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Accounting Policies of Kothari Sugars & Chemicals Ltd. Company
Mar 31, 2024
MATERIAL ACCOUNTING POLICIES
1. Statement of Compliance
The financial statements have been prepared in accordance with Ind AS notified under section 133 of the Companies Act 2013 [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
1.1 Basis of preparation and presentation
The financial statements have been prepared in accordance with Ind AS under notified under section 133 of the Companies Act 2013 [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
The financial statements have been prepared on a historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
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, leasing transactions that are within the scope of Ind AS 116, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorized 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 principal accounting policies are set out below:
1.2 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
(a) Sale of goods
Revenue from the sale of goods is recognized at the point in time when control of goods is transferred to customer depending on the terms of the sales and all the following conditions are satisfied:
⢠the company has transferred to the buyer the significant risks and rewards of ownership ofthe goods.
⢠the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.
⢠the amount of revenue can be measured reliably.
⢠it is probable thatthe economic benefits associated with the transaction will flow to the company; and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
(b) Rendering of Services
Revenue from a contract to provide services is based on the agreements / arrangements with the concerned parties. In the case of services rendered over a period revenue is recognized based on the progress measured in line with the receiver of service. In the case of service rendered at a point in time, revenue is recognized on satisfaction of performance obligation.
(c) Dividend and interest income
(i) Dividend income from investments is recognized when the shareholder''s right to receive payment has been established.
(ii) Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company using the effective interest rate method.
(d) Insurance Claims
Insurance claims are accounted for based on claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
1.3 Leasing
Leases are classified in accordance with Ind AS 116,
Standards for Leases which is effective form 01st
April 2019. Below conditions need to be fulfilled if the
contract is to be classified as lease:
⢠Identified asset.
⢠Lessee obtains substantially all of the economic benefits.
⢠Lessee directs the use.
Lessee Accounting:
⢠A Lessee will recognize assets and liabilities for all leases for a term of more than 12 months unless the underlying asset is of low value.
⢠A Lessee is required to recognize a right of use asset representing its right to use the underlying leased asset and a lease liability representing its obligations to make lease payments.
⢠A lessee will measure right-of-use assets similarly to other non-financial assets (such as property, plant and equipment) and lease liabilities similarly to otherfinancial liabilities.
⢠A lessee recognizes depreciation of the right-of-use asset and interest on the lease liability (as per IND AS 17 the same was classified as rent in case of operating lease on a straight-line basis)
⢠Lease liability = Present value of lease rentals present value of expected payments at the end of lease. The lease liability will be amortized using the effective interest rate method.
⢠Lease term = non-cancellable period renewable period if lessee reasonably certain to exercise.
⢠Right to use asset = Lease liability lease payments (advance) - lease incentives to be received if any initial initial direct costs cost of dismantling / restoring etc. The assets will be depreciated as per Ind AS 16 Property plant and equipment.
Lessor Accounting:
⢠A lessor shall classify each of its leases as either an operating lease or a finance lease.
⢠A lease is classified as a finance lease if it transfers substantially all the risks and rewards. incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset.
⢠For operating leases, lessors continue to recognize the underlying asset and recognize the lease rental incomes on a straight-line basis.
⢠For finance leases, lessors derecognize the underlying asset and recognize a net investment in the lease.
1.4 Functional and presentation currency and Foreign Currency Transactions
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which these entities operate (i.e., the âfunctional currencyâ). The financial statements are presented in Indian Rupee (''), the national currency of India, which is the functional currency of the Company.
In preparing the financial statements of the company, transactions in currencies other than the entity''s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. All receivables and payable in foreign currency are restated based on the exchange rate prevailing at the reporting date and the resultant gain or loss is recognized in profit and loss statement.
1.5 Borrowing and related costs
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs), and the redemption amount is recognized in Profit and Loss over the period of borrowings using effective interest method.
Borrowing costs directly attributable to the acquisition, construction, or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
1.6 Government grants
Government grants are not recognized until there is a reasonable assurance that the Company will comply with the conditions attached to them and the grants will be received.
Government grants related to revenue nature are recognized on a systematic basis in the Statement of Profit and Loss over the periods necessary to match them with the related costs which they are intended to compensate and are adjusted with the related expenditure. If not related to a specific expenditure, it is taken as income and presented under âOther Income.â
1.7 EmployeeBenefits
(a) Retirement benefit costs and termination benefits
Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date.
Defined benefit costs are categorized as follows:
⢠Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements)
⢠net interest expense or income; and
⢠Re-measurement
The company presents the first two components of defined benefit costs in profit or loss in the line item âEmployee benefits expenseâ.
Past service cost is recognized in profit or loss in the period of a plan amendment.
Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur. Re-measurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or
loss. Defined benefit plans comprise gratuity payable to eligible employees on the exit due to retirement or otherwise. Contributions paid/payable to defined contribution plans comprising of Superannuation and Provident Funds for certain employees covered under the respective Schemes are recognized in the Statement of Profit and Loss each year.
A liability fora termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs.
(b) Short-term and other long-term employee benefits
A liability is recognized for benefits accruing to employees in respect of wages and salaries in the period the related service is rendered.
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognized in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
1.8 Earnings per Share
The Company presents basic and diluted earnings per share (EPS) data for its equity shares. Basic EPS is calculated by dividing the profit or loss attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.
1.9 Taxation
Income tax expense represents the sum of the tax currently payable net of MAT (Minimum Alternate Tax) credit utilization and deferred tax.
(a) Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before taxâ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Company offsets current tax assets and current tax liabilities, where it has
J
a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis or to realize the assets and settle the liabilities simultaneously.
(b) Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.
Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
(c) MAT Credit
It is the difference between the amount paid as per book profit tax under section 115JB of the Income tax Act, 1961 and the tax as per regular provisions of the Income Tax Act, 1961.MAT credit is a tax credit and as per IndAS 12 tax credits are treated as deferred tax assets.
(d) Current and deferred tax for the year
Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
1.10 Property, Plant and Equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated. Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Company''s accounting policy. Such properties are classified into the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Useful lives applied as above are based on Schedule II to the Companies Act, 2013 except certain items of Buildings for which the useful life has been taken based on internal technical evaluation.
Assets costing ''5,000 and below are depreciated over a period of one year. An item of property, plant and equipment is de-recognized upon disposal or
when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising from 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 recognized in profit or loss.
1.11 Investment Property
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost including transactions costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16''s requirement for cost model.
An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on de-recognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is de-recognized.
1.12 Intangible Assets
(a) Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
(b) De-recognition of intangible assets
An intangible asset is de-recognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from de-recognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, and arerecognized in profit or loss when the asset is de-recognized.
(c) Useful lives of intangible assets
Estimated useful lives of the intangible assets are not more than 6 years.
1.13 Inventories
Inventories are stated at the lower of cost and net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
Cost of inventory comprises of purchase price, cost of conversion and other directly attributable costs that have been incurred in bringing the inventories to their respective present location and condition. Borrowing costs are not included in the value of inventories. The cost of inventories is computed on a weighted average basis. Inventories are written down on a case-by-case basis if the anticipated net realizable value declines below the carrying amount of the inventories. Such write downs are recognized in the Statement of Profit and Loss. When the reason for a write-down of the inventories ceases to exist, the write-down is reversed.
Mar 31, 2023
CORPORATE OVERVIEW
Kothari Sugars and Chemicals Limited (referred to as âKSCLâ or the âCompanyâ) are the Manufacturers of Sugar, Alcohol and Powerhaving units at Kattur and Sathamangalam, Tamilnadu.
KSCL has two sugar factories having a capacity to crush 6400 Tons of Cane per day, generate 33 MW of power and a distillery having a capacity of 60 KLPD.
The functional and presentation currency of the Company is Indian Rupees (â '' â) which is the currency of the primary economic environment in which the Company operates.
SIGNIFICANT ACCOUNTING POLICIES 1. Statement of Compliance
The financial statements have been prepared in accordance with Ind AS notified under section 133 of the Companies Act 2013 [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
1.1 Basis of preparation and presentation
The financial statements have been prepared in accordance with Ind AS under notified under section 133 of the Companies Act 2013 [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
The financial statements have been prepared on a historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
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, leasing transactions that are within the scope of Ind AS 116, and measurements that have some similarities to fair value but are not fair value, such as net realizable V value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorized 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 principal accounting policies are set out below:
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
(a) Sale of goods
Revenue from the sale of goods is recognized at the point in time when control of goods is transferred to customer depending on the terms of the sales and all the following conditions are satisfied:
⢠the company has transferred to the buyer the significant risks and rewards of ownership of the goods.
⢠the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.
⢠the amount of revenue can be measured reliably.
⢠it is probable that the economic benefits associated with the transaction will flow to the company; andthe costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from a contract to provide services is based on the agreements/ arrangements with the concerned parties. In the case of services rendered over a period revenue is recognized based on the progress measured in line with the receiver of service. In the ,
case of service rendered at a point in time, revenue is recognized on satisfaction of performance obligation.
(c) Dividend and interest income
(i) Dividend income from investments is recognized when the shareholder''s right to receive payment has been established.
(ii) Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company using the effective interest rate method.
Insurance claims are accounted for based on claims admitted/ expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
Leases are classified in accordance with Ind AS 116, Standards for Leases which is effective form 01st April 2019. Below conditions need to be fulfilled if the contract is to be classified as lease:
⢠Identified asset.
⢠Lessee obtains substantially all of the economic benefits.
⢠Lessee directs the use.
⢠A Lessee will recognize assets and liabilities for all leases for a term of more than 12 months unless the underlying asset is of low value.
⢠A Lessee is required to recognize a right of use asset representing its right to use the underlying leased asset and a lease liability representing its obligations to make lease payments.
⢠A lessee will measure right-of-use assets similarly to other non-financial assets (such as property, plant and equipment) and lease liabilities similarly to other financial liabilities.
⢠A lessee recognizes depreciation of the right-of-use asset and interest on the lease liability (as per IND AS 17 the same was classified as rent in case of operating lease on a straight-line basis)
⢠Lease liability = Present value of lease rentals present value of expected payments at the end of lease. The lease liability will be amortized using the effective interest rate method.
⢠Lease term = non-cancellable period renewable period if lessee reasonably certain to exercise.
⢠Right to use asset = Lease liability lease
V payments (advance)-lease incentives to be
received if any initial initial direct costs cost of dismantling/ restoring etc. The assets will be depreciated as per Ind AS 16 Property plant and equipment.
Lessor Accounting:
⢠A lessor shall classify each of its leases as either an operating lease or a finance lease.
⢠A lease is classified as a finance lease if it transfers substantially all the risks and rewards. incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset.
⢠For operating leases, lessors continue to recognize the underlying asset and recognize the lease rental incomes on a straight-line basis.
⢠For finance leases, lessors derecognize the underlying asset and recognize a net investment in the lease.
1.4 Functional and presentation currency and Foreign currency Transactions
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which these entities operate (i.e., the âfunctional currencyâ). The financial statements are presented in Indian Rupee (''), the national currency of India, which is the functional currency of the Company.
In preparing the financial statements of the company, transactions in currencies other than the entity''s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. All receivables and payable in foreign currency are restated based on the exchange rate prevailing at the reporting date and the resultant gain or loss is recognized in profit and loss statement.
1.5 Borrowing and related costs
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs), and the redemption amount is recognized in Profit and Loss over the period of borrowings using effective interest method.
Borrowing costs directly attributable to the acquisition, construction, or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their j
intended use or sale. Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
Government grants are not recognized until there is a reasonable assurance that the Company will comply with the conditions attached to them and the grants will be received.
Government grants related to revenue nature are recognized on a systematic basis in the Statement of Profit and Loss over the periods necessary to match them with the related costs which they are intended to compensate and are adjusted with the related expenditure. If not related to a specific expenditure, it is taken as income and presented under âOther Income.â
1.7 Employee Benefits(a) Retirement benefit costs and termination benefits
Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date.
Defined benefit costs are categorized as follows:
⢠Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements)
⢠net interest expense or income; and
⢠Re-measurement
The company presents the first two components of defined benefit costs in profit or loss in the line item ''Employee benefits expense''.
Past service cost is recognized in profit or loss in the period of a plan amendment.
Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the l balance sheet with a charge or credit recognized in
other comprehensive income in the period in which they occur. Re-measurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss.Defined benefit plans comprise gratuity payable to eligible employees on the exit due to retirement or otherwise. Contributions paid/payable to defined contribution plans comprising of Superannuation and Provident Funds for certain employees covered under the respective Schemes are recognized in the Statement of Profit and Loss each year.
A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs.
(b) short-term and other long-term employee benefits
A liability is recognized for benefits accruing to employees in respect of wages and salaries in the period the related service is rendered.
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognized in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
The Company presents basic and diluted earnings per share (EPS) data for its equity shares. Basic EPS is calculated by dividing the profit or loss attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.
Income tax expense represents the sum of the tax currently payable net of MAT (Minimum Alternate Tax) credit utilization and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s
current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis or to realize the assets and settle the liabilities simultaneously.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.
Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
It is the difference between the amount paid as per book profit tax under section 115JB of the Income tax Act, 1961 and the tax as per regular provisions of the Income Tax Act, 1961.MAT credit is a tax credit and as per IndAS 12 tax credits are treated as deferred tax assets.
c. Current and deferred tax for the year
Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
1.10 Property, Plant and Equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated. Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Company''s accounting policy. Such properties are classified into the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Estimated useful lives of the assets are as follows:
|
Block of the asset |
useful Life in (years) |
|
Freehold Land |
NA |
|
Factory Building |
30 |
|
Plant and Equipment |
15 |
|
Office Equipment |
5 |
|
Furniture and Fixtures |
10 |
|
Vehicles |
8 |
usemi lives applied as above are based on scneauie II to the Companies Act, 2023 except certain items of Buildings for which the useful life has been taken based on internal technical evaluation.
Assets costing '' 5,000 and below are depreciated over a period of one year.An item of property, plant and equipment is de-recognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising from 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 recognized in profit or loss.
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost including transactions costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16''s requirement for cost model.
An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on de-recognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is de-recognized.
1.12 Intangible Assets(a) Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
(b) De-recognition of intangible assets
An intangible asset is de-recognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from
de-recognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, and arerecognized in profit or loss when the asset is de-recognized.
(c) useful lives of intangible assets
Estimated useful lives of the intangible assets are as follows software licenses 3 to 6 years
Inventories are stated at the lower of cost and net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
Cost of inventory comprises of purchase price, cost of conversion and other directly attributable costs that have been incurred in bringing the inventories to their respective present location and condition. Borrowing costs are not included in the value of inventories. The cost of inventories is computed on a weighted average basis. Inventories are written down on a case-by-case basis if the anticipated net realizable value declines below the carrying amount of the inventories. Such write downs are recognized in the Statement of Profit and Loss. When the reason for a write-down of the inventories ceases to exist, the write-down is reversed.
Provisions are recognized when the Company has a present obligation (legal or constructive) because of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, considering the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received,and the amount of the receivable can be measured reliably.
Financial assets and financial liabilities are recognized when a company entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.
(a) Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortized cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition). The debt instruments carried at amortized cost include Deposits, Debtors, Loans and advances recoverable in cash.
The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; andthe contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.All other financial assets are subsequently measured at fair value.
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest expenses over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Expense isrecognized on an effective interest basis for debt instruments other than those financial liabilities classified as at FVTPL. Interest expense is recognized in profit or loss and is included in the Finance cost line item.
(c) i nvestments in equity instruments at FVTPL (Fair Value Through Profit and Loss account)
The Company has elected to carry investment in equity instruments as Fair value through Profit and Loss account. On initial recognition, the Company can make an irrevocable election (on an instrument-byinstrument basis) to present the subsequent changes in fair value in profit and loss account pertaining to investments in equity instruments. This election is permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in the Profit and Loss account.
The Company has certain strategic equity investments,and some are heldfor trading.The Company has elected the FVTPL irrevocable option for these investments (see note 5). Fair value is determined in the manner described in note 39.3.
(d) Financial assets at fair value through profit or loss (FVTPL)
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ''Other income'' line item.
(e) Impairment of financial assets
The Company applies the expected credit loss model for recognizing impairment loss on financial assets measured at amortized cost, lease receivables, trade receivables, and other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the
cash flows that the Company expects to receive (i.e., all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument through the expected life of that financial instrument.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
The company assess the impairment of trade receivables on case-to-case basis and creates allowance for expected credit loss accordingly.
(f) De-recognition of financial assets
The Company de-recognizes a financial asset when the contractual rights to the cash flow from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset andrecognizes a collateralized borrowing for the proceeds received.
On de-recognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.
(g) Modification of financial assets
When the contractual cash flows of a financial asset is modified without requiring a derecognition then the gross carrying amount of the financial assets is recalculated based on the modified cash flows and a gain or loss is recognized in the statement of profit and loss for the difference between the amortized cost before modification and the recalculated gross carrying amount.
All financial liabilities are subsequently measured at amortized cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for de-recognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
(a) Financial liabilities at FVTPL
Financial liabilities at FVTPL include derivative liabilities. Non-derivative financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognized by theCompany as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL. There are no non-derivative financial liabilities carried at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognized in profit or loss. Fair value is determined in the manner described in note 39.3.
(b) Financial liabilities subsequently measured at amortized cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the ''Finance costs'' line item.
(c) De-recognition of financial liabilities
The Company de-recognizes financial liabilities when, and only when, the Company''s obligations are discharged, cancelled, or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.
Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing, and financing activities of the Company are segregated based on the available information.
1.19 Key sources of estimation uncertainty and judgement made:
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized 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.
Key assumption 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 is as given below.
(a) Fair value measurement and valuation processes
Some of the Company''s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. The management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in note 3.
(b) useful lives of Property, Plant and Equipment
The useful life of property, plant, equipment, and other intangible assets are reviewed at each reporting date. Any re-adjustment would result in revised depreciation for the future periods.
(c) Provisions and contingent liabilities
The Company estimates provisions that have present obligations because of past events, and it is probable that an outflow of resources will be required to settle the obligations. These provisions are reviewed at the end of each reporting period and are adjusted to reflect the current best estimates.
(d) Provision for income tax and Deferred tax
The Income tax expenses for the year estimated using assumptions and judgements certain allowances and provisions, any change in actual income tax expenses is recognized in the year it arises. Deferred tax assets are recognized to the extent of future taxable profit expected by the management.
(e) Provision for defined benefit obligations to employees
The Company''s provisions for defined benefit obligations are on the basis of actuarial valuation report which uses various inputs and assumptions to estimate the obligations. (Refer note 36 ).
(f) Significant judgements made in the preparation of financials
(a) Outcome of the litigations involving the company:
The impact of litigations involving the Company have been presented based on the best judgement of the Company on the outcome of these litigations wherever the management expects the outcome to be unfavorable, the expected outflow is estimated and provided in the books based on the provisioning policy.
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
1.21 cash and cash equivalents
The Company considers all highly liquid investments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
Mar 31, 2018
NOTES FORMING PART OF FINANCIAL STATEMENTS NOTE - 1
CORPORATE OVERVIEW
Kothari Sugars and Chemicals Limited (referred to as âKSCLâ or the âCompanyâ) are the Manufacturers of Sugar, Alcohol and Power generation having units at Kattur and Sathamangalam, Tamilnadu.
KSCL has two sugar factories having a capacity to crush 6400 Tons of Cane per day, generate 33 MW of power and a distillery having a capacity of 60 KLPD.
The functional and presentation currency of the Company is Indian Rupees (â''â) which is the currency of the primary economic environment in which the Company operates.
The financial statements for the year ended 31st March, 2018 was approved for issue by the Board of Directors of the Company on 28th May, 2018 and is subject to the adoption by the shareholders in the ensuing Annual General Meeting.
SIGNIFICANT ACCOUNTING POLICIES 1.10 STATEMENT OF COMPLIANCE
The financial statements have been prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015.
Up to the year ended March 31, 2017, the company prepared its financial statements in accordance with the requirements of previous GAAP which includes Standards notified under the Companies (Accounting Standards) Rules, 2006. These are the Company''s first Ind AS financial statements. The date of transition to Ind AS is April 1, 2016. Refer Note 1.30 for the details of first-time adoption exemptions availed by the Company.
1.11 BASIS OF PREPARATION AND PRESENTATION
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below. 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 for share-based payment transactions that are within the scope of Ind AS 102, leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorized 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 principal accounting policies are set out below.
1.12 revenue recognition
Revenue is measured at
the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
(a) SALE OF GOODS
Revenue from the sale of goods is recognized when the goods are dispatched and titles have passed, at which time all the following conditions are satisfied:
- the company has transferred to the buyer the significant risks and rewards of ownership of the goods;
- the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
- the amount of revenue can be measured reliably;
- it is probable that the economic benefits associated with the transaction will flow to the company; and
- the costs incurred or to be incurred in respect of the transaction can be measured reliably.
In barter transaction, revenue is recognized at fair value of the goods given up when the goods are dispatched. Consequent to the introduction of Goods and Service Tax (GST) with effect from 1st July 2017 Central Excise, Value Added Tax (VAT) etc. have been subsumed into GST Accordingly, the figures for the year is not strictly relatable to previous year
(b) RENDERING OF SERVICES
Revenue from a contract to provide services is based on the agreements / arrangements with the concerned parties and when services are rendered.
(c) DIVIDEND AND INTEREST INCOME
a) Dividend income from investments is recognized when the shareholder''s right to receive payment has been established.
b) Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
(d) INSURANCE CLAIMS
Insurance claims are accounted for on the basis of claims admitted/ expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
1.13 LEASES
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset and the arrangement conveys a right to use the asset even if that right is not explicitly specified in an arrangement. For arrangements entered into prior to the transition date, i.e.1st April, 2016, the Company has determined whether the arrangements contain lease on the basis of facts and circumstances existing on the date of transition.
Leases are classified as finance leases 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.
company as lessor
The Company''s significant leasing arrangements are in respect of operating leases for premises that are cancelable in nature. The lease rentals under such agreements are recognized in the Statement of Profit and Loss as per the terms of the lease.
Rental income from operating leases is generally recognized on a straight-line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the Company''s expected inflationary cost increases, such increases are recognized in the year in which such benefits accrue.
1.14 functional and presentation currency and foreign currency transactions
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which these entities operate (i.e. the âfunctional currencyâ). The financial statements are presented in Indian Rupee (''), the national currency of India, which is the functional currency of the Company.
In preparing the financial statements of the company, transactions in currencies other than the entity''s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.
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 recognized in profit or loss in the period in which they arise except for :
- Exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; and
- Exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognized initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.
1.15 BORROWING COSTS
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
1.16 GOVERNMENT GRANTS
Subsequent to transition to Ind AS Government grants are recognized at fair value when there is reasonable assurance that the grant would be received and the Company would comply with all the conditions attached with them.
Government grants related to PPE are treated as deferred income (included under non-current liabilities with current portion considered under current liabilities) and are recognized and credited in the Statement of Profit and Loss on a systematic and rational basis over the estimated useful life of the related asset and included under âOther Incomeâ.
Government grants related to revenue nature are recognized on a systematic basis in the Statement of Profit and Loss over the periods necessary to match them with the related costs which they are intended to compensate and are adjusted with the related expenditure. If not related to a specific expenditure, it is taken as income and presented under âOther Incomeâ.
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.
In respect of government loans at below-market rate of interest existing on the date of transition, the Company has availed the optional exemption under Ind AS 101 - First Time Adoption and has not recognized the corresponding benefit of the government loan at below-market interest rate as Government grant.
1.17 EMPLOYEE BENEFITS
(a) Retirement benefit costs and termination benefits
Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period.
Defined benefit costs are categorized as follows:
- Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- net interest expense or income; and
- Re-measurement
The company presents the first two components of defined benefit costs in profit or loss in the line item ''Employee benefits expense''.
Past service cost is recognized in profit or loss in the period of a plan amendment.
Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur. Re-measurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss.
Curtailment gains and losses are accounted for as past service costs. The retirement benefit obligation recognized in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
Contributions paid/payable to defined contribution plans comprising of Superannuation (under a scheme of Life Insurance Corporation of India) and Provident Funds for certain employees covered under the respective Schemes are recognized in the Statement of Profit and Loss each year.
The Company makes contributions to Provident Fund Trusts for certain employees, at a specified percentage of the employees'' salary. The Company has an obligation to make good the shortfall, if any, between the return from the investments of trust and the notified interest rates
A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs.
(b) Short-term and other long-term employee benefits
A liability is recognized for benefits accruing to employees in respect of wages and salaries in the period the related service is rendered.
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognized in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.
Gratuity for certain employees is covered under a Scheme of Reliance Nippon Life Insurance Co. Limited and contributions in respect of such scheme are recognized in the Statement of Profit and Loss. The liability as at the Balance Sheet date is provided for based on the actuarial valuation carried out as at the end of the year.
1.18 EARNINGS PER SHARE
The Company presents basic and diluted earnings per share (EPS) data for its equity shares. Basic EPS is calculated by dividing the proft or loss attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.
1.19 TAXATION
Income tax expense represents the sum of the tax currently payable and deferred tax.
(a) Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis or to realize the assets and settle the liabilities simultaneously
(b) Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to ^ be recovered. ^
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. MAT is recognized as deferred tax assets in the Balance Sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realized.
(c) Current and deferred tax for the year
Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
1.20 PROPERTY, PLANT AND EQUIPMENT
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
All Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any.
The cost of an asset includes the purchase cost of materials, including import duties and non-refundable taxes, and any directly attributable costs of bringing an asset to the location and condition of its intended use. Interest on borrowings used to finance the construction of qualifying assets are capitalized as part of the cost of the asset until such time that the asset is ready for its intended use.
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses. Freehold land is not depreciated.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Company''s accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation is recognized so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Estimated useful lives of the assets are as follows:
Assets costing '' 5,000 and below are depreciated over a period of one year.
Assets on leased premises are depreciated on the remaining period of lease or as per the useful life prescribed in schedule II of the Companies Act 2013 whichever is earlier
An item of property, plant and equipment is de-recognized upon disposal or when no future economic benefits are expected to arise from the continued use of the 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 recognized in profit or loss.
1.21 INVESTMENT PROPERTY
For transition to Ind AS, the Group has elected to continue with the carrying value of its investment property recognized as of April 1, 2016 measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost including transactions costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16''s requirement for cost model.
An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on de-recognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is de-recognized.
1.22 INTANGIBLE ASSETS
Intangible assets acquired separately
For transition to Ind AS, the Group has elected to continue with the carrying value of its intangible assets recognized as of April 1, 2016 measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
(a) De-recognition of intangible assets
An intangible asset is de-recognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from de-recognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is de-recognized.
(b) useful lives of intangible assets
Estimated useful lives of the intangible assets are as follows: Licenses 3 to 6 years.
1.23 Impairment of Tangible & Intangible Assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset (or a 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 recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.
1.24 INVENTORIES
Inventories are stated at the lower of cost and net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.
Cost of inventory comprises of purchase price, cost of conversion and other directly attributable costs that have been incurred in bringing the inventories to their respective present location and condition. Borrowing costs are not included in the value of inventories.
The cost of inventories is computed on weighted average basis. Inventories are written down on a case-by-case basis if the anticipated net realizable value declines below the carrying amount of the inventories. Such write downs are recognized in the Statement of Profit and Loss. When the reason for a write-down of the inventories ceases to exist, the write-down is reversed.
1.25 PROVISIONS, CONTINGENT LIABILITIES / ASSETS
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash lows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
A contingent liability is not recognized in the financial statements, however, is disclosed, unless the possibility of an outflow of resources embodying economic benefits is remote. If it becomes probable that an outflow of future economic benefits will be required for an item dealt with as a contingent liability, a provision is recognized in the financial statements of the period (except in the extremely rare circumstances where no reliable estimate can be made).
1.26 FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognized when a company entity becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
1.27 FINANCIAL ASSETS
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets
(a) Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortized cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition). The debt instruments carried at amortized cost include Deposits, Debtors, Loans and advances recoverable in cash.
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
For the impairment policy on financial assets measured at amortized cost, refer Note 1.26(e)
Investment in subsidiaries and associates are accounted under cost basis.
All other financial assets are subsequently measured at fair value.
(b) Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest expenses over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Expense is recognized on an effective interest basis for debt instruments other than those financial liabilities classified as at FVTPL. Interest expense is recognized in profit or loss and is included in the Finance cost line item.
(c) Investments in equity instruments at FVTPL (Fair Value Through Profit and Loss account)
The Company has elected to carry investment in equity instruments as Fair value through Profit and Loss account.
On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in profit and loss account pertaining to investments in equity instruments. This election is permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in Profit and Loss account.
The Company has equity investments which are held for trading. The Company has elected the FVTPL irrevocable option for these investments (see note 6). Fair value is determined in the manner described in note 41.3.
Dividends on these investments in equity instruments are recognized in profit or loss when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably. Dividends recognized in profit or loss is included in the âOther income'' line item.
(d) Financial assets at fair value through profit or loss (FVTPL)
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the âOther income'' line item. Dividend on financial assets at FVTPL is recognized when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
(e) Impairment of financial assets
The Company applies the expected credit loss model for recognizing impairment loss on financial assets measured at amortized cost, lease receivables, trade receivables, and other contractual rights to receive cash or other financial asset, and financial guarantees not designated as at FVTPL.
Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument through the expected life of that financial instrument.
For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward looking information or case to case basis.
(f) De-recognition of financial assets
The Company de-recognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
On de-recognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.
(g) Foreign exchange gains and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortized cost and FVTPL, the exchange differences are recognized in profit or loss except for those which are designated as hedging instruments in a hedging relationship.
1.28 FINANCIAL LIABILITIES AND EQUITY INSTRUMENTS
(a) Classification as debt or equity
Debt and equity instruments issued by the company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
(b) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a company entity are recognized at the proceeds received, net of direct issue costs.
Repurchase of the Company''s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
(c) Financial liabilities
All financial liabilities are subsequently measured at amortized cost using the effective interest method or at FVTPL. However, financial liabilities that arise when a transfer of a financial asset does not qualify for de-recognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
1. Financial liabilities at FVTPL
Financial liabilities at FVTPL include derivative liabilities. Non-derivative financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognized by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL. There are no non-derivative financial liabilities carried at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in the ''Other income'' line item.
Fair value is determined in the manner described in note 41.3.
2. Financial liabilities subsequently measured at amortized cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the ''Finance costs'' line item.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
3. Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortized cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortized cost of the instruments and are recognized in ''Other income''.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognized in profit or loss.
4. De-recognition of financial liabilities
The Company de-recognizes financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.
1.29 CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
1.30 FIRST-TIME ADOPTION - MANDATORY EXCEPTIONS, OPTIONAL EXEMPTIONS
(a) Overall principle
The Company has prepared the opening balance sheet as per Ind AS as of April 1, 2016 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities. However, this principle is subject to the certain exception and certain optional exemptions availed by the Company as detailed below.
(b) De-recognition of financial assets and financial liabilities
The Company has applied the de-recognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after April 1, 2016 (the transition date).
(c) Classification of debt instruments
The Company has determined the classification of debt instruments in terms of whether they meet the amortized cost criteria or the FVTOCI criteria based on the facts and circumstances that existed as of the transition date.
(d) Impairment of financial assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101. The Company has determined the classification of debt instruments in terms of whether they meet the amortized cost criteria or the FVTOCI criteria based on the facts and circumstances that existed as of the transition date.
(e) Deemed cost for property, plant and equipment and investment property
The Company has elected to continue with the carrying value of all of its plant and equipment, investment property recognized as of April 1, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
(f) Determining whether an arrangement contains a lease
The Company has applied Appendix C of Ind AS 17 Determining whether an Arrangement contains a Lease to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.
(g) Equity investments at FVTPL
The Company has designated investment in equity shares other than subsidiaries, associate and joint ventures as at FVTPL on the basis of facts and circumstances that existed at the transition date.
(h) Government loan
The Company has elected the option to carry the below market interest rate government loans on transition date at their carrying value measured as per the previous GAAP.
1.31 KEY SOURCES OF ESTIMATION UNCERTAINTY
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized 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.
Key assumption 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 is as given below.
(a) Fair value measurement and valuation processes
Some of the Company''s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party qualified values to perform the valuation. The management works closely with the qualified external values to establish the appropriate valuation techniques and inputs to the model. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in notes 3 and 41.3
(b) useful life of property plant & Equipment, Investment properties & Other Intangible Assets
The Company reviews the estimated useful lives of Property, plant and equipment at the end of each reporting period. During the current year, there has been no change in life considered for the assets.
1.32 CONTINGENCIES
Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgment and the use of estimates regarding the outcome of future events.
1.33 DEFERRED TAX ASSETS
The recognition of deferred tax assets requires assessment of whether it is probable that sufficient future taxable profits will be available against which deferred tax assets can be utilized. The company reviews at each balance sheet the carrying amount of deferred tax asset.
1.34 DEFINED BENEFIT PLAN
The cost of the defined benefit gratuity plan and other post-employment medical 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.
1.35 OPERATING CYCLE
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Mar 31, 2016
CORPORATE OVERVIEW
Kothari Sugars and Chemicals Limited (referred to as âKSCLâ or the âCompanyâ) are the Manufacturers of Sugar, Alcohol and Power generation having units at Kattur and Sathamangalam, Tamilnadu.
Parvathi Trading & Finance Co.Pvt.Ltd.owns 70.20% of the Company''s equity share capital and hence its holding Company.
SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements of âthe Company âhave 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) / Companies Act, 1956 (âthe Act 1956â), as applicable. The 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.
(b) USE OF ESTIMATES
The preparation of financial statements requires the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financials and reported amounts of income and expense during the year. Example of such estimates include provision for doubtful receivables, employee benefits, provision for income taxes, accounting for contract costs expected to be incurred, the useful lives of depreciable fixed assets and provision for impairment. Although these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes different from the estimates.
(c) TANGIBLE / INTANGIBLE ASSETS AND DEPRECIATION
(i) Fixed assets are recorded at cost and cost includes appropriate direct and allocated expenses including interest on specified borrowings for acquisition of assets up to the date of commencement of commercial production.
(ii) Depreciation on tangible fixed assets acquired after 01st April 2014 are provided under straight line method based on the useful life of the assets and in accordance with Schedule II to the Companies Act, 2013 and reckoning the maximum residual value @ 5% of the original cost of the asset. Assets acquired prior to 01st April 2014, the carrying amount as on 01st April 2014 is depreciated over the remaining useful life of the asset.
In respect of assets costing up to Rs.5,000/- the Company has fully depreciated considering the materiality aspect in the year of acquisition.
(iii) Intangible assets are amortized equally over their estimated useful life not exceeding 5 years.
(d) FOREIGN CURRENCY TRANSACTION
Transactions in foreign exchange are initially recognized at the rates prevailing on the date of transaction. All monetary assets and liabilities are restated at balance sheet date using year end closing rate. Resultant exchange difference is recognized as income or expense in the year in which they arise.
(e) INVESTMENTS
Investments which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.
Long term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. Current Investments are carried at the lower of cost and Fair Value.
(f) INVENTORIES
i) Raw Materials and Stores and Spares are valued at weighted average cost.
ii) Finished Stocks are valued at cost (including applicable overheads and Excise Duty) or net realizable values whichever is lower. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated cost necessary to make the sale.
iii) Work-in-Process value is derived from the value of finished goods less estimated cost of work still to be completed.
iv) Modvat / Cenvat / Service Tax credits on materials / services / capital items are availed on purchases / installation of assets respectively and utilized for payment of excise duty on goods manufactured and the unutilized credit is carried forward in the books. ,
(g) CASH AND CASH EQUIVALENTS
Cash and cash equivalents for the purpose of cash flow statement comprise cash in hand, cash at bank, demand deposits with banks.
(h) REVENUE RECOGNITION
i) Revenue is recognized to the extent that it is probable that the economic benefits will low to the Company and the revenue can be reliably measured.
ii) Revenue is recognized when the significant risks and rewards of ownership of the goods have been passed to the buyer. Sales are disclosed net of Value Added Tax (VAT), trade discounts and returns as applicable. Excise Duty recovery from customer is deducted from turnover (gross). The excise duty differential between closing and opening stocks of excisable goods is included under âChange in inventoriesâ
(iii) Revenue from services is recognized (net of service tax, as applicable) pro-rata over the period of the contract as and when services are rendered.
(iv) Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend income is recognized when the Company''s right to receive dividend is established by the Balance Sheet date.
(i) EMPLOYEE BENEFITS
Defined Contribution Plans
The Company makes Provident fund and Superannuation contributions to defined contribution retirement benefit plans for qualifying employees. Under the Provident Fund scheme, the Company is required to contribute a specified percentage of payroll cost to the Employees Provident Fund Scheme,1952 to fund the benefits. The interest as declared by the Government from time to time accrues to the credit of the employees under the scheme. Under the Superannuation scheme, the company is required to contribute a specified percentage of payroll cost to underwriters to enable them to make the settlement to the qualifying employees.
Defined benefit plans
The Company makes annual contributions to the Employees'' Group Gratuity-cum-Life Assurance Scheme with the underwriters, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment. Liability for unavailed leave for a section of the workmen for whom it is considered as a long term benefit is actuarially valued and provided for but is not funded. Liability for unavailed leave for other employees considered as short term benefits and provided accordingly in the books of accounts.
(j) RESEARCH AND DEVELOPMENT
Research and Development expenditure, other than capital, as and when incurred are charged to revenue.
(k) SEGMENT REPORTING
The accounting policies adopted for segmental reporting are in line with the accounting policies of the company with the following additional policies:
i) Inter-segment adjustments are carried out on estimated basis having regard to current trends wherever the actual cost is unascertainable.
ii) Revenues and expenses have been identified to segments wherever relatable on the basis of their relationship to specific operating activities of the segment. Revenue and expenses, which relate to the enterprise as a whole and are not specifically allocable to segments on a reasonable basis, have been included under âunallocated corporate expensesâ.
(l) IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to Statement of Profit and Loss Account in the year in which an asset is identified as impaired, after considering adjustment, if any, already carried out.
(m) BORROWING COSTS
Borrowing cost directly attributable to the acquisition and construction of a asset which takes a substantial period of time to get ready for its intended use, are capitalized as a part of the cost of such assets, until such time the asset is substantially ready for its intended use. All other borrowing cost are recognized in the Statement of Profit or Loss in the period they occur. Borrowing cost consists of interest and other costs incurred in connection with borrowing of funds.
(n) PROVISIONS AND CONTINGENT LIABILITIES
A provision is created when there is a present obligation as a result of an obligation / event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require immediate outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likely hood of outflow of resources is very remote, no provision or disclosure is made.
(o) EARNINGS PER SHARE
The earnings considered in ascertaining earnings per share comprises of the net profit after tax before exceptional items. The number of shares used in computing earnings per share is the weighted average number of shares outstanding during the year. Diluted earning per share comprises of weighted average share considered for deriving basic earnings per share as well as dilutive potential equity shares.
(p) TAXES ON INCOME
Tax expense comprises of current tax and deferred tax. Current income tax is provided on the taxable income for the period as per the provision of Income Tax Act 1961. Deferred tax is recognized, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and is capable of reversal in one or more subsequent periods. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date.
(q) Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Rental payments made under operating leases are charged to the Statement of Profit and Loss.
In the case of leased tangible assets and such leases where the Company has substantially retained all the risks and rewards of ownership are classified as operating leases. Lease Income on such operating leases is recognized in the Statement of Profit and Loss.
(r) Classification of Current / Non-Current Assets and Liabilities
All assets and liabilities are presented as Current or Non-current as per the Company''s normal operating cycle and other criteria set out in Schedule III of the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization, the Company has ascertained its operating cycle as 12 months for the purpose of Current / Non-current classification of assets and liabilities.
Mar 31, 2015
(a) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
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 ("the 2013 Act")/Companies Act, 1956 ("the Act
1956"), as applicable. The 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.
(b) USE OF ESTIMATES
The preparation of financial statements requires the Company to make
estimates and assumptions that affect the reported balances of assets
and liabilities and disclosures relating to the contingent liabilities
as at the date of the financials and reported amounts of income and
expense during the year. Example of such estimates include provision
for doubtful receivables, employee benefits, provision for income
taxes, accounting for contract costs expected to be incurred, the
useful lives of depreciable fixed assets and provision for impairment.
(c) FIXED ASSETS & DEpRECIATION
(i) Fixed assets are recorded at cost and includes appropriate direct
and allocated expenses including interest on specified borrowings for
acquisition of assets up to the date of commencement of commercial
production. Technical know-how fees in respect of specific turnkey
projects are capitalized.
(ii) Depreciation on tangible fixed assets acquired after 01st April
2014 are provided under straight line method based on the useful life
of the assets and in accordance with Schedule II to the Companies Act,
2013 and reckoning the maximum residual value @ 5% of the original cost
of the asset. Assets acquired prior to 01st April 2014, the carrying
amount as on 01st April 2014 is depreciated over the remaining useful
life of the asset.
In respect of assets costing up to Rs.5,000/- the Company has fully
depreciated considering the materiality aspect in the year of
acquisition.
(iii) Intangible assets are amortized equally over their estimated
useful life not exceeding 5 years.
(d) FOREIGN CuRRENCY TRANSACTION
Transactions in foreign exchange are initially recognized at the rates
prevailing on the date of transaction. All monetary assets and
liabilities are restated at balance sheet date using year end rates.
Resultant exchange difference is recognized as income or expense in
that period.
(e) INVESTMENTS
Investments are classified into current and long term Investments.
Current Investments are stated at lower of cost and Fair Value. Long
term Investments are valued at Cost. A provision for diminution is made
to recognize a decline other than temporary in the value of
Investments.
(f) INVENTORIES
i) Raw Materials and Stores and Spares are valued at weighted average
cost.
ii) Finished Stocks are valued at cost (including applicable overheads
and Excise Duty) or net realizable values whichever is lower.
iii) Work-in-Process value is derived from the value of finished goods
less estimated cost of work still to be completed.
iv) Modvat / Cenvat / Service Tax credits on materials / capital items
are availed on purchases / installation of assets respectively and
utilized for payment of Excise Duty on goods manufactured and the
unutilized credit is carried forward in the books.
(g) REVENuE AND EXpENDITuRE RECOGNITION
i) All revenues and expenses are accounted on accrual basis
ii) Sales are net of trade discounts and Sales Tax and Excise Duty.
Excise duty recovery from customer is deducted from turnover (gross).
The excise duty differential between closing and opening stocks of
excisable goods is included under "Change in inventories"
(h) EMPLOYEE BENEFITS Defined Contribution Plans
The Company makes Provident fund and Superannuation contributions to
defined contribution retirement benefit plans for qualifying employees.
Under the Provident Fund scheme, the Company is required to contribute
a specified percentage of payroll cost to the Employees Provident Fund
Scheme,1952 to fund the benefits. The interest as declared by the
Government from time to time accrues to the credit of the employees
under the scheme. Under the Superannuation scheme, the company is
required to contribute a specified percentage of payroll cost to
underwriters to enable them to make the settlement to the qualifying
employees.
Defined benefit plans
The Company makes annual contributions to the Employees' Group
Gratuity-cum-Life Assurance Scheme with the underwriters, a funded
defined benefit plan for qualifying employees. The scheme provides for
lump sum payment to vested employees at retirement, death while in
employment or on termination of employment. Liability for unavailed
leave for a section of the workmen for whom it is considered as a long
term benefit is actuarially valued and provided for but is not funded.
Liability for unavailed leave for other employees considered as short
term benefits and provided according in the books of accounts.
(i) RESEARCH AND DEVELOPMENT
Research and Development expenditure, other than capital, as and when
incurred are charged to revenue.
(j) segment reporting
The accounting policies adopted for segmental reporting are in line
with the accounting policies of the company with the following
additional policies:
i) Inter-segment adjustments are carried out on estimated basis having
regard to current trends wherever the actual cost is unascertainable.
ii) Revenues and expenses have been identified to segments wherever
relatable on the basis of their relationship to specific operating
activities of the segment. Revenue and expenses, which relate to the
enterprise as a whole and are not specifically allocable to segments on
a reasonable basis, have been included under "unallocated corporate
expenses".
(k) IMpAIRMENT of ASSETS
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Profit and Loss Account in the year in which an asset is identified as
impaired, after considering adjustment if any already carried out.
(l) provision of contingent liabilities
A provision is created when there is a present obligation as a result
of an obligation / event that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A
disclosure for contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require immediate outflow of resources. Where there is a possible
obligation or a present obligation in respect of which the likely hood
of outflow of resources is very remote, no provision or disclosure is
made.
(m) EARNINGS PER Share
The earnings considered in ascertaining earnings per share comprises of
the net profit after tax before exceptional items. The number of shares
used in computing earnings per share is the weighted average number of
shares outstanding during the year. Diluted earning per share comprises
of weighted average share considered for deriving basic earnings per
share as well as dilutively potential equity shares.
(n) TAXES oN INCoME
Tax expense comprises of current tax and deferred tax. Current Income
Tax is provided on the taxable income for the period as per the
provision of Income Tax Act 1961. Deferred tax is recognized, subject
to consideration of prudence, on timing differences, being the
difference between taxable income and accounting income that originate
in one period and is capable of reversal in one or more subsequent
periods.
(o) Leases
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating
leases. Rental payments made under operating leases are charged to the
Statement of Profit and Loss.
In the case of leased tangible assets and such leases where the Company
has substantially retained all the risks and rewards of ownership are
classified as operating leases. Lease Income on such operating leases
is recognized in the Statement of Profit and Loss.
Mar 31, 2014
(a) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention, as applicable to a going concern, as adopted consistently
by the company.
(b) USE OF ESTIMATES
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures relating to the
contingent liabilities as at the date of the financials and reported
amounts of income and expense during the year. Example of such
estimates include provision for doubtful receivables, employee
benefits, provision for income taxes, accounting for contract costs
expected to be incurred, the useful lives of depreciable fixed assets
and provision for impairment.
(c) BASIS OF CONSOLIDATION
The financial statements are prepared in accordance with principles and
procedures for the preparation and presentation of consolidated
financial statements as laid down in Accounting Standard 21 (AS 21).
(d) FIxed ASSETS & DEpRECIATION
(i) Fixed assets are recorded at cost and cost includes appropriate
direct and allocated expenses including interest on specified
borrowings for acquisition of assets up to the date of commencement of
commercial production. Technical know-how fees in respect of specific
turnkey projects are capitalized.
(ii) Depreciation on fixed assets is provided at Straight Line Method
in accordance with Schedule XIV to the Companies Act, 1956. Based on
technical opinion, plant and machinery have been classified as
continuous process plant and depreciation has been provided at 5.28% on
the original cost. Assets costing less than Rs.5000/- are fully
depreciated.
(e) FOREIGN CURRENCY TRANSACTION
Transactions in foreign exchange are initially recognized at the rates
prevailing on the date of transaction. All monetary assets and
liabilities are restated at balance sheet date using year end rates.
Resultant exchange difference is recognized as income or expense in
that period.
(f) investments
Investments are classified into current and long term Investments in
line with the revised schedule VI requirement. Current Investments are
stated at lower of cost and Fair Value. Long term Investments are
valued at Cost .A provision for diminution is made to recognize a
decline other than temporary in the value of Investments.
(g) INVENTORIES
i) Raw Materials and Stores and Spares are valued at weighted average
cost.
ii) Finished Stocks are valued at cost (including applicable overheads
and excise duty) or net realizable values whichever is lower.
iii) Work-in-Process value is derived from the value of finished goods
less estimated cost of work still to be completed.
iv) Modvat / Cenvat / Service Tax credits on materials / capital items
are availed on purchases / installation of assets respectively and
utilized for payment of excise duty on goods manufactured and the
unutilized credit is carried forward in the books.
(h) REVENUE RECOGNITION
i) All revenues are accounted on accrual basis
ii) Sales are net of trade discounts and sales tax.
(i) RETIREMENT BENEFITS
Defined Contribution Plans
The Company makes Provident fund and Superannuation contributions to
defined contribution retirement benefit plans for qualifying employees.
Under the Provident Fund scheme, the Company is required to contribute
a specified percentage of payroll cost to the Employees Provident Fund
Scheme,1952 to fund the benefits. The interest as declared by the
Government from time to time accrues to the credit of the employees
under the scheme. Under the Superannuation scheme, the company is
required to contribute a specified percentage of payroll cost to
underwriters to enable them to make the settlement to the qualifying
employees.
Defined benefit plans
The Company makes annual contributions to the Employees'' Group
Gratuity-cum-Life Assurance Scheme with the underwriters, a funded
defined benefit plan for qualifying employees. The scheme provides for
lump sum payment to vested employees at retirement, death while in
employment or on termination of employment. Liability for unavailed
leave for Kattur & Sathamangalam plant workmen is actuarially valued
and provided for but is not funded.
(j) RESEARCH AND DEVELOPMENT
Research and Development expenditure, other than capital, as and when
incurred are charged to revenue.
(k) SEGMENT REPORTING
The accounting policies adopted for segmental reporting are in line
with the accounting policies of the company with the following
additional policies:
i) Inter-segment adjustments are carried out on estimated basis having
regard to current trends wherever the actual cost is unascertainable.
ii) Revenues and expenses have been identified to segments wherever
relatable on the basis of their relationship to specific operating
activities of the segment. Revenue and expenses, which relate to the
enterprise as a whole and are not specifically allocable to segments on
a reasonable basis, have been included under "unallocated corporate
expenses".
(l) IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Profit and Loss Account in the year in which an asset is identified as
impaired, after considering adjustment if any already carried out.
(m) PROVISION OF CONTINGENT LIABILITIES
The Company creates a provision when there is a present obligation as a
result of an obligation / event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for contingent liability is made when there is
a possible obligation or a present obligation that may, but probably
will not, require immediate outflow of resources. Where there is a
possible obligation or a present obligation in respect of which the
likely hood of outflow of resources is very remote, no provision or
disclosure is made.
(n) EARNINGS PER SHARE
The earnings considered in ascertaining earnings per share comprises of
the net profit after tax before exceptional items. The number of shares
used in computing earnings per share is the weighted average number of
shares outstanding during the year. Diluted earning per share comprises
of weighted average share considered for deriving basic earnings per
share as well as dilutively potential equity shares.
(o) TAXES ON INCOME
Tax expense comprises of current tax and deferred tax. Current income
tax is provided on the taxable income for the period as per the
provision of Income tax Act 1961. Deferred tax is recognized, subject
to consideration of prudence, on timing differences, being the
difference between taxable income and accounting income that originate
in one period and is capable of reversal in one or more subsequent
periods.
(p) LEASES
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as operating
leases. Rental payments made under operating leases are charged to the
statement of Profit and Loss.
The Company has leased certain tangible assets and such leases where
the Company has substantially retained all the risks and rewards of
ownership are classified as operating leases. Lease Income on such
operating leases is recognized in the Statement of Profit and Loss.
Debentures/Zero Coupon Bonds are secured by the first charge on all
movable and immovable properties situated in the state of Gujarat and
Kattur unit in Tamilnadu, except book debts of the company.
Mar 31, 2013
(A) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The fnancial statements have been prepared under the historical cost
convention, as applicable to a going concern, as adopted consistently
by the company.
(B) USE OF ESTIMATES
The preparation of fnancial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures relating to the
contingent liabilities as at the date of the fnancials and reported
amounts of income and expense during the year. Example of such
estimates include provision for doubtful receivables, employee
benefits, provision for income taxes, accounting for contract costs
expected to be incurred, the useful lives of depreciable fxed assets
and provision for impairment.
(C) BASIS OF CONSOLIDATION
The fnancial statements are prepared in accordance with principles and
procedures for the preparation and presentation of consolidated
fnancial statements as laid down in Accounting Standard 21 (AS 21).
(D) FIXED ASSETS & DEPRECIATION
(i) Fixed assets are recorded at cost and cost includes appropriate
direct and allocated expenses including interest on specified
borrowings for acquisition of assets up to the date of commencement of
commercial production. Technical know-how fees in respect of specific
turnkey projects are capitalized.
(ii) Depreciation on fxed assets is provided at Straight Line Method in
accordance with Schedule XIV to the Companies Act, 1956. Based on
technical opinion, plant and machinery have been classified as
continuous process plant and depreciation has been provided at 5.28% on
the original cost. Assets costing less than Rs.5000/- are fully
depreciated
(E) FOREIGN CURRENCY TRANSACTION
Transactions in foreign exchange are initially recognized at the rates
prevailing on the date of transaction. All monetary assets and
liabilities are restated at balance sheet date using year end rates.
Resultant exchange difference is recognized as income or expense in
that period.
(F) INVESTMENTS
Investments are classified into current and long term Investments in
line with the revised schedule VI requirement. Current Investments are
stated at lower of cost and Fair Value. Long term Investments are
valued at Cost. A provision for diminution is made to recognize a
decline other than temporary in the value of Investments.
(G) INVENTORIES
(i) Raw Materials and Stores and Spares are valued at weighted average
cost.
(ii) Finished Stocks are valued at cost (including applicable overheads
and excise duty) or net realizable values whichever is lower.
(iii) Work-in-Process value is derived from the value of fnished goods
less estimated cost of work still to be completed.
(iv) Modvat/Cenvat/Service Tax credits on materials / capital items are
availed on purchases / installation of assets respectively and utilized
for payment of excise duty on goods manufactured and the unutilized
credit is carried forward in the books.
(H) REVENUE RECOGNITION
i) All revenues are accounted on accrual basis ii) Sales are net of
trade discounts and sales tax.
(i) RetiRement BeneFits
Defined Contribution Plans
The Company makes Provident fund and Superannuation contributions to
defined contribution retirement benefit plans for qualifying employees.
Under the Provident Fund scheme, the Company is required to contribute
a specified percentage of payroll cost to the Employees Provident Fund
Scheme,1952 to fund the benefits. The interest as declared by the
Government from time to time accrues to the credit of the employees
under the scheme. Under the Superannuation scheme, the company is
required to contribute a specified percentage of payroll cost to
underwriters to enable them to make the settlement to the qualifying
employees.
Defined benefit plans
The Company makes annual contributions to the Employees'' Group
Gratuity-cum-Life Assurance Scheme with the underwriters, a funded
defined benefit plan for qualifying employees. The scheme provides for
lump sum payment to vested employees at retirement, death while in
employment or on termination of employment. Liability for unavailed
leave for Kattur & Sathamangalam plant workmen is actuarially valued
and provided for but is not funded.
(J) RESEARCH AND DEVELOPMENT
Research and Development expenditure, other than capital, as and when
incurred are charged to revenue.
(K) SEGMENT REPORTING
The accounting policies adopted for segmental reporting are in line
with the accounting policies of the company with the following
additional policies:
(i) Inter-segment adjustments are carried out on estimated basis having
regard to current trends wherever the actual cost is unascertainable.
(ii) Revenues and expenses have been identified to segments wherever
relatable on the basis of their relationship to specific operating
activities of the segment. Revenue and expenses, which relate to the
enterprise as a whole and are not specifically allocable to segments on
a reasonable basis, have been included under "unallocated corporate
expenses".
(L) IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Profit and Loss Account in the year in which an asset is identified as
impaired, after considering adjustment if any already carried out.
(M) PROVISION OF CONTINGENT LI ABILITIES
The Company creates a provision when there is a present obligation as a
result of an obligation / event that probably requires an outflow of
resources and
a reliable estimate can be made of the amount of the obligation. A
disclosure for contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require immediate outflow of resources. Where there is a possible
obligation or a present obligation in respect of which the likely hood
of outflow of resources is very remote, no provision or disclosure is
made.
(N) EARNINGS PER SHARE
The earnings considered in ascertaining earnings per share comprises of
the net profit after tax before exceptional items. The number of shares
used in computing earnings per share is the weighted average number of
shares outstanding during the year. Diluted earning per share comprises
of weighted average share considered for deriving basic earnings per
share as well as dilutively potential equity shares.
(O) TAXES ON INCOME
Tax expense comprises of current tax and Deferred Tax. Current income
tax is provided on the taxable income for the period as per the
provision of Income Tax Act 1961. Deferred tax is recognized, subject
to consideration of prudence, on timing differences, being the
difference between taxable income and accounting income that originate
in one period and is capable of reversal in one or more subsequent
periods.
(P) LEASES
Leases in which a significant portion of the risks and rewards of
ownership are retained by the Lessor are classified as operating
leases. Rental payments made under operating leases are charged to the
statement of Profit and Loss.
The Company has leased certain tangible assets and such leases where
the Company has substantially retained all the risks and rewards of
ownership are classified as operating leases. Lease Income on such
operating leases is recognized in the Statement of Profit and Loss.
Mar 31, 2012
(a) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention, as applicable to a going concern, as adopted consistently
by the company.
(b) BASIS OF CONSOLIDATION
The financial statements are prepared in accordance with principles and
procedures for the preparation and presentation of consolidated
financial statements as laid down in Accounting Standard 21 (AS 21).
(c) FIXED ASSETS & DEPRECIATION
(i) Fixed assets are recorded at cost and cost includes appropriate
direct and allocated expenses including interest on specified
borrowings for acquisition of assets up to the date of commencement of
commercial production. Technical know-how fees in respect of specific
turnkey projects are capitalized.
(ii) Depreciation on fixed assets is provided at Straight Line Method
in accordance with Schedule XIV to the Companies Act, 1956. Based on
technical opinion, plant and machinery have been classified as
continuous process plant and depreciation has been provided at 5.28% on
the original cost. Assets costing less than Rs. 5,000/- are fully
depreciated.
(d) FOREIGN CURRENCY TRANSACTION
Transactions in foreign exchange are initially recognized at the rates
prevailing on the date of transaction. All monetary assets and
liabilities are restated at balance sheet date using year end rates.
Resultant exchange difference is recognized as income or expense in
that period.
(e) INVESTMENTS
Investments are classified into current and long term Investments in
line with the revised schedule VI requirement. Current Investments are
stated at lower of cost and Fair Value. Long term Investments are
valued at Cost. A provision for diminution is made to recognize a
decline other than temporary in the value of Investments.
(f) INVENTORIES
(i) Raw Materials and Stores & Spares are valued at weighted average
cost.
(ii) Finished Stocks are valued at cost (including applicable overheads
and excise duty) or net realizable values whichever is lower.
(iii) Work-in-Process value is derived from the value of finished goods
less estimated cost of work still to be completed.
(iv) Modvat/Cenvat/Service Tax credits on materials/capital items are
availed on purchases/installation of assets respectively and utilized
for payment of excise duty on goods manufactured and the unutilized
credit is carried forward in the books.
(g) REVENUE RECOGNITION
(i) All revenues are accounted on accrual basis.
(ii) Sales are net of trade discounts and sales tax.
(iii) Dividend income is accounted when the right to receive is
established.
(h) RETIREMENT BENEFITS
Defined Contribution Plans
The Company makes Provident fund and Superannuation contributions to
defined contribution retirement benefit plans for qualifying employees.
Under the Provident Fund scheme, the Company is required to contribute
a specified percentage of payroll cost to the Employees Provident Fund
Scheme, 1952 to fund the benefits. The interest as declared by the
Government from time to time accrues to the credit of the employees
under the scheme. Under the Superannuation scheme, the company is
required to contribute a specified percentage of payroll cost to
underwriters to enable them to make the settlement to the qualifying
employees.
Defined benefit plans
The Company makes annual contributions to the Employees' Group
Gratuity-cum-Life Assurance Scheme with the underwriters, a funded
defined benefit plan for qualifying employees. The scheme provides for
lump sum payment to vested employees at retirement, death while in
employment or on termination of employment. Liability for unavailed
leave for Kattur & Sathamangalam plant workmen is actuarially valued
and provided for but is not funded.
(i) RESEARCH AND DEVELOPMENT
Research and Development expenditure, other than capital, as and when
incurred are charged to revenue.
(j) SEGMENT REPORTING
The accounting policies adopted for segmental reporting are in line
with the accounting policies of the company with the following
additional policies:
(i) Inter-segment adjustments are carried out on estimated basis having
regard to current trends wherever the actual cost is unascertainable.
(ii) Revenues and expenses have been identified to segments wherever
relatable on the basis of their relationship to specific operating
activities of the segment. Revenue and expenses, which relate to the
enterprise as a whole and are not specifically allocable to segments on
a reasonable basis, have been included under "unallocated corporate
expenses".
(k) IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Profit and Loss Account in the year in which an asset is identified as
impaired, after considering adjustment if any already carried out.
(l) CONTINGENT LIABILITIES & PROVISIONS
The Company creates a provision when there is a present obligation as a
result of an obligation/event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for contingent liability is made when there is
a possible obligation or a present obligation that may, but probably
will not, require immediate outflow of resources. Where there is a
possible obligation or a present obligation in respect of which the
likely hood of outflow of resources is very remote, no provision or
disclosure is made.
(m) EARNINGS PER SHARE
The earnings considered in ascertaining earnings per share comprises of
the net profit after tax before exceptional items. The number of shares
used in computing earnings per share is the weighted average number of
shares outstanding during the year. Diluted earning per share comprises
of weighted average share considered for deriving basic earnings per
share as well as dilutively potential equity shares.
(n) TAXES ON INCOME
Tax expense comprises of current tax and deferred tax. Current income
tax is provided on the taxable income for the period as per the
provision of Income tax Act 1961. Deferred tax is recognized, subject
to consideration of prudence, on timing differences, being the
difference between taxable income and accounting income that originate
in one period and is capable of reversal in one or more subsequent
periods.
Mar 31, 2011
(1) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention, as applicable to a going concern, as adopted consistently
by the Company.
(2) FIXED ASSETS & DEPRECIATION
(a) Fixed assets are recorded at cost and cost includes appropriate
direct and allocated expenses including interest on specified
borrowings for acquisition of assets up to the date of commencement of
commercial production. Technical know-how fees in respect of specific
turnkey projects are capitalised.
(b) Depreciation on fixed assets is provided at Straight Line Method in
accordance with Schedule XIV to the Companies Act, 1956. Based on
technical opinion, plant and machinery have been classified as
continuous process plant and depreciation has been provided at 5.28% on
the original cost. Assets costing less than Rs.5000/- are fully
depreciated.
(3) FOREIGN CURRENCY TRANSACTION
Transactions in foreign exchange are initially recognized at the rates
prevailing on the date of transaction. All monetary assets and
liabilities are restated at balance sheet date using year end rates.
Resultant exchange difference is recognized as income or expense in
that period.
(4) INVESTMENTS
All Investments are stated at cost and provision for diminution in
value other than Long Term Investments is made to reflect its quoted /
fair value. Current investments are carried at lower of cost or fair
value and determined on an individual investment basis.
(5) INVENTORIES
(a) Raw Materials and Stores and Spares are valued at weighted average
cost.
(b) Finished Stocks are valued at cost (including applicable overheads
and excise duty) or net realisable value whichever is lower.
(c) Work-in-Process value is derived from the value of finished goods
less estimated cost of work still to be completed.
(d) Modvat /Cenvat / Service Tax credits on materials / capital items
are availed on purchases / installation of assets respectively and
utilised for payment of excise duty on goods manufactured and the
unutilised credit is carried forward in the books.
(6) REVENUE RECOGNITION
(a) All revenues are accounted on accrual basis
(b) Sales are net of trade discounts and sales tax.
(7) RETIREMENT BENEFITS Defined Contribution Plans
The Company makes Provident Fund and Superannuation contributions to
defined contribution retirement benefit plans for qualifying employees.
Under the Provident Fund scheme, the Company is required to contribute
a specified percentage of payroll cost to the Employees Provident Fund
Scheme,1952 to fund the benefits. The interest as declared by the
Government from time to time accrues to the credit of the employees
under the scheme. Under the Superannuation scheme, the company is
required to contribute a specified percentage of payroll cost to
underwriters to enable them to make the settlement to the qualifying
employees.
Defined benefit plans
The Company makes annual contributions to the Employees' Group
Gratuity-cum-Life Assurance Scheme with the underwriters, a funded
defined benefit plan for qualifying employees. The scheme provides for
lump sum payment to vested employees at retirement, death while in
employment or on termination of employment. Liability for unavailed
leave for Kattur & Sathamangalam plant workmen is actuarially valued
and provided for but is not funded.
Short Term Compensated absence
Leave encashment benefit for all employees except Kattur &
Sathamangalam plant work men is in the nature of short term compensated
absence and accounted on accrual basis.
(8) RESEARCH AND DEVELOPMENT
Research and Development expenditure, other than capital, as and when
incurred are charged to revenue.
(9) SEGMENT REPORTING
The accounting policies adopted for segmental reporting are in line
with the accounting policies of the company with the following
additional policies:
(a) Inter-segment adjustments are carried out on estimated basis having
regard to current trends wherever the actual cost is unascertainable.
(b) Revenues and expenses have been identified to segments wherever
relatable on the basis of their relationship to specific operating
activities of the segment. Revenue and expenses, which relate to the
enterprise as a whole and are not specifically allocable to segments on
a reasonable basis have been included under "unallocated corporate
expenses".
(10) IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Profit and Loss Account in the year in which an asset is identi- fied
as impaired, after considering adjustment if any already carried out.
(11) PROVISION OF CONTINGENT LIABILITIES
The Company creates a provision when there is a present obligation as a
result of an obligation / event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for contingent liability is made when there is
a possible obligation or a present obligation that may, but probably
will not, require immediate outflow of resources. Where there is a
possible obligation or a present obligation in respect of which the
likelyhood of outflow of resources is very remote, no provision or
disclosure is made.
(12) EARNINGS PER SHARE
The earnings considered in ascertaining earnings per share comprises of
the net profit after tax before exceptional items. The number of shares
used in computing earnings per share is the weighted average number of
shares outstanding during the year. Diluted earning per share comprises
of weighted average share considered for deriving basic earnings per
share as well as dilutively potential equity shares.
(13) TAXES ON INCOME
Tax expense comprises of current tax and deferred tax. Current income
tax is provided on the taxable income for the period as per the
provision of Income tax Act 1961. Deferred tax is recognized, subject
to consideration of prudence, on timing differences, being the
difference between taxable income and accounting income that originate
in one period and is capable of reversal in one or more subsequent
periods.
Mar 31, 2010
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention, as applicable to a going concern, as adopted consistently
by the company.
2. FIXED ASSETS & DEPRECIATION
(a) Fixed assets are recorded at cost and cost includes appropriate
direct and allocated expenses including interest on specified
borrowings for acquisition of assets up to the date of commencement of
commercial production. Technical know-how fees in respect of specific
turnkey projects are capitalised.
(b) Depreciation on fixed assets is provided at Straight Line Method in
accordance with Schedule XIV to the Companies Act, 1956. Based on
technical opinion, plant and machinery have been classified as
continuous process plant and depreciation has been provided at 5.28% on
the original cost. Assets costing less than Rs.5000/- are fully
depreciated.
3. FOREIGN CURRENCY TRANSACTION
Transactions in foreign exchange are initially recognized at the rates
prevailing on the date of transaction. All monetary assets and
liabilities are restated at balance sheet date using year end rates.
Resultant exchange difference is recognized as income or expense in
that period.
4. INVESTMENTS
All Investments are stated at cost and provision for diminution in
value other than Long Term Investments is made to reflect its quoted /
fair value. Current investments are carried at lower of cost or fair
value and determined on an individual investment basis.
5. INVENTORIES
(a) Raw Materials and Stores and Spares are valued at weighted average
cost.
(b) Finished Stocks are valued at cost (including applicable overheads
and excise duty) or net realisable values whichever is lower.
(c) Work-in-Process value is derived from the value of finished goods
less estimated cost of work still to be completed.
(d) Closing Stock of Molasses including own production is valued at
average purchase cost.
(e) Modvat /Cenvat / Service Tax credits on materials / capital items
are availed on purchases / installation of assets respectively and
utilised for payment of excise duty on goods manufactured and the
unutilised credit is carried forward in the books.
6. REVENUE RECOGNITION
(a) All revenues are accounted on accrual basis
(b) Sales are net of trade discounts and sales tax.
7. RETIREMENT BENEFITS Defined Contribution Plans
The Company makes Provident fund and Superannuation contributions to
defined contribution retirement benefit plans for qualifying employees.
Under the Provident Fund scheme, the Company is required to contribute
a specified percentage of payroll cost to the Employees Provident Fund
Scheme,1952 to fund the benefits. The interest as declared by the
Government from time to time accrues to the credit of the employees
under the scheme. Under the Superannuation scheme, the company is
required to contribute a specified percentage of payroll cost to
underwriters to enable them to make the settlement to the qualifying
employees.
Defined benefit plans
The Company makes annual contributions to the Employeesà Group
Gratuity-cum-Life Assurance Scheme of an Insurance Company, a funded
defined benefit plan for qualifying employees. The scheme provides for
lump sum payment to vested employees at retirement, death while in
employment or on termination of employment. Liability for unavailed
leave for Kattur & Sathamangalam plant workmen is actuarially valued
and provided for but is not funded.
Short Term Compensated absence
Leave encashment benefit for all employees except Kattur &
Sathamangalam plant work men is in the nature of short term compensated
absence and accounted on accrual basis.
8. RESEARCH AND DEVELOPMENT
Research and Development expenditure, other than capital, as and when
incurred are charged to revenue.
9. SEGMENT REPORTING
The accounting policies adopted for segmental reporting are in line
with the accounting policies of the company with the following
additional policies:
(a) Inter-segment adjustments are carried out on estimated basis having
regard to current trends wherever the actual cost is unascertainable.
(b) Revenues and expenses have been identified to segments wherever
relatable on the basis of their relationship to specific operating
activities of the segment. Revenue and expenses, which relate to the
enterprise as a whole and are not specifically allocable to segments on
a reasonable basis have been included under Ãunallocated income /
expenseÃ.
10. IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of assets
exceeds its recoverable value. An impairment loss is charged to the
Profit and Loss Account in the year in which an asset is identified as
impaired, after considering adjustment if any already carried out.
11. PROVISION OF CONTINGENT LIABILITIES
The Company creates a provision when there is a present obligation as a
result of an obligation / event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require immediate outflow of resources. Where there is a
possible obligation or a present obligation in respect of which the
likely hood of outflow of resources is very remote, no provision or
disclosure is made.
12. EARNINGS PER SHARE
The earnings considered in ascertaining earnings per share comprises of
the net profit after tax before exceptional items. The number of shares
used in computing earnings per share is the weighted average number of
shares outstanding during the year. Diluted earning per share comprises
of weighted average share considered for deriving basic earnings per
share as well as dilutively potential equity shares.
13. TAXES ON INCOME
Tax expense comprises of current tax and deferred tax. Current income
tax is provided on the taxable income for the period as per the
provision of Income Tax Act 1961. Deferred tax is recognized, subject
to consideration of prudence, on timing differences, being the
difference between taxable income and accounting income that originate
in one period and is capable of reversal in one or more subsequent
periods.
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