedule II of the Companies Act, 2013. No depreciation is provided on freehold land.
e) Gains and losses on disposal of Property, Plant and Equipment is recognized in the Statement of Profit and Loss.
f) An impairment loss is recognized where applicable when the carrying amount of Property, Plant and Equipment exceeds its recoverable amount.
2.4 Goodwill, Other Intangible assets and amortization
a) Intangible assets are stated at cost of acquisition including duties, taxes and expenses incidental to acquisition and installation, net of accumulated depreciation. Recognition of costs as an asset is ceased when the asset is complete and available for its intended use.
b) On transition to Ind AS, the Company has elected to continue with the carrying value of its intangible assets measured at the
previous GAAP and use that carrying value as the deemed cost of intangible assets.
c) Intangible assets comprising of Trademark and computer software are amortized on straight line method over a period of twenty years and five years respectively.
d) Goodwill acquired on account of amalgamation is being amortized in the Statement of Profit and Loss in line with National Company Law Tribunal, Kolkata ("NCLT") order dated 19 January 2018 on the basis of management''s estimate useful life of 20 years.
e) Gains and Losses on disposal of Intangible assets is recognized in the Statement of Profit and Loss.
2.5 Impairment of assets
Assessment is done at each balance sheet date as to whether there is any indication that an asset (Property, Plant and Equipment and other assets) may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset/ cash generating unit is made. Assets whose carrying value exceeds their recoverable amount are written down to their recoverable amount. Recoverable amount is higher of an asset''s or cash generating unit''s net selling price and its value in use. Assessment is also done at each balance sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased / increased. An impairment loss is recognised in the Statement of Profit and Loss as and when the carrying value of an asset exceeds its recoverable amount. Where an impairment loss subsequently reverses, the carrying value of the asset is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the Statement of Profit and Loss immediately.
2.6 Investments in subsidiaries
Investments in subsidiaries are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognised in the Statement of Profit and Loss.
2.7 Financial assets
The financial assets are classified in the following categories:
a) financial assets measured at amortised cost,
b) financial assets measured at fair value through Profit and Loss (FVTPL), and
c) financial assets measured at fair value through other comprehensive income (FVOCI).
The classification of financial assets depends on the Company''s business model for managing financial assets and the contractual terms of the cash flow. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at FVOCI. The Company reclassifies debt investments when and only when its business model for managing those assets changes.
Regular purchases and sales of financial assets are recognised on trade-date, being the date on which the Company commits to purchase or sale the financial asset.
At initial recognition, the financial assets (excluding trade receivables which do not contain a significant financing component) are measured at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in the profit or loss. Financial assets are not reclassified subsequent to their recognition except if and in the period the Company changes its business model for arranging financial assets.
Financial assets measured at amortised cost Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method. Interest income from these financial assets is included in Other Income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/ (losses). The losses arising from impairment are recognised in the Statement of Profit and Loss.
Financial instruments measured at FVTPL Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through Profit and Loss. Financial instruments included within FVTPL category are measured initially as well as at each reporting period at fair value plus transaction costs as applicable. Fair value movements are recorded in Statement of Profit and Loss. Investments in units of mutual funds, alternate investment funds (AIF) other than equity (not held for trading) and debentures are accounted for at fair value and the changes in fair value are recognised in the Statement of Profit and Loss.
Financial assets at FVOCI
Financial assets are measured at FVOCI if these financial assets are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in Profit and Loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to retained earnings. Interest income from these financial assets is included in other income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/ (losses) and impairment expenses are presented as separate line item in Statement of Profit and Loss.
Equity instruments
The Company measures all equity investments at fair value. The Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, and accordingly there is no subsequent reclassification of fair value gains and losses to profit or loss on de-recognition. Dividends from such investments are recognised in profit or loss as other income when the Company''s right to receive payments is established. Changes in the fair value of financial assets at fair value through OCI are recognised in changes in fair value of FVOCI equity instrument. [Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.]
De-recognition of financial asset
The Company de-recognises a financial asset when the contractual rights to the cash flows from the financial assets expire or it transfers the financial assets and such transfer qualifies for derecognition under Ind AS 109 : "Financial Instruments".
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Except for Trade Receivables, where in the simplified approach of lifetime expected credit losses is recognised from initial recognition of the receivables as required by Ind AS 109: "Financial Instruments". Impairment loss
allowance recognised /reversed during the year is charged/written back to Statement of Profit and Loss.
2.8 Financial Liabilities 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 recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction cost of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. 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 as other gains/(losses).
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach. A financial liability (or a part of -financial liability) is de-recognised from Company''s balance sheet when obligation specified in the contract is discharged or cancelled or expired.
2.9 Inventories
Raw materials, Stores and Spares parts and components are valued at cost (cost being determined on weighted average basis) or at net realizable value, whichever is lower. Semi-finished goods and work-in-progress are valued at raw materials cost plus labour and overheads apportioned on an estimated basis depending upon the stages of completion or at net realizable value, whichever is lower. Finished goods are valued at cost or at net realizable value, whichever is lower. Cost includes all direct cost and applicable manufacturing and administrative overheads. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated cost necessary to make the sale.
2.10 Employee Benefit
a) Defined Contribution Plans
Payments to defined contribution plans are charged as an expense as they fall due. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Company''s obligations under the schemes are equivalent to those arising in a defined contribution benefit scheme.
b) Defined Benefit Plans
For defined benefit retirement schemes the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuation being carried out at each balance sheet date. Re-measurement gains and losses of the net defined benefit liability/ (asset) are recognised immediately in other comprehensive income. The service cost and net interest on the net defined benefit liability/ (asset) is treated as a net expense within employment costs. Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognised, whichever is earlier. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined-benefit obligation as reduced by the fair value plan assets.
c) Compensated Absences
Accrued liability in respect of leave encashment benefit on retirement is accounted for on the basis of actuarial valuation as at the year end and charged in the Statement of Profit and Loss every year. Compensated absences benefits comprising of entitlement to accumulation of Sick Leave is provided for based on actuarial valuation at the end of the year. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss. Accumulated Compensated Absences, which are expected to be availed or encashed or contributed within the 12 months from the end of the year are treated as short term employee benefits and the balance/ expected to availed or encashed or contributed beyond 12 months from the year end are treated as long term liability.
d) Other Short Term Employee Benefits
Short Term Employee Benefits are recognized as an expense as per the Company''s schemes based on expected obligation on an undiscounted basis.
2.11 Revenue Recognition
Revenue from contracts with customers are recognised when the control over the goods or services promised in the contract are transferred to the customer. The amount of revenue recognised depicts the transfer of promised goods and services to customers for an amount that reflects the consideration to which the Company is entitled to in exchange for the goods and services. Revenue from sale of products is recognised when the control over such goods have been transferred, being when the goods
are delivered to the customers. Delivery occurs when the products have been shipped or delivered to the specific location as the case may be, risks of loss have been transferred to the customers, and either the customer has accepted the goods in accordance with the sales contract or the acceptance provisions have lapsed or the Company has objective evidence that all criteria for acceptance have been satisfied. Revenue from these sales are recognized based on the price specified in the contract, which is fixed. No element of Significant financing is deemed present as the sales are made against the receipt of advance or with an agreed credit period (in a very few cases) of upto 90 days, which is consistent with the market practices. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only passage of time is required before payment is done.
2.12 Other Income
Interest income from financial assets at fair value through profit or loss is disclosed as interest income within other income. Interest income on financial assets at amortised cost and financial assets at FVOCI is calculated using the effective interest method and is recognised in the Statement of Profit and Loss as part of other income.
Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For credit-impaired financial assets, the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance). Dividends are received from financial assets at fair value through profit or loss and at FVOCI. Dividend income is recognised when the right to receive dividend is established. Export incentives are accounted as income in the Statement of Profit and Loss when no Significant uncertainty exists regarding the collectability.
2.13 Derivative Instruments
The Company uses derivative financial instruments such as foreign exchange contracts to hedge its exposure to movements in foreign exchange rates relating to the underlying transactions. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value and resulting gain or loss is recognized in the Statement of Profit and Loss at the end of each reporting period. Any profit or loss arising on cancellation of derivative instruments is recognized as income or expense for the period.
2.14 Taxation
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences.
Current tax is determined as the amount of tax payable in respect of taxable income for the year based on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in
tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty. Deferred income tax is provided in fullusing the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
2.15 Borrowing Cost
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 capitalisation. Other borrowing costs are expensed in the period in which they are incurred.
2.16 Provisions
Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the balance sheet date and are not discounted to its present value, except where the effect of the time value of money is material. Contingent Liabilities
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the
Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
2.17 Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in event of default, insolvency or bankruptcy of the Company or the counterparty.
2.18 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Board of Directors of the Company has been identified as being the chief operating decision maker. Refer note 36 for segment information presented.
2.19 Leases
As a lessee Leases are recognised as right of use assets and a correspondence liability at the date at which the leased asset is available for use by the Company. Contract may contain both lease and non lease components. The Company allocates the consideration in the contract to the lease and non lease components based on their relative standalone prices. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payment:-
a) Fixed payments (including in substance fixed payments) less any lease incentive receivable.
b) Variable lease payment that are based on an index or a rate, initially measured using the index or a rate at the commencement date.
c) Amount expected to be paid by the Company as under residual value guarantees.
d) Exercise price of a purchase option if the Company is reasonably certain to exercise that option.
e) Payment of penalties for terminating the lease, if the lease term reflects the Company exercising that option. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee''s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Company:
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a) Where possible, use recent third party financing received by the individual lessee as a starting point, adjusted to reflect changes in the financing conditions since third party -financing was received.
b) Use a built up approach that starts with risk free interest rate adjusted for credit risk of leases held by Gloster Limited, which does not have recent third party financing.
If a readily observable amortising loan rate is available to the individual lessee (through recent financing or market data) which has a similar payment profile to the lease, then the company uses that rate as a starting point to determine the incremental borrowing rate. Lease payments are allocated between principal and finance cost. The finance cost is charged to 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. Right-of use assets are measured at cost comprising the following:-
i) the amount of the initial measurement of lease liability
ii) any lease payment made at or before the commencement date less any lease incentive received
iii) any initial direct cost and
iv) restoration costs.
Right of use assets are generally depreciated over the shorter of the asset''s useful life and the lease term on a straight line basis. Payment associated with short-term leases of equipment and all the leases of low value assets are recognised on a straight line basis as an expense in the Statement of Profit and Loss. Short term leases are leases with a lease term of 12 months or less.
2.20 Trade Receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business and
reflects Company''s unconditional right to consideration (that is, payment is due only on the passage of time). Trade receivables are recognised initially at the transaction price as they do not contain Significant financing components. The Company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance.
2.21 Rounding of Amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest Lakhs (with two place of decimal) as per the requirement of schedule III, unless otherwise stated.
2A Critical Estimates and Judgements
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company''s accounting policies. This note provides an overview of the areas that involved a higher degree of judgement 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.
(i) Estimation of defined benefit obligation- Refer note 28 of the financial statements.
(ii) Estimated fair value of unlisted securities -Refer notes 5 (c), 9 (a), and 33 of the -financial statements.
(iii) Useful life of Property, Plant and Equipment, Goodwill and Other Intangible assets - Refer note 2.3 & 2.4 above and notes 3, 4(c) & 4(d) of the financial statements.
Estimates and judgements 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.
Mar 31, 2023
Note: 1 Corporate Information
Gloster Limited is a public company within the meaning of Companies Act, 2013. The Company is a leading manufacturer & exporter of all types of Jute & Jute allied products, Woven & Non-Woven Jute Geotextiles, Treated Fabric-Rot Proof, Fire Retardant, Jute products for Interior Decoration & Packaging of Industrial & Agricultural Produce. The Company also produces Jute & Cotton Shopping Bags & Made Ups. Gloster exports Jute goods to various countries spread over the World. The registered office of the Company is situated at 21, Strand Road, Kolkata - 700 001 and the Company''s manufacturing facilities are located at Bauria on the banks of Holy Ganges in West Bengal. The equity shares of the Company are listed on the BSE Ltd and The Calcutta Stock Exchange Limited. The financial statements for the year ended 31 March 2023 were approved and authorised for issue with the resolution of the Board of Directors on May 30, 2023.
Note: 2 Significant Accounting Policies
This note provides a list of the significant accounting policies adopted in the preparation of these standalone financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
(i) Compliance with Ind AS
These standalone financial statements have been prepared to comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] read with the National Company Law Tribunal (NCLT), Kolkata order dated 19 January 2018 as stated in note 2.4 below and other relevant provisions of the Act.
(ii) Classification of current and non-current
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 Ind AS 1 - "Presentation of Financial Statements" and Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current / noncurrent classification of assets and liabilities.
(iii) New and amended standards adopted by the Company The Ministry of Corporate Affairs had vide notification dated 23 March 2022 notified Companies (Indian Accounting Standards) Amendment Rules, 2022 which amended certain accounting standards, and are effective 1 April 2022. These amendments did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.
(iv) New amendments issued but not effective
The Ministry of Corporate Affairs has vide notification dated 31 March 2023 notified Companies (Indian Accounting Standards) Amendment Rules, 2023 (the ''Rules'') which amends certain accounting standards, and are effective 1 April 2023.
The Rules predominantly amend Ind AS 12, "Income taxes", and Ind AS 1, "Presentation of Financial Statements". The other amendments to Ind AS notified by these rules are primarily in the nature of clarifications.
These amendments are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions. Specifically, no changes would be necessary as a consequence of amendments made to Ind AS 12 as the Company''s accounting policy already complies with the now mandatory treatment.
(v) Historical cost convention
These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention, except for the following:
- certain financial assets and liabilities those are measured at
fair value;
- defined benefit plans - plan assets measured at fair value.
The preparation of financial statements in conformity with the Ind AS specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in outcomes requiring a material adjustment to the carrying amounts of assets and liabilities in future periods.
2.3 Property, Plant and Equipment and Depreciation
a) Freehold land is carried at historical cost. All other items of Property, Plant and Equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
b) Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to Statement of Profit and Loss during the reporting period in which they are incurred.
c) On transition to Ind AS, the Company has elected to continue with the carrying value of its Property, Plant and Equipment measured at the previous GAAP and use that carrying value as the deemed cost of Property, Plant and Equipment.
d) Depreciation is provided on straight line method over the estimated useful lives of the assets. Pursuant to Notification of Schedule II of the Companies Act, 2013 becoming effective, the Company has adopted the useful lives as per the lives specified for the respective Property, Plant & Equipment in the Schedule II of the Companies Act, 2013. No depreciation is provided on freehold land.
e) Gains and losses on disposal of Property, Plant and Equipment is recognized in the Statement of Profit and Loss.
f) An impairment loss is recognized where applicable when the carrying amount of Property, Plant and Equipment exceeds its recoverable amount.
2.4 Intangible assets and amortization
a) Intangible assets are stated at cost of acquisition including duties, taxes and expenses incidental to acquisition and installation, net of accumulated depreciation. Recognition of costs as an asset is ceased when the asset is complete and available for its intended use.
b) On transition to Ind AS, the Company has elected to continue with the carrying value of its intangible assets measured at the previous GAAP and use that carrying value as the deemed cost of intangible assets.
c) Intangible assets comprising of Trademark and computer software are amortized on straight line method over a period of twenty years and five years respectively.
d) Goodwill acquired on account of amalgamation is being amortized in the Statement of Profit and Loss in line with National Company Law Tribunal, Kolkata ("NCLT") order dated 19 January 2018 on the basis of management''s estimate useful life of 20 years.
e) Gains and Losses on disposal of Intangible assets is recognized in the Statement of Profit and Loss.
Assessment is done at each balance sheet date as to whether there is any indication that an asset (Property, Plant and Equipment and other assets) may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset/ cash generating unit is made. Assets whose carrying value exceeds their recoverable amount are written down to their recoverable amount. Recoverable amount is higher of an asset''s or cash generating unit''s net selling price and its value in use. Assessment is also done at each balance sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased /increased. An impairment
loss is recognised in the Statement of Profit and Loss as and when the carrying value of an asset exceeds its recoverable amount. Where an impairment loss subsequently reverses, the carrying value of the asset is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the Statement of Profit and Loss immediately.
2.6 Investments in subsidiaries
Investments in subsidiaries are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognised in the Statement of Profit and Loss.
The financial assets are classified in the following categories:
a) financial assets measured at amortised cost,
b) financial assets measured at fair value through Profit and Loss (FVTPL), and
c) financial assets measured at fair value through other comprehensive income (FVOCI).
The classification of financial assets depends on the Company''s business model for managing financial assets and the contractual terms of the cash flow. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at FVOCI. The Company reclassifies debt investments when and only when its business model for managing those assets changes.
Regular purchases and sales of financial assets are recognised on trade-date, being the date on which the Company commits to purchase or sale the financial asset.
At initial recognition, the financial assets (excluding trade receivables which do not contain a significant financing component) are measured at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in the profit or loss. Financial assets are not reclassified subsequent to their recognition except if and in the period the Company changes its business model for arranging financial assets.
Financial assets measured at amortised cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method. Interest income from these financial assets is included in Other Income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses). The losses arising from impairment are recognised in the Statement of Profit and Loss.
Financial instruments measured at FVTPL
Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through Profit and Loss. Financial instruments included within FVTPL category are measured initially as well as at each reporting period at fair value plus transaction costs as applicable. Fair value movements are recorded in Statement of Profit and Loss. Investments in units of mutual funds, alternate investment funds (AIF) other than equity and debentures are accounted for at fair value and the changes in fair value are recognised in the Statement of Profit and Loss.
Financial assets are measured at FVOCI if these financial assets are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in Profit and Loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to retained earnings. Interest income from these financial assets is included in other income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in Statement of Profit and Loss.
Equity instruments
The Company measures all equity investments at fair value. The Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, and accordingly there is no subsequent reclassification of fair value gains and losses to profit or loss on de-recognition. Dividends from such investments are recognised in profit or
loss as other income when the Company''s right to receive payments is established.
Changes in the fair value of financial assets at fair value through OCI are recognised in changes in fair value of FVOCI equity instrument. [Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.] De-recognition of financial asset
The Company de-recognises a financial asset when the contractual rights to the cash flows from the financial assets expire or it transfers the financial assets and such transfer qualifies for derecognition under Ind AS 109 : "Financial Instruments".
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised. Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Except for Trade Receivables, where in the simplified approach of lifetime expected credit losses is recognised from initial recognition of the receivables as required by Ind AS 109: "Financial Instruments". Impairment loss allowance recognised /reversed during the year is charged/written back to Statement of Profit and Loss.
2.8 Financial Liabilities Borrowings
Borrowings are measured at amortised cost using the effective interest method. 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 recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction cost of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. 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 as other gains/(losses).
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach. A financial liability (or a part of financial liability) is de-recognised from Company''s balance sheet when obligation specified in the contract is discharged or cancelled or expired.
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. The amounts are unsecured and are usually paid within the agreed credit terms with the vendors. 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.
2.9 Subsidy / Government Grant
Subsidy/ Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants relating to income are deferred and recognised in the Statement of Profit and Loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income. Government grants relating to the purchase of Property, Plant and Equipment are included in other liabilities as deferred income and are credited to Statement of Profit and Loss on a straight-line basis over the expected lives of the related assets and presented within other income.
Raw materials, Stores and Spares parts and components are valued at cost (cost being determined on weighted average basis) or at net realizable value, whichever is lower. Semi-finished goods and stock-in-process are valued at raw materials cost plus labour and overheads apportioned on an estimated basis depending upon the stages of completion or at net realizable value, whichever is lower. Finished goods are valued at cost or at net realizable value, whichever is lower. Cost includes all direct cost and applicable manufacturing and administrative overheads. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated cost necessary to make the sale.
a) Defined Contribution Plans
Payments to defined contribution plans are charged as an expense as they fall due. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Company''s obligations under the schemes are equivalent to those arising in a defined contribution benefit scheme.
b) Defined Benefit Plans
For defined benefit retirement schemes the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuation being carried out at each balance sheet date. Re-measurement gains and losses of the net defined benefit liability/ (asset) are recognised immediately in other comprehensive income. The service cost and net interest on the net defined benefit liability/ (asset) is treated as a net expense within employment costs. Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognised, whichever is earlier. The retirement benefit obligation recognised in the balance sheet represents the present value of the defined-benefit obligation as reduced by the fair value plan assets.
c) Compensated Absences
Accrued liability in respect of leave encashment benefit on retirement is accounted for on the basis of actuarial valuation as at the year end and charged in the Statement of Profit and Loss every year. Compensated absences benefits comprising of entitlement to accumulation of Sick Leave is provided for based on actuarial valuation at the end of the year. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss. Accumulated Compensated Absences, which are expected to be availed or encashed or contributed within the 12 months from the end of the year are treated as short term employee benefits and the balance/ expected to availed or encashed or contributed beyond 12 months from the year end are treated as long term liability.
d) Other Short Term Employee Benefits
Short Term Employee Benefits are recognized as an expense as per the Company''s schemes based on expected obligation on an undiscounted basis.
Revenue from contracts with customers are recognised when the control over the goods or services promised in the contract are transferred to the customer. The amount of revenue recognised depicts the transfer of promised goods and services to customers for an amount that reflects the consideration to which the Company is entitled to in exchange for the goods and services. Revenue from sale of products is recognised when the control over such goods have been transferred, being when the goods are delivered to the customers. Delivery occurs when the products have been shipped or delivered to the specific location as the case may be, risks of loss have been transferred to the customers, and either the customer has accepted the goods in accordance with the sales contract or the acceptance provisions have lapsed or the Company has objective evidence that all criteria for acceptance have been satisfied. Revenue from these sales are recognized based on the price specified in the contract, which is fixed. No element of significant financing is deemed present as the sales are made against the receipt of advance or with an agreed credit period (in a very few cases) of upto 90 days, which is consistent with the market practices. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only passage of time is required before payment is done.
Interest income from financial assets at fair value through profit or loss is disclosed as interest income within other income. Interest income on financial assets at amortised cost and financial assets at FVOCI is calculated using the effective interest method and is recognised in the Statement of Profit and Loss as part of other income.
Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For credit-impaired financial assets, the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance). Dividends are received from financial assets at fair value through profit or loss and at FVOCI. Dividend income is recognised when the right to receive dividend is established.
Export incentives are accounted as income in the Statement of Profit and Loss when no significant uncertainty exists regarding the collectability. Insurance claims are accounted to the extent the Company is reasonably certain of their ultimate collection.
2.14 Foreign Currency Transaction
(i) Functional Currency
Items included in the financial statements 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 rupee (INR), which is Gloster Limited''s functional and presentation currency.
(ii) Initial Recognition
On initial recognition, all foreign currency transactions are recorded at exchange rates prevailing on the date of the transaction.
(iii) Subsequent Recognition
At the reporting date, foreign currency non-monetary items carried in terms of historical cost are reported using the exchange rate at the date of transactions. All monetary assets and liabilities in foreign currency are restated at the end of accounting period at the closing exchange rate. Gains/ losses arising out of fluctuations in the exchange rates are recognised in the Statement of Profit and Loss in the period in which they arise.
The Company uses derivative financial instruments such as foreign exchange contracts to hedge its exposure to movements in foreign exchange rates relating to the underlying transactions. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value and resulting gain or loss is recognized in the Statement of Profit and Loss at the end of each reporting period. Any profit or loss arising on cancellation of derivative instruments is recognized as income or expense for the period.
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
Current tax is determined as the amount of tax payable in respect of taxable income for the year based on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
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 capitalisation. Other borrowing costs are expensed in the period in which they are incurred.
Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best â estimate of the expenditure required to settle the present obligation at the balance sheet date and are not discounted to its present value, except where the effect of the time value of money is material.
Contingent Liabilities
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
2.20 Cash and Cash Equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other shortterm, 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, and bank overdrafts.
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Company, on or before the end of the reporting period but not distributed at the end of the reporting period.
2.22 Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in event of default, insolvency or bankruptcy of the Company or the counterparty.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Board of Directors of the Company has been identified as being the chief operating decision maker. Refer note 36 for segment information presented.
Leases are recognised as right of use assets and a correspondence liability at the date at which the leased asset is available for use by the Company. Contract may contain both lease and non lease components. The Company allocates the consideration in the contract to the lease and non lease components based on their relative standalone prices. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payment:-
a) Fixed payments (including in substance fixed payments) less any lease incentive receivable.
b) Variable lease payment that are based on an index or a rate, initially measured using the index or a rate at the commencement date.
c) Amount expected to be paid by the Company as under residual value guarantees.
d) Exercise price of a purchase option if the Company is reasonably certain to exercise that option.
e) Payment of penalties for terminating the lease, if the lease term reflects the Company exercising that option. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee''s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Company:
a) Where possible, use recent third party financing received by the individual lessee as a starting point, adjusted to reflect changes in the financing conditions since third party financing was received.
b) Use a built up approach that starts with risk free interest rate adjusted for credit risk of leases held by Gloster Limited, which does not have recent third party financing.
If a readily observable amortising loan rate is available to the individual lessee (through recent financing or market data) which has a similar payment profile to the lease, then the company uses that rate as a starting point to determine
the incremental borrowing rate. Lease payments are allocated between principal and finance cost. The finance cost is charged to 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. Right-of-use assets are measured at cost comprising the following:-
i) the amount of the initial measurement of lease liability
ii) any lease payment made at or before the commencement date less any lease incentive received
iii) any initial direct cost and
iv) restoration costs.
Right of use assets are generally depreciated over the shorter of the asset''s useful life and the lease term on a straight line basis. Payment associated with short-term leases of equipment and all the leases of low value assets are recognised on a straight line basis as an expenses in the Statement of Profit and Loss. Short term leases are leases with a lease term of 12 months or less.
Lease income from operating leases where the company is a lessor is recognised in income on a straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating lease are added to the carrying amount of the underlying asset and recognised as expense over the lease term on the same basis as lease income. The respective leased assets are included in the balance sheet based on their nature.
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business and reflects Company''s unconditional right to consideration (that is, payment is due only on the passage of time). Trade receivables are recognised initially at the transaction price as they do not contain significant financing components. The Company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest Lakhs (with two place of decimal) as per the requirement of schedule III, unless otherwise stated.
When items of income and expenses within Statement of Profit and Loss from ordinary activities are of as such size, nature and or incidence that their disclosure is relevant to explain the performance of the enterprise for the period, the nature and amount of such material items are disclosed separately as exceptional items.
2A Critical Estimates and Judgements The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company''s accounting policies. This note provides an overview of the areas that involved a higher degree of judgement 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.
(i) Estimation of defined benefit obligation- Refer note 28 of the financial statements
(ii) Estimated fair value of unlisted securities -Refer notes 5(c), 9(a) and 33 of the financial statements
(iii) Useful life of Property, Plant and Equipment, Goodwill and Intangible assets - Refer note 2.3 & 2.4 above and notes 3, 4(c) & 4(d) of the financial statements.
Estimates and judgements 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.
Mar 31, 2018
Notes to the Standalone Financial Statements
Note: 1 Corporate Information
Gloster Limited (formerly Kettlewell Bullen & Company Limited, renamed on 9 May, 2018) is a public company within the meaning of Companies Act, 2013. Consequent to amalgamation of erstwhile Gloster Limited with the Company with appointed date of 1 January, 2015 and effective date being 30 March, 2018, the principle business activity of the company is now manufacturing of jute goods and it is no longer a non banking financial Company. The Company is a leading manufacturer & exporter of all types of Jute & Jute allied products. Woven & Non-Woven Jute Geotextiles, Treated Fabric-Rot Proof, Fire Retardant, Jute Products for Interior Decoration & Packaging of Industrial & Agricultural Produce. The Company also produces Jute & Cotton Shopping Bags & Made Ups. Gloster exports Jute goods to various countries spread over the World. The Company''s manufacturing facilities are located at Bauria on the banks of Holy Ganges in West Bengal. The equity shares of the Company are in the process of listing on the BSE Ltd. &The Calcutta Stock Exchange Ltd.
Note: 2 Summary of significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of these standalone financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of Preparation
(i) Compliance with Ind AS
These standalone financial statements have been prepared to comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016] and other relevant provisions of the Act.
The standalone financial statements up to year ended 31 March, 2016 were prepared in accordance with generally accepted accounting principles in India (Previous GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 ("the 2013 Act") as applicable.
These financial statements are the first financial statements of the Company under Ind AS. Refer note 39 for an explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.
ii) Classification of current and non-current
All asset 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 Ind AS 1 - Presentation of Financial Statements and Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current / non-current classification of assets and liabilities.
(iii) Historical cost convention
These financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention, except for the following:
certain financial assets and liabilities those are measured at fair value
defined benefit plans - plan assets measured at fair value
2.2 Use of estimates
The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in outcomes requiring a material adjustment to the carrying amounts of assets and liabilities in future periods.
2.3 Property, Plant and equipment and Depreciation
a) Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
b) Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to statement of profit or loss
during the reporting period in which they are incurred.
c) Depreciation is provided on Straight line method over the estimated useful lives of the assets. Pursuant to Notification of Schedule II of the Companies Act, 2013 becoming effective, the Company has adopted the useful lives as per the lives specified for the respective fixed assets in the Schedule II of the Companies Act, 2013. No depreciation is provided on Freehold Land.
d) Gains and losses on disposal of Property, plant and equipmentis recognized in the statement of profit and loss.
e) An impairment loss is recognized where applicable when the carrying amount of property, plant and equipment exceeds its recoverable amount.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of all the Property, plant and equipment.
2.4 Intangible assets and amortization
a) Intangible assets are stated at cost of acquisition including duties, taxes and expenses incidental to acquisition and installation, net of accumulated depreciation. Recognition of costs as an asset is ceased when the asset is complete and available for its intended use.
b) Intangible assets comprising of computer software is depreciated on straight line method over a period of five years.
c) Goodwill and trademark is amortized over its estimated useful life of 20 years and as allowed under the approved scheme.
d) Gains and Losses on disposal of Intangible assets is recognized in the Statement of Profit and Loss.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognized as at 1 April 2016 measured as per the Previous GAAP and use that carrying value as the deemed cost of all the Intangible assets.
2.5 Impairment of assets
Assessment is done at each balance sheet date as to whether there is any indication that an asset (property, plant and equipment) may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset/ cash generating unit is made. Assets whose carrying value exceeds their recoverable amount are written down to there coverable amount.
Recoverable amount is higher of an asset''s or cash generating unit''s net selling price and its value in use. Assessment is also done at each balance sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased /increased.
An impairment loss is recognised in the statement of profit and loss as and when the carrying value of an asset exceeds its recoverable amount.Where an impairment loss subsequently reverses, the carrying value of the asset is increased to the revised estimate of its recoverable amount so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an impairment loss is recognised in the statement of profit and loss immediately.
2.6 Investments in subsidiaries
Investments in subsidiaries are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognised in the statement of profit and loss.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of Investments in subsidiaries, recognized as at 1 April 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of all the Investments in subsidiaries.
2.7 Financial assets
The financial assets are classified in the following categories:
a) financial assets measured at amortised cost,
b) financial assets measured at fair value through profit and loss (FVTPL), and
c) financial assets measured at fair value through other comprehensive income (FVOCI).
The classification of financial assets depends on the Company''s business model for managing financial assets and the contractual terms of the cash flow.
At initial recognition, the financial assets are measured at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in the Profit or Loss. Financial assets are not reclassified subsequent to their
recognition except if and in the period the Company changes its business model for arranging financial assets.
Financial assets measured at amortised cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method. The losses arising from impairment are recognised in the Statement of Profit or Loss.
Trade Receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less provision for impairment, if any.
Financial instruments measured at FVTPL
Financial instruments included within FVTPL category are measured initially as well as at each reporting period at fair value plus transaction costs as applicable. Fair value movements are recorded in statement of profit and loss.
Investments in units of mutual funds, alternate investment funds (AlF''s) other than equity and debentures are accounted for at fair value and the changes in fair value are recognised in the statement of Profit and Loss.
Financial assets at FVOCI
Financial assets are measured at FVOCI if these financial assets are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Equity instruments
The Company measures all equity investments at fair value. The Company''s management has elected to present fair value gains and losses on equity investments in other comprehensive income, and accordingly there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Company''s right to receive payments is established.
De-recognition of financial asset
The Company de-recognises a financial asset when the contractual rights to the cash flows from the financial assets expire or it transfers the financial assets and such transfer qualifies for de-recognition under Ind AS 109 : Financial
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
Only for Trade receivables, the simplified approach of lifetime expected credit losses is recognised from initial recognition of the receivables as required by Ind AS 109: Financial Instruments.
Impairment loss allowance recognised /reversed during the year is charged/written back to Statement of Profit and Loss.
2.8 Financial Liabilities
Financial liabilities are measured at amortised cost using the effective interest method.
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. Fees paid on the establishment of loan facilities are recognised as transaction cost of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach.
For Trade and Other Payables maturing within one year from the balance sheet date, the carrying amount approximates fair value to short-term maturity of these instruments.
A financial liability (or a part of financial liability) is de-recognised from Company''s balance sheet when obligation specified in the contract is discharged or cancelled or expired.
2.9 Subsidy / Government Grant
Subsidy/ Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognised in the statement of profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.
Government grants relating to the purchase of property, plant and equipment are included in other liabilities as deferred income and are credited to statement of profit or loss on a straight-line basis over the expected lives of the related assets and presented within other income.
2.10 Inventories
Raw materials. Stores and Spares parts and components are valued at cost (cost being determined on weighted average basis) or at net realizable value whichever is lower. Semi-finished goods and stock-in-process are valued at raw materials cost plus labour and overheads apportioned on an estimated basis depending upon the stages of completion or at net realizable value whichever is lower. Finished goods are valued at cost or at net realizable value whichever is lower. Cost includes all direct cost and applicable manufacturing and administrative overheads.Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated cost necessary to make the sale.
2.11 Employee Benefit
a) Defined Contribution Plans
Payments to defined contribution plans are charged as an expense as they fall due. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Company''s obligations under the schemes are equivalent to those arising in a defined contribution benefit scheme.
b) Defined Benefit Plans
For defined benefit retirement schemes the cost of providing benefits is determined using the Projected Unit Credit Method.with actuarial valuation being carried out at each balance sheet date. Re-measurement gains and losses of the net defined benefit liability/ (asset) are recognised immediately in other comprehensive income. The service cost and net interest on the net defined benefit liability/ (asset) is treated as a net expense within employment costs.
Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognised, whichever is earlier.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined-benefit obligation as reduced by the fair value plan assets.
c) Compensated absences
Accrued liability in respect of leave encashment benefit on retirement is accounted for on the basis of actuarial valuation as at the year end and charged in the Statement of Profit and Loss every year.
Compensated absences benefits comprising of entitlement to accumulation of Sick Leave is provided for based on actuarial valuation at the end of the year. Actuarial gains and losses are recognized immediately in the statement of Profit and Loss.
Accumulated Compensated Absences and Gratuity liability, which are expected to be availed or encashed or contributed within the 12 months from the end of the year are treated as short term employee benefits and the balance expected to availed or encashed or contributed beyond 12 months from the year end are treated as long term liability.
d) Other short term employee benefits
Short Term Employee Benefits are recognized as an expense as per the Company''s schemes based on expected obligation on an undiscounted basis.
2.12 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty and net of returns, trade allowances, rebates, value added taxes and amounts collected on behalf of third parties.
The Company recognizes revenue at fair value when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Company''s activities. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
2.13 Other Income
Interest Income is recognized on a time proportion basis taking in to account the amount outstanding and the effective interest rate applicable.
Dividend income is recognized when the right to receive dividend is established.
Export incentive are accounted as income in the Statement of Profit and Loss when no significant uncertainty exists regarding the collectability.
Insurance claims are accounted to the extent the Company is reasonably certain of their ultimate collection.
2.14 Foreign Currency Transaction
(i) Initial Recognition
On initial recognition, all foreign currency transactions are recorded at exchange rates prevailing on the date of the transaction.
(ii) Subsequent Recognition
At the reporting date, foreign currency non-monetary items carried in terms of historical cost are reported using the exchange rate at the date of transactions.
All monetary assets and liabilities in foreign currency are restated at the end of accounting period at the closing exchange rate.
Gains/losses arising out of fluctuations in the exchange rates are recognised in the Statement of Profit and Loss in the period in which they arise.
2.15 Derivative Instruments
The Company uses derivative financial instruments such as foreign exchange contracts to hedge its exposure to movements in foreign exchange rates relating to the underlying transactions.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value and resulting gain or loss is recognized in the statement of profit and loss at the end of each reporting period. Any profit or loss arising on cancellation of derivative instruments is recognized as income or expense for the period.
2.16 Taxation
Current tax is determined as the amount of tax payable in respect of taxable income for the year based on the basis of the tax laws enacted or substantively enacted at the end of the reporting period.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
2.17 Borrowing Cost
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.
Other borrowing costs are expensed in the period in which they are incurred.
2.18 Provisions and Contingent Liabilities
Provisions: Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value, except where the effect of the time value of money is material.
Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
2.19 Earnings per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
2.20 Cash and Cash Equivalents
In the cash flow statement, cash and cash equivalents include cash in hand, and balance with bank in current account.
2.21 Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Company, on or before the end of the reporting period but not distributed at the end of the reporting period.
2.22 Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in event of default, insolvency or bankruptcy of the Company or the counterparty.
2.23 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The Board of directors of the Company has been identified as being the chief operating decision maker. Refer note 34 for segment information presented.
2.24 Leases
As a lessee
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 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.
As a lessor
Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
2.25 Standards issued but not yet effective
Ind AS 115: Revenue from contracts with customers
The Company is in the process of assessing the detailed impact of Ind AS 115. Presently, the Company is no table to reasonably estimate the impact that application of Ind AS 115 is expected to have on its financial statements, except that adoption of Ind AS 115 is not expected to significantly change the timing of the Company''s revenue recognition for product sales. Consistent with the current practice, recognition of revenue will continue to occur at a point in time when products are dispatched to customers, which is also when the control of the asset is transferred to the customer under Ind AS 115.
The Company intends to adopt the standard using the modified retrospective approach which means that the cumulative impact of the adoption will be recognised in retained earnings as of 1 April 2018 and that comparatives will not be restated.
Ind AS 21: Foreign currency transactions and advance consideration
Management has assessed the effects of applying the appendix to its foreign currency transactions for which consideration is received in advance. The Company expects this change to impact its accounting for revenue contracts involving advance payments in foreign currency.
The Company intends to adopt the amendments prospectively to items in scope of the appendix that are initially recognised on or after the beginning of the reporting period in which the appendix is first applied (i.e. from 1 April 2018).
2A Critical estimates and judgements
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company''s accounting policies.
This note provides an overview of the areas that involved a higher degree of judgement 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.
Estimation of defined benefit obligation- Refer note 26 Estimated fair value of unlisted securities -Refer note 31
Recognition of deferred tax assets for carried forward tax losses - Refer note 30
(iv) Useful life of property, plant and equipments and intangible assets - Refer note 2.3 and 2.4
Estimates and judgements 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.
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