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Accounting Policies of IFGL Refractories Ltd. Company
Mar 31, 2025
2. MATERIAL ACCOUNTING POLICIES
This note provides a list of the Material Accounting Policies adopted in the preparation of these Standalone Financial Statements.
These policies have been consistently applied to all the periods presented, unless otherwise stated.
2.1 Compliance with Ind AS
The Standalone Financial Statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind
AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation
requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS Compliant Schedule III), as applicable to Standalone
Financial Statement.
The Financial Statements are presented in Indian Rupees, which is the functional currency of the Company and the currency of
the primary economic environment in which the Company operates, and all values are rounded to the nearest lakhs (00,000.00),
except as otherwise indicated.
The Company has prepared the Financial Statements on the basis that it will continue to operate as a going concern.
2.2 Basis of Preparation
These Standalone Financial Statements have been prepared on a Historical Cost basis except certain Financial Assets and
Liabilities (Refer Accounting Policy regarding Financial Instruments).
Fair Value Measurement
Historical cost is generally based on the Fair Value of the consideration given in exchange for Goods and Services.
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, regardless of whether that price is directly observable or estimated using another
valuation technique. In estimating the Fair Value of an Asset or a Liability, the Company takes into account the characteristics of
the Asset or Liability if market participants would take those characteristics into account when pricing the Asset or Liability at the
measurement date. Fair Value for measurement and/or disclosure purposes in these Financial Statements is determined on such
a basis, except leasing transactions that are within the scope of Ind AS 116 - Leases that have some similarities to Fair Value but
are not Fair Value, such as Net Realisable Value in Ind AS 2 - Inventories or Value in Use in Ind AS 36 - Impairment of Assets.
2.3 Current versus Non-Current classification
All Current/Non-Current Assets and Liabilities have been classified as Current/Non-Current as per the Company''s normal operating
cycle and other criteria set out in the Schedule III to the Companies Act, 2013 and Ind AS 1 - Presentation of Financial Statements
based on the nature of asset and liabilities and the time between the acquisition of assets for processing and their realisation
in Cash and Cash Equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of Current/Non-
Current classification of Assets and Liabilities. Defferred Tax Liabilities are always classified as Non-Current by the Company.
2.4 Property, Plant and Equipment
Freehold Land is carried at Historical Cost. Property, Plant and Equipment are stated at Cost of Acquisition or Construction less
Accumulated Depreciation and Impairment Loss, if any. The cost of an item of Property, Plant and Equipment comprises of its
cost of acquisition inclusive of inward freight, import duties and other non-refundable taxes or levies and any other cost directly
attributable to the acquisition/construction of those items. Expenses capitalised also include applicable Borrowing Costs for
long-term construction projects if the recognition criteria are met. Subsequent costs are included in the Asset''s carrying amount
or recognised as a separate Asset, as appropriate, only when it is probable that future economic benefits associated with the item
will flow to the Company and the cost of the item can be measured reliably. The Carrying Value of any component accounted for
as a separate Asset is derecognised when replaced.
All other repairs and maintenance are charged to the Standalone Statement of Profit and Loss when incurred. An item of
Property, Plant and Equipment is derecognised upon disposal or when no future economic benefits are expected to arise from
the continued use of Asset. Any Gain or Loss arising on the disposal or retirement of an item of Property, Plant and Equipment
is determined as the difference between the Sales proceeds and the Carrying Amount of the Asset and is recognised in the
Standalone Statement of Profit and Loss.
Capital Work-in-Progress is stated at Cost (including Borrowing cost, where applicable and adjusted for exchange difference),
incurred during construction/installation/preoperative periods relating to items or project in progress net of accumulated
impairment loss, if any.
2.5 Intangible Assets (Including Goodwill)
Intangible Assets are recognised at the Cost incurred for its acquisition and are carried at Cost less Accumulated Amortisation
and Accumulated Impairment Loss, if any. Cost of Intangible Asset is capitalised where it is expected to provide future economic
benefits and the cost can be measured reliably. Capitalisation Costs include license fees and costs of implementation/system
integration services.
Subsequent expenditure is capitalised only when it increases the future economic benefits from the specific asset to which it
relates and cost of the asset can be measured reliably.
An item of Intangible of Asset is derecognised upon disposal or when no future economic benefits are expected to arise from the
continued use of asset. Any Gain or Loss arising on the disposal or retirement of an item of Intangible Asset is determined as the
difference between the Sales proceeds and the Carrying amount of the Asset and is recognised in the Standalone Statement of
Profit and Loss.
Goodwill arising on Amalgamation has been recognised in accordance with the approved Scheme as detailed in Note
38. Said Goodwill is being amortised in accordance with the scheme for which the Company has estimated useful life of 10
years. Such Goodwill will be tested for impairment at every reporting period and wherever there is an indication that the
recoverable amount is less than its carrying amount based on a number of factor including business plan, operating results,
future cash flows and economic conditions. The recoverable amount is determined based on higher of Value in Use and Fair
Value less Cost to Sell. The Company uses Discounted Cash Flow method to determine the recoverable amount. Cash flow
projections take into account past experience and represent management''s best estimate about future developments.
As per Ind AS 38, the expenditure on research and development is classified into the expenditure on research phase and
development phase. As per paragraph 54 of Ind AS 38, any expenditure on research phase should be recognised as an expense
immediately. Any expenditure on development phase should be recognised as an Intangible Asset, if the recognition criteria
given in Paragraph 57 of Ind AS 38 are satisfied.
2.6 Depreciation and Amortisation
Depreciation/Amortisation of Property, Plant and Equipment and Intangible Assets is calculated using Straight Line Method to
allocate their costs, net of their residual values, over their estimated useful lives.
The useful lives considered is as prescribed in Schedule II to the Companies Act, 2013 except for certain items of Plant and
Machinery (Machinery Spares) which are depreciated over a period of 1-5 years. The Asset''s residual values and useful lives are
reviewed and adjusted if necessary, at the end of each reporting period.
Pro-rata Depreciation/Amortisation is charged on Assets from/upto the date on which such Assets are ready for intended use/are
discarded or sold.
Computer Software is classified as Intangible Asset and amortised on a Straight Line basis over a period of 2 years.
Vehicles are depreciated over the period of 5 years.
2.7 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 asset''s recoverable amount. An
asset''s recoverable amount is the higher of an Asset''s or Cash-Generating Unit''s (CGU) 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 or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount.
When an Impairment Loss subsequently reverses, the Carrying Amount of the Asset (or Cash Generating Unit) is increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that
would have been determined had no Impairment Loss been recognised for the Asset (or Cash Generating Unit) in prior years. A
reversal of an Impairment Loss is recognised immediately in Standalone Statement of Profit and Loss.
The Company assesses where climate risks could have a significant impact, such as the introduction of emission-reduction
legislation that may increase manufacturing costs. These risks in relation to climate-related matters are included as key
assumptions where they materially impact the measure of recoverable amount. These assumptions have been included in the
cash-flow forecasts in assessing Value-in-Use amounts.
2.8 Inventories
Inventories are stated at the Lower of Cost and Net Realizable Value.
Raw Materials, Trading Goods and Stores and Spares : Cost includes cost of purchase and other costs incurred in bringing the
Inventories to their present location and condition. Cost is determined on Weighted Average Basis.
Finished Goods and Work-in-Progress : Cost includes cost of Direct Materials and Labour and a proportion of Manufacturing
Overheads based on the normal operating capacity.
Net Realisable Value is the estimated selling price less estimated costs for completion and sale. Obsolete, slow moving and
defective Inventories are identified periodically and, where necessary, a provision is made for such Inventories.
2.9 Foreign Currency Transactions
The functional and presentation currency of the Company is Indian Rupee. At the end of each reporting period, Foreign Currency
monetary items are translated using the functional currency spot rates prevailing at the reporting date. Exchange differences on
monetary items are recognised in Standalone Statement of Profit and Loss in the period in which they arise except for exchange
differences on transactions entered into in order to hedge certain Foreign Currency Risks. 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 non-monetary 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 Other Comprehensive Income or Profit or Loss are also recognised in Other Comprehensive Income
or Profit or Loss, respectively).
2.10 Investment in Subsidiaries
Investment in Subsidiaries are carried at Cost in accordance with Ind AS 27. Investments in Subsidiaries are carried at cost
less provision for impairment, if any. Investments in Subsidiaries are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by
which the carrying amount of investments exceeds its recoverable amount.
2.11 Financial Instruments, Financial Assets, Financial Liabilities and Equity Instruments
2.11.1 Financial Assets
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.
Recognition : Financial Assets include Investments, Trade Receivables, Cash and Cash Equivalents, other Bank balances and other
Financial Assets etc. Such assets are initially recognised at transaction price when the Company becomes party to contractual
obligations. All the Financial Assets are initially measured at Fair Value. Transaction Costs that are directly attributable to the
acquisition of Financial Asset (other than Financial Assets carried at Fair Value through Profit or Loss) are added to or deducted
from the Fair Value measured on initial recognition of the Financial Assets.
Classification : Management determines the classification of an Asset at initial recognition depending on the purpose for which
the Assets were acquired. The subsequent measurement of Financial Assets depends on such classification.
Financial Assets are classified as those measured at :
(a) Amortised cost, where the Financial Assets are held solely for collection of Cash Flows arising from payments of principal
and/or interest.
(b) Fair Value through Other Comprehensive Income (FVTOCI), where the Financial Assets are held not only for collection of Cash
Flows arising from payments of principal and interest but also from the sale of such assets. Such Assets are subsequently
measured at Fair Value, with unrealised gains and losses arising from changes in the Fair Value being recognised in Other
Comprehensive Income.
(c) Fair Value through Profit or Loss (FVTPL), where the assets are managed in accordance with an approved investment strategy
that triggers purchase and sale decisions based on the Fair Value of such assets. Such assets are subsequently measured
at Fair Value, with unrealised gains and losses arising from changes in the Fair Value being recognised in the Standalone
Statement of Profit and Loss in the period in which Trade Receivables, Cash and Cash Equivalents, other Bank balances and
Other Financial Assets etc are classified for measurement at amortised cost while Investments may fall under any of the
aforesaid classes.
Impairment : The Company assesses at each reporting date whether a Financial Asset (or a group of Financial Assets) such
as Investments, Trade Receivables, other Bank balances and other Financial Assets held at amortised cost and Financial
Assets that are measured at Fair Value through Other Comprehensive Income are tested for impairment based on evidence
or information that is available without undue cost or effort. Expected Credit Losses (ECL) are based on the difference
between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects
to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include
cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since
initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months
(a 12 month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition,
a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the
default (a lifetime ECL).
For Trade Receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track
changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has
established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to
the Debtors and the economic environment.
Reclassification : When and only when the business model is changed, the Company shall reclassify all affected Financial Assets
prospectively from the reclassification date as subsequently measured at amortised cost, Fair Value through Other Comprehensive
Income, Fair Value through Profit or Loss without restating the previously recognised gains, losses or interest and in terms of the
reclassification principles laid down in the Ind AS relating to Financial Instruments.
De-recognition : Financial Assets are derecognised when the right to receive Cash Flows from the Assets has expired, or has been
transferred and the Company has transferred substantially all of the risks and rewards of ownership.
Concurrently, if the Asset is one that is measured at :
(a) Amortised Cost, the Gain or Loss is recognised in the Standalone Statement of Profit and Loss.
(b) Fair Value through Other Comprehensive Income, the cumulative Fair Value adjustments previously taken to Reserves are
reclassified to the Standalone Statement of Profit and Loss unless the Asset represents an Equity Investment in which case
the cumulative Fair Value adjustments previously taken to Reserves is reclassified within Equity.
Income Recognition : Interest Income is recognised in the Standalone Statement of Profit and Loss using the Effective Interest
Method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life
of the Financial Asset to the gross carrying amount of the Financial Asset. Dividend Income is recognised in the Standalone
Statement of Profit and Loss when the right to receive Dividend is established and the amount can be measured reliably.
2.11.2 Financial Liabilities
Borrowings, Trade Payables and Other Financial Liabilities are initially recognised at the value of the respective contractual
obligations. They are subsequently measured at amortised cost. Any discount or premium on redemption/settlement is
recognised in the Standalone Statement of Profit and Loss as Finance Cost over the life of the liability using the Effective Interest
Method and adjusted to the liability figure disclosed in the Balance Sheet. Financial Liabilities are derecognised when the liability
is extinguished, that is, when the contractual obligation is discharged, cancelled and on expiry.
De-recognition
A Financial Liability is derecognised when the obligation under the liability is discharged or cancelled or expired. When an
existing Financial Liability is replaced by another from the same lender on substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and
the recognition of a new liability. The difference in the respective Carrying Amounts is recognised in the Standalone Statement of
Profit and Loss.
Offsetting Financial Instruments
Financial Assets and Liabilities are offset and the net amount is included in the Balance Sheet where there is a legally enforceable
right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability
simultaneously.
2.11.3 Equity Instruments
Equity Instruments are recognised at the value of the proceeds, net of direct costs of the capital issue.
2.12 Revenue
Revenue from contract with customers is recognised when control of the goods or services are transferred or rendered to the
customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods
or services. Company satisfies performance obligation by transferring promised goods and services to the customer. Performance
obligations may be satisfied at a point of time. Performance obligations are said to be satisfied at a point of time when the
customer obtains controls of the asset.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation. The transaction Price of goods sold and services rendered is net of
variable consideration on account of various discounts and schemes offered by the Company as part of the contract, excluding
amounts collected on behalf of third parties.
Trade Receivables that do not contain a significant financing component are measured at Transaction Price.
Interest Income is recognised in the Standalone Statement of Profit and Loss using the Effective Interest Method. The Effective
Interest Rate is the rate that exactly discounts estimated future cash receipts through the expected life of the Financial Asset to
the Gross Carrying Amount of the Financial Asset.
Export Incentives in the form of Duty Drawbacks and Remission of Duties and Taxes on Export Products (RODTEP) are recognised
on accrual basis against goods exported.
2.13 Government Grant
The Company may receive Government Grants that require compliance with certain conditions related to the Company''s
operating activities or are provided to the Company by way of financial assistance on the basis of certain qualifying criteria.
Government Grants are recognised when there is reasonable assurance that the grant will be received and the Company will
comply with the conditions attached to the grant.
Accordingly, Export Benefits are accounted for as Government Grants in the year of exports based on eligibility and when there
is no uncertainty in receiving the same.
2.14 Employee Benefits
Short Term Obligations
Liabilities for Wages and Salaries, including non monetary benefits that are expected to be settled wholly within 12 months after
the end of the reporting period in which the employees render the related services are measured at the amounts expected to be
paid. The Liabilities are presented as current Employee Benefit Obligations in the Standalone Financial Statements. Cost of non
accumulating Compensated Absences are recognised when the absences occur.
Post Employment Obligations
The Company makes contributions to both Defined Benefit and Defined Contribution Schemes.
(i) Contributions towards Provident Fund are recognised as Expense. Provident Fund contributions in respect of employees
upto August 2017 of erstwhile IFGL Refractories Limited are made to a Trustee managed exempted Fund and interest paid
to members thereof is not lower than that declared annually by the Central Government. Shortfall, if any, is made good by
the Company. Membership to said Fund has been closed on and from September 1, 2017, subject to necessary approvals
and/or permissions. Provident Fund in respect of remaining employees are made to Statutory Provident Fund established
by the Central Government. The Company''s contribution is recognised as an expense in the Standalone Statement of Profit
and Loss for the period in which the employees render related service.
(ii) Contribution under Statutory Employees'' Pension Scheme is made as per statutory requirements and charged as expenses
for the year.
(iii) Certain employees who joined before April 1,2004 in erstwhile IFGL Refractories Limited are members of a Trustee managed
Superannuation Fund. Said Fund provides for Superannuation Benefit on retirement/death/incapacitation/termination
and was amended from the Defined Benefit to Defined Contribution Plan effective April 1, 2004. Defined Benefits were
frozen on March 31, 2004. Necessary formalities and approvals have been complied with and obtained. Contribution to
Superannuation Fund (Defined Contribution Plan) for certain employees is charged as expenses for the year.
(iv) The Company also contributes to the Central Government administered Employees'' State Insurance Scheme for its eligible
employees which is a Defined Contribution Plan.
(v) The Company provides Gratuity benefit to its employees through a Trustee managed Fund. Gratuity entitlement of the
employees is as per provisions of the Payment of Gratuity Act, 1972. However, in case of employees joining before April 1,
2003 of erstwhile IFGL Refractories Limited, they are entitled to Gratuity as per Scheme framed by that Company or as per
the Payment of Gratuity Act, 1972, whichever is higher. Liability towards Gratuity, Superannuation (Defined Benefit Plan)
covering eligible employees, is provided and funded on the basis of year end Actuarial Valuation. The Liability or Asset
recognised in the Balance Sheet in respect of Gratuity Plans is the present value of Defined Benefit Obligations at the end
of the reporting period less the Fair Value of Plan Assets. The Defined Benefit Obligation is calculated annually by actuary
using the Projected Unit Credit Method. The Present Value of the Defined Benefit Obligations is determined by discounting
the estimated future cash outflows by reference to market yields at the end of the reporting period on Government Bonds
that have terms approximating to the terms of the related obligation. The Net Interest Cost is calculated by applying the
discount rate to the net balance of the Defined Benefit Obligation and the Fair Value of Plan Assets. This cost is included in
the Employee Benefit Expense in the Standalone Statement of Profit and Loss.
Re-measurement, comprising of actuarial gains and losses arising from experience adjustments and changes in actuarial
assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income. They are included
in Retained Earnings in the Statement of Changes in Equity and in the Balance Sheet.
(vi) Accrued Liability towards Compensated Absence, covering eligible employees, evaluated on the basis of year end Actuarial
Valuation is recognised as a charge.
2.15 Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to
control the use of an identified asset for a period of time in exchange for consideration.
Company as a Lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of
low-value assets. The Company recognises lease liabilities to make lease payments and Right-of-Use Assets representing the
Right-of-Use of the underlying Assets.
Right-of-Use Assets
The Company recognises Right-of-Use Assets at the commencement date of the lease (i.e., the date the underlying asset is
available for use). Right-of-Use Assets are measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities.
Right-of-Use Assets are depreciated on a straight-line basis over the lease term or estimated useful life of asset, whichever is less.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a
purchase option, depreciation is calculated using the estimated useful life of the asset.
The Right-of-Use Assets are also subject to Impairment. Refer to the Material Accounting Policies under Note 2.7: Impairment of
Non Financial Assets.
Lease Liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the Present Value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments)
less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid
under residual value guarantees.
In calculating the Present Value of lease payments, the Company uses its incremental borrowing rate at the lease commencement
date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of
lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g.,
changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in
the assessment of an option to purchase the underlying asset.
Short-Term Leases and Leases of Low-Value Assets
The Company applies the Short-Term Lease Recognition exemption to its Short-Term Leases of Office, Machinery and Equipment
(i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase
option). It also applies the Lease of Low-Value Assets recognition exemption to Leases of Offices, Equipment, etc. that are of low-
value. Lease payments on short term leases and leases of low-value assets are recognised as expense on a Straight Line basis over
the Lease Term.
2.16 Taxes on Income
Taxes on Income comprises of Current Taxes and Deferred Taxes. Current Tax in the Standalone Statement of Profit and Loss is
provided as the amount of tax payable in respect of taxable income for the period using tax rates and tax laws enacted at the end
of the reporting period, together with any adjustment to tax payable in respect of previous years. Current Income Tax relating to
items recognised outside Profit or Loss is recognised outside Profit or Loss (either in Other Comprehensive Income or in Equity).
Current Tax items are recognised in correlation to the underlying transaction either in Other Comprehensive income or directly
in Equity. The Company periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid
to the Tax Authorities.
"Deferred Tax is recognised on temporary differences between the Carrying Amounts of Assets and Liabilities and the amounts
used for taxation purposes (tax base), at the tax rates and tax laws enacted or substantively enacted by the end of the reporting
period. Deferred tax Assets are recognised to the extent that it is probable that taxable Profit will be available against which the
deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
(a) When the Deferred Tax Asset relating to the deductible temporary difference arises from the initial recognition of an
Asset or Liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting Profit nor taxable Profit or Loss and does not give rise to equal taxable and deductible temporary differences;
(b) In respect of deductible temporary differences associated with Investments in Subsidiaries, Associates and Interests in
Joint Ventures, Deferred Tax Assets are recognised only to the extent that it is probable that the temporary differences
will reverse in the foreseeable future and taxable Profit will be available against which the temporary differences can be
utilised.
Deferred Tax Assets and Liabilities are offset when there is legally enforceable right to offset Current Tax Assets and
Liabilities and when the Deferred Tax balances related to the same taxation authority. Current Tax Assets and Tax Liabilities
are offset where the entity has a legally enforceable right to offset and intends either to settle on net basis or to realise
the asset and settle the liability simultaneously. In assessing the recoverability of Deferred Tax Assets, the Company relies
on the same forecast assumptions used elsewhere in the Financial Statements and in other management reports, which,
among other things, reflect the potential impact of climate related development on the business, such as increased cost
of production as a result of measures to reduce carbon emission."
2.17 Provisions
Provisions are recognised when, as a result of a past event, the Company has a legal or constructive obligation, it is probable
that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. The amount so
recognised is a best estimate of the consideration required to settle the obligation at the reporting date, taking into account the
risks and uncertainties surrounding the obligation. In an event when the time value of money is material, the provision is carried
at the Present Value of the Cash Flows estimated to settle the obligation.
2.18 Operating Segments
Operating Segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision
Maker (CODM). The CODM is responsible for allocating resources and assessing performance of the Operating Segments. Based
on such the Company operates in one Operating Segment, viz. Specialised Refractories and Ceramics.
Segments are organised based on business and geographies which have similar economic characteristics as well as exhibit
similarities in nature of products and services offered, the nature of production processes, the type and class of customer and
distribution methods. As per Ind AS 108, if a financial report contains both the Consolidated Financial Statements of a Parent
that is within the scope of this Indian Accounting Standard as well as the Parent''s Standalone Financial Statements, segment
information is required only in the Consolidated Financial Statements. Accordingly, the Company has presented segment only
for Consolidated Financial Statements.
2.19 Borrowings
Borrowings are initially recognised at Fair Value, Net of Transaction Costs incurred. Borrowings are subsequently measured
at Amortised Cost using Effective Interest Method. Any difference between the proceeds (Net of Transaction Costs) and the
redemption amount is recognised in Profit or Loss over the period of the borrowings using the Effective Interest Method. Fees
paid on the establishment of loan facilities are recognised as Transaction Costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no
evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity
services and amortised over the period of the facility to which it relates.
Borrowings are derecognised from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.
Borrowings are classified as Current and Non-Current Liabilities based on repayment schedule agreed with the Banks.
Borrowing Costs
Borrowing Costs that are directly attributable to the acquisition, construction or production of a Qualifying Asset are capitalised
during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying Assets are
assets that necessarily take a substantial period of time to get ready for their intended use or sale. Borrowing Costs consist of
interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing Cost also includes Exchange
Differences to the extent regarded as an adjustment to the Borrowing Costs.
Other Borrowing Costs are expensed in the period in which they are incurred.
2.20 Cash and Cash Equivalents
Cash and Cash Equivalent in the Balance Sheet comprise Cash at Banks and on Hand and Short-Term Deposits with an original
maturity of three months or less, that are readily convertible to a known amount of Cash and subject to an insignificant risk of
changes in value.
2.21 Earnings Per Share
Basic Earnings per Share is calculated by dividing the Net Profit or Loss attributable to Equity Holders of the Company by the
Weighted Average Number of Equity Shares outstanding during the period.
For the purpose of calculating Diluted Earnings per Share, the Net Profit or Loss for the period attributable to Equity Shareholders
of the Company and the Weighted Average Number of Shares outstanding during the period are adjusted for the effects of all
dilutive potential Equity Shares.
2.22 Contingent Liabilities
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
Company does not recognize a Contingent Liability but discloses its existence in the Financial Statements.
2.23 Dividend Income
Dividend is recognised in Profit or Loss only when the right to receive payment is established, it is probable that the economic
benefits associated with the Dividend will flow to the Company, and the amount of the Dividend can be measured reliably, which
is generally when Shareholders approve the Dividend.
2.24 Recent Accounting Pronouncements
Ministry of Corporate Affairs ("MCA") has notified amendments to the existing standards Ind AS 117 - Insurance Contracts and Ind
As 116 - Leases, relating to sale and lease back transactions, applicable from April 1,2024. The Company has assessed that there
is no significant impact on its Financial Statements.
2.25 Standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the
Company''s Financial Statements are disclosed below. The Company will adopt this new and amended standard, when it become
effective.
Lack of exchangeability - Amendments to Ind AS 21
The Ministry of Corporate Affairs notified amendments to Ind AS 21 - The Effects of Changes in Foreign Exchange Rates to specify
how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when
exchangeability is lacking. The amendments also require disclosure of information that enables users of its Financial Statements
to understand how the currency not being exchangeable into the other currency affects, or is expected to affect, the entity''s
financial performance, financial position and cash flows.
The amendments are effective for annual reporting periods beginning on or after April 1,2025. When applying the amendments,
an entity cannot restate comparative information.
The amendments are not expected to have an impact on the Company''s Financial Statements.
3. USE OF ESTIMATES AND JUDGEMENTS
The preparation of Standalone Financial Statements in conformity with Ind AS 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 Standalone 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.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
Judgements in applying Accounting Policies
The Judgements, apart from those involving estimations (see Note below), that the Company has made in the process of applying
its Accounting Policies and that have a significant effect on the amounts recognised in these Standalone Financial Statements
pertain to useful life of Intangible Assets acquired in merger. Refer Notes to the Standalone Financial Statements.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end of
the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of Assets and
Liabilities within the next financial year.
3.1 Useful lives of Property, Plant and Equipment and Intangible Assets
As described in the Material Accounting Policies, the Company reviews the estimated useful lives of Property, Plant and
Equipment and Intangible Assets at the end of each reporting period and any changes are accounted for prospectively.
3.2 Fair Value Measurements and Valuation Processes
Some of the Company''s Assets and Liabilities are measured at Fair Value for Financial Reporting purposes. Fair Value measurements
are categorised into Level 1,2 or 3 based on the degree to which the inputs to the Fair Value measurements are observable and
the significance of the inputs to the Fair Value measurement in its entirety, which are described as follows :
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical Assets or Liabilities that the entity can access at
the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the Asset or Liability,
either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the Asset or Liability. The Company engages third party valuers, where required,
to perform the valuation. Information about the valuation techniques and inputs used in determining the Fair Value of
various Assets and Liabilities are disclosed in the Notes to the Standalone Financial Statements.
3.3 Defined Benefit Plans (Gratuity Benefits)
The cost of the Defined Benefit Gratuity Plan and other post employment benefits and the present value of the gratuity
obligation 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 long-term nature, a Defined Benefit
Obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in
India, the management considers the interest rates of Government Bonds where remaining maturity of such bond correspond to
expected term of Defined Benefit Obligation.
The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in
response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.
Further details about Gratuity obligations are given in Note 29.
Mar 31, 2024
2. MATERIAL ACCOUNTING POLICIES
This note provides a list of the Material Accounting Policies adopted in the preparation of these Standalone Financial Statements. These policies have been consistently applied to all the periods presented, unless otherwise stated.
2.1 Compliance with Ind AS
The Standalone Financial Statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS Compliant Schedule III), as applicable to Standalone Financial Statement.
The Financial Statements are presented in Indian Rupees, which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates, and all values are rounded to the nearest lakhs (00,000.00), except as otherwise indicated.
The Company has prepared the Financial Statements on the basis that it will continue to operate as a going concern.
2.2 Basis of Preparation
These Standalone Financial Statements have been prepared on a Historical Cost basis except certain Financial Assets and Liabilities (refer Accounting Policy regarding Financial Instruments).
Historical cost is generally based on the Fair Value of the consideration given in exchange for goods and services.
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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the Fair Value of an Asset or a Liability, the Company takes into account the characteristics of the Asset or Liability if market participants would take those characteristics into account when pricing the Asset or Liability at the measurement date. Fair Value for measurement and/or disclosure purposes in these Financial Statements is determined on such a basis, except leasing transactions that are within the scope of Ind AS 116-Leases that have some similarities to Fair Value but are not Fair Value, such as Net Realisable Value in Ind AS 2-Inventories or Value in Use in Ind AS 36-Impairment of Assets.
2.3 Current versus Non-Current Classification
All Current/Non-Current Assets and Liabilities have been classified as Current/Non-Current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013 and Ind AS 1-Presentation of Financial Statements based on the nature of asset and liabilities and the time between the acquisition of assets for processing and their realisation in Cash and Cash Equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of Current/Non-Current classification of Assets and Liabilities.
2.4 Property, Plant and Equipment - Tangible Assets
Freehold Land is carried at Historical Cost. Property, Plant and Equipment are stated at cost of acquisition or construction less accumulated depreciation and impairment loss, if any. The cost of an item of Property, Plant and Equipment comprises of its cost of acquisition inclusive of inward freight, import duties and other non-refundable taxes or levies and any other cost directly attributable to the acquisition/construction of those items. Expenses capitalised also include applicable Borrowing Costs for long
term construction projects if the recognition criteria are met. Subsequent costs are included in the asset''s Carrying Amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The Carrying Value of any component accounted for as a separate asset is derecognised when replaced.
All other repairs and maintenance are charged to the Standalone Statement of Profit and Loss when incurred. An item of Property, Plant and Equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of asset. Any gain or loss arising on the disposal or retirement of an item of Property, Plant and Equipment is determined as the difference between the Sales Proceeds and the Carrying Amount of the asset and is recognised in the Standalone Statement of Profit and Loss.
Capital Work-in-Progress is stated at cost (including Borrowing Cost, where applicable and adjustment for Exchange Difference), incurred during construction/installation/preoperative periods relating to items or project in progress net of accumulated impairment loss, if any.
2.5 Intangible Assets (Including Goodwill)
Intangible Assets are recognised at the cost incurred for its acquisition and are carried at cost less accumulated amortisation and accumulated impairment loss, if any. Cost of Intangible Asset is capitalised where it is expected to provide future economic benefits and the cost can be measured reliably. Capitalisation Costs include License Fees and costs of implementation/system integration services. The costs are capitalised in the year in which the related Intangible Asset is put to use.
Subsequent expenditure is capitalised only when it increases the future economic benefits from the specific asset to which it relates.
An item of Intangible Asset is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of asset. Any gain or loss arising on the disposal or retirement of an item of Intangible Asset is determined as the difference between the Sales Proceeds and the Carrying Amount of the asset and is recognised in the Standalone Statement of Profit and Loss.
Goodwill arising on Amalgamation has been recognised in accordance with the approved Scheme as detailed in Note 38. Said Goodwill is being amortised in accordance with the scheme for which the Company has estimated useful life of 10 years. Such Goodwill will be tested for impairment at every reporting period and wherever there is an indication that the Recoverable Amount is less than its Carrying Amount based on a number of factor including business plan, operating results, future cash flows and economic conditions. The recoverable amount is determined based on higher of Value in Use and Fair Value less Cost to Sell. The Company uses Discounted Cash Flow Method to determine the Recoverable Amount. Cash Flow Projections take into account past experience and represent Management''s best estimate about future developments.
As per Ind AS 38, the expenditure on Research and Development is classified into the expenditure on Research Phase and Development Phase. As per Paragraph 54 of Ind AS 38, any expenditure on Research Phase should be recognised as an Expense immediately. Any expenditure on Development Phase should be recognised as an Intangible Asset, if the recognition criteria given in Paragraph 57 of Ind AS 38 are satisfied.
2.6 Depreciation and Amortisation
Depreciation/Amortisation of Property, Plant and Equipment and Intangible Assets is calculated using Straight Line Method to allocate their costs, net of their residual values, over their estimated useful lives.
The useful lives considered is as prescribed in Schedule II to the Companies Act, 2013 except for certain items of Plant and Machinery (Machinery Spares) which are depreciated over a period of 1-5 years. The asset''s residual values and useful lives are reviewed and adjusted if necessary, at the end of each reporting period.
Pro-rata Depreciation/Amortisation is charged on assets from/upto the date on which such assets are ready for intended use/are discarded or sold.
Computer Software is classified as Intangible Asset and amortised on a Straight Line basis over a period of 2 years.
Vehicles are depreciated over the period of 5 years.
2.7 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 Asset''s Recoverable Amount. An Asset''s Recoverable Amount is the higher of an Asset''s or Cash-Generating Unit''s (CGU) 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 or groups of assets. When the Carrying Amount of an Asset or CGU exceeds its Recoverable Amount, the Asset is considered Impaired and is written down to its Recoverable Amount.
When an Impairment Loss subsequently reverses, the Carrying Amount of the Asset (or Cash Generating Unit) is increased to the revised estimate of its Recoverable Amount, but so that the increased Carrying Amount does not exceed the Carrying Amount that would have been determined had no Impairment Loss been recognised for the Asset (or Cash Generating Unit) in prior years. A reversal of an Impairment Loss is recognised immediately in Standalone Statement of Profit and Loss.
The Company assesses where climate risks could have a significant impact, such as the introduction of emission reduction legislation that may increase manufacturing costs. These risks in relation to climate related matters are included as key assumptions where they materially impact the measure of Recoverable Amount. These assumptions have been included in the cash flow forecasts in assessing Value-in-Use amounts.
2.8 Inventories
Inventories are stated at the lower of cost and net realizable value.
Raw materials, Trading Goods and Stores and Spares : Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on Weighted Average Basis.
Finished Goods and Work in Progress : Cost includes cost of Direct Materials and Labour and a proportion of Manufacturing Overheads based on the normal operating capacity.
Net Realisable Value is the estimated selling price less estimated costs for completion and sale. Obsolete, slow moving and defective inventories are identified periodically and, where necessary, a provision is made for such inventories.
2.9 Foreign Currency Transactions
The functional and presentation currency of the Company is Indian Rupee. At the end of each reporting period, Foreign Currency monetary items are translated using the functional currency spot rates prevailing at the reporting date. Exchange differences on monetary items are recognised in Standalone Statement of Profit and Loss in the period in which they arise except for exchange differences on transactions entered into in order to hedge certain Foreign Currency Risks. 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 non-monetary 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 Other Comprehensive Income or Profit or Loss are also recognised in Other Comprehensive Income or Profit or Loss, respectively)
2.10 Investment in Subsidiaries
Investment in Subsidiaries are carried at cost in accordance with Ind AS 27. Investments in Subsidiaries are carried at cost less provision for impairment, if any. Investments in subsidiaries are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of investments exceeds its recoverable amount.
2.11 Financial Instruments, Financial Assets, Financial Liabilities and Equity Instruments
2.11.1 Financial Assets
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.
Recognition : Financial Assets include Investments, Trade Receivables, Cash and Cash Equivalents, other Bank balances and Other Financial Assets etc. Such assets are initially recognised at transaction price when the Company becomes party to contractual obligations. All the Financial Assets are initially measured at Fair Value. Transaction Costs that are directly attributable to the acquisition of Financial Asset (other than Financial Assets carried at Fair Value through Profit or Loss) are added to or deducted from the Fair Value measured on initial recognition of the Financial Assets.
Classification : Management determines the classification of an Asset at initial recognition depending on the purpose for which the Assets were acquired. The subsequent measurement of Financial Assets depends on such classification.
Financial Assets are classified as those measured at :
a) Amortised Cost, where the Financial Assets are held solely for collection of cash flows arising from payments of principal and/or interest.
b) Fair Value through Other Comprehensive Income (FVTOCI), where the Financial Assets are held not only for collection of cash flows arising from payments of principal and interest but also from the sale of such assets. Such assets are subsequently measured at Fair Value, with Unrealised Gains and Losses arising from changes in the Fair Value being recognised in Other Comprehensive Income.
c) Fair Value through Profit or Loss (FVTPL), where the assets are managed in accordance with an approved investment strategy that triggers purchase and sale decisions based on the Fair Value of such assets. Such assets are subsequently measured at Fair Value, with Unrealised Gains and Losses arising from changes in the Fair Value being recognised in the Standalone Statement of Profit and Loss in the period in which Trade Receivables, Cash and Cash Equivalents, other Bank Balances and Other Financial Assets etc are classified for measurement at Amortised Cost while Investments may fall under any of the aforesaid classes.
Impairment : The Company assesses at each reporting date whether a Financial Asset (or a group of Financial Assets) such as Investments, Trade Receivables, other Bank balances and Other Financial Assets held at Amortised Cost and Financial Assets that are measured at Fair Value through Other Comprehensive Income are tested for impairment based on evidence or information that is available without undue cost or effort. Expected Credit Losses (ECL) are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original Effective Interest Rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12 month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a Lifetime ECL).
For Trade Receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
Reclassification : When and only when the business model is changed, the Company shall reclassify all affected Financial Assets prospectively from the reclassification date as subsequently measured at amortised cost, Fair Value through Other Comprehensive Income, Fair Value through Profit or Loss without restating the previously recognised gains, losses or interest and in terms of the reclassification principles laid down in the Ind AS relating to Financial Instruments.
De-recognition : Financial Assets are derecognised when the right to receive cash flows from the assets has expired, or has been transferred and the Company has transferred substantially all of the risks and rewards of ownership.
Concurrently, if the asset is one that is measured at :
a) Amortised Cost, the Gain or Loss is recognised in the Standalone Statement of Profit and Loss,
b) Fair Value through Other Comprehensive Income, the cumulative Fair Value adjustments previously taken to Reserves are reclassified to the Standalone Statement of Profit and Loss unless the asset represents an Equity Investment in which case the cumulative Fair Value adjustments previously taken to reserves is reclassified within Equity.
Income Recognition : Interest Income is recognised in the Standalone Statement of Profit and Loss using the Effective Interest Method. The Effective Interest Rate is the rate that exactly discounts estimated future cash receipts through the expected life of the Financial Asset to the Gross Carrying Amount of the Financial Asset. Dividend Income is recognised in the Standalone Statement of Profit and Loss when the right to receive Dividend is established and the amount can be measured reliably.
2.11.2 Financial Liabilities
Borrowings, Trade Payables and Other Financial Liabilities are initially recognised at the value of the respective contractual obligations. They are subsequently measured at amortised cost. Any discount or premium on redemption/settlement is recognised in the Standalone Statement of Profit and Loss as Finance Cost over the life of the liability using the Effective Interest Method and adjusted to the liability figure disclosed in the Balance Sheet. Financial Liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation is discharged, cancelled and on expiry.
De-recognition
A Financial Liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing Financial Liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective Carrying Amounts is recognised in the Standalone Statement of Profit and Loss.
Offsetting Financial Instruments
Financial Assets and Liabilities are offset and the net amount is included in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
2.11.3 Equity Instruments
Equity Instruments are recognised at the value of the proceeds, net of direct costs of the capital issue.
2.12 Revenue
Revenue from contract with customers is recognised when when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Company satisfies performance obligation by transferring promised goods and services to the customer. Performance obligations may be satisfied at a point of time or over a period of time. Performance obligations satisfied over a period of time are recognised as per the terms of relevant contractual agreements/arrangements. Performance obligations are said to be satisfied at a point of time when the customer obtains controls of the asset.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The Transaction Price of goods sold and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract, excluding amounts collected on behalf of third parties.
Trade Receivables that do not contain a significant financing component are measured at Transaction Price.
Interest Income is recognised in the Standalone Statement of Profit and Loss using the Effective Interest Method. The Effective Interest Rate is the rate that exactly discounts estimated future cash receipts through the expected life of the Financial Asset to the Gross Carrying Amount of the Financial Asset.
Export Incentives in the form of Duty Drawbacks and Remission of Duties and Taxes on Export Products (RODTEP) are recognised on accrual basis against goods exported.
2.13 Government Grant
The Company may receive Government Grants that require compliance with certain conditions related to the Company''s operating activities or are provided to the Company by way of financial assistance on the basis of certain qualifying criteria.
Government Grants are recognised when there is reasonable assurance that the grant will be received and the Company will comply with the conditions attached to the grant.
Accordingly, Export Benefits are accounted for as Government Grants in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
2.14 Employee Benefits
Short Term Obligations
Liabilities for wages and salaries, including non monetary benefits that are expected to be settled wholly within 12 months after the end of the reporting period in which the employees render the related services are measured at the amounts expected to be paid. The Liabilities are presented as current Employee Benefit Obligations in the Standalone Financial Statements. Cost of non accumulating Compensated Absences are recognised when the absences occur.
Post Employment Obligations
The Company makes contributions to both Defined Benefit and Defined Contribution Schemes.
i) Contributions towards Provident Fund are recognised as Expense. Provident Fund contributions in respect of employees upto August 2017 of erstwhile IFGL Refractories Limited are made to a Trustee managed exempted Fund and interest paid to members thereof is not lower than that declared annually by the Central Government. Shortfall, if any, is made good by the Company. Membership to said Fund has been closed on and from September 1,2017, subject to necessary approvals and/or permissions. Provident Fund in respect of remaining employees are made to Statutory Provident Fund established by the Central Government. The Company''s contribution is recognised as an Expense in the Standalone Statement of Profit and Loss for the period in which the employees render related service.
ii) Contribution under Statutory Employees''Pension Scheme is made as per statutory requirements and charged as expenses for the year.
iii) Certain employees who joined before April 1, 2004 in erstwhile IFGL Refractories Limited are members of a Trustee managed Superannuation Fund. Said Fund provides for Superannuation Benefit on retirement/death/incapacitation/ termination and was amended from the Defined Benefit to Defined Contribution Plan effective April 1, 2004. Defined Benefits were frozen on March 31, 2004. Necessary formalities and approvals have been complied with and obtained. Contribution to Superannuation Fund (Defined Contribution Plan) for certain employees is charged as expenses for the year.
iv) The Company also contributes to the Central Government administered Employees'' State Insurance Scheme for its eligible employees which is a Defined Contribution Plan.
v) The Company provides Gratuity benefit to its employees through a Trustee managed Fund. Gratuity entitlement of the employees is as per provisions of the Payment of Gratuity Act, 1972. However, in case of employees joining before April 1,2003 of erstwhile IFGL Refractories Limited, they are entitled to Gratuity as per Scheme framed by that Company or as per the Payment of Gratuity Act, 1972, whichever is higher. Liability towards Gratuity, Superannuation (Defined Benefit Plan) covering eligible employees, is provided and funded on the basis of year end Actuarial Valuation. The Liability or Asset recognised in the Balance Sheet in respect of Gratuity Plans is the Present Value of Defined Benefit Obligations at the end of the reporting period less the Fair Value of Plan Assets. The Defined Benefit Obligation is calculated annually by actuary using the Projected Unit Credit Method. The Present Value of the Defined Benefit Obligations is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on Government Bonds that have terms approximating to the terms of the related obligation. The Net Interest Cost is calculated by applying the discount rate to the net balance of the Defined Benefit Obligation and the Fair Value of Plan Assets. This cost is included in the Employee Benefit Expense in the Standalone Statement of Profit and Loss.
Re-measurement, comprising of actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income. They are included in Retained Earnings in the Statement of Changes in Equity and in the Balance Sheet.
vi) Accrued Liability towards Compensated Absence, covering eligible employees, evaluated on the basis of year end Actuarial Valuation is recognised as a charge.
2.15 Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a Lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises Lease Liabilities to make Lease Payments and Right-of-Use Assets representing the Right of Use the underlying Assets.
Right-of-Use Assets
The Company recognises Right-of-Use Assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right of Use Assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of Lease Liabilities.
Right-of-Use Assets are depreciated on a straight-line basis over the lease term or estimated useful life of asset, whichever is less.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The Right-of-Use Assets are also subject to impairment. Refer to the Accounting Policies under Section 2.7: Impairment of Non Financial Assets.
Lease Liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the Present Value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
In calculating the Present Value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
Short-Term Leases and Leases of Low-Value Assets
The Company applies the Short-Term Lease Recognition exemption to its Short-Term Leases of Office, Machinery and Equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the Lease of Low-Value Assets recognition exemption to Leases of Offices, Equipment, etc. that are of low value. Lease payments on short term leases and leases of low-value assets are recognised as expense on a Straight-Line basis over the Lease Term.
2.16 Taxes on Income
Taxes on Income comprises of Current Taxes and Deferred Taxes. Current Tax in the Standalone Statement of Profit and Loss is provided as the amount of tax payable in respect of taxable income for the period using tax rates and tax laws enacted at the end of the reporting period, together with any adjustment to tax payable in respect of previous years. Current Income Tax relating to items recognised outside Profit or Loss is recognised outside Profit or Loss (either in Other Comprehensive Income or in Equity). Current Tax items are recognised in correlation to the underlying transaction either in Other Comprehensive Income or directly in Equity. The Company periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the Tax Authorities.
Deferred Tax is recognised on temporary differences between the Carrying Amounts of Assets and Liabilities and the amounts used for taxation purposes (tax base), at the tax rates and tax laws enacted or substantively enacted by the end of the reporting period. Deferred Tax Assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
(a) When the Deferred Tax Asset relating to the deductible temporary difference arises from the initial recognition of an Asset or Liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable Profit or Loss and does not give rise to equal taxable and deductible temporary differences;
(b) In respect of deductible temporary differences associated with Investments in Subsidiaries, Associates and Interests in Joint Ventures, Deferred Tax Assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
Deferred Tax Assets and Liabilities are offset when there is legally enforceable right to offset Current Tax Assets and Liabilities and when the Deferred Tax balances related to the same taxation authority. Current Tax Assets and Tax Liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on net basis or to realise the Asset and settle the Liability simultaneously.
In assessing the recoverability of Deferred Tax Assets, the Company relies on the same forecast assumptions used elsewhere in the financial statements and in other management reports, which, among other things, reflect the potential impact of climate related development on the business, such as increased cost of production as a result of measures to reduce carbon emission.
Mar 31, 2023
1. CORPORATE INFORMATION
IFGL Refractories Limited is a Public Limited Company and was incorporated under the Companies Act, 1956. The Company is primarily engaged in the manufacturing, trading and selling of Refractory items and its related equipment and accessories used in Steel plants. The Company also provides services in relation to refractory goods. Manufacturing facilities of the Company are located in Kandla Special Economic Zone (SEZ), Gujarat, Kalunga Industrial Estate near Rourkela, Odisha and Industrial Park APIIC De-Notified Area, Atchutapuram, Visakhapatnam District, Andhra Pradesh. The Company has operating Subsidiaries in Asia (China), in Europe (Germany and United Kingdom) and in North America (USA). The Company caters to both domestic and international markets. The shares of the Company are listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE).
These Ind AS Financial Statements were authorised for issue in accordance with a resolution of the Board of Directors on 27th May 2023.
2. SIGNIFICANT ACCOUNTING POLICIES :
This note provides a list of the significant accounting policies adopted in the preparation of these Standalone Financial Statements. These policies have been consistently applied to all the periods presented, unless otherwise stated.
The Standalone Financial Statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS Compliant Schedule III), as applicable to Standalone Financial Statement.
The Financial Statements are presented in Indian Rupees, which is the functional currency of the Company and the currency of the primary economic environment in which the Company operates, and all values are rounded to the nearest lakhs (00,000.00), except as otherwise indicated.
These Standalone Financial Statements have been prepared on a Historical Cost basis except certain Financial Assets and Liabilities (refer Accounting Policy).
Historical cost is generally based on the Fair Value of the consideration given in exchange for goods and services.
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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the Fair Value of an Asset or a Liability, the Company takes into account the characteristics of the Asset or Liability if market participants would take those characteristics into account when pricing the Asset or Liability at the measurement date. Fair Value for measurement and/or disclosure purposes in these Financial Statements is determined on such a basis, except leasing transactions that are within the scope of Ind AS 116 - Leases that have some similarities to Fair Value but are not Fair Value, such as Net Realisable Value in Ind AS 2 - Inventories or Value in Use in Ind AS 36 - Impairment of Assets.
2.3 Current versus Non-Current Classification
All Current/Non-Current Assets and Liabilities have been classified as Current/Non-Current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013 and Ind AS 1 - Presentation of Financial Statements based on the nature of asset and liabilities and the time between the acquisition of assets for processing and their realisation in Cash and Cash Equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of Current/Non-Current classification of Assets and Liabilities.
2.4 Property, Plant and Equipment - Tangible Assets
Freehold Land is carried at Historical Cost. Property, Plant and Equipment are stated at cost of acquisition or construction less accumulated depreciation and impairment, if any. The cost of an item of Property, Plant and Equipment comprises of its cost of acquisition inclusive of inward freight, import duties and other non-refundable taxes or levies and any other cost directly attributable to the acquisition/construction of those items. Expenses capitalised also include applicable borrowing costs for qualifying assets, if any. Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying value of any component accounted for as a separate asset is derecognised when replaced.
All other repairs and maintenance are charged to the Standalone Statement of Profit and Loss when incurred. An item of Property, Plant and Equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of asset. Any gain or loss arising on the disposal or retirement of an item of Property, Plant and Equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Standalone Statement of Profit and Loss.
Capital Work-in-Progress is stated at cost (including borrowing cost, where applicable and adjustment for exchange difference), incurred during construction/installation/preoperative periods relating to items or project in progress net of accumulated impairment loss, if any.
Intangible Assets are recognised at the cost incurred for its acquisition and are carried at cost less amortisation and impairment, if any. Cost of Intangible Asset is capitalised where it is expected to provide future economic benefits and the cost can be measured reliably. Capitalisation Costs include license fees and costs of implementation/system integration services. The costs are capitalised in the year in which the related Intangible Asset is put to use.
Subsequent expenditure is capitalised only when it increases the future economic benefits from the specific asset to which it relates.
An item of Intangible Asset is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of asset. Any gain or loss arising on the disposal or retirement of an item of Intangible Asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Standalone Statement of Profit and Loss.
Goodwill arising on Amalgamation has been recognised in accordance with the approved Scheme as detailed in Note 38. Said Goodwill is being amortised in accordance with the scheme for which the Company has estimated useful life of 10 years. Such goodwill will be tested for impairment at every reporting period and wherever there is an indication that the recoverable amount is less than its carrying amount based on a number of factor including business plan, operating results, future cash flows and economic conditions. The recoverable amount is determined based on higher of Value in Use and Fair Value less cost to sell. The Company uses discounted cash flow method to determine the recoverable amount. Cash flow projections take into account past experience and represent management''s best estimate about future developments.
As per Ind AS 38, the expenditure on research and development is classified into the expenditure on research phase and development phase. As per paragraph 54 of Ind AS 38, any expenditure on research phase should be recognised as an expense immediately. Any expenditure on development phase should be recognised as an intangible asset, if the recognition criteria given in paragraph 57 of Ind AS 38 are satisfied.
2.6 Depreciation and Amortisation
Depreciation/Amortisation of Property, Plant and Equipment and Intangible Assets is calculated using Straight Line Method to allocate their costs, net of their residual values, over their estimated useful lives.
The useful lives considered is as prescribed in Schedule II to the Companies Act, 2013 except for certain items of Plant and Machinery (Machinery Spares) which are depreciated over a period of 1-5 years. The Asset''s residual values and useful lives are reviewed and adjusted if necessary, at the end of each reporting period.
Pro-rata depreciation/amortisation is charged on assets from/upto the date on which such assets are ready for intended use/are discarded or sold.
Computer Software is classified as Intangible Asset and amortised on a Straight Line basis over a period of 2 years.
Vehicles are depreciated over the period of 5 years.
2.7 Impairment of Non Financial Assets
Impairment Loss, if any, is provided to the extent, the Carrying amount of Assets or cash generating units exceed their recoverable amount. Recoverable amount is higher of an Asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an Asset or Cash generating unit and from its disposal at the end of its useful life.
When an Impairment Loss subsequently reverses, the Carrying Amount of the Asset (or Cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no Impairment Loss been recognised for the Asset (or Cash generating unit) in prior years. A reversal of an Impairment Loss is recognised immediately in Standalone Statement of Profit and Loss.
The Company assesses where climate risks could have a significant impact, such as the introduction of emission-reduction legislation that may increase manufacturing costs. These risks in relation to climate-related matters are included as key assumptions where they materially impact the measure of recoverable amount. These assumptions have been included in the cash-flow forecasts in assessing value-in-use amounts.
Inventories are stated at lower of cost and net realizable value.
Raw materials, Trading goods and Stores and spares : Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on Weighted Average Basis.
Finished Goods and Work in Progress : Cost includes cost of Direct Materials and labour and a proportion of manufacturing overheads based on the normal operating capacity.
Net Realisable Value is the estimated selling price less estimated costs for completion and sale. Obsolete, slow moving and defective inventories are identified periodically and, where necessary, a provision is made for such Inventories.
2.9 Foreign Currency Transactions
The functional and presentation currency of the Company is Indian Rupee. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non monetary items carried at Fair Value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the Fair Value was determined. Non monetary items that are measured in terms of Historical Cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in Standalone Statement of Profit and Loss in the period in which they arise except for exchange differences on transactions entered into in order to hedge certain Foreign Currency Risks.
2.10 Investment in subsidiaries
Investment in Subsidiaries are carried at cost in accordance with Ind AS 27.
2.11 financial Instruments, financial assets, financial Liabilities and Equity Instruments2.11.1 Financial Assets
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.
Recognition : Financial Assets include Investments, Trade Receivables, Cash and Cash Equivalents, other Bank balances and other Financial assets etc. Such assets are initially recognised at transaction price when the Company becomes party to contractual obligations. All the Financial Assets are initially measured at Fair Value. Transaction Costs that are directly attributable to the acquisition of Financial Asset (other than Financial Assets carried at Fair Value through Profit or Loss) are added to or deducted from the Fair Value measured on initial recognition of the Financial Assets.
classification : Management determines the classification of an Asset at initial recognition depending on the purpose for which the Assets were acquired. The subsequent measurement of Financial Assets depends on such classification.]
Financial Assets are classified as those measured at :
a) Amortised cost, where the Financial Assets are held solely for collection of cash flows arising from payments of principal and/or interest.
b) Fair Value through Other Comprehensive Income (FVTOCI), where the Financial Assets are held not only for collection of cash flows arising from payments of principal and interest but also from the sale of such assets. Such assets are subsequently measured at Fair Value, with unrealised gains and losses arising from changes in the Fair Value being recognised in Other Comprehensive Income.
c) Fair Value through Profit or Loss (FVTPL), where the assets are managed in accordance with an approved investment strategy that triggers purchase and sale decisions based on the Fair Value of such assets. Such assets are subsequently measured at Fair Value, with unrealised gains and losses arising from changes in the Fair Value being recognised in the Standalone Statement of Profit and Loss in the period in which Trade Receivables, Cash and Cash Equivalents other Bank balances and other Financial Assets etc are classified for measurement at amortised cost while Investments may fall under any of the aforesaid classes.
Impairment : The Company assesses at each reporting date whether a Financial Asset (or a group of Financial Assets) such as Investments, Trade Receivables and other Bank balances and other Financial Assets held at amortised cost and Financial Assets that are measured at Fair Value through Other Comprehensive Income are tested for impairment based on evidence or information that is available without undue cost or effort. Expected Credit Losses (ECL) are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For Trade Receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the Debtors and the economic environment.
Reclassification : When and only when the business model is changed, the Company shall reclassify all affected Financial Assets prospectively from the reclassification date as subsequently measured at amortised cost, Fair Value through Other Comprehensive Income, Fair Value through Profit or Loss without restating the previously recognised gains, losses or interest and in terms of the reclassification principles laid down in the Ind AS relating to Financial Instruments.
De-recognition : Financial Assets are derecognised when the right to receive cash flows from the assets has expired, or has been transferred and the Company has transferred substantially all of the risks and rewards of ownership.
Concurrently, if the asset is one that is measured at :
a) Amortised Cost, the Gain or Loss is recognised in the Standalone Statement of Profit and Loss,
b) Fair Value through Other Comprehensive Income, the Cumulative Fair Value adjustments previously taken to reserves are reclassified to the Standalone Statement of Profit and Loss unless the Asset represents an Equity Investment in which case the Cumulative Fair Value adjustments previously taken to reserves is reclassified within Equity.
Income recognition : Interest Income is recognised in the Standalone Statement of Profit and Loss using the effective interest method. The effective Interest Rate is the rate that exactly discounts estimated future cash receipts through the expected life of the Financial Asset to the Gross Carrying Amount of the Financial Asset. Dividend Income is recognised in the Standalone Statement of Profit and Loss when the right to receive Dividend is established and the amount can be measured reliably.
Borrowings, Trade Payables and Other Financial Liabilities are initially recognised at the value of the respective contractual obligations. They are subsequently measured at amortised cost. Any discount or premium on redemption/settlement is recognised in the Standalone Statement of Profit and Loss as Finance Cost over the life of the Liability using the effective interest method and adjusted to the liability figure disclosed in the Balance Sheet. Financial Liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation is discharged, cancelled and on expiry.
A Financial Liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing Financial Liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective Carrying Amounts is recognised in the Standalone Statement of Profit and Loss.
Offsetting Financial Instruments
Financial Assets and Liabilities are offset and the net amount is included in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
Equity Instruments are recognised at the value of the proceeds, net of direct costs of the capital issue.
Revenue from contract and service income with customers is recognised when the Company satisfies performance obligation by transferring promised goods and services to the customer. Performance obligations may be satisfied at a point of time or over a period of time. Performance obligations satisfied over a period of time are recognised as per the terms of relevant contractual agreements/arrangements. Performance obligations are said to be satisfied at a point of time when the customer obtains controls of the asset.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The Transaction Price of goods sold and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract, excluding amounts collected on behalf of third parties.
Trade Receivables that do not contain a significant financing component are measured at Transaction Price.
Interest Income is recognised in the Standalone Statement of Profit and Loss using the effective interest method. The effective Interest Rate is the rate that exactly discounts estimated future cash receipts through the expected life of the Financial Asset to the Gross Carrying Amount of the Financial Asset.
Export Incentives in the form of duty drawbacks and Remission of Duties and Taxes on Export Products (RODTEP) are recognised on accrual basis against goods exported.
The Company may receive Government Grants that require compliance with certain conditions related to the Company''s operating activities or are provided to the Company by way of financial assistance on the basis of certain qualifying criteria. Government Grants are recognised when there is reasonable assurance that the grant will be received and the Company will comply with the conditions attached to the grant.
Accordingly, Export Benefits are accounted for as Government Grants in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
Short Term Obligations
Liabilities for wages and salaries, including non monetary benefits that are expected to be settled wholly within 12 months after the end of the reporting period in which the employees render the related services are measured at the amounts expected to be paid. The Liabilities are presented as current Employee Benefit Obligations in the Standalone Financial Statements. Cost of non accumulating Compensated Absences are recognised when the absences occur.
Post Employment Obligations
The Company makes contributions to both Defined Benefit and Defined Contribution Schemes.
i) Contributions towards Provident Fund are recognised as Expense. Provident Fund contributions in respect of employees upto August 2017 of erstwhile IFGL Refractories Limited are made to a Trustee managed exempted Fund and interest paid to members thereof is not lower than that declared annually by the Central Government. Shortfall, if any, is made good by the Company. Membership to said Fund has been closed on and from 1st September 2017, subject to necessary approvals and/or permissions. Provident Fund in respect of remaining employees are made to Statutory Provident Fund established by the Central Government. The Company''s contribution is recognised as an expense in the Standalone Statement of Profit and Loss for the period in which the employees render related service.
ii) Contribution under statutory Employees'' Pension Scheme is made as per statutory requirements and charged as expenses for the year.
iii) Certain employees who joined before 31st March 2004 in erstwhile IFGL Refractories Limited are members of a Trustee managed Superannuation Fund. Said Fund provides for Superannuation Benefit on retirement/death/incapacitation/ termination and was amended from the Defined Benefit to Defined Contribution Plan effective 1st April 2004. Defined Benefits were frozen on 31st March 2004. Necessary formalities and approvals have been complied with and obtained. Contribution to Superannuation Fund (Defined Contribution Plan) for certain employees is charged as expenses for the year.
iv) The Company also contributes to the Central Government administered Employees'' State Insurance Scheme for its eligible employees which is a Defined Contribution Plan.
v) The Company provides Gratuity benefit to its employees through a Trustee managed Fund. Gratuity entitlement of the employees is as per provisions of the Payment of Gratuity Act, 1972. However, in case of employees joining before 1st April 2003 of erstwhile IFGL Refractories Limited, they are entitled to Gratuity as per Scheme framed by that Company or as per the Payment of Gratuity Act, 1972, whichever is higher. Liability towards Gratuity, Superannuation (Defined Benefit Plan) covering eligible employees, is provided and funded on the basis of year end Actuarial Valuation. The Liability or Asset recognised in the Balance Sheet in respect of Gratuity Plans is the present value of Defined Benefit Obligations at the end of the reporting period less the Fair Value of Plan Assets. The Defined Benefit Obligation is calculated annually by actuary using the Projected Unit Credit Method. The Present Value of the Defined Benefit Obligations is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on Government Bonds that have terms approximating to the terms of the related obligation. The Net Interest Cost is calculated by applying the discount rate to the net balance of the Defined Benefit Obligation and the Fair Value of Plan Assets. This cost is included in the Employee Benefit Expense in the Standalone Statement of Profit and Loss. Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income. They are included in Retained Earnings in the Statement of Changes in Equity and in the Balance Sheet.
vi) Accrued Liability towards Compensated Absence, covering eligible employees, evaluated on the basis of year end Actuarial Valuation is recognised as a charge.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and Right of use assets representing the Right of use the underlying assets.
The Company recognises Right of Use Assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right of Use Assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.
Right of Use Assets are depreciated on a straight-line basis over the lease term or estimated useful life of asset, which ever is less. If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The Right of Use Assets are also subject to impairment. Refer to the accounting policies under Section 2.7 : Impairment of Non Financial Assets.
At the commencement date of the lease, the Company recognises lease liabilities measured at the Present Value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
In calculating the Present Value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g. changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
Short-Term Leases and Leases of Low-Value Assets
The Company applies the Short-Term Lease Recognition exemption to its Short-Term Leases of Office, Machinery and Equipment (i.e., those leases that have a Lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the Lease of Low-Value Assets recognition exemption to Leases of Offices, Equipment etc. that are of low value. Lease payments on short term leases and leases of low-value assets are recognised as expense on a Straight-Line basis over the Lease term.
Taxes on Income comprises of Current Taxes and Deferred Taxes. Current Tax in the Standalone Statement of Profit and Loss is provided as the amount of tax payable in respect of taxable income for the period using tax rates and tax laws enacted at the end of the reporting period, together with any adjustment to tax payable in respect of previous years. Current Income Tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in Other Comprehensive Income or in Equity). Current Tax items are recognised in correlation to the underlying transaction either in OCI or directly in Equity. The Company periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred Tax is recognised on temporary differences between the Carrying Amounts of Assets and Liabilities and the amounts used for taxation purposes (tax base), at the tax rates and tax laws enacted or substantively enacted by the end of the reporting period. Deferred Tax Assets are recognised for the future tax consequences to the extent it is probable that future taxable profits will be available against which such temporary differences, unused tax credits and to unused tax losses.
Deferred Tax Assets and Liabilities are offset when there is legally enforceable right to offset Current Tax Assets and Liabilities and when the Deferred Tax balances related to the same taxation authority. Current Tax Assets and Tax Liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on net basis or to realise the asset and settle the liability simultaneously.
In assessing the recoverability of deferred tax assets, the Company relies on the same forecast assumptions used elsewhere in the Financial Statements and in other management reports, which, among other things, reflect the potential impact of climate-related development on the business, such as increased cost of production as a result of measures to reduce carbon emission.
Minimum alternate tax (MAT) paid in a year is charged to the Statement of Profit and Loss as Current Tax for the year. The Deferred Tax Asset is recognised for MAT credit available only to the extent that it is probable that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset, it is created by way of credit to the Statement of Profit and Loss and shown as part of Deferred Tax Asset. The company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent that it is no longer probable that it will pay normal tax during the specified period.
Provisions are recognised when, as a result of a past event, the Company has a legal or constructive obligation, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. The amount so recognised is a best estimate of the consideration required to settle the obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. In an event when the time value of money is material, the provision is carried at the Present Value of the cash flows estimated to settle the obligation.
Operating Segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The CODM is responsible for allocating resources and assessing performance of the Operating Segments. Based on such the Company operates in one Operating Segment, viz. Specialised Refractories and Ceramics.
Segments are organised based on business and geographies which have similar economic characteristics as well as exhibit similarities in nature of products and services offered, the nature of production processes, the type and class of customer and distribution methods. As per Ind AS 108, if a financial report contains both the Consolidated Financial Statements of a Parent that is within the scope of this Indian Accounting Standard as well as the Parent''s Separate Financial Statements, segment information is required only in the Consolidated Financial Statements. Accordingly, the Company has presented segment only for Consolidated Financial Statements.
Borrowings are initially recognised at Fair Value, Net of Transaction Costs incurred. Borrowings are subsequently measured at Amortised Cost using effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in Profit or Loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as Transaction Costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are derecognised from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.
Borrowings are classified as Current and Non-Current Liabilities based on repayment schedule agreed with banks. borrowing costs
General and Specific Borrowing Costs that are directly attributable to the acquisition, construction or production of a Qualifying Asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying Assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other Borrowing Costs are expensed in the period in which they are incurred.
2.20 cash and cash Equivalents
Cash and Cash Equivalent in the Balance Sheet comprise Cash at Banks and on hand and Short-Term Deposits with an original maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value.
Basic Earnings per Share is calculated by dividing the Net Profit or loss attributable to Equity Holders of the Company by the Weighted Average number of Equity Shares outstanding during the period.
For the purpose of calculating Diluted Earnings per Share, the net profit or loss for the period attributable to Equity Shareholders of the Company and the Weighted Average Number of Shares outstanding during the period are adjusted for the effects of all dilutive potential Equity Shares.
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 Company does not recognize a contingent liability but discloses its existence in the Financial Statements.
2.23 New and Amended Standardsa. amendments to Ind As 37 : onerous contracts - costs of Fulfilling a contract
An Onerous Contract is a contract under which the unavoidable of meeting the obligations under the contract costs (i.e. the costs that the Company cannot avoid because it has the contract) exceed the economic benefits expected to be received under it.
The amendments specify that when assessing whether a contract is onerous or loss-making, an entity needs to include costs that relate directly to a contract to provide goods or services including both incremental costs (e.g. the costs of direct labour and materials) and an allocation of costs directly related to contract activities (e.g. depreciation of equipment used to fulfil the contract and costs of contract management and supervision). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.
The Company applied the amendments to the contracts for which it had not fulfilled all of its obligations at the beginning of the reporting period.
Prior to the application of the amendments, the Company had not identified any contracts as being onerous as the unavoidable costs under the contracts, which were the costs of fulfilling them, comprised only incremental costs directly related to the contracts. As a result of the amendments, the company assessed whether certain other directly related costs are required to be included by the company in determining the costs of fulfilling the contracts. The Company, therefore, recognised an Onerous Contract provision as at 1st April 2022, which increased as of 31st March 2023.
b. amendments to Ind As 103 : conceptual framework
The amendments replaced the reference to the ICAI''s "Framework for the Preparation and Presentation of Financial Statements under Indian Accounting Standards" with the reference to the "Conceptual Framework for Financial Reporting under Indian Accounting Standard" without significantly changing its requirements.
The amendments also added an exception to the recognition principle of Ind AS 103 Business Combinations to avoid the issue of potential ''day 2'' gains or losses arising for liabilities and contingent liabilities that would be within the scope of Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets or Appendix C, Levies, of Ind AS 37, if incurred separately. The exception requires entities to apply the criteria in Ind AS 37 or Appendix C, Levies, of Ind AS 37, respectively, instead of the Conceptual Framework, to determine whether a present obligation exists at the acquisition date.
The amendments also add a new paragraph to IFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date.
These amendments had no impact on the Standalone Financial Statements of the Company as there were no Contingent Assets, Liabilities or Contingent Liabilities within the scope of these amendments that arose during the period.
c. Amendments to Ind AS 16 : Property, Plant and Equipment : Proceeds before Intended Use
The amendments modified paragraph 17(e) of Ind AS 16 to clarify that excess of Net Sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the Profit or Loss but deducted from the directly attributable costs considered as part of cost of an item of Property, Plant and Equipment.
The amendments are effective for annual reporting periods beginning on or after 1st April 2022. These amendments had no impact on the Standalone Financial Statements of the Company as there were no sales of such items produced by Property, Plant and Equipment made available for use on or after the beginning of the earliest period presented.
d. Ind AS 109 Financial Instruments - Fees in the ''10 per cent'' test for derecognition of Financial Liabilities
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original Financial Liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other''s behalf.
3. USE OF ESTIMATES AND JUDGEMENTS :
The preparation of Standalone 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 Standalone 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. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Judgements in applying Accounting Policies
The judgements, apart from those involving estimations (see Note below), that the Company has made in the process of applying its accounting policies and that have a significant effect on the amounts recognised in these Standalone Financial Statements pertain to useful life of Intangible Assets acquired in merger. Refer Notes to the Standalone Financial Statements.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of Assets and Liabilities within the next Financial Year.
3.1 Useful lives of Property, Plant and Equipment and Intangible Assets
As described in the significant accounting policies, the Company reviews the estimated useful lives of Property, Plant and Equipment and Intangible Assets at the end of each reporting period.
3.2 Fair Value Measurements and Valuation Processes
Some of the Company''s Assets and Liabilities are measured at Fair Value for Financial Reporting purposes. Fair Value measurements are categorised into Level 1,2 or 3 based on the degree to which the inputs to the Fair Value measurements are observable and the significance of the inputs to the Fair Value measurement in its entirety, which are described as follows :
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical Assets or Liabilities that the Entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the Asset or Liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the Asset or Liability. The Company engages third party valuers, where required, to perform the valuation.
Information about the valuation techniques and inputs used in determining the Fair Value of various Assets and Liabilities are disclosed in the Notes to the Standalone Financial Statements.
The determination of Company''s Liability towards Defined Benefit Obligation to employees is made through independent Actuarial Valuation including determination of amounts to be recognised in the Standalone Statement of Profit and Loss and in Other Comprehensive Income. Such valuation depend upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in Note 29 to the Standalone Financial Statements.
3.4. Claims, Provisions and Contingent Liabilities
The Company has ongoing litigations with various regulatory authorities and third parties. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on management''s assessment of specific circumstances of each dispute and relevant external advice, management provides for its best estimate of the liability. Such accruals are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such litigations is provided in Note 33 to the Standalone Financial Statements.
3.5. Provision against obsolete and slow-moving Inventories
The Company reviews the condition of its Inventories and makes provision against obsolete and slow moving Inventory items which are identified as no longer suitable for sale or use. Company estimates the Net Realisable Value for such Inventories based primarily on the latest invoice prices and current market conditions. The Company carries out an Inventory review at each Balance Sheet date and makes provision against obsolete and slow moving items. The Company reassesses the estimation on each Balance Sheet date.
3.6. Impairment of Financial assets
The Company assesses impairment based on Expected Credit Losses (ECL) model on Trade Receivables. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of Trade Receivables. The provision matrix is based on its historically observed default rates over the expected life of the Trade Receivable and is adjusted for forward looking estimates. At every reporting date, the historically observed default rates are updated and changes in the forward looking estimates are analysed.
Deferred Tax Assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses including unabsorbed depreciation can be utilised. Significant management estimate and assumptions is required to determine the amount Deferred Tax Assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. For details Refer Note 9.
3.8 Leases- Estimating the Incremental Borrowing Rate
The Company does not determine the interest rate implicit in the lease, therefore, it uses its Incremental Borrowing Rate (IBR) to measure Lease Liabilities. The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right of use asset in a similar economic environment.
Mar 31, 2019
Notes to the Standalone Financial Statements
(Rs. in lacs)
1. GENERAL INFORMATION
IFGL Refractories Limited (formerly known as IFGL Exports Limited) (the "Company") is a Public Limited Company and was incorporated under the Companies Act, 1956. The Company is primarily engaged in the manufacturing, trading and selling of Refractory items used in Steel plants. The Company also provides services in relation to refractory goods. Manufacturing facilities of the Company are located in Kandla Special Economic Zone (SEZ), Gujarat and Kalunga Industrial Estate near Rourkela, Odisha. The Company has operating Subsidiaries in Asia (China), in Europe (Germany and United Kingdom) and in North America (USA). The Company caters to both domestic and international markets. The shares of the Company are listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE).
2. SIGNIFICANT ACCOUNTING POLICIES :
This note provides a list of the significant accounting policies adopted in the preparation of these Financial Statements. These policies have been consistently applies to all the periods presented, unless otherwise stated.
2.1 Statement of Compliance
These Financial Statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013. The Financial Statements have also been prepared in accordance with the relevant presentation requirements of the Companies Act, 2013. Upto the year ended 31st March 2017, the Company prepared its Financial Statements in accordance with the requirements of the previous Generally Accepted Accounting Principles (Previous GAAP), which includes Standards notified under the Companies (Accounting Standards) Rules, 2006.
2.2 Basis of Preparation
The Financial Statements are prepared in accordance with the Historical Cost Convention, except for certain items (e.g. Financial Instruments) that are measured at fair values, as explained in the Accounting Policies.
Historical Cost is generally based on the Fair Value of the consideration given in exchange for goods and services.
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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the Fair Value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair Value for measurement and/or disclosure purposes in these Financial Statements is determined on such a basis, except leasing transactions that are within the scope of Ind AS 17 - Leases and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 - Inventories or value in use in Ind AS 36- Impairment of Assets.
2.3 Operating Cycle
All Assets and Liabilities have been classified as current/non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013 and Ind AS 1 - Presentation of Financial Statements based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalent, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of Assets and Liabilities.
2.4 Property, Plant and Equipment - Tangible Assets
Freehold Land is carried at Historical Cost. Property, Plant and Equipment are stated at cost of acquisition or construction less accumulated depreciation and impairment, if any. The cost of an item of Property, Plant and Equipment comprises of its cost of acquisition inclusive of inward freight, import duties and other non-refundable taxes or levies and any other cost directly attributable to the acquisition/construction of those items. Expenses capitalised also include applicable borrowing costs for qualifying assets, if any. Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying value of any component accounted for as a separate asset is derecognised when replaced.
All other repairs and maintenance are charged to the Standalone Statement of Profit or Loss when incurred. An item of Property, Plant and Equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of asset. Any gain or loss arising on the disposal or retirement of an item of Property, Plant and Equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Standalone Statement of Profit and Loss.
For the unit in SEZ, Kandla, the Company has adopted the provisions of Para 46/46A of previous GAAP Accounting Standard 11.
Exchange differences arising on restatement/settlement of long-term foreign currency borrowings relating to acquisition of depreciable Property, Plant and Equipment are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such Property, Plant and Equipment.
Capital Work-in-Progress is stated at cost (including borrowing cost, where applicable and adjustment for exchange difference), incurred during construction/installation/preoperative periods relating to items or project in progress.
2.5 Intangible Assets
Intangible Assets are recognised at the cost incurred for its acquisition and are carried at cost less amortisation and impairment, if any. Cost of Intangible Asset is capitalised where it is expected to provide future economic benefits and the cost can be measured reliably. Capitalisation Costs include license fees and costs of implementation/system integration services. The costs are capitalised in the year in which the related Intangible Asset is put to use.
Subsequent expenditure is capitalised only when it increases the future economic benefits from the specific asset to which it relates.
An item of Intangible Asset is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of asset. Any gain or loss arising on the disposal or retirement of an item of Intangible Asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Standalone Statement of Profit and Loss.
Goodwill arising on Amalgamation has been recognised in accordance with the approved Scheme as detailed in Note 37. Said Goodwill is being amortised in accordance with the Scheme for which the Company has estimated useful life of 10 years. Such Goodwill will be tested for impairment at every reporting period and wherever there is an indication that the recoverable amount is less than its carrying amount based on a number of factors including business plan, operating results, future cash flows and economic conditions. The recoverable amount is determined based on higher of value in use and fair value less cost to sell. The Company uses discounted cash flow method to determine the recoverable amount. Cash flow projections take into account past experience and represent Management''s best estimate about future developments.
2.6 Depreciation and Amortisation
Depreciation/Amortisation of Property, Plant and Equipment and Intangible Assets is calculated using Straight Line Method to allocate their costs, net of their residual values, over their estimated useful lives.
The useful lives considered is as prescribed in Schedule II to the Companies Act, 2013. The asset''s residual values and useful lives are reviewed and adjusted if necessary, at the end of each reporting period.
Pro-rata depreciation/amortisation is charged on assets from/upto the date on which such assets are ready for intended use/ are discarded or sold.
Computer Software is classified as Intangible Asset and amortised on a Straight Line basis over a period of 2 to 5 years.
2.7 Impairment of Assets
Impairment Loss, if any, is provided to the extent, the carrying amount of assets or cash generating units exceed their recoverable amount. Recoverable amount is higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life.
When an Impairment Loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no Impairment Loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an Impairment Loss is recognised immediately in Profit or Loss.
2.8 Inventories
Inventories are stated at lower of Cost and Net Realisable Value. The cost is calculated on Weighted Average Method. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its present location and condition and includes, where applicable, appropriate overheads based on normal level of activity. Net Realisable Value is the estimated selling price less estimated costs for completion and sale. Obsolete, slow moving and defective Inventories are identified periodically and, where necessary, a provision is made for such Inventories.
2.9 Foreign Currency Transactions
The functional and presentation currency of the Company is Indian Rupee. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non monetary items carried at Fair Value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the Fair Value
was determined. Non monetary items that are measured in terms of Historical Cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in Profit or Loss in the period in which they arise except for exchange differences on transactions entered into in order to hedge certain Foreign Currency Risks.
2.10 Investment in Subsidiaries
Investment in Subsidiaries are carried at cost less accumulated impairment, if any.
2.11 Financial Instruments, Financial Assets, Financial Liabilities and Equity Instruments : 2.11.1 Financial Assets
Recognition : Financial Assets include Investments, Trade Receivables, Security Deposits, Cash and Cash Equivalents etc. Such assets are initially recognised at transaction price when the Company becomes party to contractual obligations. All the Financial Assets are initially measured at Fair Value. Transaction Costs that are directly attributable to the acquisition of Financial Asset (other than Financial Assets carried at Fair Value through Profit or Loss) are added to or deducted from the Fair Value measured on initial recognition of the Financial Assets.
Classification : Management determines the classification of an Asset at initial recognition depending on the purpose for which the Assets were acquired. The subsequent measurement of Financial Assets depends on such classification. Financial Assets are classified as those measured at:
a) Amortised Cost, where the Financial Assets are held solely for collection of cash flows arising from payments of principal and/or interest.
b) Fair Value through Other Comprehensive Income (FVTOCI), where the Financial Assets are held not only for collection of cash flows arising from payments of principal and interest but also from the sale of such assets. Such assets are subsequently measured at Fair Value, with unrealised gains and losses arising from changes in the Fair Value being recognised in Other Comprehensive Income.
c) Fair Value through Profit or Loss (FVTPL), where the assets are managed in accordance with an approved investment strategy that triggers purchase and sale decisions based on the Fair Value of such assets. Such assets are subsequently measured at Fair Value, with unrealised gains and losses arising from changes in the Fair Value being recognised in the Standalone Statement of Profit and Loss in the period in which Trade Receivables, Security Deposits, Cash and Cash Equivalents etc are classified for measurement at amortised cost while Investments may fall under any of the aforesaid classes.
Impairment: The Company assesses at each reporting date whether a Financial Asset (or a group of Financial Assets) such as Investments, Trade Receivables and Security Deposits held at amortised cost and Financial Assets that are measured at Fair Value through Other Comprehensive Income are tested for impairment based on evidence or information that is available without undue cost or effort. Expected credit losses are assessed and loss allowances recognised if the credit quality of the Financial Asset has deteriorated significantly since initial recognition. For Trade Receivables, the Company provides for lifetime expected credit losses recognised from initial recognition of the receivables. For other Financial Assets, the impairment methodology is applied depending on whether there has been a significant increase in credit risk from initial recognition or not. In case of significant increase in credit risk, lifetime expected credit loss is provided, otherwise 12 months expected credit loss is provided.
Reclassification : When and only when the business model is changed, the Company shall reclassify all affected Financial Assets prospectively from the reclassification date as subsequently measured at amortised cost, Fair Value through Other Comprehensive Income, Fair Value through Profit or Loss without restating the previously recognised gains, losses or interest and in terms of the reclassification principles laid down in the Ind AS relating to Financial Instruments.
De-recognition : Financial Assets are derecognised when the right to receive cash flows from the assets has expired, or has been transferred and the Company has transferred substantially all of the risks and rewards of ownership.
Concurrently, if the asset is one that is measured at:
a) Amortised Cost, the gain or loss is recognised in the Standalone Statement of Profit and Loss,
b) Fair Value through Other Comprehensive Income, the cumulative Fair Value adjustments previously taken to reserves are reclassified to the Standalone Statement of Profit and Loss unless the asset represents an Equity Investment in which case the cumulative Fair Value adjustments previously taken to reserves is reclassified within Equity.
Income Recognition : Interest Income is recognised in the Standalone Statement of Profit and Loss using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the Financial Asset to the gross carrying amount of the Financial Asset. Dividend Income is recognised in the Standalone Statement of Profit and Loss when the right to receive Dividend is established and the amount can be measured reliably.
2.11.2 Financial Liabilities
Borrowings, Trade Payables and other Financial Liabilities are initially recognised at the value of the respective contractual obligations. They are subsequently measured at amortised cost. Any discount or premium on redemption/settlement is recognised in the Standalone Statement of Profit and Loss as finance cost over the life of the liability using the effective interest method and adjusted to the liability figure disclosed in the Balance Sheet. Financial Liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation is discharged, cancelled and on expiry.
Offsetting Financial Instruments
Financial Assets and Liabilities are offset and the net amount is included in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
2.11.3 Equity Instruments
Equity Instruments are recognised at the value of the proceeds, net of direct costs of the capital issue.
2.11.4 Derivatives
Derivatives are initially recognised at fair value and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gains/losses is recognised in the Standalone Statement of Profit and Loss immediately.
2.12 Revenue
Revenue from contract with customers is recognised when the Company satisfies performance obligation by transferring promised goods and services to the customer. Performance obligations may be satisfied at a point of time or over a period of time. Performance obligations satisfied over a period of time are recognised as per the terms of relevant contractual agreements/arrangements. Performance obligations are said to be satisfied at a point of time when the customer obtains controls of the asset.
Revenue is measured based on transaction price, which is the fair value of the consideration received or receivable, stated net of discounts, returns and value added tax. Transaction price is recognised based on the price specified in the contract, net of the estimated sales incentives/discounts. Accumulated experience is used to estimate and provide for the discounts/right of return, using the expected value method.
A refund liability is recognised for expected returns in relation to sales made corresponding assets are recognised for the products expected to be returned.
Interest Income is accounted for on accrual basis in time proportion inclusive of related tax deducted at source.
Export Incentives in the form of duty drawbacks and Status Holder Incentive Scrip (SHIC) are recognised on accrual basis against goods exported.
2.13 Government Grant
The Company may receive government grants that require compliance with certain conditions related to the Company''s operating activities or are provided to the Company by way of financial assistance on the basis of certain qualifying criteria.
Government Grants are recognised when there is reasonable assurance that the grant will be received and the Company will comply with the conditions attached to the grant.
Accordingly, Export Benefits are accounted for as Government Grants in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
2.14 Employee Benefits :
Short Term Obligations
Liabilities for wages and salaries, including non monetary benefits that are expected to be settled wholly within 12 months after the end of the reporting period in which the employees render the related services are measured at the amounts expected to be paid. Liabilities are presented as current employee benefit obligations in the Financial Statements. Cost of non accumulating compensated absences are recognised when the absences occur.
Post Employment Obligations
The Company makes contributions to both Defined Benefit and Defined Contribution Schemes.
i) Contributions towards Provident Fund are recognised as expense. Provident Fund contributions in respect of employees upto August 2017 of erstwhile IFGL Refractories Limited are made to a Trustee managed exempted Fund and interest paid to members thereof is not lower than that declared annually by the Central Government. Shortfall, if any, is made good by the Company. Membership to said Fund has been closed on and from 1st September 2017, subject to necessary approvals and/or permissions. Provident Fund in respect of remaining employees are made to Statutory Provident Fund established by the Central Government. The Company''s contribution is recognised as an expense in the Standalone Statement of Profit and Loss for the period in which the employees render related service.
ii) Contribution under statutory Employees'' Pension Scheme is made as per statutory requirements and charged as expenses for the year.
iii) Certain employees who joined before 31st March 2004 in erstwhile IFGL Refractories Limited are members of a Trustee managed Superannuation Fund. Said Fund provides for Superannuation Benefit on retirement/death/incapacitation/ termination and was amended from the Defined Benefit to Defined Contribution Plan effective 1st April 2004. Defined Benefits were frozen on 31st March 2004. Necessary formalities and approvals have been complied with and obtained. Contribution to Superannuation Fund (Defined Contribution Plan) for certain employees is charged as expenses for the year.
iv) The Company also contributes to the Central Government administered Employees'' State Insurance Scheme for its eligible employees which is a Defined Contribution Plan.
v) The Company provides Gratuity Benefit to its employees. Employees of erstwhile IFGL Refractories Limited are provided Gratuity Benefits through a Trustee managed Fund, membership whereof has been closed on and from 1st September 2017 and awaiting merger with that of similar Fund of the Company, subject to necessary approvals and permissions. Gratuity entitlement of the employees is as per provisions of the Payment of Gratuity Act, 1972. However, in case of employees joining before 1st April 2003 of erstwhile IFGL Refractories Limited, they are entitled to Gratuity as per scheme framed by that Company or as per the Payment of Gratuity Act, 1972, whichever is higher. Liability towards Gratuity, Superannuation (Defined Benefit Plan) covering eligible employees, is provided and funded on the basis of year end Actuarial Valuation. Liability or asset recognised in the Balance Sheet in respect of Gratuity Plans is the present value of Defined Benefit Obligations at the end of the reporting period less the Fair Value of Plan Assets. The Defined Benefit Obligation is calculated annually by actuary using the Projected Unit Credit Method. The present value of the Defined Benefit Obligations is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on Government Bonds that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the Defined Benefit Obligation and the Fair Value of Plan Assets. This cost is included in the employee benefit expense in the Standalone Statement of Profit or Loss.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumption are recognised in the period in which they occur, directly in Other Comprehensive Income. They are included in Retained Earnings in the Statement of changes in Equity and in the Balance Sheet.
vi) Accrued Liability towards Compensated Absence, covering eligible employees, evaluated on the basis of year end Actuarial Valuation is recognised as a charge.
2.15 Leases
Leases are recognised as a Finance Lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as Operating Leases.
Rentals payable under Operating Leases are charged to the Standalone Statement of Profit and Loss on a Straight Line basis over the term of the relevant lease unless the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
2.16 Taxes on Income
Taxes on Income comprises of Current Taxes and Deferred Taxes. Current Tax in the Standalone Statement of Profit and Loss is provided as the amount of tax payable in respect of taxable income for the period using tax rates and tax laws enacted at the end of the reporting period, together with any adjustment to tax payable in respect of previous years. The Company periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred Tax is recognised on temporary differences between the carrying amounts of assets and liabilities and the amounts used for taxation purposes (tax base), at the tax rates and tax laws enacted or substantively enacted by the end of the reporting period. Deferred Tax Assets are recognised for the future tax consequences to the extent it is probable that future taxable profits will be available against which such unused tax losses can be utilised.
Income Tax, in so far as it relates to items disclosed under Other Comprehensive Income or Equity are disclosed separately under Other Comprehensive Income or Equity, as applicable.
Deterred Tax Assets and Liabilities are ottset when there is legally enforceable right to offset Current Tax Assets and Liabilities and when the Deferred Tax balances related to the same taxation authority. Current Tax Assets and Tax Liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on net basis or to realise the asset and settle the liability simultaneously.
Tax Credit is recognised in respect of Minimum Alternate Tax (MAT) as per the provisions of Section 115JAA/115JB of the Income Tax Act, 1961 based on convincing evidence that the Company will recover the same against normal Income Tax within the statutory time frame which is reviewed at each Balance Sheet date.
2.17 Provisions
Provisions are recognised when, as a result of a past event, the Company has a legal or constructive obligation, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. The amount so recognised is a best estimate of the consideration required to settle the obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. In an event when the time value of money is material, the provision is carried at the present value of the cash flows estimated to settle the obligation.
2.18 Operating Segments
Operating Segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The CODM is responsible for allocating resources and assessing performance of the Operating Segments. Based on such the Company operates in one Operating Segment, viz. Specialised Refractories and Ceramics.
Segments are organised based on business which have similar economic characteristics as well as exhibit similarities in nature of products and services offered, the nature of production processes, the type and class of customer and distribution methods.
Segment Revenue arising from third party customers is reported on the same basis as revenue in the Financial Statements. Inter Segment Revenue is reported on the basis of transactions which are primarily market led. Segment Results represent profits before finance charges, unallocated common expenses and taxes. "Unallocated Common Expenses" include revenue and expenses that relate to initiatives/costs attributable to the enterprise as a whole and are not attributable to segments.
2.19 Changes in Accounting Standard and recent accounting pronouncements
On 30th March 2019, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2019, notifying Ind AS 116 on Leases. Ind AS 116 would replace the existing leases standard Ind AS 17. The standard sets out the principles for the recognition, measurement, presentation and disclosures for both parties to a contract, i.e. the lessee and the lessor. Ind AS 116 introduces a single lease accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Currently for operating lease rentals are charged to the Standalone Statement of Profit and Loss. The Company is currently evaluating the implications of Ind AS 116 on the Standalone Financial Statements.
The Companies (Indian Accounting Standards) Amendment Rules, 2019 notified amendments to the following accounting standards. The amendments would be effective from 1st April 2019.
- Ind AS 12- Income Taxes-Appendix C on uncertainty over Income Tax treatments
- Ind AS 23 - Borrowing Costs
- Ind AS 28- Investment in Associates and Joint Ventures
- Ind AS 103 and Ind AS 111 - Business Combinations and Joint Arrangements
- Ind AS 109- Financial Instruments
- Ind AS 19- Employee Benefits
The Company is in the process of evaluating the impact of such amendments and does not expect significant impact on its Standalone Financial Statements.
3. USE OF ESTIMATES AND JUDGEMENTS :
The preparation of Standalone 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 Standalone 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. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Judgements in applying Accounting Policies
The judgements, apart from those involving estimations (see note below), that the Company has made in the process of applying its accounting policies and that have a significant effect on the amounts recognised in these Standalone Financial Statements pertain to useful life of Intangible Assets acquired in merger. Refer notes to the Standalone Financial Statements.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of Assets and Liabilities within the next financial year.
3.1 Useful lives of Property, Plant and Equipment and Intangible Assets
As described in the significant accounting policies, the Company reviews the estimated useful lives of Property, Plant and Equipment and Intangible Assets at the end of each reporting period.
3.2 Fair Value Measurements and Valuation Processes
Some of the Company''s assets and liabilities are measured at Fair Value for financial reporting purposes. Fair Value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the Fair Value measurements are observable and the significance of the inputs to the Fair Value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability. The Company engages third party valuers, where required, to perform the valuation. Information about the valuation techniques and inputs used in determining the Fair Value of various assets and liabilities are disclosed in the notes to the Standalone Financial Statements.
3.3 Actuarial Valuation
The determination of Company''s Liability towards Defined Benefit Obligation to employees is made through independent Actuarial Valuation including determination of amounts to be recognised in the Standalone Statement of Profit and Loss and in Other Comprehensive Income. Such valuation depend upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in notes to the Standalone Financial Statements.
3.4 Claims, Provisions and Contingent Liabilities
The Company has ongoing litigations with various regulatory authorities and third parties. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on management''s assessment of specific circumstances of each dispute and relevant external advice, Management provides for its best estimate of the liability. Such accruals are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such litigations is provided in notes to the Standalone Financial Statements.
3.5 Provision against obsolete and slow moving Inventories
The Company reviews the condition of its Inventories and makes provision against obsolete and slow moving Inventory items which are identified as no longer suitable for sale or use. Company estimates the net realisable value for such Inventories based primarily on the latest invoice prices and current market conditions. The Company carries out an Inventory review at each Balance Sheet date and makes provision against obsolete and slow moving items. The Company reassesses the estimation on each Balance Sheet date.
3.6 Impairment of Financial Assets
The Company assesses impairment based on Expected Credit Losses (ECL) model on Trade Receivables. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of Trade Receivables. The provision matrix is based on its historically observed default rates over the expected life of the Trade Receivable and is adjusted for forward looking estimates. At every reporting date, the historically observed default rates are updated and changes in the forward looking estimates are analysed.
Mar 31, 2018
1. SIGNIFICANT ACCOUNTING POLICIES :
This note provides a list of the significant accounting policies adopted in the preparation of theses Financial Statements. These policies have been consistently applied to all the periods presented, unless otherwise stated.
1.1 Statement of Compliance
These Financial Statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013. The Financial Statements have also been prepared in accordance with the relevant presentation requirements of the Companies Act, 2013. Upto the year ended 31st March 2017, the Company prepared its Financial Statements in accordance with the requirements of the previous Generally Accepted Accounting Principles (Previous GAAP), which includes Standards notified under the Companies (Accounting Standards) Rules, 2006. These are the Companyâs first Ind AS Financial Statements. The date of transition to Ind AS is 1st April 2016. Details of the first time exceptions and optional exemptions availed by the Company and principal adjustments along with related reconciliations are detailed in Note 36.
1.2 Basis of Preparation
The Financial Statements are prepared in accordance with the Historical Cost Convention, except for certain items (e.g. Financial Instruments) that are measured at fair values, as explained in the Accounting Policies.
Historical Cost is generally based on the Fair Value of the consideration given in exchange for goods and services.
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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the Fair Value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair Value for measurement and/or disclosure purposes in these Financial Statements is determined on such a basis, except leasing transactions that are within the scope of Ind AS 17 - Leases and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 - Inventories or value in use in Ind AS 36 - Impairment of Assets.
1.3 Operating Cycle
All Assets and Liabilities have been classified as current/non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013 and Ind AS 1 - Presentation of Financial Statements based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalent, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of Assets and Liabilities.
1.4 Property, Plant and Equipment - Tangible Assets
Freehold Land is carried at Historical Cost. Property, Plant and Equipment are stated at cost of acquisition or construction less accumulated depreciation and impairment, if any. The cost of an item of Property, Plant and Equipment comprises of its cost of acquisition inclusive of inward freight, import duties and other non-refundable taxes or levies and any other cost directly attributable to the acquisition/construction of those items. Expenses capitalised also include applicable borrowing costs for qualifying assets, 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 realiably. The carrying value of any component accounted for as a separate asset is derecognised when replaced.
All other repairs and maintenance are charged to the Statement of Profit or Loss when incurred. An item of Property, Plant and Equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of asset. Any gain or loss arising on the disposal or retirement of an item of Property, Plant and Equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
For the unit in SEZ, Kandla, the Company has adopted the provisions of Para 46/46A of previous GAAP Accounting Standard 11. The effects of changes in Foreign Exchange Rates, accordingly, exchange differences arising on restatement/settlement of longterm foreign currency borrowings relating to acquisition of depreciable Property, Plant and Equipment are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such Property, Plant and Equipment.
Capital Work-in-Progress is stated at cost (including borrowing cost, where applicable and adjustment for exchange difference), incurred during construction/installation/preoperative periods relating to items or project in progress.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying values of all of its Property, Plant and Equipment and Capital Work-in-Progress recognised as at 1st April 2016 measured as per the previous GAAP (Indian GAAP) and use that carrying value as the deemed cost of the Property, Plant and Equipment.
1.5 Intangible Assets
Intangible Assets are recognised at the cost incurred for its acquisition and are carried at cost less amortisation and impairment, if any. Cost of Intangible Asset is capitalised where it is expected to provide future economic benefits and the cost can be measured reliably. Capitalisation Costs include license fees and costs of implementation/system integration services. The costs are capitalised in the year in which the related Intangible Asset is put to use.
Subsequent expenditure is capitalised only when it increases the future economic benefits from the specific asset to which it relates.
An item of Intangible Asset is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of asset. Any gain or loss arising on the disposal or retirement of an item of Intangible Asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss. Goodwill arising on Amalgamation has been recognised in accordance with the approved Scheme as detailed in Note 38. Said Goodwill is being amortised in accordance with the Scheme for which the Company has estimated useful life of 10 years. Such Goodwill will be tested for impairment at every reporting period and wherever there is an indication that the recoverable amount is less than its carrying amount based on a number of factors including business plan, operating results, future cash flows and economic conditions. The recoverable amount is determined based on higher of value in use and fair value less cost to sell. The Company uses discounted cash flow method to determine the recoverable amount. Cash flow projections take into account past experience and represent managementâs best estimate about future developments.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying values of all of its Intangible Assets recognised as at 1st April 2016 measured as per the previous GAAP (Indian GAAP) and use that carrying value as the deemed cost of the Intangible Assets.
1.6 Depreciation and Amortisation
Depreciation/Amortisation of Property, Plant and Equipment and Intangible Assets is calculated using Straight Line Method to allocate their costs, net of their residual values, over their estimated useful lives.
The useful lives considered is as prescribed in Schedule II to the Companies Act, 2013. The assetâs residual values and useful lives are reviewed and adjusted if necessary, at the end of each reporting period.
Pro-rata depreciation/amortisation is charged on assets from/upto the date on which such assets are ready for intended use/are discarded or sold.
Computer Software is classified as Intangible Asset and amortised on a Straight Line basis over a period of 2 to 5 years.
1.7 Impairment of Assets
Impairment Loss, if any, is provided to the extent, the carrying amount of assets or cash generating units exceed their recoverable amount. Recoverable amount is higher of an assetâs net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life.
When an Impairment Loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no Impairment Loss been recognised for the asset (or cash generating unit) in prior years. A reversal of an Impairment Loss is recognised immediately in Profit or Loss.
1.8 Inventories
Inventories are stated at lower of Cost and Net Realisable Value. Cost of Raw Materials and Traded Goods comprise of cost of purchases, other directly attributable expenditures, non-refundable taxes and duties, net of rebates and discounts. Cost of Work-in-Progress and Finished Goods comprise of cost of direct materials, direct labour and an appropriate proportion of variable and fixed overheads. The cost is calculated on Weighted Average Method. Cost also comprises any other expenditure incurred in the normal course of business in bringing such Inventories to its present location and condition. Net Realisable Value is the estimated selling price less estimated costs for completion and sale. Obsolete, slow moving and defective Inventories are identified periodically and where necessary, a provision is made for such Inventories.
1.9 Foreign Currency Transactions
The functional and presentation currency of the Company is Indian Rupee. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non monetary items carried at Fair Value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the Fair Value was determined. Non monetary items that are measured in terms of Historical Cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in Profit or Loss in the period in which they arise except for exchange differences on transactions entered into in order to hedge certain Foreign Currency Risks.
1.10 Investment in Subsidiaries
Investment in Subsidiaries are carried at cost less accumulated impairment, if any.
1.11 Financial instruments, Financial Assets, Financial Liabilities and Equity Instruments :
1.11.1 Financial Assets
Recognition : Financial Assets include Investments, Trade Receivables, Security Deposits, Cash and Cash Equivalents etc. Such assets are initially recognised at transaction price when the Company becomes party to contractual obligations. All the Financial Assets are initially measured at Fair Value. Transaction Costs that are directly attributable to the acquisition of Financial Asset (other than Financial Assets carried at Fair Value through Profit or Loss) are added to or deducted from the Fair Value measured on initial recognition of the Financial Asset.
Classification : Management determines the classification of an Asset at initial recognition depending on the purpose for which the Assets were acquired. The subsequent measurement of Financial Assets depends on such classification.
Financial Assets are classified as those measured at :
a) Amortised Cost, where the Financial Assets are held solely for collection of cash flows arising from payments of principal and/or interest.
b) Fair Value through Other Comprehensive Income (FVTOCI), where the Financial Assets are held not only for collection of cash flows arising from payments of principal and interest but also from the sale of such assets. Such assets are subsequently measured at Fair Value, with unrealised gains and losses arising from changes in the Fair Value being recognised in Other Comprehensive Income.
c) Fair Value through Profit or Loss (FVTPL), where the assets are managed in accordance with an approved investment strategy that triggers purchase and sale decisions based on the Fair Value of such assets. Such assets are subsequently measured at Fair Value, with unrealised gains and losses arising from changes in the Fair Value being recognised in the Statement of Profit and Loss in the period in which Trade Receivables, Security Deposits, Cash and Cash Equivalents etc are classified for measurement at amortised cost while Investments may fall under any of the aforesaid classes.
Impairment : The Company assesses at each reporting date whether a Financial Asset (or a group of Financial Assets) such as Investments, Trade Receivables and Security Deposits held at amortised cost and Financial Assets that are measured at Fair Value through Other Comprehensive Income are tested for impairment based on evidence or information that is available without undue cost or effort. Expected credit losses are assessed and loss allowances recognised if the credit quality of the Financial Asset has deteriorated significantly since initial recognition. For Trade Receivables, the Company provides for lifetime expected credit losses recognised from initial recognition of the receivables. For other Financial Assets, the impairment methodology is applied depending on whether there has been a significant increase in credit risk from initial recognition or not. In case of significant increase in credit risk, lifetime expected credit loss is provided, otherwise 12 months expected credit loss is provided. Reclassification : When and only when the business model is changed, the Company shall reclassify all affected Financial Assets prospectively from the reclassification date as subsequently measured at amortised cost, Fair Value through Other Comprehensive Income, Fair Value through Profit or Loss without restating the previously recognised gains, losses or interest and in terms of the reclassification principles laid down in the Ind AS relating to Financial Instruments.
De-recognition : Financial Assets are derecognised when the right to receive cash flows from the assets has expired, or has been transferred and the Company has transferred substantially all of the risks and rewards of ownership.
Concurrently, if the asset is one that is measured at :
a) Amortised Cost, the gain or loss is recognised in the Statement of Profit and Loss,
b) Fair Value through Other Comprehensive Income, the cumulative Fair Value adjustments previously taken to reserves are reclassified to the Statement of Profit and Loss unless the asset represents an Equity Investment in which case the cumulative Fair Value adjustments previously taken to reserves is reclassified within Equity.
Income Recognition : Interest Income is recognised in the Statement of Profit and Loss using the effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the Financial Asset to the gross carrying amount of the Financial Asset. Dividend Income is recognised in the Statement of Profit and Loss when the right to receive Dividend is established and the amount can be measured reliably.
1.11.2 Financial Liabilities
Borrowings, Trade Payables and other Financial Liabilities are initially recognised at the value of the respective contractual obligations. They are subsequently measured at amortised cost. Any discount or premium on redemption/settlement is recognised in the Statement of Profit and Loss as finance cost over the life of the liability using the effective interest method and adjusted to the liability figure disclosed in the Balance Sheet. Financial Liabilities are derecognised when the liability is extinguished, that is, when the contractual obligation is discharged, cancelled and on expiry.
Offseting Financial Instruments
Financial Assets and Liabilities are offset and the net amount is included in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
1.11.3 Equity Instruments
Equity Instruments are recognised at the value of the proceeds, net of direct costs of the capital issue.
1.11.4 Derivatives
Derivatives are initially recognised at fair value and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gains/losses is recognised in the Statement of Profit and Loss immediately.
1.12 Revenue
Revenue is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of returns and discounts to customers. Revenue from the sale of goods includes excise and other duties which the Company pays as a principal but excludes amounts collected on behalf of third parties, such as sales tax and value added tax. Revenue from the sale of goods is recognised when significant risks and rewards of ownership have been transferred to the customer, which is mainly upon delivery, the amount of revenue can be measured reliably and recovery of the consideration is probable. Revenue from services is recognised in the periods in which the services are rendered in accordance with the terms of the contract and when collectibility of resultant receivable is reasonably certain.
Interest Income is accounted for on accrual basis in time proportion inclusive of related tax deducted at source.
Export Incentives in the form of duty drawbacks and Status Holder Incentive Scrip (SHIC) are recognised on accrual basis against goods exported.
1.13 Government Grant
The Company may receive government grants that require compliance with certain conditions related to the Companyâs operating activities or are provided to the Company by way of financial assistance on the basis of certain qualifying criteria.
Government Grants are recognised when there is reasonable assurance that the grant will be received and the Company will comply with the conditions attached to the grant.
Accordingly, Export Benefits are accounted for as Government Grants in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
1.14 Employee Benefits :
Short Term Obligations
Liabilities for wages and salaries, including non monetary benefits that are expected to be settled wholly within 12 months after the end of the reporting period in which the employees render the related services are measured at the amounts expected to be paid. The Liabilities are presented as current employee benefit obligations in the Financial Statements. Cost of non accumulating compensated absences are recognised when the absences occur.
Post Employment Obligations
The Company makes contributions to both Defined Benefit and Defined Contribution Schemes.
i) Contributions towards Provident Fund are recognised as expense. Provident Fund contributions in respect of employees upto August 2017 of erstwhile IFGL Refractories Limited are made to a Trustee managed exempted Fund and interest paid to members thereof is not lower than that declared annually by the Central Government. Shortfall, if any, is made good by the Company. Membership to said Fund has been closed on and from 1st September 2017, subject to necessary approvals and/or permissions. Provident Fund in respect of remaining employees are made to Statutory Provident Fund established by the Central Government. The Companyâs contribution is recognised as an expense in the Statement of Profit and Loss for the period in which the employees render related service.
ii) Contribution under statutory Employeesâ Pension Scheme is made as per statutory requirements and charged as expenses for the year.
iii) Certain employees who joined before 31st March 2004 in erstwhile IFGL Refractories Limited are members of a Trustee managed Superannuation Fund. Said Fund provides for Superannuation Benefit on retirement/death/incapacitation/ termination and was amended from the Defined Benefit to Defined Contribution Plan effective 1st April 2004. Defined Benefits were frozen on 31st March 2004. Necessary formalities and approvals have been complied with and obtained. Contribution to Superannuation Fund (Defined Contribution Plan) for certain employees is charged as expenses for the year.
iv) The Company also contributes to the Central Government administered Employeesâ State Insurance Scheme for its eligible employees which is a Defined Contribution Plan.
v) The Company provides Gratuity benefit to its employees. Employees of erstwhile IFGL Refractories Limited are provided Gratuity Benefits through a Trustee managed Fund, membership whereof has been closed on and from 1st September 2017 and awaiting merger with that of similar Fund of the Company, subject to necessary approvals and permissions. Gratuity entitlement of the employees is as per provisions of the Payment of Gratuity Act, 1972. However, in case of employees joining before 1st April 2003 of erstwhile IFGL Refractories Limited, they are entitled to Gratuity as per scheme framed by that Company or as per the Payment of Gratuity Act, 1972, whichever is higher. Liability towards Gratuity, Superannuation (Defined Benefit Plan) covering eligible employees, is provided and funded on the basis of year end Actuarial Valuation. The liability or asset recognised in the Balance Sheet in respect if Gratuity Plans is the present value of Defined Benefit Obligations at the end of the reporting period less the fair value of Plan Assets. The Defined Benefit Obligation is calculated annually by actuary using the Projected Unit Credit Method. The present value of the Defined Benefit Obligations is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on Government Bonds that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the Defined Benefit Obligation and the Fair Value of Plan Assets. This cost is included in the employee benefit expense in the Profit or Loss.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income. They are included in retained earnings in the Statement of changes in Equity and in the Balance Sheet.
vi) Accrued Liability towards Compensated Absence, covering eligible employees, evaluated on the basis of year end Actuarial Valuation is recognised as a charge.
1.15 Leases
Leases are recognised as a Finance Lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as Operating Leases.
Rentals payable under Operating Leases are charged to the Statement of Profit and Loss on a Straight Line basis over the term of the relevant lease unless the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
1.16 Taxes on Income
Taxes on Income comprises of Current Taxes and Deferred Taxes. Current Tax in the Statement of Profit and Loss is provided as the amount of tax payable in respect of taxable income for the period using tax rates and tax laws enacted at the end of the reporting period, together with any adjustment to tax payable in respect of previous years. The Company periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred Tax is recognised on temporary differences between the carrying amounts of assets and liabilities and the amounts used for taxation purposes (tax base), at the tax rates and tax laws enacted or substantively enacted by the end of the reporting period. Deferred Tax Assets are recognised for the future tax consequences to the extent it is probable that future taxable profits will be available against which such unused tax losses can be utilised.
Income Tax, in so far as it relates to items disclosed under Other Comprehensive Income or Equity, are disclosed separately under Other Comprehensive Income or Equity, as applicable.
Deferred Tax Assets and Liabilities are offset when there is legally enforceable right to offset Current Tax Assets and Liabilities and when the Deferred Tax balances related to the same taxation authority. Current Tax Assets and Tax Liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on net basis or to realise the asset and settle the liability simultaneously.
Tax Credit is recognised in respect of Minimum Alternate Tax (MAT) as per the provisions of Section 115JAA/115JB of the Income Tax Act, 1961 based on convincing evidence that the Company will recover the same against normal Income Tax within the statutory time frame which is reviewed at each Balance Sheet date.
1.17 Provisions
Provisions are recognised when, as a result of a past event, the Company has a legal or constructive obligation, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. The amount so recognised is a best estimate of the consideration required to settle the obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. In an event when the time value of money is material, the provision is carried at the present value of the cash flows estimated to settle the obligation.
1.18 Operating Segments
Operating Segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The CODM is responsible for allocating resources and assessing performance of the Operating Segments. Based on such the Company operates in one Operating Segment, viz. Specialised Refractories and Ceramics.
Segments are organised based on business which have similar economic characteristics as well as exhibit similarities in nature of products and services offered, the nature of production processes, the type and class of customer and distribution methods. Segment Revenue arising from third party customers is reported on the same basis as revenue in the Financial Statements. Inter Segment Revenue is reported on the basis of transactions which are primarily market led. Segment Results represent profits before finance charges, unallocated common expenses and taxes. âUnallocated Common Expensesâ include revenue and expenses that relate to initiatives/costs attributable to the enterprise as a whole and are not attributable to segments.
Mar 31, 2017
1.1 Basis of Preparation
The Financial Statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013 (âthe 2013 Actâ). The Financial Statements have been prepared on accrual basis under the Historical Cost Convention. The accounting policies adopted in the preparation of the Financial Statements are consistent with those followed in the previous year. All Assets and Liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of Assets and Liabilities. Refer is also made to Note 42.
1.2 Use of Estimates
The preparation of Financial Statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of Assets and Liabilities (including Contingent Liabilities) and the reported Income and Expenses during the year. The Management believes that the estimates used in preparation of the Financial Statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known/materialise.
1.3 Fixed Assets (including Intangible Assets other than Goodwill arising on amalgamation) are stated at cost less accumulated depreciation/amortisation and impairment losses, if any. The Company capitalises all costs (Net of Refundable Credits) relating to acquisition and installation of Fixed Assets. For the unit in SEZ, Kandla, the Company has adopted the provisions of para 46/46A of Accounting Standard 11. The effects of changes in Foreign Exchange Rates, accordingly, exchange differences arising on restatement/settlement of long term foreign currency borrowings relating to acquisition of depreciable Fixed Assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets. An impairment loss is recognised wherever the carrying value of the Fixed Assets exceeds its recoverable amount i.e. net selling price or value in use, whichever is higher. Insurance Spares that are specific to a Fixed Asset are capitalised along with the main asset. All other Spares are recognised as inventory.
1.4 Goodwill arising on amalgamation has been recognised in accordance with the approved scheme as detailed in Note 42. Said Goodwill has been amortised in accordance with the scheme for which the Company has estimated useful life of 10 years. Such Goodwill will be tested for impairment on annual basis and wherever there is an indication that the recoverable amount is less than its carrying amount based on a number of factors including business plan, operating results, future cash flows and economic conditions. The recoverable amount is determined based on higher of value in use and fair value less cost to sell. The Company generally uses discounted cash flow method to determine the recoverable amount. Cash flow projections take into account past experience and represent managementâs best estimate about future developments.
1.5 Depreciation and Amortisation
Depreciation on Tangible Fixed Assets has been provided on the Straight Line Method as per the useful life prescribed in Schedule II to the Companies Act, 2013. Leasehold Land is amortised over the duration of the lease. Intangible Assets (other than Goodwill arising on amalgamation and Computer Software) are amortised on Straight Line Method over a period of five years. Intangible Assets are amortised on Straight Line basis as follows :
Goodwill on amalgamation - 10 years (Refer Notes 2.4 and 42)
Computer Software - 2 to 5 years
The estimated useful life of the Intangible Assets and the amortisation period are reviewed at the end of each financial year and the amortisation period is revised to reflect the changed pattern, if any.
1.6 Inventories are valued at lower of Cost and Net Realisable Value after providing for obsolescence and other losses, where considered necessary. Cost is determined on the Weighted Average basis. Cost comprises expenditure incurred in the normal course of business in bringing such inventories to its present location and condition and includes, where applicable, appropriate overheads.
1.7 Revenue from sale of products are exclusive of Sales Tax and returns and are recognised when significant risk and rewards of ownership of the goods is transferred to the buyer and the revenue is measurable at the time of sale and it is reasonable to expect ultimate collection of the sale consideration. Revenue from services are recognised when services are rendered and related costs are incurred. Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same. Interest Income is accounted for on accrual basis.
1.8 Current Investments are stated at lower of cost and fair value. Non-current Investments are carried individually at cost less provision for diminution, other than temporary in the value of such investments.
1.9 Current Tax is determined as the amount of tax payable in respect of taxable income for the year based on applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future Income Tax Liability, is considered as an asset if there is convincing evidence that the Company will pay normal Income Tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.
Deferred Tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred Tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred Tax Liabilities are recognised for all timing differences. Deferred Tax Assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, Deferred Tax Assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred Tax Assets are reviewed at each Balance Sheet date for their realisability.
1.10 Transactions in Foreign Currencies are recognised at the rates existing at the time of such transactions. Gain or losses resulting from the settlement of such transactions are recognised in the Statement of Profit and Loss. Year end balances of monetary assets and liabilities denominated in foreign currencies are translated at applicable year end rates and the resultant differences is recognised in the Statement of Profit and Loss. Non monetary items at the Balance Sheet date are stated at Historical Cost. In case of Forward Exchange Contracts which are entered into to hedge the foreign currency risk of a trade receivable/trade payable recognised in these Financial Statements, premium or discount on such contracts are amortised over the life of the contract and exchange differences arising thereon in the reporting period are recognised in the Statement of Profit and Loss. Any Profit or Loss arising on cancellation or renewal of such a Forward Exchange Contracts is recognised as income or as expense in the period in which such cancellation or renewal is made. Forward Exchange Contracts which are arranged to hedge the foreign currency risk of a firm commitment or a highly probable forecast transaction is marked to market at the year end and the resulting losses, if any, are charged to the Statement of Profit and Loss. The gain, if any, based on the above evaluation, is not accounted for on grounds of prudence.
1.11 Borrowing Cost that are attributable to acquisition, construction or production of qualifying assets (assets which require substantial period of time to get ready for its intended use) are capitalised as part of cost of such assets. All other borrowing costs are recognised as expenses in the period they are incurred.
1.12 Employee Benefits :
i) The undiscounted amount of Short-Term Employee Benefits (i.e. benefits payable within one year) is recognised in the period in which employee services are rendered.
ii) Contributions towards Provident Fund are recognised as expense. Provident Fund contributions in respect of certain employees are made to Trust administered by erstwhile IFGL Refractories Limited; the interest rate payable to the members of the Trust is not lower than the rate of interest declared annually by the Central Government under the Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall, if any, is to be made good by the Company. Provident Fund contributions in respect of other employees are made to fund managed by Central Government under the Employeesâ Provident Funds and Miscellaneous Provisions Act, 1952.
iii) Contribution under Employeesâ Pension Scheme is made as per statutory requirements and charged as expenses for the year.
iv) Contribution to Superannuation (Defined Contribution Plan) for certain employees is charged as expenses for the year.
v) The Company also contributes to the Central Government administered Employeesâ State Insurance Scheme for its eligible employees which is a Defined Contribution Plan.
vi) Liability towards Gratuity, Superannuation (Defined Benefit Plan) covering eligible employees, is provided and funded on the basis of year end actuarial valuation.
vii) Accrued liability towards compensated absence, covering eligible employees, evaluated on the basis of year end actuarial valuation is recognised as a charge.
viii) Actuarial gains/losses arising under Defined Benefit Plans are recognised immediately in the Statement of Profit and Loss as income/expense for the year in which they occur.
1.13 Provisions and Contingencies
Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the Notes. Contingent Assets are neither recognised nor disclosed in the Financial Statements.
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