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Accounting Policies of I G Petrochemicals Ltd. Company
Mar 31, 2025
1A : CORPORATE INFORMATION
I G Petrochemicals Limited ("The Companyâ) having CIN No. L51496GA1988PLC000915, is engaged in the manufacturing of Phthalic Anhydride, Maleic Anhydride & Diethyl Phthalate. The Company is a public limited Company incorporated in India with its registered office at T-10, 3rd Floor, Jairam Complex, Mala, Neugi Nagar, Panaji, Goa - 403 001.
The Board of Directors approved the financial statements for the year ended 31st March, 2025 and authorised for issue on 19th May, 2025.
1B: PREPARATION AND PRESENTATION OF STANDALONE FINANCIAL STATEMENTS
BASIS OF PREPARATION
i) Statement of compliances with Ind-AS
These standalone financial statements have been prepared in accordance with Indian Accounting Standards ("Ind ASâ) notified under section 133 of the Companies Act, 2013 ("the Actâ), read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time), presentation requirements of Division
II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III) and other relevant provisions of the Act.
The standalone financial statements have been prepared in accordance with Indian accounting Standards (Ind AS) under the historical cost convention on the accrual basis and except for certain financial instruments and defined benefit plans which are measured at fair value and amortised cost. Accounting policies have been consistently applied except where a newly issued Indian accounting standard is initially adopted or a revision to an existing Indian accounting standard requires a change in the accounting policy hitherto in use. The Standalone Financial Statements are presented in lakhs or decimal thereof unless otherwise specified.
The Company has prepared the financial statements on the basis that it will continue to operate as a going concern.
ii) Classification between Current and Non-current
The Company presents assets and liabilities in the balance sheet based on current/non-current classification.
AN ASSET IS TREATED AS CURRENT WHEN IT IS:
i. Expected to be realized or intended to be sold or consumed in normal operating cycle.
ii. Held primarily for the purpose of trading.
iii. Expected to be realized within twelve months after the reporting period, or
iv. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A LIABILITY IS CURRENT WHEN:
i. It is expected to be settled in normal operating cycle.
ii. It is held primarily for the purpose of trading.
iii. It is due to be settled within twelve months after the reporting period, or
iv. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The terms of the liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification. The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
1C: MATERIAL ACCOUNTING POLICIES a) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at acquisition cost net of recoverable taxes, trade discount and rebates less accumulated depreciation and accumulated impairment losses, if any. Freehold land is carried at historical cost. Such cost also includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.
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.
All other repairs and maintenance costs are charged to the Statement of Profit and Loss during the period in which they are incurred.
Gains or losses arising on retirement or disposal of property, plant and equipment are recognized in the Statement of Profit and Loss.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as "Capital work-in-progressâ. Capital work-inprogress includes cost of property, plant and equipment under installation/under development as at the balance sheet date. Capital work in progress is stated at cost, net of accumulated impairment loss, if any.
Depreciation is calculated as per the estimated useful life of assets prescribed by the Schedule II of the Company Act, 2013 using straight line method. The residual values, useful lives and methods of depreciation of property,
plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate with exception to the following:
⢠Depreciation on property, plant and equipment of Maleic Anhydride acquired in earlier year from Mysore Petro Chemicals Limited is provided based on the useful life determined by the valuer which is as follows:
|
Asset |
Useful life as per valuer |
Useful life as per Schedule II |
|
Building |
20 to 30 years |
30 years |
|
Furniture & fixtures |
5 years |
10 years |
|
Vehicles |
5 to 6 years |
8 years |
|
Plant & Equipment |
20 years |
8 to 20 years |
|
Road |
10 years |
10 years |
⢠Catalyst used in the production process is amortized
over a period of 3 years against useful life of 8 to 20 years as per schedule II, so as to expense out the cost over its estimated useful life based on a technical evaluation.
Freehold land is not required to amortize and leasehold land is amortized over the period of lease.
Depreciation on addition to property, plant and equipment is provided on pro-rata basis from the date of acquisition. Depreciation on sale/deduction from property, plant and equipment is provided up to the date preceding the date of sale, deduction as the case may be.
) INVESTMENT PROPERTY
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment properties are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in profit or loss as incurred.
The Company depreciates building component of investment property over 30 years from the date of original purchase.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer applying a valuation model recommended by the International Valuation Standards Committee.
Investment properties are derecognized either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of derecognition. In determining the amount of consideration from the derecognition of investment properties the Company considers the effects of variable consideration, existence of a significant financing component, non-cash consideration, and consideration payable to the buyer (if any).
c) INTANGIBLE ASSETS
Separately purchased intangible assets are initially measured at cost. Intangible assets acquired in a business combination are recognized at fair value at the acquisition date. Subsequently, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortized on a straight-line basis over the period of their expected useful lives.
Intangible assets comprising of Software are amortised on a straight line basis over its estimated useful life or maximum 5 years, whichever is less.
The amortization period and the amortization method for finite-life intangible assets is reviewed at each financial year end and adjusted prospectively, if appropriate.
d) GOODWILL
Goodwill represents the cost of acquired business as established at the date of acquisition of the business in excess of the acquirer''s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities less accumulated impairment losses, if any.
Goodwill is not amortized but are tested for impairment annually.
e) INVESTMENTS IN SUBSIDIARIES
I nvestments 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 to its recoverable amount. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognized in the Statement of Profit and Loss.
f) INVENTORIES
BASIS OF VALUATION:
Inventories are valued at lower of cost and net realizable value after providing cost of obsolescence, if any. However, materials and other items held for use in the production of inventories are not written down below cost
if the finished products in which they will be incorporated are expected to be sold at or above cost. The comparison of cost and net realizable value is made on an item-byitem basis.
METHOD OF VALUATION:
Cost of raw materials has been determined by using moving weighted average cost method and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
Cost of finished goods and work-in-progress includes direct labour and an appropriate share of fixed and variable production overheads.
Fixed production overheads are allocated on the basis of normal capacity of production facilities. Cost is determined on moving weighted average basis.
Cost of traded goods has been determined by using moving weighted average cost method and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Provision of obsolescence on inventories is considered on the basis of management''s estimate based on demand and market of the inventories.
g) Fair value measurement
The Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
i. In the principal market for the asset or liability, or
ii. In the absence of a principal market, in the most advantageous market for the asset or liability accessible to the Company.
h) BORROWING COST
Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of the respective asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time (generally over twelve months) to get ready for its intended use or sale.
Borrowing costs consist of interest and other costs that a Company incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing cost.
All other borrowing costs are recognized as expense in the period in which they occur.
i) FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to a financial asset of one Entity and a financial liability or equity instrument of another entity.
FINANCIAL ASSETS:
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument.
On initial recognition, a financial asset is recognized at fair value. In case of Financial assets which are recognized at fair value through profit and loss (FVTPL), its transaction cost are recognized in the statement of profit and loss. In other cases, the transaction cost are attributed to the acquisition value of the financial asset.
Financial assets are subsequently classified as measured at:
AMORTISED COST:
Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortised cost using the effective interest rate (''EIR'') method less impairment, if any. The amortization of EIR and loss arising from impairment, if any is recognized in the Statement of Profit and Loss.
FAIR VALUE THROUGH PROFIT AND LOSS (FVTPL): A financial asset not classified as either amortised cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, is recognised in the Statement of Profit and Loss.
TRADE RECEIVABLES AND LOANS:
Trade receivables are held at realizable value net of any expected credit losses.
DERECOGNITION
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
FINANCIAL LIABILITIES:
Initial recognition and measurement
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the fair value. In case of trade payables, they are initially recognized at fair value and subsequently, these liabilities are held at amortized cost, using the effective interest method.
SUBSEQUENT MEASUREMENT
Financial liabilities are subsequently measured at
amortized cost using the EIR method.
DERECOGNITION
A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.
j) PROVISIONS AND CONTINGENT LIABILITIES
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The contingent liability is not recognized in books of account but its existence is disclosed in financial statements unless the probability of outflow of resources is remote.
k) REVENUE FROM CONTRACT WITH CUSTOMERS
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, incentives and return. Revenue exclude tax collected from customers on behalf of the government.
Ind AS 115 "Revenue from contracts with Customers" provides a control-based revenue recognition model and provides a five step application approach to be followed for revenue recognition.
A) Identify the contracts with a customer,
B) Identify the performance obligations,
C) Determine the transaction price,
D) Allocate the transaction price to the performance obligations,
E) Recognise revenue when or as an entity satisfies performance obligation.
Revenue from sale of goods is recognised at the point in time when control of the goods is Transferred to the customer, generally on delivery of the goods and there are no unfulfilled obligations.
The Company considers, whether there are other promises in the contract in which there are separate performance obligations, to which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of goods, the Company considers the effects of variable consideration, the existence of significant financing components, non-cash consideration, and consideration payable to the customer (if any).
Export incentive
Income from export incentives such as duty drawback and MEIS are recognized on accrual basis.
Interest Income
Interest income is recognized on accrual basis.
Dividend Income
Dividend income on investments is recognized when the right to receive dividend is established.
Insurance Claims
Insurance claim receivable is accounted for when amount of claim is finalized by insurance company.
l) EMPLOYEE BENEFITS
Defined contribution plans
Contributions to defined contribution schemes such as employees'' state insurance, labour welfare fund, employee pension scheme etc. are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees.
Company''s provident fund contribution, except of certain employees, is made to an irrevocable trust set up by the company and contribution to pension fund deposited with the Regional Provident Fund Commissioner and charged as an expense to the Statement of Profit and Loss. The above benefits are classified as Defined Contribution Schemes as the Company has no further defined obligations beyond the monthly contributions.
In respect of certain employee, provident fund contributions are made to a trust administered by the Company. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. The liability in respect of the shortfall of interest earnings of the Fund is determined on the basis of an actuarial valuation. The Company also provides for retirement/post-retirement benefits in the form of gratuity and leave pay.
Defined benefit plans
For defined benefit plans, the amount recognized as ''Employee benefit expenses'' in the Statement of Profit and Loss is the cost of accruing employee benefits promised to employees over the year and the costs of individual events such as past/future service benefit changes and settlements (such events are recognized immediately in the Statement of Profit and Loss). The amount of net interest expense calculated by applying the liability discount rate to the net defined benefit liability or asset is charged or credited to ''Employee benefit expenseâ in the Statement of Profit and Loss. Any differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognized immediately in ''Other comprehensive income'' and subsequently not reclassified to the Statement of Profit and Loss.
The defined benefit plan surplus or deficit on the Balance Sheet comprises the total for each plan of the fair value of plan assets less the present value of the defined benefit liabilities (using a discount rate by reference to market yields on government bonds at the end of the reporting period).
All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Company''s net obligation into current and non-current is as per the actuarial valuation report.
Termination benefits
Termination benefits, in the nature of voluntary retirement benefits or termination benefits arising from restructuring, are recognized in the Statement of Profit and Loss. The Company recognizes termination benefits at the earlier of the following dates.
(a) When the Company can no longer withdraw the offer of those benefits; or
(b) When the Company recognizes costs for a restructuring that are within the scope of Ind AS 37 and involves the payment of termination benefits.
Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.
Compensated absences
Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement at the year end.
Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the year end are treated as other long term employee benefits. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the statement of profit and loss in the year in which they arise.
Leaves under define benefit plans can be encashed only on discontinuation of service by employee.
The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of unutilized leave balances is provided at the end of year and charged to the statement of profit and loss.
m) INCOME TAXES
Income tax expense for the year comprises of current tax and deferred tax. Tax is recognized in the Statement of Profit and Loss except to the extent it relates to a business combination or to an item which is recognized directly in equity or in other comprehensive income. In which case, the tax is also recognized in other comprehensive income or equity.
Current Tax
Current tax is the expected tax payable/receivable on the taxable income/loss for the year using applicable tax rates and the provisions of the Income Tax Act, 1961 at the Balance Sheet date, and any adjustment to taxes in respect of previous years.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis.
Deferred Tax
Deferred tax is recognized in respect of temporary differences between the carrying amount of assets
and liabilities for financial reporting purposes and the corresponding amounts used for tax base purposes.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.
n) FOREIGN CURRENCIES
I) FUNCTIONAL AND PRESENTATION CURRENCY I tems included in the financial statements 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 the Company''s functional and presentation currency.
II) TRANSACTIONS AND BALANCES
On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction. Gains/Losses arising out of fluctuation in foreign exchange rate between the transaction date and settlement date are recognised in the Statement of Profit and Loss.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date and the exchange differences are recognised in the Statement of Profit and Loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.
The gain or loss arising on translation of nonmonetary items measured at fair value is treated
in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).
o) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise balance with banks, cash on hand, cheques/draft on hand and short-term deposits net of bank overdraft with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purposes of the cash flow statement, cash and cash equivalents include balance with banks, cash on hand, cheques/draft on hand and short-term deposits net of bank overdraft.
p) EARNINGS PER SHARE
Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company 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 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.
q) LEASES
The Company as a Lessee
The Company''s lease asset classes primarily consist of leases for Buildings. The Company assesses whether a contract is or contains a lease, at inception of contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
i. The contract involves the use of an identified asset.
ii. The Company has substantially all of the economic benefits from use of the asset through the period of the lease and
iii. The Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROUâ) and a corresponding leases liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short term leases) and leases
of low value assets. For these short term and leases of low value assets, the Company recognizes the lease payments as on operating expense on a straight-line basis over the term of the lease.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straightline basis over the shorter of the lease term or useful life of the underlying asset.
The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made.
A lease liability is remeasured upon the occurrences of certain events such as a change in the lease term or a change in the lease term or a change in an index or rate used to determine lease payments. The remeasurement normally also adjusts the leased assets.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payment have been classified as financing cash flows.
The Company as a Lessor
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
r) DIVIDEND DISTRIBUTIONS
The Company recognizes a liability to make the payment of dividend to owners of equity, when the distribution is authorized, and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
1D: MATERIAL ACCOUNTING JUDGEMENT, ESTIMATES AND ASSUMPTION
The preparation of financial statements in conformity with Ind AS requires the Management to make estimate and assumptions that affect the reported amount of assets and liabilities as at the Balance Sheet date, reported amount of revenue and expenses for the year and disclosures of contingent liabilities as at the Balance
Sheet date. The estimates and assumptions used in the accompanying financial statements are based upon the Management''s evaluation of the relevant facts and circumstances as at the date of the financial statements. Actual results could differ from these estimates.
Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future years. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates, if any, are recognized in the year in which the estimates are revised and in any future years affected.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the year end date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
(I) DEFINED BENEFIT PLANS (GRATUITY BENEFITS AND COMPENSATED ABSENCES)
The cost of the defined benefit plans such as gratuity and compensated absences are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its longterm nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each year end.
The principal assumptions are the discount and salary growth rate. The discount rate is based upon the market yields available on government bonds at the accounting date with a term that matches that of liabilities. Salary increase rate takes into account of inflation, seniority, promotion and other relevant factors on long term basis.
(II) USEFUL LIVES OF PROPERTY, PLANT AND
EQUIPMENT (PPE) AND INTANGIBLE ASSETS
Property, plant and equipment/intangible assets are depreciated/amortised over their estimated useful life, after taking into account estimated residual value. Management reviews the estimated useful life and residual values of the assets annually in order to determine the amount of Depreciation/ amortisation to be recorded during any reporting
period. The useful life and residual values are based on the company''s historical experience with similar assets and take into account anticipated technological changes, expected level of usage and product life-cycle. The depreciation/amortisation for future periods is revised if there are significant changes from previous estimates.
(III) LEGAL & TAX MATTERS AND CONTINGENT LIABILITIES
Various litigations and claims related to Company are assessed primarily by the management and also in certain cases by with the support of the relevant external advice. Disclosures related to such provision for legal cases, as well as contingent liabilities, require judgement and estimations.
(IV) RECOGNITION OF PROPERTY, PLANT AND EQUIPMENT (PPE) AND CAPITAL WORK-INPROGRESS
Significant level of judgement is involved in assessing whether the expenditure incurred meets the recognition criteria under Ind AS 16, Property and equipment. Also estimates are involved in determining the cost attributable to bringing the
assets to the location and condition necessary for it to be capable of operating in the manner intended by the management.
(V) IMPAIRMENT OF GOODWILL
Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires the management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than the carrying amount, a material impairment loss may arise.
1E): RECENT ACCOUNTING PRONOUNCEMENTS
Ministry of Corporate Affairs ("MCAâ) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31st March, 2025, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
Mar 31, 2024
1C: MATERIAL ACCOUNTING POLICIES
A) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at acquisition cost net of recoverable taxes, trade discount and rebates less accumulated depreciation and accumulated impairment losses, if any. Freehold land is carried at historical cost. Such cost also includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.
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.
All other repairs and maintenance costs are charged to the Statement of Profit and Loss during the period in which they are incurred.
Gains or losses arising on retirement or disposal of property, plant and equipment are recognized in the Statement of Profit and Loss.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as "Capital work-in-progressâ. Capital work-inprogress includes cost of property, plant and equipment under installation / under development as at the balance sheet date. Capital work in progress is stated at cost, net of accumulated impairment loss, if any.
Depreciation is calculated as per the estimated useful life of assets prescribed by the Schedule II of the Company Act 2013 using straight line method. The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate with exception to the following:
⢠Depreciation on property, plant and equipment of Maleic Anhydride acquired in earlier year from Mysore Petro Chemicals Limited is provided based on the useful life determined by the valuer which is as follows:
⢠Catalyst used in the production process is amortized over a period of 3 years against useful life of 8 to 20 years as per schedule II, so as to expense out the cost over its estimated useful life based on a technical evaluation.
Freehold land is not required to amortize and leasehold land is amortized over the period of lease.
Depreciation on addition to property plant and equipment is provided on pro-rata basis from the date of acquisition. Depreciation on sale/deduction from property plant and equipment is provided up to the date preceding the date of sale, deduction as the case may be.
B) INVESTMENT PROPERTY
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment properties are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in profit or loss as incurred.
The Company depreciates building component of investment property over 30 years from the date of original purchase.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer applying a valuation model recommended by the International Valuation Standards Committee.
Investment properties are derecognized either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between
the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of derecognition. In determining the amount of consideration from the derecognition of investment properties the Company considers the effects of variable consideration, existence of a significant financing component, non-cash consideration, and consideration payable to the buyer (if any).
C) INTANGIBLE ASSETS
Separately purchased intangible assets are initially measured at cost. Intangible assets acquired in a business combination are recognized at fair value at the acquisition date. Subsequently, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortized on a straight-line basis over the period of their expected useful lives.
Intangible assets comprising of Software are amortised on a straight line basis over its estimated useful life or maximum 5 years, whichever is less.
The amortization period and the amortization method for finite-life intangible assets is reviewed at each financial year end and adjusted prospectively, if appropriate.
D) GOODWILL
Goodwill represents the cost of acquired business as established at the date of acquisition of the business in excess of the acquirer''s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities less accumulated impairment losses, if any.
Goodwill is not amortized but are tested for impairment annually.
E) 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 to its recoverable amount. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognized in the Statement of Profit and Loss.
F) INVENTORIES Basis of Valuation:
Inventories are valued at lower of cost and net realizable value after providing cost of obsolescence, if any. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. The comparison of cost and net realizable value is made on an item-byitem basis.
Method of Valuation:
Cost of raw materials has been determined by using moving weighted average cost method and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
Cost of finished goods and work-in-progress includes direct labour and an appropriate share of fixed and variable production overheads.
Fixed production overheads are allocated on the basis of normal capacity of production facilities. Cost is determined on moving weighted average basis.
Cost of traded goods has been determined by using moving weighted average cost method and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Provision of obsolescence on inventories is considered on the basis of management''s estimate based on demand and market of the inventories.
G) FAIR VALUE MEASUREMENT
The Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
i In the principal market for the asset or liability, or
ii In the absence of a principal market, in the most advantageous market for the asset or liability accessible to the Company.
H) BORROWING COST
Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of the respective asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time (generally over twelve months) to get ready for its intended use or sale.
Borrowing costs consist of interest and other costs that a Company incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing cost.
All other borrowing costs are recognized as expense in the period in which they occur.
I) FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to a financial asset of one Entity and a financial liability or equity instrument of another entity.
Financial Assets:
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument.
On initial recognition, a financial asset is recognized at fair value. In case of Financial assets which are recognized at fair value through profit and loss (FVTPL), its transaction cost are recognized in the statement of profit and loss. In other cases, the transaction cost are attributed to the acquisition value of the financial asset.
Financial assets are subsequently classified as measured at:
Amortised cost:
Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortised cost using the effective interest rate (''EIR'') method less impairment, if any. The amortization of EIR and loss arising from impairment, if any is recognized in the Statement of Profit and Loss.
Fair value through profit and loss (FVTPL):
A financial asset not classified as either amortised cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, is recognised in the Statement of Profit and Loss.
Trade Receivables and Loans:
Trade receivables are held at realizable value net of any expected credit losses.
De-recognition:
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
Financial Liabilities:
Initial recognition and measurement
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the fair value. In case of trade payables, they are initially recognized at fair value and subsequently, these
liabilities are held at amortized cost, using the effective interest method.
Subsequent measurement
Financial liabilities are subsequently measured at amortized cost using the EIR method.
De-recognition
A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.
Mar 31, 2023
1B: SIGNIFICANT ACCOUNTING POLICIES
A) BASIS OF PREPARATION
i) Statement of compliances with Ind -AS
These standalone financial statements have been prepared in accordance with Indian Accounting Standards (âInd ASâ) notified under section 133 of the Companies Act 2013 (âthe Actâ), read with the Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act.
The standalone financial statements have been prepared in accordance with Indian accounting Standards (Ind AS) under the historical cost convention on the accrual basis and except for certain financial instruments and defined benefit plans which are measured at fair value and amortised cost. Accounting policies have been consistently applied except where a newly issued Indian accounting standard is initially adopted or a revision to an existing Indian accounting standard requires a change in the accounting policy hitherto in use. The Standalone Financial Statements are presented in lakhs or decimal thereof unless otherwise specified.
The Company has prepared the financial statements on the basis that it will continue to operate as a going concern.
ii) Classification between Current and Non-current
The Company presents assets and liabilities in the balance sheet based on current/non-current classification.
An asset is treated as current when it is:
i. Expected to be realized or intended to be sold or consumed in normal operating cycle.
ii. Held primarily for the purpose of trading.
iii. Expected to be realized within twelve months after the reporting period, or
iv. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as noncurrent.
A liability is current when:
i. It is expected to be settled in normal operating cycle.
ii. It is held primarily for the purpose of trading.
iii. It is due to be settled within twelve months after the reporting period, or
iv. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The terms of the liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
B) PROPERTY. PLANT AND EQUIPMENT
Property, plant and equipment is stated at acquisition cost net of recoverable taxes, trade discount and rebates less accumulated depreciation and accumulated impairment losses, if any. Freehold land is carried at historical cost.
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.
All other repairs and maintenance costs are charged to the Statement of Profit and Loss during the period in which they are incurred.
Gains or losses arising on retirement or disposal of property, plant and equipment are recognized in the Statement of Profit and Loss.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as âCapital work-in-progressâ.
Depreciation is calculated as per the estimated useful life of assets prescribed by the Schedule II of the Company Act 2013 using straight line method. The residual values, useful lives and methods
of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate with exception to the following:
⢠Depreciation on property, plant and equipment of Maleic Anhydride acquired in earlier year from Mysore Petro Chemicals Limited is provided based on the useful life determined by the valuer which is as follows:
⢠Catalyst used in the production process is amortized over a period of 3 years against useful life of 8 to 20 years as per schedule II, so as to expense out the cost over its estimated useful life based on a technical evaluation.
Freehold land is not required to amortize and leasehold land is amortized over the period of lease.
Depreciation on addition to property plant and equipment is provided on prorata basis from the date of acquisition. Depreciation on sale/deduction from property plant and equipment is provided up to the date preceding the date of sale, deductionas the case may be.
C) INVESTMENT PROPERTY
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition,
investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment properties are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in profit or loss as incurred.
The Company depreciates building component of investment property over 30 years from the date of original purchase.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in the notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer applying a valuation model recommended by the International Valuation Standards Committee.
Investment properties are derecognized either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of derecognition. In determining the amount of consideration from the derecognition of investment properties the Company considers the effects of variable consideration, existence of a significant financing component, noncash consideration, and consideration payable to the buyer (if any).
D) INTANGIBLE ASSETS
Separately purchased intangible assets are initially measured at cost. Intangible assets acquired in a business combination are recognized at fair value at the acquisition date. Subsequently, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortized on a straight-line basis over the period of their expected useful lives.
Intangible assets comprising of Software are amortised on a straight line basis over its estimated useful life or maximum 5 years, whichever is less.
The amortization period and the amortization method for finite-life intangible assets is reviewed at each financial year end and adjusted prospectively, if appropriate.
E) GOODWILL
Goodwill represents the cost of acquired business as established at the date of acquisition of the business in excess of the acquirer''s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities less accumulated impairment losses, if any.
Goodwill is not amortized but are tested for impairment annually.
F) 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 to its recoverable amount. On disposal of investments in subsidiaries and joint
venture, the difference between net disposal proceeds and the carrying amounts are recognized in the Statement of Profit and Loss.
G) INVENTORIES
Inventories are valued at lower of cost and net realizable value after providing cost of obsolescence, if any. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. The comparison of cost and net realizable value is made on an item-by-item basis.
Cost of raw materials has been determined by using moving weighted average cost method and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
Cost of finished goods and work-inprogress includes direct labour and an appropriate share of fixed and variable production overheads and excise duty as applicable.
Fixed production overheads are allocated on the basis of normal capacity of production facilities. Cost is determined on moving weighted average basis.
Cost of traded goods has been determined by using moving weighted average cost method and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Provision of obsolescence on inventories is considered on the basis ofmanagement''s estimate based on demand and market of the inventories.
H) FAIR VALUE MEASUREMENT
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
? In the principal market for the asset or liability, or
? In the absence of a principal market, in the most advantageous market for the asset or liability accessible to the Company.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observableinputs and minimizing the use of unobservable inputs. The Company''s management determines the policies and procedures for fair value measurement such as derivative instrument. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
? Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
? Level 2 â Valuation techniques for
which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable.
? Level 3 â Valuation techniques for
which the lowest level input that is significant to the fair value
measurement is unobservable.
I) BORROWING COST
Borrowing costs that are attributable to the acquisition, construction or
production of a qualifying asset are capitalized as part of the cost of the asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset that necessarily requires a substantial period of time (generally over twelve months) to get ready for its intended use or sale.
All other borrowing costs are expensed in the period in which they occur.
Borrowing costs consist of interest and other costs that a Company incurs in connection with the borrowing of funds.
J) FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to a financial asset of one Entity and a financial liability or equity instrument of another entity.
Financial Assets:
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument.
On initial recognition, a financial asset is recognized at fair value. In case of Financial assets which are recognized at fair value through profit and loss (FVTPL), its transaction cost are recognized in the statement of profit and loss. In other cases, the transaction cost are attributed to the acquisition value of the financial asset.
Financial assets are subsequently classified as measured at:-
Amortised cost:
Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows thatare solely payments of principal and interest, are subsequently measured at amortised cost using the effective interest rate (''EIR'') method less impairment, if any. The amortization of EIR and loss arising from impairment, if any is recognized in the Statement of Profit and Loss.
Fair value through profit and loss (FVTPL):
A financial asset not classified as either amortised cost or FVOCI, is classified as FVTPL. Such financial assets are measured
at fair value with all changes in fair value, including interest income and dividend income if any, is recognised in the Statement of Profit and Loss.
Fair value through other comprehensive income (FVOCI):
Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognized in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognized in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognized in OCI is reclassified from the equity to the Statement of Profit and Loss.
Financial assets are not reclassified subsequent to their recognition, except if and in the period the Company changes its business model for managing financial assets.
Trade Receivables and Loans:
Trade receivables are held at realizable value net of any expected credit losses.
Debt Instruments:
Debt instruments are subsequently measured at amortized cost, fair value through other comprehensive income (âFVOCIâ) or fair value through profit or loss (''FVTPL'') till derecognition on the basis of (i) the entity''s business model for managing the financial assets and (ii) the contractual cash flow characteristics of the financial asset.
i. Measured at amortized cost:
Financial assets that are held within a
business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortized cost using the effective interest rate (''EIR'') method less impairment, if any. The amortization of EIR and loss arising from impairment, if any is recognized in the Statement of Profit and Loss.
ii. Measured at fair value through other comprehensive income:
Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognized in the other comprehensive income (OCI). Interest income measure dusing the EIR method and impairment losses, if any are recognized in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognized in OCI is reclassified from the other equity to ''other incomeâ in the Statement of Profit and Loss.
iii. Cash and Cash Equivalents: Cash and cash equivalents are short-term (three months or less from the date of acquisition), highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value.
iv. Measured at fair value through profit or loss: A financial asset not classified as either amortized cost or FVOCI, is classified as FVTPL. Such
financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognized as ''other incomeâ in the Statement of Profit and Loss.
Equity Instruments:
All investments in equity instruments classified under financial assets are initially measured at fair value. The Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL.
The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument is recognized as other income in the Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognized in OCI. Amounts recognized in OCI are not subsequently reclassified to the Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognized as ''other incomeâ in the Statement of Profit and Loss.
Derecognition
The Company derecognizes a financial asset when the contractual rights to the cashflows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.
Impairment of Financial Asset
Expected credit losses are recognized for all financial assets subsequent to initial recognition other than financials assets in FVTPL category.
For financial assets other than trade receivables, as per Ind AS 109, the Company recognizes 12 month expected credit losses for all originated or acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial recognition. The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset increases significantly since its initial recognition. The Companyâs trade receivables do not contain significant financing component. In determining the allowances for doubtful trade receivables, the company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The impairment losses and reversals are recognized in Statement of Profit and Loss.
Financial Liabilities:
Initial recognition and measurement
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the fair value. In case of trade payables, they are initially recognized at fair value and subsequently, these liabilities are held at amortized cost, using the effective interest method.
Subsequent measurement
Financial liabilities are subsequently measured at amortized cost using the EIR method.
Derecognition
A financial liability is derecognized when the obligation specified in the contract is discharged, cancelled or expires.
Mar 31, 2022
(A) CORPORATE INFORMATION
I G Petrochemicals Limited having CIN L51496GA1988PLC000915, is engaged in the manufacturing of Phthalic Anhydride, Maleic Anhydride & Diethyl Phthalate. The Company is a public limited company incorporated in India with its registered office at T-10, 3rd Floor, Jairam Complex, Mala, Neugi Nagar, Panaji, Goa - 403 001.
These standalone financial statements have been prepared in accordance with lndian Accounting Standards (âInd ASâ) notified under Section 133 of the Companies Act, 2013 (âthe Actâ), read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.
The financial statements have been prepared in accordance with Ind AS under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values, and on the basis of accounting principle of a going concern in accordance with generally accepted accounting principles (GAAP). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The financial statements are presented in lakhs or decimal thereof unless otherwise specified.
Items included in the financial statements of Company are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ). Indian rupee is the functional currency of the Company.
All amounts are rounded to two decimal places to the nearest lakh, unless otherwise stated.
(C) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at acquisition cost net of recoverable taxes, trade discount and rebates less accumulated depreciation and accumulated impairment losses, if any.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
All other repairs and maintenance costs are charged to the Statement of Profit and Loss during the period in which they are incurred.
Gains or losses arising on retirement or disposal of property, plant and equipment are recognised in the Statement of Profit and Loss.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as âCapital work-inprogressâ.
Depreciation is calculated as per the estimated useful life of assets prescribed by the Schedule II of the Act.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate with exception to the following:
¦ Depreciation on property, plant and equipment of Maleic Anhydride acquired in earlier year from Mysore Petro Chemicals Limited is provided based on the useful
life determined by the valuer which is as follows:
|
Asset |
Useful life as per valuer |
Useful life as per Schedule II |
|
Building |
20 to 30 years |
30 years |
|
Furniture & fixtures |
5 years |
10 years |
|
Vehicles |
5 to 6 years |
8 years |
|
Plant & Equipment |
20 years |
8 to 20 years |
|
Road |
10 years |
10 years |
Catalyst used in the production process is amortized over a period of 3 years against useful life of 8 to 20 years as per Schedule II, so as to expense out the cost over its estimated useful life based on a technical evaluation.
Freehold land is not required to amortize and leasehold land is amortized over the period of lease.
(D) INTANGIBLE ASSETS AND GOODWILL
Separately purchased intangible assets are initially measured at cost. Intangible assets acquired in a business combination are recognised at fair value at the acquisition date. Subsequently, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortised on a straight-line basis over the period of their expected useful lives.
Intangible assets comprising of Software are amortised on a straight line basis over its estimated useful life or maximum 5 years, whichever is less.
The amortisation period and the amortisation method for finite-life intangible assets is reviewed at each financial year end and adjusted prospectively, if appropriate.
Goodwill represents the cost of acquired business as established at the date of acquisition of the business in excess of the acquirerâs interest in the net fair value of the identifiable assets, liabilities and contingent liabilities less
accumulated impairment losses, if any.
Goodwill is not amortised but are tested for impairment annually.
(E) INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURE
Investments in subsidiaries and joint venture 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 to its recoverable amount. On disposal of investments in subsidiaries and joint venture, the difference between net disposal proceeds and the carrying amounts are recognized in the Statement of Profit and Loss.
Insurance and other claims are accounted as and when unconditionally admitted by the appropriate authorities. Interest income is recognized on accrual basis and the dividend income on investment is recognized when the right to receive dividend is established .
Inventories are valued at the lower of cost or net realisable value. Cost is computed on a weighted average basis. Cost of finished goods and work-in-progress include all costs of purchases, conversion costs and other costs incurred in bringing the inventories to their present location and condition. The net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.
Borrowing costs include exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost, except in case of foreign currency borrowing which existed on the date of transition i.e. 1st April, 2016 from previous GAAP to Ind AS wherein Company continues to exercise the option in terms of para 46A inserted in the AS-11 - The Effects of Change in Foreign Exchange
Rates. Consequently, the loss/gain of foreign exchange on translation of foreign exchange borrowing continued to be capitalized.
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
(I) FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial Assets
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument.
On initial recognition, a financial asset is recognised at fair value. In case of financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction cost are recognized in the statement of profit and loss. In other cases, the transaction cost are attributed to the acquisition value of the financial asset.
Financial assets are subsequently classified as measured at:
Amortised cost
Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortised cost using the effective interest rate (âEIRâ) method less impairment, if any. The amortization of EIR and loss arising from impairment, if any is recognized in the Statement of Profit and Loss.
Fair value through profit and loss (FVTPL)
A financial asset not classified as either
amortised cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, is recognised in the Statement of Profit and Loss.
Fair value through other comprehensive income (FVOCI)
Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income.
Fair value movements are recognized in the other comprehensive income (OCI).
Interest income measured using the EIR method and impairment losses, if any are recognized in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognized in OCI is reclassified from the equity to the Statement of Profit and Loss.
Financial assets are not reclassified subsequent to their recognition, except if and in the period the Company changes its business model for managing financial assets.
Trade Receivables and Loans
Trade receivables are held at realisable value net of any expected credit losses.
Debt Instruments
Debt instruments are subsequently measured at amortised cost, fair value through other comprehensive income (âFVOCIâ) or fair value through profit or loss (âFVTPLâ) till derecognition on the basis of (i) the entityâs business model for managing the financial assets and (ii) the contractual cash flow characteristics of the financial asset.
(a) Measured at amortised cost
Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that
are solely payments of principal and interest, are subsequently measured at amortised cost using the effective interest rate (âEIRâ) method less impairment, if any. The amortisation of EIR and loss arising from impairment, if any is recognised in the Statement of Profit and Loss.
(b) Measured at fair value through other comprehensive income
Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognized in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the other equity to âother incomeâ in the Statement of Profit and Loss.
(c) Cash and Cash Equivalents
Cash and cash equivalents are short-term (three months or less from the date of acquisition), highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value.
(d) Measured at fair value through profit or loss
A financial asset not classified as either amortised cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised as âother incomeâ in the Statement of Profit and Loss.
Equity Instruments
All investments in equity instruments classified under financial assets are initially measured at fair value. The Company may, on initial recognition, irrevocably elect to measure the
same either at FVOCI or FVTPL.
The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument is recognised as other income in the Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognised in OCI. Amounts recognised in OCI are not subsequently reclassified to the Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised as âother incomeâ in the Statement of Profit and Loss.
Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.
Impairment of Financial Asset
Expected credit losses are recognized for all financial assets subsequent to initial recognition other than financials assets in FVTPL category.
For financial assets other than trade receivables, as per Ind AS 109, the Company recognises 12 month expected credit losses for all originated or acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial recognition. The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset increases significantly since its initial recognition. The Companyâs trade receivables do not contain significant financing component. In determining the allowances for doubtful trade receivables, the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix.
The impairment losses and reversals are recognised in Statement of Profit and Loss.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions ofthe instrument. Financial liabilities are initially measured at the fair value. In case of trade payables, they are initially recognised at fair value and subsequently, these liabilities are held at amortised cost, using the effective interest method.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using the EIR method.
Derecognition
A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires.
(J) PROVISIONS AND CONTINGENT LIABILITIES
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.
If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or nonoccurrence of one or more uncertain future
events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The contingent liability is not recognized in books of account but its existence is disclosed in financial statements.
(K) REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Ind AS-115 âRevenue from contracts with Customersâ provides a control-based revenue recognition model and provides a five step application approach to be followed for revenue recognition .
A) Identify the contracts with a customer .
B) Identify the performance obligations.
C) Determine the transaction price;
D) Allocate the transaction price to the performance obligations,
E) Recognise revenue when or as an entity satisfies performance obligation.
Export incentive
Income from export incentives such as duty drawback and MEIS are recognised on accrual basis.
Service Contract
Income from services rendered is recognised based on agreements/ arrangements with the customers as the service is performed
in proportion to the stage of completion of the transaction at the reporting date and the amount of revenue can be measured reliably.
Interest income is recognized on accrual basis. Dividend Income
Dividend income on investments is recognised when the right to receive dividend is established.
Insurance Claims
Insurance claim receivable is accounted for when amount of claim is finalized by insurance company.
Defined contribution plans
Contributions to defined contribution schemes such as employeesâ state insurance, labour welfare fund, employee pension scheme etc. are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees.
Companyâs provident fund contribution, except of certain employees, is made to an irrevocable trust set up by the Company and contribution to pension fund deposited with the Regional Provident Fund Commissioner and charged as an expense to the Statement of Profit and Loss. The above benefits are classified as Defined Contribution Schemes as the Company has no further defined obligations beyond the monthly contributions.
In respect of certain employee, provident fund contributions are made to a trust administered by the Company. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. The liability in respect of the shortfall of interest earnings of the Fund is determined on the basis of an actuarial valuation. The
Company also provides for retirement/post-retirement benefits in the form of gratuity and leave pay.
Defined benefit plans
For defined benefit plans, the amount recognised as âEmployee benefit expensesâ in the Statement of Profit and Loss is the cost of accruing employee benefits promised to employees over the year and the costs of individual events such as past/future service benefit changes and settlements (such events are recognised immediately in the Statement of Profit and Loss). The amount of net interest expense calculated by applying the liability discount rate to the net defined benefit liability or asset is charged or credited to âEmployee benefit expenseâ in the Statement of Profit and Loss. Any differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised immediately in âOther comprehensive incomeâ and subsequently not reclassified to the Statement of Profit and Loss.
The defined benefit plan surplus or deficit on the Balance Sheet comprises the total for each plan of the fair value of plan assets less the present value of the defined benefit liabilities (using a discount rate by reference to market yields on government bonds at the end of the reporting period).
All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Companyâs net obligation into current and non-current is as per the actuarial valuation report.
Termination benefits
Termination benefits, in the nature of voluntary retirement benefits or termination benefits arising from restructuring, are recognised in
the Statement of Profit and Loss. The Company recognises termination benefits at the earlier of the following dates:
(a) when the Company can no longer withdraw the offer of those benefits; or
(b) when the Company recognises costs for a restructuring that is within the scope of Ind AS-37 and involves the payment of termination benefits.
Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value
The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of unutilized leave balances is provided at the end of year and charged to the statement of profit and loss.
(M) IMPAIRMENT OF NON FINANCIAL ASSETS:
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset. unless the asset does not generate cash inflows that are largely independent of those from other assets.
If such assets are considered to be impaired, the impairment to be recognized in the Statement of Profit and Loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this
amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
Income tax expense for the year comprises of current tax and deferred tax. Tax is recognised in the Statement of Profit and Loss except to the extent it relates to a business combination or to an item which is recognised directly in equity or in other comprehensive income. In which case, the tax is also recognised in other comprehensive income or equity.
Current tax is the expected tax payable/ receivable on the taxable income/ loss for the year using applicable tax rates at the Balance Sheet date, and any adjustment to taxes in respect of previous years..
Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding amounts used for tax base purposes.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future
taxable profits will allow the deferred tax asset to be recovered.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis.
Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.
The financial statements are presented in INR (''), the functional currency of the Company. In preparing the financial statement, transactions in currencies other than the entityâs functional currencies (foreign currencies) are recognized at the rates of exchange prevailing at the dates of transactions. At the end of each reporting period, monitory items denominated in foreign currencies are restated at the rates prevailing at that date. Non monitory items that are measured in terms of historical cost in a foreign currency are not restated.
Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except for:
Exchange differences on translations or settlement of long term foreign currency monetary items in respect of loans borrowed before 1st April, 2016 at rates different from those at which they were initially recorded or reported in the previous financial statements, in so far as it relates to acquisition of depreciate assets, are adjusted to the cost of the assets and depreciated over remaining useful life of such assets. In other cases of long term foreign currency monetary items, these are accumulated in âForeign currency monetary item translation differenceâ by recognition as income or expense in each period over the balance term of such
items till settlement occurs but not beyond 31st March, 2022.
Exchange difference on foreign currency borrowing relating to assets under construction for future productive use are included in the cost of those assets to the extent they are regarded as an adjustment to interest cost.
Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company 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 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.
Business combinations are accounted for using the acquisition accounting method as at the date of the acquisition, which is the date at which control is transferred to the Company. The consideration transferred in the acquisition and the identifiable assets acquired and liabilities assumed are recognised at fair values on their acquisition date. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. The Company recognises any non-controlling interest in the acquired entity on an acquisition-
by-acquisition basis either at fair value or at the non-controlling interestâs proportionate share of the acquired entityâs net identifiable assets. Consideration transferred does not include amounts related to settlement of pre-existing relationships. Such amounts are recognised in the Statement of Profit and Loss.
Transaction costs are expensed as incurred, other than those incurred in relation to the issue of debt or equity securities. Any contingent consideration payable is measured at fair value at the acquisition date. Subsequent changes in the fair value of contingent consideration are recognised in the Statement of Profit and Loss.
The Company has adopted Ind AS-116 - Leases effective 1st April, 2019 using the modified retrospective method. The Company has applied the standard to its leases with the cumulative impact recognized on the date of initial application (1st April, 2019). Accordingly previous period information has not been restated.
The Companyâs leased asset classes primarily consist of leases for Buildings. The Company assesses whether a contract is or contains a lease, at inception of contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether :
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset (âROUâ) and a corresponding leases liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short term leases) and leases of low value assets. For these short term and leases of low value assets, the Company recognizes the lease payments as on operating expense on a straight-line basis over the term of the lease.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term or useful life of the underlying asset.
The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made.
A lease liability is remeasured upon the occurrences of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The remeasurement normally also adjusts the leased assets.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payment have been classified as financing cash flows.
Mar 31, 2018
Note a : (a) general information
I G Petrochemicals Limited (âthe Companyâ) is a public limited Company incorporated in India with its registered office at T-10, 3rd Floor, Jairam Complex, Mala, Neugi Nagar, Panaji, Goa 403001.
(B) basis of preparation
In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (âInd ASâ), notified under the Companies (Indian Accounting Standards) Rules, 2015, with effect from 1st April, 2017.
The transition from the previous GAAP to Ind AS has been accounted for, in accordance with Ind AS 101 âFirst Time Adoption of Indian Accounting Standardsâ, with 1st April, 2016 as the transition date.
The financial statements have been prepared under the historical cost convention, with the exception of certain assets and liabilities that are required to be carried at fair value by Ind-AS.
(c) property, plant and equipment
Property, plant and equipment is stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Profit and Loss during the period in which they are incurred.
Gains or losses arising on retirement or disposal of property, plant and equipment are recognised in the Statement of Profit and Loss.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as âCapital work-in-progressâ.
Depreciation is provided on a pro-rata basis on the straight line method based on estimated useful life prescribed under Schedule II to the Companies Act, 2013 with the exception of the following:
- Depreciation on property, plant and equipment acquired from, Mysore Petro Chemicals Limited is provided based on the useful life determined by the valuer which is as follows:
Catalyst used in the production process is amortized over a period of 3 years against useful life of 8 to 20 years as per schedule II.
Freehold land is not depreciated.
Leasehold land is amortized over the period of lease.
The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year end and adjusted prospectively, if appropriate.
Upon first-time adoption of Ind AS, the Company has elected to measure all its property, plant and equipment at the Previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS i.e., 1st April, 2016.
(D) intangible assets
Separately purchased intangible assets are initially measured at cost. Intangible assets acquired in a business combination are recognised at fair value at the acquisition date. Subsequently, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either finite or indefinite. Finite-life intangible assets are amortised on a straight-line basis over the period of their expected useful lives. Estimated useful lives by major class of finite-life intangible assets are as follows:
Computer software : 4 years
The amortisation period and the amortisation method for finite-life intangible assets is reviewed at each financial year end and adjusted prospectively, if appropriate.
Goodwill is initially recognised based on the accounting policy for business combinations. These assets are not amortised but are tested for impairment annually.
Upon first-time adoption of Ind AS, the Company has elected to measure its intangible assets at the Previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS i.e. 1st April, 2016.
(E) investments in subsidiaries and joint vENTuRE
Investments in subsidiaries and joint venture 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 to its recoverable amount. On disposal of investments in subsidiaries and joint venture, the difference between net disposal proceeds and the carrying amounts are recognized in the Statement of Profit and Loss.
Upon first-time adoption of Ind AS, the Company has elected to measure its investments in subsidiaries and joint ventures at the Previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS i.e. 1st April, 2016.
(F) inventories
I nventories are valued at the lower of cost and net realisable value. Cost is computed on a weighted average basis. Cost of finished goods and work-in-progress include all costs of purchases, conversion costs and other costs incurred in bringing the inventories to their present location and condition. The net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and estimated costs necessary to make the sale.
(G ) cash and cash equivalents
Cash and cash equivalents are short-term (three months or less from the date of acquisition), highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value.
(H) financial instruments
Financial Assets:
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument.
On initial recognition, a financial asset is recognised at fair value, in case of Financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction cost are recognized in the statement of profit and loss. In other cases, the transaction cost are attributed to the acquisition value of the financial asset.
Financial assets are subsequently classified as measured at
- amortized cost
- fair value through profit and loss (FVTPL)
- fair value through other comprehensive income (FVOCI).
Financial assets are not reclassified subsequent to their recognition, except if and in the period the Company changes its business model for managing financial assets.
Trade Receivables and Loans:
Trade receivables are held at amortised cost, using the effective interest rate (EIR) method net of any expected credit losses. The EIR is the rate that discounts estimated future cash income through the expected life of financial instrument.
Debt instruments:
Debt instruments are initially measured at amortised cost, fair value through other comprehensive income (âFVOCIâ) or fair value through profit or loss (âFVTPLâ) till derecognition on the basis of (i) the entityâs business model for managing the financial assets and (ii) the contractual cash flow characteristics of the financial asset.
(a) Measured at amortised cost: Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortised cost using the effective interest rate (âEIRâ) method less impairment, if any. The amortisation of EIR and loss arising from impairment, if any is recognised in the Statement of Profit and Loss.
(b) Measured at fair value through other comprehensive income: Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognized in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to âother incomeâ in the Statement of Profit and Loss.
(c) Measured at fair value through profit or loss: A financial asset not classified as either amortised cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised as âother incomeâ in the Statement of Profit and Loss.
Equity Instruments:
All investments in equity instruments classified under financial assets are initially measured at fair value , the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL.
The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument is recognised as other income in the Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognised in OCI. Amounts recognised in OCI are not subsequently reclassified to the Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised as âother incomeâ in the Statement of Profit and Loss.
Derecognition
The Company derecognises a financialasset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.
Impairment of Financial Asset
Expected credit losses are recognized for all financial assets subsequent to initial recognition other than financials assets in FVTPL category.
For financial assets other than trade receivables, as per Ind AS 109, the Company recognises 12 month expected credit losses for all originated or acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial recognition. The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset increases significantly since its initial recognition. The Companyâs trade receivables do not contain significant financing component and loss allowance on trade receivables is measured at an amount equal to life time expected losses i.e. expected cash shortfall.
The impairment losses and reversals are recognised in Statement of Profit and Loss.
Financial Liabilities:
Initial recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the amortised cost unless at initial recognition, they are classified as fair value through profit and loss. In case of trade payables, they are initially recognised at fair value and subsequently, these liabilities are held at amortised cost, using the effective interest method.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using the EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.
Derecognition
A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires.
(I) provisions and contingent liabilities
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.
If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the
existence of which willbe 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 the obligation or a reliable estimate of the amount cannot be made.
(J) revenue recognition
Revenue from sale of goods is recognised when all the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract. There is no continuing managerial involvement, with the goods and the amount of revenue can be measured reliably. The Company retains no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. Revenue is measured at fair value of the consideration received or receivable, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government which are levied on sales such as value added tax.
Income from export incentives such as duty drawback and premium on sale of import licenses are recognised on accrual basis.
Income from services rendered is recognised based on agreements/ arrangements with the customers as the service is performed in proportion to the stage of completion of the transaction at the reporting date and the amount of revenue can be measured reliably.
Interest income is recognized using the effective interest rate (EIR) method.
Dividend income on investments is recognised when the right to receive dividend is established.
(K) expenditure
Expenses are accounted on accrual basis.
(L) employee benefits: DEFINED contribution plans
Contributions to defined contribution schemes such as employeesâ state insurance, labour welfare fund, employee pension scheme, etc. are charged as an expense based on the amount of contribution required to be made as and when services are rendered by the employees.
Companyâs provident fund contribution, in respect of certain employees, is made to an irrevocable trust set up by the company and contribution to pension fund deposited with the Regional Provident Fund Commissioner and charged as an expense to the Statement of Profit and Loss. The above benefits are classified as Defined Contribution Schemes as the Company has no further defined obligations beyond the monthly contributions.
Defined benefit plans
In respect of certain employees, provident fund contributions are made to a trust administered by the Company. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company. The liability in respect of the shortfall of interest earnings of the Fund is determined on the basis of an actuarial valuation. The Company also provides for retirement/post-retirement benefits in the form of gratuity and leave pay.
For defined benefit plans, the amount recognised as âEmployee benefit expensesâ in the Statement of Profit and Loss is the cost of accruing employee benefits promised to employees over the year and the costs of individual events such as past/future service benefit changes and settlements (such events are recognised immediately in the Statement of Profit and Loss). The amount of net interest expense calculated by applying the liability discount rate to the net defined benefit liability or asset is charged or credited to âFinance costsâ in the Statement of Profit and Loss. Any differences between the interest income on plan assets and the return actually achieved, and any changes in the liabilities over the year due to changes in actuarial assumptions or experience adjustments within the plans, are recognised immediately in âOther comprehensive incomeâ and subsequently not reclassified to the Statement of Profit and Loss.
The defined benefit plan surplus or deficit on the Balance Sheet comprises the total for each plan of the fair value of plan assets less the present value of the defined benefit liabilities (using a discount rate by reference to market yields on government bonds at the end of the reporting period).
All defined benefit plans obligations are determined based on valuations, as at the Balance Sheet date, made by independent actuary using the projected unit credit method. The classification of the Companyâs net obligation into current and non-current is as per the actuarial valuation report.
Termination benefits
Termination benefits, in the nature of voluntary retirement benefits or termination benefits arising from restructuring, are recognised in the Statement of Profit and Loss. The Company recognises termination benefits at the earlier of the following dates:
(a) when the Company can no longer withdraw the offer of those benefits; or
(b) when the Company recognises costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of termination benefits.
Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value
(M) impairment
(i) Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (âECLâ) model for measurement and recognition of impairment loss on following:
- Financial assets measured at amortised cost; and
- Financial assets measured at FVOCI - debt investments
Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime expected losses for all other financial assets, ECL are measured at an amount equal to the 12 month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL.
Loss allowance for financial assets measured at amortised cost are deducted from gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to statement of profit and loss and recognised in OCI.
ii) Impairment of non-financial assets
The Company assess at each reporting date whether there is any indication that the carrying amount may not be recoverable, if any, such indication exists, then the assets recoverable amount is estimated and an impairment loss is recognised if the carrying amount of an asset or CGL exceeds its estimated recoverable amount in the statement of profit and loss.
Goodwill is tested annually for impairment.
The Companyâs non-financial assets, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment, if any, indication exists, then the assetâs recoverable amount is estimated.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(N) income TAXES
Income tax expense for the year comprises of current tax and deferred tax. It is recognised in the Statement of Profit and Loss except to the extent it relates to a business combination or to an item which is recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable/receivable on the taxable income/ loss for the year using applicable tax rates at the Balance Sheet date, and any adjustment to taxes in respect of previous years. Interest income/ expenses and penalties, if any, related to income tax are included in current tax expense.
Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.
A deferred tax liability is recognised based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted, or substantively enacted, by the end of the reporting period. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority.
(O) FOREIGN currencies
The financial statements are presented in INR, the functional currency of the Company. Items included in the financial statements of the Company are recorded using the currency of the primary economic environment in which the Company operates (the âfunctional currencyâ).
Foreign currency transactions are translated into the functional currency using exchange rates at the date of the transaction. Foreign exchange gains and losses from settlement of these transactions, and from translation of monetary assets and liabilities at the reporting date exchange rates are recognised in the Statement of Profit and Loss.
(p) EARNINGS pER SHARE
Basic earnings per share is computed by dividing the net profit for the period attributable to the equity shareholders of the Company 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 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.
(Q) BUSINESS cOMBINATION
Business combinations are accounted for using the acquisition accounting method as at the date of the acquisition, which is the date at which control is transferred to the Company. The consideration transferred in the acquisition and the identifiable assets acquired and liabilities assumed are recognised at fair values on their acquisition date. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. The Company recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interestâs proportionate share of the acquired entityâs net identifiable assets.
Consideration transferred does not include amounts related to settlement of pre-existing relationships. Such amounts are recognised in the Statement of Profit and Loss.
Transaction costs are expensed as incurred, other than those incurred in relation to the issue of debt or equity securities. Any contingent consideration payable is measured at fair value at the acquisition date. Subsequent changes in the fair value of contingent consideration are recognised in the Statement of Profit and Loss.
FIRST TIME ADOpTION OF IND AS
The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from 1st April, 2017, with a transition date of 1st April, 2016. These financial statements for the year ended 31st March, 2018 are the first financial statements the Company has prepared under Ind AS. For all periods upto and including the year ended 31st March, 2017 , the Company prepared its financial statements in accordance with the accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (âPrevious GAAPâ).
The adoption of Ind AS has been carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards. Ind AS 101 requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements be applied retrospectively and consistently for all financial years presented. Accordingly, the Company has prepared financial statements which comply with Ind AS for year ended 31st March, 2018, together with the comparative information as at and for the year ended 31st March, 2017 and the opening Ind AS Balance Sheet as at 1st April, 2016, the date of transition to Ind AS.
In preparing these Ind AS financialstatements, the Company has availed certain exemptions and exceptions in accordance with Ind AS 101, as explained below. The resulting difference between the carrying values of the assets and liabilities in the financial statements as at the transition date under Ind AS and Previous GAAP have been recognised directly in equity (retained earnings or another appropriate category of equity). This note explains the adjustments made by the Company in restating its financial statements prepared under previous GAAP, including the Balance Sheet as at 1st April, 2016 and the financial statements as at and for the year ended 31st March, 2017.
A. optional Exemptions from retrospective application
Ind AS 101 permits first-time adopters certain exemptions from retrospective application of certain requirements under Ind AS. The Company has elected to apply the following optional exemptions from retrospective application:
(i) Business combinations
Ind AS 103 Business Combinations has not been applied to acquisitions of subsidiaries, or of interests in associates and joint ventures and transactions which are considered businesses for Ind AS, that occurred before 1st April, 2016. The carrying amounts of assets and liabilities in accordance with Previous GAAP are considered as their deemed cost at the date of acquisition. After the date of the acquisition, measurement is in accordance with Ind AS.
(ii) Deemed cost for property, plant and equipment and intangible assets
The Company has elected to measure all its property, plant and equipment and intangible assets at the Previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS.
The Company has elected to continue to capitalize difference on foreign exchange arising from translation of long term foreign currency monetary items loss as permitted by companyâs Accounting Rules 2006 by notification dated 29th December, 2011 issued by the Ministry of Corporate Affairs and exemption allowed vide para D13AA of Ind AS-101 first time adoption of Ind AS.
(iii) Investments in subsidiaries and joint ventures
The Company has elected to measure its investments in subsidiaries and joint ventures at the Previous GAAP carrying amount as its deemed cost on the date of transition to Ind AS.
B. Mandatory Exceptions from retrospective application
The Company has applied the following exceptions to the retrospective application of Ind AS as mandatorily required under Ind AS 101:
(i) Estimates
On assessment of the estimates made under the Previous GAAP financialstatements, the Company has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates. However, estimates that were required under Ind AS but not required under Previous GAAP are made by the Company for the relevant reporting dates reflecting conditions existing as at that date.
(ii) Classification and measurement of financial assets
The classification of financial assets to be measured at amortised cost or fair value through other comprehensive income is made on the basis of the facts and circumstances that existed on the date of transition to Ind AS.
c. Transition to Ind AS - Reconciliations
The following reconciliations provide the explanations and quantification of the differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101:
I. Reconciliation of Equity as at 1st April, 2016
II. a. Reconciliation of Equity as at 31st March, 2017
b. Reconciliation of Statement of Profit and Loss for the year ended 31st March, 2017
III. Adjustments to Statement of Cash Flows for the year ended 31st March, 2017
Previous GAAP figures have been reclassified/regrouped wherever necessary to conform with financial statements prepared under Ind AS.
Mar 31, 2017
a. Basis of preparation
The financial statements of the company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The financial statements have been prepared under the historical cost convention on an accrual basis except in case of assets for which provision for impairment is made and revaluation is carried out. The accounting policies have been consistently applied by the Company and except for the changes in accounting policy discussed more fully below, are consistent with those used in the previous year.
b. Use of estimates
The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon managementâs best knowledge of current events and actions, actual results could differ from these estimates.
c. Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
d. Depreciation and Amortisation :
i. Leasehold land is amortized over the period of lease.
ii. Intangible assets are amortized over the estimated useful life of 4 years.
iii. Depreciation on Plant & Equipments, Furniture, Office Equipments, Buildings and Vehicles is provided on straight line basis based on the revised remaining useful life of the assets as per Part-C of Schedule II of the Companies Act, 2013.
e. Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assetâs net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
f. Investments
Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as longterm investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.
g. Inventories
Inventories are valued as follows:
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
h. Revenue Recognition :
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
Sale of Goods
Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. Excise Duty deducted from turnover (gross) is the amount that is included in the amount of turnover (gross) and not the entire amount of liability arised during the year.
Interest
Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
Dividends
Revenue is recognized when the shareholdersâ right to receive payment is established by the balance sheet date.
i. Foreign Currency Transaction
i. Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
ii. Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
iii. Exchange Differences
Exchange differences arising on the settlement of monetary items or on reporting companyâs monetary items at rates different from those at which they were initially recorded during the year or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise except in case of long term liabilities, where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.
iv. Forward Exchange Contracts not intended for trading or speculation purposes
The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year.
j. Retirement and other employee benefits
i. Retirement benefits in the form of Provident Fund, in case of certain employees, are a defined contribution scheme and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective trusts.
ii. Gratuity liability and Provident Fund, in case of other employees not covered under defined contribution scheme, are defined benefit obligations. Gratuity liability is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year. Provident Fund contribution to the Trust is charged to Profit and Loss Account of the year when the contribution to the fund is due. Any deficit in the fund is provided for and funded.
iii. Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method
iv. Actuarial gains/losses are immediately taken to the Statement of profit and loss account and are not deferred.
k. Income taxes
Tax expense comprises of current income tax and is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
At each balance sheet date the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized.
Minimum Alternate Tax (MAT):
MAT credit is recognised as an asset only when and to the extent there is convincing Evidence that the Company will pay normal Income tax during the specified period. In the year ,in which the MAT credit becomes eligible to be recognised as an asset in accordance with the recommendations contained in the Guidance note issued by ICAI, the said asset is created by way of credit to the statement of Profit and Loss and is shown as MAT credit entitlement. The Company reviews the same at each Balance sheet and writes down the carrying amount of MAT credit Entitlement to the extent there is no longer convincing evidence to the effect that the Company will pay normal Income Tax during the specified period.
l. 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. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
m. Provisions, Contingent Liabilities & Contingent Assets:
A provision is recognized when an enterprise has a present obligation as a result of past event it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Provision for expenditure relating to voluntary retirement is made when the employee accepts the offer of early retirement.
n. Cash and Cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.
o. Derivative Instruments
The Company uses derivative financial instruments such as forward exchange contracts to hedge its risks associated with foreign currency fluctuations. Accounting policy for forward exchange contracts is given in note i (iv) above
Mar 31, 2015
A. Basis of preparation
The financial statements have been prepared to comply in all material
respects with the Notified accounting standard by Companies Accounting
Standards Rules, 2006 and the relevant provisions of the Companies Act,
1956. The financial statements have been prepared under the historical
cost convention on an accrual basis except in case of assets for which
provision for impairment is made and revaluation is carried out. The
accounting policies have been consistently applied by the Company and
except for the changes in accounting policy discussed more fully below,
are consistent with those used in the previous year.
b. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
c. Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use. Borrowing costs relating to acquisition of fixed
assets which takes substantial period of time to get ready for its
intended use are also included to the extent they relate to the period
till such assets are ready to be put to use.
d. Depreciation and Amortisation :
i. Leasehold land is amortized over the period of lease.
ii. Intangible assets are amortized over the estimated useful life of
4 years.
iii. Depreciation on Plant & Equipments, Furniture, Office Equipments,
Buildings and Vehicles is provided on straight line basis based on the
revised remaining useful life of the assets as per Part-C of Schedule
II of the Companies Act 2013.
e. Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
f. Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.
g. Inventories
Inventories are valued as follows:
Raw materials, Lower of cost and net realizable value. However,
`components, materials and other items held for use in the
stores production of inventories are not written down
and spares below cost if the finished products in which they
will be incorporated are expected to be sold at or
above cost. Cost is determined on a weighted
average basis.
Stock in Lower of cost and net realizable value. Cost
Process and includes direct materials and labour and a
finished goods proportion of manufacturing overheads based on
normal operating capacity. Cost of finished goods
includes excise duty.
Catalyst Amortised on the basis of its estimated useful life
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
h. Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of Goods
Revenue is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excise Duty deducted
from turnover (gross) is the amount that is included in the amount of
turnover (gross) and not the entire amount of liability arised during
the year.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividends
Revenue is recognized when the shareholders'' right to receive payment
is established by the balance sheet date.
i. Foreign Currency Transaction
i. Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii. Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction and non-monetary items which are carried
at fair value or other similar valuation denominated in a foreign
currency are reported using the exchange rates that existed when the
values were determined.
iii. Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting company''s monetary items at rates different from those at
which they were initially recorded during the year or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise except in case of long term
liabilities, where they relate to acquisition of fixed assets, in which
case they are adjusted to the carrying cost of such assets.
iv. Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year.
j. Retirement and other employee benefits
i. Retirement benefits in the form of Provident Fund, in case of
certain employees, are a defined contribution scheme and the
contributions are charged to the Statement of Profit and Loss of the
year when the contributions to the respective funds are due. There are
no other obligations other than the contribution payable to the
respective trusts.
ii. Gratuity liability and Provident Fund, in case of other employees
not covered under defined contribution scheme, are defined benefit
obligations. Gratuity liability is provided for on the basis of an
actuarial valuation on projected unit credit method made at the end of
each financial year. Provident Fund contribution to the Trust is
charged to Statement of Profit and Loss of the year when the
contribution to the fund is due. Any deficit in the fund is provided
for and funded.
iii. Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per projected
unit credit method
iv. Actuarial gains/losses are immediately taken to the Statement of
profit and loss and are not deferred.
k. Income taxes
Tax expense comprises of current income tax and is measured at the
amount expected to be paid to the tax authorities in accordance with
the Indian Income Tax Act.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognized only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. In situations
where the company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognized only if there is virtual
certainty supported by convincing evidence that they can be realized
against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of deferred tax
asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
l. 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. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
m. Provisions, Contingent Liabilities & Contingent Assets:
A provision is recognized when an enterprise has a present obligation
as a result of past event it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates. Provision for expenditure relating to voluntary retirement
is made when the employee accepts the offer of early retirement.
n. Cash and Cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
o. Derivative Instruments
The Company uses derivative financial instruments such as forward
exchange contracts to hedge its risks associated with foreign currency
fluctuations. Accounting policy for forward exchange contracts is given
in note i (iv) above
Mar 31, 2014
A. Basis of preparation
The financial statements have been prepared to comply in all material
respects with the Notified accounting standard by Companies Accounting
Standards Rules, 2006 and the relevant provisions of the Companies Act,
1956. The financial statements have been prepared under the historical
cost convention on an accrual basis except in case of assets for which
provision for impairment is made and revaluation is carried out. The
accounting policies have been consistently applied by the Company and
except for the changes in accounting policy discussed more fully below,
are consistent with those used in the previous year.
b. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
c. Fixed Assets
Fixed assets are stated at cost (or revalued amounts, as the case may
be), less accumulated depreciation and impairment losses if any. Cost
comprises the purchase price and any attributable cost of bringing the
asset to its working condition for its intended use. Borrowing costs
relating to acquisition of fixed assets which takes substantial period
of time to get ready for its intended use are also included to the
extent they relate to the period till such assets are ready to be put
to use.
d. Depreciation and Amortisation :
Leasehold land is amortized over the period of lease.
i. Intangible assets are amortized over the estimated useful life of 4
years.
iii. Depreciation on Furniture, Office Equipments and Vehicles is
provided using written down value method at the rates prescribed in
Schedule XIV to the Companies Act, 1956 on pro-rata basis with
reference to date of acquisition
iv Depreciation on Building is provided using straight line method at
the rates prescribed in Schedule XIV of the Companies Act 1956, on
pro-rata basis with reference to date of acquisition
v. Depreciation on Plant & Equipments (historical cost) for the year is
provided on Straight line Method as per rates specified in schedule XIV
of the Companies Act, 1956 / the balance useful life of 12 to 28 years
of the assets as determined by an approved Valuer on pro rata basis
with reference to date of acquisition, the useful life is higher than
that provided in Schedule XIV of the Companies Act 1956. The continuous
process plant as defined therein have been taken on technical
assessment and depreciation provided accordingly. The depreciation on
incremental revalued amount is provided on straight line method as per
the rates in Schedule XIV of the Companies Act 1956.
e. Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
f. Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.
g. Inventories
Inventories are valued as follows
Raw materials, Lower of cost and net realizable value. However,
materials and other items held for use in the components, stores
production of inventories are not written down below cost if the
finished products in which they and spares will be incorporated are
expected to be sold at or above cost. Cost is determined on a weighted
average basis
Stock in Process and Lower of cost and net realizable value. Cost
includes direct materials and labour and a proportion finished goods of
manufacturing overheads based on normal operating capacity. Cost of
finished goods includes excise duty.
Catalyst Amortised on the basis of its estimated useful life
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
h. Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured
Sale of Goods
Revenue is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excise Duty deducted
from turnover (gross) is the amount that is included in the amount of
turnover (gross) and not the entire amount of liability arised during
the year.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividends
Revenue is recognized when the shareholders'' right to receive payment
is established by the balance sheet date.
i. Foreign Currency Transaction
i. Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction
ii. Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction and non-monetary items which are carried
at fair value or other similar valuation denominated in a foreign
currency are reported using the exchange rates that existed when the
values were determined
iii. Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting company''s monetary items at rates different from those at
which they were initially recorded during the year or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise except in case of long term
liabilities, where they relate to acquisition of fixed assets, in which
case they are adjusted to the carrying cost of such assets.
iv. Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year.
j. Retirement and other employee benefits
Retirement benefits in the form of Provident Fund, in case of certain
employees, are a defined contribution scheme and the contributions are
charged to the Statement of Profit and Loss of the year when the
contributions to the respective funds are due. There are no other
obligations other than the contribution payable to the respective
trusts.
i. Gratuity liability and Provident Fund, in case of other employees
not covered under defined contribution scheme, are defined benefit
obligations. Gratuity liability is provided for on the basis of an
actuarial valuation on projected unit credit method made at the end of
each financial year. Provident Fund contribution to the Trust is
charged to Statement of Profit and Loss of the year when the
contribution to the fund is due. Any deficit in the fund is provided
for and funded
iii. Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per projected
unit credit method
iv. Actuarial gains/losses are immediately taken to the Statement of
profit and loss and are not deferred
k. Income taxes
Tax expense comprises of current income tax and is measured at the
amount expected to be paid to the tax authorities in accordance with
the Indian Income Tax Act.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognized only to the extent that there is reasonable
certainty that sufficient future taxable ncome will be available
against which such deferred tax assets can be realized. In situations
where the company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognized only if there is virtual
certainty supported by convincing evidence that they can be realized
against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of deferred tax
asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write- down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
l. 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. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
m. Provisions, Contingent Liabilities & Contingent Assets
A provision is recognized when an enterprise has a present obligation
as a result of past event it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates. Provision for expenditure relating to voluntary retirement
is made when the employee accepts the offer of early retirement..
n. Cash and Cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
o. Derivative Instruments
The Company uses derivative financial instruments such as forward
exchange contracts to hedge its risks associated with foreign currency
fluctuations. Accounting policy for forward exchange contracts is given
in note i (iv) above.
Mar 31, 2013
A. Basis of preparation
The financial statements have been prepared to comply in all material
respects with the Notified accounting standard by Companies Accounting
Standards Rules, 2006 and the relevant, provisions of the Companies
Act, 1956. The financial statements have been prepared under the
historical cost convention on an accrual basis except in case of assets
for which provision for impairment is''made and revaluation is carried
out. The accounting policies have been consistently applied by the
Company clnd except for the changes in accounting policy discussed more
fully below, are consistent with those used in the previous year.
b. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ .
from these estimates.
c. Fixed Assets
Fixed assets are stated at cost (or revalued amounts, as the case may
be), less accumulated depreciation and impairment losses if any. Cost
comprises the purchase price and any attributable cost of bringing the
asset to its working condition for its intended use. Borrowing costs
relating to acquisition of fixed assets which takes substantial period
of time to get ready for its intended use are also included to the
extent they relate to the period till such assets are ready to be put
to use.
d. Depreciation and Amortisation :
i. Leasehold land is amortized over the period of lease.
ii. Intangible assets are amortized over the estimated useful life of
4 years.
iii. Depreciation on Furniture, Office Equipments and Vehicles is
provided using written down value method at the rates prescribed in
Schedule XIV to the Companies Act, 1956 on pro-rata basis with
reference to date of acquisition.
iv. Depreciation on Building is provided using straight line method at
the rates prescribed in Schedule XIV of the Companies Act 1956, on
pro-rata basis with reference to date of acquisition.
v. Depreciation on Plant & Equipments (historical cost) for the year is
provided on Straight line Method as per rates specified in schedule XIV
of the Companies Act, 1956 /the balance useful life of 12 to 28 years
of the assets as determined by an approved Valuer on pro rata basis
with reference to date of acquisition, the useful life is higher than
that provided in Schedule XIV of the Companies Act 1956. The continuous
process plant as defined therein have been taken on technical
assessment and depreciation provided accordingly. The depreciation on
incremental revalued amount is provided on straight line method as per
the rates in Schedule XIV of the Companies Act 1956.
e. Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
f. Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminutior in value is made to recognize a
decline other than temporary in the value of the investments.
g. Inventories
Inventories are valued as follows:
Raw materials, Lower of cost and net realizable value. However,
materials and other items held for use in the
components, stores production of inventories are not written down below
cost if the finished products in which they and spares will be
incorporated are expected to be sold at or above cost. Cost is
determined on a weighted average basis.
Stock in Process and Lower of cost and net realizable value. Cost
includes direct materials and labour and a proportion finished goods of
manufacturing overheads based on normal operating capacity. Cost of
finished goods includes excise duty.
Catalyst Amortised on the basis of its estimated useful life
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completioi and estimated
costs necessary to make the sale.
h. Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenu< can be
reliably measured.
Sale of Goods
Revenue is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excis Duty deducted
from turnover (gross) is the amount that is included in the amount of
turnover (gross) and not the entir amount of liability arised during
the year.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividends
Revenue is recognized when the shareholders'' right to receive payment
is established by the balance sheet date.
i. Foreign Currency Transaction
/. Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount th exchange rate between the
reporting currency and the foreign currency at the date of the
transaction.
//. Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terrr of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transacts and non-monetary items which are carried
at fair value or other similar valuation denominated in a foreign
currency are reported using the exchange rates that existed when the
values were determined.
///. Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting company''s monetary items at rates different from those at
which they were initially recorded during the year or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise except in case of long term
liabilities, where they relate to acquisition of fixed assets, in which
case they are adjusted to the carrying cost of such assets.
iv. Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of
the.contract. Exchange differences on such contracts are recognized in
the statement of profit and loss in the year in which the exchange
rates change, Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year.
j. Retirement and other employee benefits
i. Retirement benefits in the form of Provident Fund, in case of
certain employees, are a defined contribution scheme and the
contributions are charged to the Statement of Profit and Loss of the
year when the contributions to the respective funds are due. There are
no other obligations other than the contribution payable to the
respective trusts.
ii. Gratuity liability and Provident Fund, in case of other employees
not covered under defined contribution scheme, are defined benefit
obligations. Gratuity liability is provided for on the basis of an
actuarial valuation on projected unit credit method made at the end of
each financial year. Provident Fund contribution to the Trust is
charged to the Statement of Profit and Loss of the year when the
contribution to the fund is due. Any deficit in the fund is provided
for and funded.
iii. Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per projected
unit credit method
iv. Actuarial gains/losses are immediately taken to the Statement of
Profit and Loss and are-not deferred. .
k. Income taxes
Tax expense comprises of current income tax and is measured at the
amount expected to be paid to the tax authorities in accordance with
the Indian Income Tax Act.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognized only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. In situations
where the company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognized only if there is virtual
certainty supported by convincing evidence that they can be realized
against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writesdown the carrying amount of deferred tax
asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such writedown is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
I. 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. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
m. Provisions, Contingent Liabilities & Contingent Assets
A provision is recognized when an enterprise has a present obligation
as a result of past event it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates. Provision for expenditure relating to voluntary retirement
is made when the employee accepts the offer of early retirement.
n. Cash and Cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
o. Derivative Instruments
The Company uses derivative financial instruments such as forward
exchange contracts to hedge its risks associated with foreign currency
fluctuations. Accounting policy for forward exchange contracts is given
in note i (iv) above.
Mar 31, 2012
A. Basis of preparation
The financial statements have been prepared to comply in all material
respects with the Notified accounting standard by Companies Accounting
Standards Rules, 2006 and the relevant- provisions of the Companies
Act, 1956. The financial - statements have been prepared under the
historical cost convention on an accrual basis except in case of assets
for which provision for impairment is made and revaluation is carried
out. The accounting policies have been consistently applied by the
Company and except for the changes in accounting policy discussed more
fully below, are consistent with those used in the previous year. .
b. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates.
c. Fixed Assets
Fixed assets are stated at cost (or revalued amounts, as the case may
be), less accumulated depreciation and impairment losses if any Cost
comprises the purchase price and any attributable cost of bringing the
asset to its working condition for its intended use. Borrowing costs
relating to acquisition of fixed assets which takes substantial period
of time to get ready for its intended use are also included to the
extent they relate to the period till such assets are ready to be put
to use.
d. Depreciation and Amortization :
i. Leasehold land is amortized over the period of lease.
ii. Intangible assets are amortized over the estimated useful life of
4 years.
iii. Depreciation on Furniture, Office Equipments and Vehicles is
provided using written down value method at the rates prescribed in
Schedule XIV to the Companies Act, 1956 on pro-rata basis with
reference to date of acquisition.
iv. Depreciation on Building is provided using straight line method at
the rates prescribed in Schedule XIV of the Companies Act 1956, on
pro-rata basis with reference to date of acquisition.
v. Depreciation on Plant & Equipment (historical cost) for the year is
provided on the balance useful life of 5 to 28 years of the assets as
determined by an approved Valuer on pro rata basis with reference to
date of acquisition, the useful life is
higher than that provided in Schedule XIV of the Companies Act 1956.
The continuous process plant as defined therein have been taken on
technical assessment and depreciation provided accordingly. The
depreciation on incremental revalued amount is provided on straight-line
method as per the rates in Schedule XIV of the Companies Act 1956.
e. Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
f. Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.
g. Inventories .
Inventories are valued as follows: '
Raw materials, Lower of cost and net realizable value. However,
materials and other items held for use in the components, production of
inventories are not written down below cost if the finished products in
which they stores and spares will be incorporated are expected to be
sold at or above cost. Cost is determined on a weighted
- average basis.
Stock in Process Lower of cost and net realizable value. Cost includes
direct materials and labour and a proportion and finished goods of
manufacturing overheads based on normal operating capacity. Cost of
finished goods includes excise duty.
Catalyst Amortized on the basis of its estimated useful life
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
h. Revenue Recognition :
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of Goods
Revenue is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excise Duty deducted
from turnover (gross) is the amount that is included in the amount of
turnover (gross) and not the entire amount of liability raised during
the year.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. Dividends Revenue is
recognized when the shareholders right to receive payment is
established by the balance sheet date.
i. Foreign Currency Transaction /. Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii. Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction and non-monetary items which are carried
at fair value or other similar valuation denominated in a foreign
currency are reported ' using the exchange rates that existed when the
values were determined.
iii. Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting company's monetary items at rates different from those at
which they were initially recorded during the year or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise except in case of long term
liabilities, where they relate to acquisition of fixed assets, in which
case they are adjusted to the carrying cost of such assets.
iv. Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year.
j. Retirement and other employee benefits
i. Retirement benefits io, the form of Provident Fund, in case of
certain employees, are a defined contribution scheme and the
contributions are charged to the Profit and Loss Account of the year
when the contributions to the respective funds are due. There are no
other obligations other than the contribution payable to the respective
trusts.
ii. Gratuity liability and Provident Fund, in case of other employees
not covered under defined contribution scheme, are defined benefit
obligations. Gratuity liability is provided for on the basis of an
actuarial valuation on projected unit credit method made at the end of
each financial year. Provident Fund contribution to the Trust is
charged to Profit and Loss Account of the year when the contribution to
the fund is due. Any deficit in the fund is provided for and funded.
iii. Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per projected
unit credit method
iv. Actuarial gains/losses are immediately taken to profit and loss
account and are not deferred.
k. Income taxes -
Tax expense comprises of current income tax and is measured at the
amount expected to be paid to the tax authorities in accordance with
the Indian Income Tax Act.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognized only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. In situations
where the company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognized only if there is virtual
certainty supported by convincing evidence that they can be realized
against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of deferred tax
asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write- down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets. It recognizes unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realized.
I. 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.
Partly paid equity shares are treated as a fraction of an equity share
to the extent that they were entitled to participate in dividends
relative to a fully paid equity share during the reporting period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
m. Provisions, Contingent Liabilities & Contingent Assets:
A provision is recognized when an enterprise has a present obligation
as a result of past event it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates. Provision for expenditure relating to voluntary retirement
is made when the employee accepts the offer of early retirement.
n. Cash and Cash equivalents ,
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
o. Derivative Instruments
The Company uses derivative financial instruments such as forward
exchange contracts to hedge its risks associated with foreign currency
fluctuations. Accounting policy for forward exchange contracts is given
in note i (iv) above.
Mar 31, 2010
A. Basis of preparation
The financial statements have been prepared to comply in all material
respects with the Notified accounting standard by Companies Accounting
Standards Rules, 2006 and the relevant provisions of the Companies Act,
1956. The financial statements have been prepared under the historical
cost convention on an accrual basis except in case of assets for which
provision for impairment is made and revaluation is carried out. The
accounting policies have been consistently applied by the Company and
except for the changes in accounting policy discussed more fully below,
are consistent with those used in the previous year.
b. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon managements best
knowledge of current events and actions, actual results could differ
from these estimates.
c. Fixed Assets
Fixed assets are stated at cost (or revalued amounts, as the case
maybe), less accumulated depreciation and impairment losses if any.
Cost comprises the purchase price and any attributable cost of bringing
the asset to its working condition for its intended use. Borrowing
costs relating to acquisition of fixed assets which takes substantial
period of time to get ready for its intended use are also included to
the extent they relate to the period till such assets are ready to be
put to use.
d. Depreciation and Amortisation :
i. Leasehold land is amortized over the period of lease.
ii. Intangible assets are amortized over the estimated useful life of
4 years.
iii. Depreciation on Furniture, Office Equipments and Vehicles is
provided using written down value method at the rates prescribed in
Schedule XIV to the Companies Act, 1956 on pro-rata basis with
reference to date of acquisition.
iv. Depreciation on Building is provided using straight line method at
the rates prescribed in Schedule XIV of the Compa-inies Act 1956, on
pro-rata basis with reference to date of acqui-sition.
v. Depreciation on Plant & Machinery (historical cost) for the year is
provided on the balance useful life of 5 to 28 years of the assets as
determined by an approved Valuer on pro rata basis with reference to
date of acquisition, the useful life is higher than that provided in
Schedule XIV of the Companies Act 1956 as referred to in Note No. 5 of
Schedule 19. The continuous process plant as defined therein have been
taken on technical assessment and depreciation provided accordingly.
The depreciation on incremental revalued amount is provided on
straightline method as per the rates in Schedule XIV of the Companies
Act 1956.
e. Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
f. Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise
a decline other than temporary in the value of the investments.
g. Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of Goods
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excise Duty deducted
from turnover (gross) is the amount that is included in the amount of
turnover (gross) and not the entire amount of liability arised during
the year.
Interest
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividends
Revenue is recognised when the shareholders right to receive payment
is established by the balance sheet date.
h. Foreign Currency Transaction
i. Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
ii. Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction and non-monetary items which are carried
at fair value or other similar valuation denominated in a foreign
currency are reported using the exchange rates that existed when the
values were determined.
iii. Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting companys monetary items at rates different from those at
which they were initially recorded during the year or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
iv. Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or as expense for the
year.
i. Retirement and other employee benefits
i. Retirement benefits in the form of Provident Fund, in case of
certain employees, are a defined contribution scheme and the
contributions are charged to the Profit and Loss Account of the year
when the contributions to the respective funds are due. There are no
other obligations other than the contribution payable to the respective
trusts.
ii. Gratuity liability and Provident Fund, in case of other employees
not covered under defined contribution scheme, are defined benefit
obligations. Gratuity liability is provided for on the basis of an
actuarial valuation on projected unit credit method made at the end of
each financial year. Provident Fund contribution to the Trust is
charged to Profit and Loss Account of the year when the contribution to
the fund is due. Any deficit in the fund is provided for and funded.
iii. Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per projected
unit credit method
iv. Actuarial gains/losses are immediately taken to profit and loss
account and are not deferred.
j. Income taxes
Tax expense comprises of current and fringe benefit tax. Current income
tax and fringe benefit tax is measured at the amount expected to be
paid to the tax authorities in accordance with the Indian Income Tax
Act.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. In situations
where the company has unabsorbed depreciation or carry forward tax
losses, all deferred tax assets are recognised only if there is virtual
certainty supported by convincing evidence that they can be realised
against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of deferred tax
asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
k. 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. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
l. Provisions, Contingent Liabilities & Contingent Assets:
A provision is recognised when an enterprise has a present obligation
as a result of past event it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates. Provision for expenditure relating to voluntary retirement
is made when the employee accepts the offer of early retirement.
m. Cash and Cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
n. Derivative Instruments
The Company uses derivative financial instruments such as forward
exchange contracts to hedge its risks associated with foreign currency
fluctuations. Accounting policy for forward exchange contracts is given
in note i(iv) above.
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