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Accounting Policies of Lords Chloro Alkali Ltd. Company
Mar 31, 2025
recognised outside statement of profit and loss (i.e. in OCI or equity depending upon the treatment of
underlying item).
Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax
assets are recognised to the extent that it is probable that the underlying tax loss, unused tax credits or
deductible temporary difference will be utilised against future taxable income. This is assessed based on
the Company''s forecast of future operating results, adjusted for significant non-taxable income and
expenses and specific limits on the use of any unused tax loss or credit. Unrecognised deferred tax
assets are re-assessed at each reporting date and are recognised to the extent that it has become
probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised
outside the statement of profit and loss is recognised outside statement of profit and loss (in OCI or
equity depending upon the treatment of underlying item).
d. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term
deposits with original maturities of three months or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value.
e. Foreign currency transactions
The financial statements are presented in Indian Rupee (''INR'' or ''Rs.'') which is also the functional
currency of the Company.
Foreign currency transactions are translated into the functional currency using the exchange rates at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates are generally recognised in profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the
statement of profit and loss, within finance costs. All other foreign exchange gains and losses are
presented in the statement of profit and loss on a net basis within other income/expenses, as the case
maybe.
f. Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognized when the Company becomes a party to the
contractual provisions of the financial instrument and are measured initially at fair value adjusted for
transaction costs, except for those carried at fair value through profit or loss which are measured
initially at fair value. Subsequent measurement of financial assets and financial liabilities is described
below:
Non-derivative financial assets
Subsequent measurement
i. Financial assets carried at amortised cost - a financial asset is measured at the amortised
cost, if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting
contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised
cost using the effective interest rate (EIR) method.
ii. Fair value through profit or loss - Assets that do not meet the criteria for amortised cost or
FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment
that is subsequently measured at fair value through profit or loss and is not part of a
hedging relationship is recognised in profit or loss and presented net in the statement of
profit and loss within other gains/(losses) in the period in which it arises. Interest income
from these financial assets is included in other income.
iii. Fair value through OCI- A financial assets measured at FVOCI if both of the following
conditions are met:
⢠The Company''s business model objectives for managing the financial assets is achieved
both by collecting contractual cash flows and selling the financial assets, and
⢠The contractual terms of the financial assets given raise in specified dates to cash flows
that are solely payments.
g. Fair Value of Financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and
assumptions that are based on market conditions and risks existing at each reporting date. The methods
used to determine fair value include discounted cash flow analysis, available quoted market prices and
dealer quotes. All methods of assessing fair value result in general approximation of value, and such
may never actually be realized. For financial assets and liabilities maturing within one year from the
Balance Sheet and which are not carried at fair value, the carrying amounts approximate fair value due
to the short maturity of these instruments.
h. Property, plant and equipment (''PPE'')
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price,
taxes (non-recoverable) borrowing cost if capitalisation criteria are met and other expenses, directly
attributable cost of bringing the asset to its working condition for the intended use. Any trade discount
and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the asset''s
carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Company and definition of asset is met. All
other repair and maintenance costs are recognised in the statement of profit or loss as incurred.
In case an item of property, plant and equipment is acquired on deferred payment basis, interest
expenses included in deferred payment is recognised as interest expense and not included in cost of
asset.
Subsequent measurement (depreciation and useful life)
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its
estimated residual value. Depreciation on tangible fixed assets has been provided on the straight-line
method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
De-recognition of PPE
The carrying amount of an item of property, plant and equipment shall be derecognized upon disposal
or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on
de-recognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the statement of profit and loss when the asset is
derecognised.
i. Capital work-in progress
Cost of material consumed and erection charges thereon along with other direct cost incurred by the
Company for the projects are shown as capital work-in-progress until capitalisation. Claims for price
variation / exchange rate variation in case of contracts are accounted for on acceptance / receipt of
claim.
j. Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on
internal/external factors, that an asset may be impaired. If any such indication exists, the Company
estimates the recoverable amount of the asset. The recoverable amount is higher of an asset''s fair value
less costs of disposal and value in use. For this purpose, assets are companied at the lowest levels for
which there are separately identifiable cash inflows which are largely independent of the cash inflows
from other assets or company of assets (cash generating units). If such recoverable amount of the asset
or the recoverable amount of the cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated
as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date,
there is an indication that a previously assessed impairment loss no longer exists, the recoverable
amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of
depreciated historical cost and the same is accordingly reversed in the statement of profit and loss.
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement
and recognition of impairment loss for financial assets. ECL is the weighted-average of 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, discounted at the original effective interest rate,
with the respective risks of default occurring as the weights. When estimating the cash flows, the
Company is required to consider:
⢠All contractual terms of the financial assets (including prepayment and extension) over the
expected life of the assets.
⢠Cash flows from the sale of collateral held or other credit enhancements that are integral to the
contractual terms.
Trade receivables: In respect of trade receivables, the Company applies the simplified approach of Ind
AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit
losses. Lifetime expected credit losses are the expected credit losses that result from all possible default
events over the expected life of a financial instrument.
Other financial assets: In respect of its other financial assets, the Company assesses if the credit risk on
those financial assets has increased significantly since initial recognition. If the credit risk has not
increased significantly since initial recognition, the Company measures the loss allowance at an amount
equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit
losses.
When making this assessment, the Company uses the change in the risk of a default occurring over the
expected life of the financial asset. To make that assessment, the Company compares the risk of a
default occurring on the financial asset as at the balance sheet date with the risk of a default occurring
on the financial asset as at the date of initial recognition and considers reasonable and supportable
information, that is available without undue cost or effort, that is indicative of significant increases in
credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has not
increased significantly since initial recognition if the financial asset is determined to have low credit risk
at the balance sheet date.
De-recognition of financial assets
A financial asset is primarily de-recognised when the contractual rights to receive cash flows from the
asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Non-derivative financial liabilities
Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortised cost
using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the de-recognition of the original liability and the recognition of a new
liability. The difference in the respective carrying amounts is recognised in the statement of profit or
loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if
there is a currently enforceable legal right to offset the recognised amounts and there is an intention to
settle on a net basis, to realize the assets and settle the liabilities simultaneously.
k. Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short¬
term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease
payments and right-of-use assets representing the right to use the underlying assets.
Company
Overview
a) Right-of-use assets
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and
lease payments made at or before the commencement date less any lease incentives received. Right-of-
use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated
useful lives of the assets.
b) Lease liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the
present value of lease payments to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual, value
guarantees. The lease payments also include the exercise price of a purchase option reasonably certain
to be exercised by the Company and payments of penalties for terminating the lease, if the lease term
reflects the Company exercising the option to terminate. Variable lease payments that do not depend
on an index or a rate are recognized as expenses in the period in which the event or condition that
triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at
the lease commencement date because the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease liabilities is increased to reflect the
accretion of the interest and reduced for the lease payments made. In addition, the carrying amount of
lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease
payments or a change in the assessment of an option to purchase the underlying asset.
c) Short-term lease ad lease of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those
lease that have a lease term of 12 months or less from the commencement date and do not contain a
purchase option). It also applies the lease of low-value assets recognition exemption that are
considered to be low value. Lease payments on short-term lease and lease of low-value assets are
recognized as expense on a straight-line basis over the lease term.
Company
Overview
l. Borrowing costs
Borrowing costs directly attributable to the acquisitions, construction or production of a qualifying asset
are capitalised during the period of time that is necessary to complete and prepare the asset for its
intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and
reported in finance costs.
A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended
use. Capitalisation of borrowing costs is suspended in the period during which the active development is
delayed due to, other than temporary, interruption.
m. Provisions, contingent liabilities and contingent assets
Provisions are recognised when present obligations as a result of a past event will probably lead to an
outflow of economic resources and amounts can be estimated reliably. Timing or amount of the outflow
may still be uncertain. A present obligation arises when there is a presence of a legal or constructive
commitment that has resulted from past events, for example, legal disputes or onerous contracts.
Provisions are not recognised for future operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based
on the most reliable evidence available at the reporting date, including the risks and uncertainties
associated with the present obligation. Provisions are discounted to their present values, where the
time value of money is material.
Any reimbursement that the Company can be virtually certain to collect from a third party with respect
to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of
the related provision.
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
In those cases where the outflow of economic resources as a result of present obligations is considered
improbable or remote, no liability is recognised.
Contingent liability is disclosed for:
⢠Possible obligations which will be confirmed only by future events not wholly within the control
of the Company or
⢠Present obligations arising from past events where it is not probable that an outflow of
resources will be required to settle the obligation or a reliable estimate of the amount of the
obligation cannot be made.
Contingent assets are not recognised. However, when inflow of economic benefits is probable, related
asset is disclosed.
2. Basis of preparation and significant accounting policies
Basis of preparation
The financial statements have been prepared on accrual and going concern basis under historical cost
convention except for certain financial instruments and plan assets, which are measured at fair values.
The significant accounting policies and measurement bases have been summarised below.
Current versus non-current classification
All assets and liabilities have been classified as current or non-current as per the Company''s normal
operating cycle and as per terms of agreements wherever applicable. Deferred tax assets and liabilities
are classified as non-current assets and non-current liabilities, as the case may be.
a. Revenue recognition and presentation:
Revenue arises mainly from the sale of manufactured and traded goods.
To determine whether to recognize revenue, the Company follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognizing revenue when/as performance obligation(s) are satisfied.
Revenue is measured at fair value of consideration received or receivable, after deduction of any trade
discounts, volume rebates and any taxes or duties collected on behalf of the government which are
recognised outside statement of profit and loss (i.e. in OCI or equity depending upon the treatment of
underlying item).
Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax
assets are recognised to the extent that it is probable that the underlying tax loss, unused tax credits or
deductible temporary difference will be utilised against future taxable income. This is assessed based on
the Company''s forecast of future operating results, adjusted for significant non-taxable income and
expenses and specific limits on the use of any unused tax loss or credit. Unrecognised deferred tax
assets are re-assessed at each reporting date and are recognised to the extent that it has become
probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised
outside the statement of profit and loss is recognised outside statement of profit and loss (in OCI or
equity depending upon the treatment of underlying item).
d. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term
deposits with original maturities of three months or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value.
e. Foreign currency transactions
The financial statements are presented in Indian Rupee (''INR'' or ''Rs.'') which is also the functional
currency of the Company.
Foreign currency transactions are translated into the functional currency using the exchange rates at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates are generally recognised in profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the
statement of profit and loss, within finance costs. All other foreign exchange gains and losses are
presented in the statement of profit and loss on a net basis within other income/expenses, as the case
maybe.
f. Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognized when the Company becomes a party to the
contractual provisions of the financial instrument and are measured initially at fair value adjusted for
transaction costs, except for those carried at fair value through profit or loss which are measured
initially at fair value. Subsequent measurement of financial assets and financial liabilities is described
below:
Non-derivative financial assets
Subsequent measurement
i. Financial assets carried at amortised cost - a financial asset is measured at the amortised
cost, if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting
contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised
cost using the effective interest rate (EIR) method.
ii. Fair value through profit or loss - Assets that do not meet the criteria for amortised cost or
FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment
that is subsequently measured at fair value through profit or loss and is not part of a
hedging relationship is recognised in profit or loss and presented net in the statement of
profit and loss within other gains/(losses) in the period in which it arises. Interest income
from these financial assets is included in other income.
iii. Fair value through OCI- A financial assets measured at FVOCI if both of the following
conditions are met:
⢠The Company''s business model objectives for managing the financial assets is achieved
both by collecting contractual cash flows and selling the financial assets, and
⢠The contractual terms of the financial assets given raise in specified dates to cash flows
that are solely payments.
g. Fair Value of Financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and
assumptions that are based on market conditions and risks existing at each reporting date. The methods
used to determine fair value include discounted cash flow analysis, available quoted market prices and
dealer quotes. All methods of assessing fair value result in general approximation of value, and such
may never actually be realized. For financial assets and liabilities maturing within one year from the
Balance Sheet and which are not carried at fair value, the carrying amounts approximate fair value due
to the short maturity of these instruments.
h. Property, plant and equipment (''PPE'')
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price,
taxes (non-recoverable) borrowing cost if capitalisation criteria are met and other expenses, directly
attributable cost of bringing the asset to its working condition for the intended use. Any trade discount
and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the asset''s
carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Company and definition of asset is met. All
other repair and maintenance costs are recognised in the statement of profit or loss as incurred.
In case an item of property, plant and equipment is acquired on deferred payment basis, interest
expenses included in deferred payment is recognised as interest expense and not included in cost of
asset.
Subsequent measurement (depreciation and useful life)
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its
estimated residual value. Depreciation on tangible fixed assets has been provided on the straight-line
method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
De-recognition of PPE
The carrying amount of an item of property, plant and equipment shall be derecognized upon disposal
or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on
de-recognition of the asset (calculated as the difference between the net disposal proceeds and the
carrying amount of the asset) is included in the statement of profit and loss when the asset is
derecognised.
i. Capital work-in progress
Cost of material consumed and erection charges thereon along with other direct cost incurred by the
Company for the projects are shown as capital work-in-progress until capitalisation. Claims for price
variation / exchange rate variation in case of contracts are accounted for on acceptance / receipt of
claim.
j. Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on
internal/external factors, that an asset may be impaired. If any such indication exists, the Company
estimates the recoverable amount of the asset. The recoverable amount is higher of an asset''s fair value
less costs of disposal and value in use. For this purpose, assets are companied at the lowest levels for
which there are separately identifiable cash inflows which are largely independent of the cash inflows
from other assets or company of assets (cash generating units). If such recoverable amount of the asset
or the recoverable amount of the cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated
as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date,
there is an indication that a previously assessed impairment loss no longer exists, the recoverable
amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of
depreciated historical cost and the same is accordingly reversed in the statement of profit and loss.
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement
and recognition of impairment loss for financial assets. ECL is the weighted-average of 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, discounted at the original effective interest rate,
with the respective risks of default occurring as the weights. When estimating the cash flows, the
Company is required to consider:
⢠All contractual terms of the financial assets (including prepayment and extension) over the
expected life of the assets.
⢠Cash flows from the sale of collateral held or other credit enhancements that are integral to the
contractual terms.
Trade receivables: In respect of trade receivables, the Company applies the simplified approach of Ind
AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit
losses. Lifetime expected credit losses are the expected credit losses that result from all possible default
events over the expected life of a financial instrument.
Other financial assets: In respect of its other financial assets, the Company assesses if the credit risk on
those financial assets has increased significantly since initial recognition. If the credit risk has not
increased significantly since initial recognition, the Company measures the loss allowance at an amount
equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit
losses.
When making this assessment, the Company uses the change in the risk of a default occurring over the
expected life of the financial asset. To make that assessment, the Company compares the risk of a
default occurring on the financial asset as at the balance sheet date with the risk of a default occurring
on the financial asset as at the date of initial recognition and considers reasonable and supportable
information, that is available without undue cost or effort, that is indicative of significant increases in
credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has not
increased significantly since initial recognition if the financial asset is determined to have low credit risk
at the balance sheet date.
De-recognition of financial assets
A financial asset is primarily de-recognised when the contractual rights to receive cash flows from the
asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Non-derivative financial liabilities
Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortised cost
using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the de-recognition of the original liability and the recognition of a new
liability. The difference in the respective carrying amounts is recognised in the statement of profit or
loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if
there is a currently enforceable legal right to offset the recognised amounts and there is an intention to
settle on a net basis, to realize the assets and settle the liabilities simultaneously.
k. Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short¬
term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease
payments and right-of-use assets representing the right to use the underlying assets.
a) Right-of-use assets
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and
lease payments made at or before the commencement date less any lease incentives received. Right-of-
use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated
useful lives of the assets.
b) Lease liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the
present value of lease payments to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual, value
guarantees. The lease payments also include the exercise price of a purchase option reasonably certain
to be exercised by the Company and payments of penalties for terminating the lease, if the lease term
reflects the Company exercising the option to terminate. Variable lease payments that do not depend
on an index or a rate are recognized as expenses in the period in which the event or condition that
triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at
the lease commencement date because the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease liabilities is increased to reflect the
accretion of the interest and reduced for the lease payments made. In addition, the carrying amount of
lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease
payments or a change in the assessment of an option to purchase the underlying asset.
c) Short-term lease ad lease of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those
lease that have a lease term of 12 months or less from the commencement date and do not contain a
purchase option). It also applies the lease of low-value assets recognition exemption that are
considered to be low value. Lease payments on short-term lease and lease of low-value assets are
recognized as expense on a straight-line basis over the lease term.
l. Borrowing costs
Borrowing costs directly attributable to the acquisitions, construction or production of a qualifying asset
are capitalised during the period of time that is necessary to complete and prepare the asset for its
intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and
reported in finance costs.
A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended
use. Capitalisation of borrowing costs is suspended in the period during which the active development is
delayed due to, other than temporary, interruption.
Mar 31, 2024
2. Basis of preparation and significant accounting policies Basis of preparation
The financial statements have been prepared on accrual and going concern basis under historical cost convention except for certain financial instruments and plan assets, which are measured at fair values.
The significant accounting policies and measurement bases have been summarised below. Current versus non-current classification
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and as per terms of agreements wherever applicable. Deferred tax assets and liabilities are classified as non-current assets and non-current liabilities, as the case may be.
a. Revenue recognition and presentation:
Revenue arises mainly from the sale of manufactured and traded goods.
To determine whether to recognize revenue, the Company follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognizing revenue when/as performance obligation(s) are satisfied.
Revenue is measured at fair value of consideration received or receivable, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government which are levied on sales such as goods and service tax, etc.
Revenue is recognized either at a point in time or over time, when (or as) the Company satisfies performance obligations by transferring the promised goods or services to its customers.
Sale of goods
Revenue from sale of goods is recognised when the control of goods is transferred to the buyer as per the terms of the contract, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Control of goods refers to the ability to direct the use of and obtain substantially all of the remaining benefits from goods.
Interest income
Interest income is recognised on time proportion basis taking into account the amount outstanding and rate applicable. For all financial assets measured at amortised cost, interest income is recorded using the effective interest rate (EIR) i.e. the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial assets.
Dividend
Dividend are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
b. Inventories
Finished goods, works-in-process, raw material, stores& spares and packing material are valued at lower of cost and net realisable value. Cost of inventory has been arrived at by using the weighted average cost formula. Cost of inventory comprises. The costs of purchase of inventories comprise the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling and other costs directly attributable to the acquisition of finished goods, materials and services. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase. Stock of scrap is valued at estimated realizable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
c. Income taxes
Tax expense recognised in the statement of profit and loss comprises the sum of deferred tax and current tax not recognised in Other Comprehensive Income (OCI) or directly in equity.
Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Current tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit and loss (i.e. in OCI or equity depending upon the treatment of underlying item).
Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilised against future taxable
income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside the statement of profit and loss is recognised outside statement of profit and loss (in OCI or equity depending upon the treatment of underlying item).
d. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
e. Foreign currency transactions
The financial statements are presented in Indian Rupee (âINRâ or âRs.â) which is also the functional currency of the Company.
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other income/expenses, as the case maybe.
f. Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below:
Non-derivative financial assets
Subsequent measurement
i. Financial assets carried at amortised cost - a financial asset is measured at the amortised cost, if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
ii. Fair value through profit or loss - Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
iii. Fair value through OCI- A financial assets measured at FVOCI if both of the following conditions are met:
⢠TheCompanyâs business model objectives for managing the financial assets is achieved both by collecting contractual cash flows and selling the financial assets, and
⢠The contractual terms of the financial assets given raise in specified dates to cash flows that are solely payments.
g. Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realized. For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to the short maturity of these instruments.
h. Property, plant and equipment (âPPEâ)
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, taxes (non-recoverable) borrowing cost if capitalisation criteria are met and other expenses, directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and definition of asset is met. All other repair and maintenance costs are recognised in the statement of profit or loss as incurred.
In case an item of property, plant and equipment is acquired on deferred payment basis, interest expenses included in deferred payment is recognised as interest expense and not included in cost of asset.
Subsequent measurement (depreciation and useful life)
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on tangible fixed assets has been provided on the straightline method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
De-recognition of PPE
The carrying amount of an item of property, plant and equipment shall be derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
i. Capital work-in progress
Cost of material consumed and erection charges thereon along with other direct cost incurred by the Company for the projects are shown as capital work-in-progress until capitalisation. Claims for price variation / exchange rate variation in case of contracts are accounted for on acceptance / receipt of claim.
j. Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on internal/external factors, that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset.The recoverable amount is higher of an assetâs fair value less costs of disposal and value in use. For this purpose, assets are companied at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or company of assets (cash generating units). If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date, there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost and the same is accordingly reversed in the statement of profit and loss.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets. ECL is the weighted-average of 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, discounted at the original effective interest rate, with the respective risks of default occurring as the weights. When estimating the cash flows, the Company is required to consider:
⢠All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
⢠Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables: In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
Other financial assets: In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.
When making this assessment, the Company uses the change in the risk of a default occurring over the expected life of the financial asset. To make that assessment, the Company compares the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.
De-recognition of financial assets
A financial asset is primarily de-recognised when the contractual rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Non-derivative financial liabilities
Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortised cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
k. Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
a) Right-of-use assets
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
b) Lease liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual, value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of the interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the underlying asset.
c) Short-term lease ad lease of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those lease that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption that are considered to be low value. Lease payments on short-term lease and lease of low-value assets are recognized as expense on a straight-line basis over the lease term.
l. Borrowing costs
Borrowing costs directly attributable to the acquisitions, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs.
A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Capitalisation of borrowing costs is suspended in the period during which the active development is delayed due to, other than temporary, interruption.
Mar 31, 2023
Summary of significant accounting policies and other explanatory information for the year ended 31st March 2023
1. Corporate information and statement of compliance with Indian Accounting Standards (Ind AS)
Lords Chloro Alkali Limited (âthe Companyâ) a public limited company domiciled in India and having its registered office at SP-460, Matsya industrial area, Alwar (Rajasthan) - 301030, was incorporated under the provisions of Companies Act, 1956. The Company is primarily engaged in the business of manufacturing of caustic soda and other chemicals.
The financial statements of the Company have been prepared to comply in all material respects with accounting principles generally accepted in India, including Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015 under Section 133 of the Companies Act, 2013 (the âActâ) and other relevant provisions of the Act.
2. Basis of preparation and significant accounting policies Basis of preparation
The financial statements have been prepared on accrual and going concern basis under historical cost convention except for certain financial instruments and plan assets, which are measured at fair values.
The significant accounting policies and measurement bases have been summarised below. Current versus non-current classification
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and as per terms of agreements wherever applicable. Deferred tax assets and liabilities are classified as non-current assets and non-current liabilities, as the case may be.
a. Revenue recognition and presentation:
Revenue arises mainly from the sale of manufactured and traded goods.
To determine whether to recognize revenue, the Company follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognizing revenue when/as performance obligation(s) are satisfied.
Revenue is measured at fair value of consideration received or receivable, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government which are levied on sales such as goods and service tax, etc.
Revenue is recognized either at a point in time or over time, when (or as) the Company satisfies performance obligations by transferring the promised goods or services to its customers.
Revenue from sale of goods is recognised when the control of goods is transferred to the buyer as per the terms of the contract, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Control of goods refers to the ability to direct the use of and obtain substantially all of the remaining benefits from goods.
Interest income is recognised on time proportion basis taking into account the amount outstanding and rate applicable. For all financial assets measured at amortised cost, interest income is recorded using the effective interest rate (EIR) i.e. the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial assets.
Dividend are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
Finished goods, works-in-process, raw material, stores& spares and packing material are valued at lower of cost and net realisable value. Cost of inventory has been arrived at by using the weighted average cost formula. Cost of inventory comprises. The costs of purchase of inventories comprise the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling and other costs directly attributable to the acquisition of finished goods, materials and services. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase. Stock of scrap is valued at estimated realizable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Tax expense recognised in the statement of profit and loss comprises the sum of deferred tax and current tax not recognised in Other Comprehensive Income (OCI) or directly in equity.
Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Current tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit and loss (i.e. in OCI or equity depending upon the treatment of underlying item).
Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside the statement of profit and loss is recognised outside statement of profit and loss (in OCI or equity depending upon the treatment of underlying item).
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and shortterm deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
e. Foreign currency transactions
The financial statements are presented in Indian Rupee (âINRâ or âRs.â) which is also the functional currency of the Company.
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other income/expenses, as the case maybe.
Initial recognition and measurement
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below:
Non-derivative financial assets
Subsequent measurement
i. Financial assets carried at amortised cost - a financial asset is measured at the amortised cost, if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
ii. Fair value through profit or loss - Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
iii. Fair value through OCI- A financial assets measured at FVOCI if both of the following conditions are met:
⢠The Companyâs business model objectives for managing the financial assets is achieved both by collecting contractual cash flows and selling the financial assets, and
⢠The contractual terms of the financial assets given raise in specified dates to cash flows that are solely payments.
g. Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realized. For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to the short maturity of these instruments.
h. Property, plant and equipment (âPPEâ)
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, taxes (non-recoverable) borrowing cost if capitalisation criteria are met and other expenses, directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and definition of asset is met. All other repair and maintenance costs are recognised in the statement of profit or loss as incurred.
In case an item of property, plant and equipment is acquired on deferred payment basis, interest expenses included in deferred payment is recognised as interest expense and not included in cost of asset.
Subsequent measurement (depreciation and useful life)
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
De-recognition of PPE
The carrying amount of an item of property, plant and equipment shall be derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
Cost of material consumed and erection charges thereon along with other direct cost incurred by the Company for the projects are shown as capital work-in-progress until capitalisation. Claims for price variation / exchange rate variation in case of contracts are accounted for on acceptance / receipt of claim.
j. Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on internal/external factors, that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount is higher of an assetâs fair value less costs of disposal and value in use. For this purpose, assets are companied at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or company of assets (cash generating units). If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date, there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost and the same is accordingly reversed in the statement of profit and loss.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets. ECL is the weighted-average of 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,
discounted at the original effective interest rate, with the respective risks of default occurring as the weights. When estimating the cash flows, the Company is required to consider:
⢠All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
⢠Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables: In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
Other financial assets: In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.
When making this assessment, the Company uses the change in the risk of a default occurring over the expected life of the financial asset. To make that assessment, the Company compares the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.
De-recognition of financial assets
A financial asset is primarily de-recognised when the contractual rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Non-derivative financial liabilities
Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortized cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
a) Right-of-use assets
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
b) Lease liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual, value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of the interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the underlying asset.
c) Short-term lease ad lease of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those lease that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption that are considered to be low value. Lease payments on short-term lease and lease of low-value assets are recognized as expense on a straight-line basis over the lease term.
Borrowing costs directly attributable to the acquisitions, construction or production of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs.
A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Capitalization of borrowing costs is suspended in the period during which the active development is delayed due to, other than temporary, interruption.
m. Provisions, contingent liabilities and contingent assets
Provisions are recognised when present obligations as a result of a past event will probably lead to an outflow of economic resources and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises when there is a presence of a legal or constructive commitment that has resulted from past events, for example, legal disputes or onerous contracts. Provisions are not recognised for future operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted to their present values, where the time value of money is material.
Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
In those cases where the outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognised.
Contingent liability is disclosed for:
¦ Possible obligations which will be confirmed only by future events not wholly within the control of the Company or
¦ Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognised. However, when inflow of economic benefits is probable, related asset is disclosed.
Expenses and liabilities in respect of employee benefits are recorded in accordance with Indian Accounting Standard 19- Employee Benefits.
Defined benefit plans
Gratuity
The Company operates one defined benefit plan for its employees, viz. gratuity. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year-end using the projected unit credit method. Actuarial gain and loss for the defined benefit plan is recognized in full in the period in which they occur in other comprehensive income.
Accumulated leave expected to be carried forward beyond twelve months, is treated as long term employee benefit. Such long term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year end. Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short term employee benefit.
Liability under continuity linked key resource and deferred salary schemes is provided for on actuarial valuation basis, which is done as per the projected unit credit method at the end of each financial period.
Defined contribution plansProvident Fund
The Company makes contribution to statutory provident fund in accordance with Employees Provident Fund and Miscellaneous Provisions Act, 1952. The plan is a defined contribution plan and contribution paid or payable is recognised as an expense in the period in which services are rendered by the employee.
Expense in respect of other short-term benefits is recognised on the basis of the amount paid or payable for the period during which services are rendered by the employee.
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Operating segments are reported in a manner consistent with the internal reporting done to the chief operating decision maker. The chief operating decision maker is responsible for allocating resources and assessing performance of the operating segments of the Company.
3. Significant accounting judgments, estimates and assumptions
When preparing the financial statements, management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses.
The actual results are likely to differ from the judgments, estimates and assumptions made by management, and will seldom equal the estimated results.
Information about significant judgments, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below:
Significant judgments:(i) Evaluation of indicators for impairment of non-financial assets
The evaluation of applicability of indicators of impairment of non-financial assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
(ii) Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilised. The recognition of deferred tax assets and reversal thereof is also dependent upon management decision relating to timing of Availment of tax holiday benefits available under the Income Tax Act, 1961 which in turn is based on estimates of future taxable profits.
Sources of estimation uncertainty:(i) Provisions
At each balance sheet date, basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However, the actual future outcome may be different from managementâs estimates.
(ii) Fair valuation of financial instruments
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument.
Mar 31, 2018
Summary of significant accounting policies and other explanatory information for the year ended 31 March 2018
1. Corporate information and statement of compliance with Indian Accounting Standards (ind AS)
Lords Chloro Alkali Limited (âthe Companyâ) a public limited company domiciled in India and having its registered office at SP-460, Matsya industrial area, Alwar (Rajasthan) - 301030, was incorporated under the provisions of Companies Act, 1956. The Company is primarily engaged in the business of manufacturing of caustic soda and other chemicals.
The financial statements of the Company have been prepared to comply in all material respects with accounting principles generally accepted in India, including Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015 under Section 133 of the Companies Act, 2013 (the âActâ) and other relevant provisions of the Act. The financial statements up to year ended 31 March 2017 were prepared in accordance with the accounting standards prescribed under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules, 2014 (as amended) (âPrevious GAAPâ) and other relevant provisions of the Act.
These financial statements for the year ended 31 March 2018 are the first financial statements which the Company has prepared under Ind AS. For purpose of comparatives, financial statements for year ended 31 March 2017 and opening Balance Sheet as at 1 April 2016 are also prepared under Ind AS. Refer note.43 for an explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows.
2. Basis of preparation and significant accounting policies Basis of preparation
The financial statements have been prepared on accrual and going concern basis under historical cost convention except for certain financial instruments and plan assets, which are measured at fair values. The accounting policies are applied consistently to all the periods presented in the financial statements, including the preparation of the opening Ind AS Balance Sheet as at 1 April 2016 being the date of transition to Ind AS, except where the Company has applied certain exemptions upon transition to Ind AS.
The significant accounting policies and measurement bases have been summarized below.
Current versus non-current classification
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and as per terms of agreements wherever applicable. Deferred tax assets and liabilities are classified as non-current assets and non-current liabilities, as the case may be.
a. Revenue recognition
Revenue is recognized to the extent it is probable that future economic benefits will flow to the Company and the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable net of related rebates. The following specific recognition criteria must also be met before revenue is recognized:
Sale of goods
A sale of goods is recognized when the goods has transferred to the buyer the significant risks and rewards of ownership, generally when the customer has taken undisputed delivery of the goods
Interest income
Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable. For all financial assets measured at amortized cost, interest income is recorded using the effective interest rate (EIR) i.e. the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial assets.
Dividend
Dividend are recognized in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
b. Inventories
Finished goods, works-in-process, raw material, stores, spares and other components are valued at lower of cost and net realizable value. Cost of inventory has been arrived at by using the weighted average cost formula. Cost of inventory comprises all costs of purchase duties, taxes (other than those subsequent recoverable from tax authorities) & all other cost incurred to bring the inventories to their present condition & location. Tools and instruments are valued at cost less depletion in value. Stock of scrap is valued at estimated realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
c. Income taxes
Tax expense recognized in the statement of profit and loss comprises the sum of deferred tax and current tax not recognized in Other Comprehensive Income (OCI) or directly in equity.
Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Current tax relating to items recognized outside statement of profit and loss is recognized outside statement of profit and loss (i.e. in OCI or equity depending upon the treatment of underlying item).
Deferred tax liabilities are generally recognized in full for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilized against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized outside the statement of profit and loss is recognized outside statement of profit and loss (in OCI or equity depending upon the treatment of underlying item).
d. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
e. Foreign currency transactions
The financial statements are presented in Indian Rupee (âINR'' or âRs.'') which is also the functional currency of the Company.
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other income/expenses, as the case maybe.
f. Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below:
Non-derivative financial assets
Subsequent measurement
i. Financial assets carried at amortized cost - a financial asset is measured at the amortized cost, if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method.
ii. Fair value through profit or loss - Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognized in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
iii. Fair value through OCI- A financial assets measured at FVOCI if both of the following conditions are met:
- The Company''s business model objectives for managing the financial assets is achieved both by collecting contractual cash flows and selling the financial assets, and
- The contractual terms of the financial assets given raise in specified dates to cash flows that are solely payments.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets. ECL is the weighted-average of 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, discounted at the original effective interest rate, with the respective risks of default occurring as the weights. When estimating the cash flows, the Company is required to consider:
- All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables: In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
Other financial assets: In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.
When making this assessment, the Company uses the change in the risk of a default occurring over the expected life of the financial asset. To make that assessment, the Company compares the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has not increased significantly
since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.
De-recognition of financial assets
A financial asset is primarily de-recognized when the contractual rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Non-derivative financial liabilities
Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortized cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
g. Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realized. For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to the short maturity of these instruments.
h. property, plant and equipment (âppEâ)
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, taxes (non-recoverable) borrowing cost if capitalization criteria are met and other expenses, directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the assetâs carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and definition of asset is met. All other repair and maintenance costs are recognized in the statement of profit or loss as incurred.
In case an item of property, plant and equipment is acquired on deferred payment basis, interest expenses included in deferred payment is recognized as interest expense and not included in cost of asset.
Subsequent measurement (depreciation and useful lives)
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
De-recognition of PPE
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognized.
i. Capital work-in progress
Cost of material consumed and erection charges thereon along with other direct cost incurred by the Company for the projects are shown as capital work-in-progress until capitalization. Claims for price variation/ exchange rate variation in case of contracts are accounted for on acceptance / receipt of claim.
j. Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on internal/external factors, that an asset may be
impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount is higher of an assetâs fair value less costs of disposal and value in use. For this purpose, assets are companied at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or company of assets (cash generating units). If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognized in the statement of profit and loss. If at the balance sheet date, there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost and the same is accordingly reversed in the statement of profit and loss.
k. Operating leases
As a lessee
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease unless the increase in rent is to compensate the lessor for the effects of inflation.
l. Borrowing costs
Borrowing costs directly attributable to the acquisitions, construction or production of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs.
A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Capitalization of borrowing costs is suspended in the period during which the active development is delayed due to, other than temporary, interruption.
m. Provisions, contingent liabilities and contingent assets
Provisions are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises when there is a presence of a legal or constructive commitment that has resulted from past events, for example, legal disputes or onerous contracts. Provisions are not recognized for future operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted to their present values, where the time value of money is material.
Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provision.
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
In those cases where the outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognized.
Contingent liability is disclosed for:
- Possible obligations which will be confirmed only by future events not wholly within the control of the Company or
- Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognized. However, when inflow of economic benefits is probable, related asset is disclosed.
n. Employee benefits
Expenses and liabilities in respect of employee benefits are recorded in accordance with Indian Accounting Standard 19- Employee Benefits.
Defined benefit plans
Gratuity
The Company operates one defined benefit plan for its employees, viz. gratuity. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year-end using the projected unit credit method. Actuarial gain and loss for the defined benefit plan is recognized in full in the period in which they occur in other comprehensive income.
Other long-term benefits
Accumulated leave expected to be carried forward beyond twelve months, is treated as long term employee benefit. Such long term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year end. Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short term employee benefit.
Liability under continuity linked key resource and deferred salary schemes is provided for on actuarial valuation basis, which is done as per the projected unit credit method at the end of each financial period.
Defined contribution plans
Provident Fund
The Company makes contribution to statutory provident fund in accordance with Employees Provident Fund and Miscellaneous Provisions Act, 1952. The plan is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.
Short-term employee benefits
Expense in respect of other short-term benefits is recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee.
o. Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
p. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting done to the chief operating decision maker. The chief operating decision maker is responsible for allocating resources and assessing performance of the operating segments of the Company.
3. Recent accounting pronouncement
In March 2018, the Ministry of Corporate Affairs (MCA) issued the Companies (Indian Accounting Standards) Amendment Rules, 2018, notifying Ind AS 115, Revenue from contract with customers, Appendix B to Ind-AS 21, Foreign currency transactions and advance consideration and amendments to certain other standards. These amendments are applicable to the Company from 1st April, 2018. The Company will be adopting the amendments from their effective date.
Ind AS 115: Revenue from Contracts with Customers
Ind AS 115 supersedes Ind AS 11, Construction contracts and Ind AS 18, Revenue. Ind AS 115 requires an entity to report information regarding nature, amount, timing and uncertainty of revenue and cash flows arising from contract with customers. The principle of Ind AS 115 is that an entity should recognize revenue that demonstrates the transfer of promised goods and services to customers at an amount that reflect the consideration to which the entity expects to be entitled in exchange for those goods and services. The standards can be applied either retrospectively to each prior reporting period presented or can be applied retrospectively with recognition of cumulative effect of contracts that are not completed contracts at the date of initial application of the standard.
Based on the preliminary assessment performed by the Company, the impact of application of standard is not expected to be material.
Appendix B to Ind AS 21, Foreign currency transaction and advance consideration
The appendix clarifies that the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the asset, expense or income (or part of it) is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment of receipt of advance consideration towards such asset, expenses or income. If there are multiple payments or receipt in advance, then an entity must determine a transaction date for each payments or receipts of advance consideration.
Based on the preliminary assessment performed by the Company, the impact of application of appendix is not expected to be material.
Mar 31, 2016
1. General
i. The Financial Statements are prepared under the historical cost convention on accrual basis and 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.
ii. Accounting Policies not specifically referred to otherwise are consistent and in accordance with generally accepted accounting principles.
2. Revenue Recognition
i. Revenue from sale of manufactured goods is recognized on dispatch to customers.
ii. Revenue from consignment sales is recognized after the subsequent sale by consignment agents to customers.
iii. Sales are inclusive of Excise duty but net of rebate & discounts.
iv. Interest Receivable on Inter-Corporate Deposits, due to uncertainty of realization, is consistently accounted for on cash basis.
v. Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable. Dividend income is recognized, when right to receive is established.
3. Fixed Assets and Depreciation
i. Fixed assets (other than those which have been revalued) are stated at cost, net of CENVAT less accumulated depreciation except Leasehold Land which is being stated at revalued cost.
ii. Depreciation on tangible assets is charged on pro-rata basis on straight line method based on the life assigned to each asset in accordance with Schedule II of Companies Act, 2013. Intangible assets are amortized over their respective individual estimated useful life on the basis of straight line method commencing from the date, the asset is available to the Company for its use.
iii. Leasehold Land - Acquisition cost of leasehold land is amortized over the period of lease including the revalued portion.
iv. The cost of Fixed Assets taken on Financial Lease is capitalized and amortized by way of depreciation.
v. Depreciation on the addition due to revaluation of Fixed Assets is amortized against the revaluation reserve.
vi. Assets under installation / construction as at the balance sheet date are shown as Capital work-in-progress and are valued at cost. However advances paid towards acquisition of assets are not included under Capital work-in-progress.
4. Foreign Currency Transactions
i. Monetary assets and liabilities related to foreign currency transactions remaining unsettled at the end of the year are translated at year-end rates.
ii. Any income or expense on account of exchange difference, either on settlement or on translation at balance sheet date, is recognized in the profit and loss as per the revised AS-11.
5. inventory Valuation
i. Inventory of Stores & Spares, Raw Materials, Chemicals & Catalyst and Fuel oil is valued at cost or net realizable value, whichever is lower.
ii. Finished goods & Stock-in-process are valued at cost or net realizable value whichever is lower.
iii. The cost of bought out inventory is computed on the basis of weighted average method.
iv. Scrap/Waste is valued at net realizable value.
6. Employees Retirement Benefits
i. Short term employee benefits obligations are estimated and provided for.
ii. Payments to defined contribution retirement benefit schemes (such as Provident Fund, Employee''s State Insurance Corporation) are charged to the statement of profit and loss of the year in which contribution to such schemes becomes due.
iii. Company''s liability towards gratuity, other retirement benefits and compensated absences are actuarially determined at each balance sheet date using the projected unit credit method. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period of occurrence.
7. investments
Long Term Investments are stated at cost unless there is a permanent fall in value thereof.
8. Taxation
i. Tax expenses comprise current and deferred taxes. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961. Deferred tax resulting from timing differences between book and tax profits is accounted for under the liability method, at the current rate of tax, to the extent that the timing differences are expected to crystallize. Deferred tax assets are recognized only to the extent there is reasonable certainty that the assets can be realized in future.
ii. CENVAT credit is accounted for by reducing the purchase cost of related materials / services.
iii. In concurrence with the opinion of the ICAI, the Minimum Alternative Tax is considered as current tax for the year in which it arises and is charged to profit & loss account accordingly. In the year in which the MAT credit becomes eligible to be recognized as an asset, the said assets is created by way of a credit to the profit and loss account and shown as âMAT credit entitlement'' under Loans & Advances.
9. Earnings per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
10. Contingent liabilities and provisions
The Company makes a provision when there is a present obligation as a result of a past event where the outflow of economic resources is probable and a reliable estimate of the amount of obligation can be made. A disclosure is made for possible future obligations that may but probably will not require outflow of resources or where a reliable estimate cannot be made, as a contingent liability in the financial statements.
11. impairment of Assets
At each Balance Sheet date, the Company reviews whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognized in the Statement of Profit & Loss to the extent the carrying amount exceeds the recoverable amount.
12. Cash Flow Statement
Cash flow statements are reported using the indirect method, whereby profit/ (loss) before extra-ordinary items/exceptional items and tax is adjusted for the effects of transactions of noncash nature and any deferrals or accruals of past or future cash receipt or payments. The cash flows from operating, investing and financing activities of the Group are segregated based on available information including taxes paid relating to these activities.
13. Cash and Cash Equivalents
Cash and Cash Equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short term investments with an original maturity of three months or less.
14. Leases
Leases where the lessor effectively retains substantially all the risk and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight line basis over the lease term.
Mar 31, 2014
1. General:
(i) The financial statements have been prepared under the historical
cost convention, on the accrual basis of accounting & comply with the
Companies (Accounting Standards) Rules 2006 issued by the Central
Government, in consultation with the National Advisory Committee on
Accounting Standards (NACAS) and relevant provisions of the Companies
Act, 1956.
(ii) The financial statements are prepared in accordance with
accounting principles generally accepted (GAAP) in India. The
accounting treatment and presentation in financial statements have been
governed by their substance over form.
2. Revenue Recognition:
(i) Revenue from sale of manufactured goods is recognised on dispatch
to customers.
(ii) Revenue from consignment sales is recognised after the subsequent
sale by consignment agents to customers.
(iii) Sales are inclusive of Excise Duty but net of rebate & discounts.
(iv) Interest Receivable on Inter-Corporate Deposits, due to
uncertainty of realization, is consistently accounted for on cash
basis.
3. Fixed Assets and Depreciation:
(i) Fixed assets (other than those which have been revalued) are stated
at cost, net of CENVAT less accumulated depreciation except Leasehold
Land which is being stated at revalued cost.
(ii) Depreciation is provided on Straight Line Method at the rates
prescribed in Schedule XIV to the Companies Act, 1956.
(iii) Depreciation on additions / deletions to fixed assets is provided
on prorata basis from the date of addition / till the date of deletion.
(iv) Leasehold Land - Acquisition cost of leasehold land is amortised
over the period of lease including the revalued portion.
(v) The cost of Fixed Assets taken on Financial Lease is capitalized
and amortised by way of depreciation.
(vi) Depreciation on the addition due to revaluation of Fixed Assets is
amortised against the revaluation reserve.
(vii) Assets under installation / construction as at the balance sheet
date are shown as Capital work-in-progress and are valued at cost.
However advances paid towards acquisition of assets are not included
under Capital work-in-progress.
4. Foreign Currency Transactions:
(i) Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are translated
at year-end rates.
(ii) Any income or expense on account of exchange difference, either on
settlement or on translation at balance sheet date, is recognized in
the profit and loss as per the revised AS-11.
5. Inventory Valuation:
(i) Inventory of Stores & Spares, Raw Materials, Chemicals & Catalyst
and Fuel Oil is valued at cost or net realizable value, whichever is
lower.
(ii) Finished goods & Stock-in-process are valued at cost or net
realisable value whichever is lower.
(iii) The cost of bought out inventory is computed on the basis of
weighted average method.
(iv) Scrap/Waste is valued at net realizable value.
6. Employees Retirement Benefits:
The Company''s contribution to Provident Fund is charged to the Profit &
Loss Account. Gratuity and Leave Encashment are accounted for on the
basis of actuarial valuation in accordance with AS-15(Revised) issued
by NACAS.
7. Investments:
Long Term Investments are stated at cost unless there is a permanent
fall in value thereof.
8. Taxation:
(i) CENVAT credit is accounted for by reducing the purchase cost of
related materials / services.
(ii) In concurrence with the opinion of the ICAI, the Minimum
Alternative Tax is considered as current tax for the year in which it
arises and is charged to profit & loss account accordingly. In the year
in which the MAT credit becomes eligible to be recognised as an asset,
the said assets is created by way of a credit to the profit and loss
account and shown as ''MAT credit entitlement'' under Loans & Advances.
(iii) Deferred tax resulting from timing differences between book and
tax profits is accounted for under the liability method, at the current
rate of tax, to the extent that the timing differences are expected to
crystallize. Deferred tax assets are recognized only to the extent
there is reasonable certainty that the assets can be realized in
future.
9. Earnings per Share:
Basic EPS is computed using the weighted average number of equity
shares outstanding during the year in accordance with AS-20.
10. Contingent liabilities and provisions
The Company makes a provision when there is a present obligation as a
result of a past event where the outflow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made. A disclosure is made for possible future obligations that may but
probably will not require outflow of resources or where a reliable
estimate cannot be made, as a contingent liability in the financial
statements.
Mar 31, 2013
1. General:
(i) The fnancial statements have been prepared under the historical
cost convention, on the accrual basis of accounting & comply with the
Companies (Accounting Standards) Rules 2006 issued by the Central
Government, in consultation with the National Advisory Committee on
Accounting Standards (NACAS) and relevant provisions of the Companies
Act, 1956.
(ii) The fnancial statements are prepared in accordance with accounting
principles generally accepted (GAAP) in India. The accounting treatment
and presentation in fnancial statements have been governed by their
substance over form.
2. Revenue Recognition:
(i) Revenue from sale of manufactured goods is recognised on dispatch
to customers.
(ii) Revenue from consignment sales is recognised after the subsequent
sale by consignment agents to customers.
(iii) Sales are inclusive of Excise Duty but net of rebate & discounts.
(iv) Interest Receivable on Inter-Corporate Deposits, due to
uncertainty of realization, is consistently accounted for on cash
basis.
3. Fixed Assets and Depreciation:
(i) Fixed assets (other than those which have been revalued) are stated
at cost, net of CENVAT less accumulated depreciation except Leasehold
Land which is being stated at revalued cost.
(ii) Depreciation is provided on Straight Line Method at the rates
prescribed in Schedule XIV to the Companies Act, 1956.
(iii) Depreciation on additions / deletions to fxed assets is provided
on prorata basis from the date of addition / till the date of deletion.
(iv) Leasehold Land  Acquisition cost of leasehold land is amortised
over the period of lease including the revalued portion.
(v) The cost of Fixed Assets taken on Financial Lease is capitalized
and amortised by way of depreciation.
(vi) Depreciation on the addition due to revaluation of Fixed Assets is
amortised against the revaluation reserve.
(vii) Assets under installation / construction as at the balance sheet
date are shown as Capital work-in-progress and are valued at cost.
However advances paid towards acquisition of assets are not included
under Capital work-in-progress.
4. Foreign Currency Transactions:
(i) Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are translated
at year-end rates.
(ii) Any income or expense on account of exchange difference, either on
settlement or on translation at balance sheet date, is recognized in
the proft and loss as per the revised ASÂ11.
5. Inventory Valuation:
(i) Inventory of Stores & Spares, Raw Materials, Chemicals & Catalyst
and Fuel Oil is valued at cost or net realizable value, whichever is
lower.
(ii) Finished goods & Stock-in-process are valued at cost or net
realisable value whichever is lower.
(iii) The cost of bought out inventory is computed on the basis of
weighted average method.
(iv) Scrap/Waste is valued at net realizable value.
6. Employees Retirement Benefts:
The Company''s contribution to Provident Fund is charged to the Proft &
Loss Account. Gratuity and Leave Encashment are accounted for on the
basis of actuarial valuation in accordance with AS-15 (Revised) issued
by NACAS.
7. Investments:
Long Term Investments are stated at cost unless there is a permanent
fall in value thereof.
8. Taxation:
(i) CENVAT credit is accounted for by reducing the purchase cost of
related materials / services.
ii) In concurrence with the opinion of the ICAI, the Minimum
Alternative ax is considered as current tax for the year in which it
arises and is charged to proft & loss account accordingly. In the year
in which the MAT credit becomes eligible to be recognised as an asset,
the said assets is created by way of a credit to the proft and loss
account and shown as ''MAT credit entitlement'' under Loans & Advances.
iii) Deferred tax resulting from timing differences between book and
tax profts is accounted for under the liability method, at the current
rate of tax, to the extent that the timing differences are expected to
crystallize. Deferred tax assets are recognized only to the extent
there is reasonable certainty that the assets can be realized in
future.
9. Earnings per Share:
Basic EPS is computed using the weighted average number of equity
shares outstanding during the year in accordance with AS-20.
10. Contingent liabilities and provisions:
The Company makes a provision when there is a present obligation as a
result of a past event where the outfow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made. A disclosure is made for possible future obligations that may
but probably will not require outfow of resources or where a reliable
estimate cannot be made, as a contingent liability in the fnancial
statements.
Mar 31, 2012
1. General:
(i) The financial statements have been prepared under the historical
cost convention, on the accrual basis of accounting & comply with the
Companies (Accounting Standards) Rules 2006 issued by the Central
Government, in consultation with the National Advisory Committee on
Accounting Standards (NACAS) and relevant provisions of the Companies
Act, 1956.
(ii) The financial statements are prepared in accordance with
accounting principles generally accepted (GAAP) in India. The
accounting treatment and presentation in financial statements have been
governed by their substance over form.
2. Revenue Recognition:
(i) Revenue from sale of manufactured goods is recognised on dispatch
to customers.
(ii) Revenue from consignment sales is recognised after the subsequent
sale by consignment agents to customers.
(iii) Sales are inclusive of Excise Duty but net of rebate & discounts.
(iv) Interest Receivable on Inter-Corporate Deposits, due to
uncertainty of realization, is consistently accounted for on cash
basis.
3. Fixed Assets and Depreciation:
(i) Fixed assets (other than those which have been revalued) are stated
at cost, net of CENVAT less accumulated depreciation except Leasehold
Land which is being stated at revalued cost.
(ii) Depreciation is provided on Straight Line Method at the rates
prescribed in Schedule XIV to the Companies Act, 1956.
(iii) Depreciation on additions / deletions to fixed assets is provided
on prorata basis from the date of addition / till the date of deletion.
(iv) Leasehold Land - Acquisition cost of leasehold land is amortised
over the period of lease including the revalued portion.
(v) The cost of Fixed Assets taken on Financial Lease is capitalized
and amortised by way of depreciation.
(vi) Depreciation on the addition due to revaluation of Fixed Assets is
amortised against the revaluation reserve.
(vii) Assets under installation / construction as at the balance sheet
date are shown as Capital work-in-progress and are valued at cost.
However advances paid towards acquisition of assets are not included
under Capital work-in-progress.
4. Foreign Currency Transactions:
(i) Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are translated
at year-end rates.
(ii) Any income or expense on account of exchange difference, either on
settlement or on translation at balance sheet date, is recognized in
the profit and loss as per the revised AS-11.
5. Inventory Valuation:
(i) Inventory of Stores & Spares, Raw Materials, Chemicals & Catalyst
and Fuel Oil is valued at cost or net realizable value, whichever is
lower.
(ii) Finished goods & Stock-in-process are valued at cost or net
realisable value whichever is lower.
(iii) The cost of bought out inventory is computed on the basis of
weighted average method.
(iv) Scrap/Waste is valued at net realizable value.
6. Employees Retirement Benefits:
The Company's contribution to Provident Fund is charged to the Profit &
Loss Account. Gratuity and Leave Encashment are accounted for on the
basis of actuarial valuation in accordance with AS-15(Revised) issued
by NACAS.
7. Investments:
Long Term Investments are stated at cost unless there is a permanent
fall in value thereof.
8. Taxation:
(i) CENVAT credit is accounted for by reducing the purchase cost of
related materials / services.
(ii) In concurrence with the opinion of the ICAI, the Minimum
Alternative Tax is considered as current tax for the year in which it
arises and is charged to profit & loss account accordingly. In the year
in which the MAT credit becomes eligible to be recognised as an asset,
the said assets is created by way of a credit to the profit and loss
account and shown as 'MAT credit entitlement' under Loans & Advances.
(iii) Deferred tax resulting from timing differences between book and
tax profits is accounted for under the liability method, at the current
rate of tax, to the extent that the timing differences are expected to
crystallize. Deferred tax assets are recognized only to the extent
there is reasonable certainty that the assets can be realized in
future.
9. Earnings per Share:
Basic EPS is computed using the weighted average number of equity
shares outstanding during the year in accordance with AS-20.
10. Contingent liabilities and provisions
The Company makes a provision when there is a present obligation as a
result of a past event where the outflow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made. A disclosure is made for possible future obligations that may
but probably will not require outflow of resources or where a reliable
estimate cannot be made, as a contingent liability in the financial
statements.
The Company has only one class of share refered as equity share having
at par value Rs. 10/-. Each holder of equity share is entitled to same
right in all respect.
Mar 31, 2011
1. Significant Accounting Policies & Practices:
1. General:
(i) The financial statements have been prepared under the historical
cost convention, on the accrual basis of accounting & comply with the
Companies (Accounting Standards) Rules 2006 issued by the Central
Government, in consultation with the National Advisory Committee on
Accounting Standards (NACAS) and relevant provisions of the Companies
Act, 1956.
(ii) The financial statements are prepared in accordance with
accounting principles generally accepted (GAAP) in India. The
accounting treatment and presentation in financial statements have been
governed by their substance over form.
2. Revenue Recognition:
(i) Revenue from sale of manufactured goods is recognized on dispatch
to customers.
(ii) Revenue from consignment sales is recognized after the subsequent
sale by consignment agents to customers.
(iii) Sales are inclusive of Excise Duty but net of rebate & discounts.
(iv) Interest Receivable on Inter-Corporate Deposits, due to
uncertainty of realization, is consistently accounted for on cash
basis.
3. Fixed Assets and Depreciation:
(i) Fixed assets (other than those which have been revalued) are stated
at cost, net of CENVAT less accumulated depreciation except Leasehold
Land which is being stated at revalued cost.
(ii) Depreciation is provided on Straight Line Method at the rates
prescribed in Schedule XIV to the Companies Act, 1956.
(iii) Depreciation on additions / deletions to fixed assets is provided
on prorate basis from the date of addition / till the date of deletion.
(iv) Leasehold Land - Acquisition cost of leasehold land is mortised
over the period of lease including the revalued portion.
(v) The cost of Fixed Assets taken on Financial Lease is capitalized
and mortised by way of depreciation.
(vi) Depreciation on the addition due to revaluation of Fixed Assets is
mortised against the revaluation reserve.
(vii) Assets under installation / construction as at the balance sheet
date are shown as Capital work-in-progress and are valued at cost.
However advances paid towards acquisition of assets are not included
under Capital work-in-progress.
4. Foreign Currency Transactions:
(i) Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are translated
at year-end rates.
(ii) Any income or expense on account of exchange difference, either on
settlement or on translation at balance sheet date, is recognized in
the profit and loss as per the revised AS-11.
5. Inventory Valuation:
(i) Inventory of Stores & Spares, Raw Materials, Chemicals & Catalyst
and Fuel Oil is valued at cost or net realizable value, whichever is
lower.
(ii) Finished goods & Stock-in-process are valued at cost or net
realizable value whichever is lower.
(iii) The cost of bought out inventory is computed on the basis of
weighted average method.
(iv) Scrap/Waste is valued at net realizable value.
6. Employees Retirement Benefits:
The Company's contribution to Provident Fund is charged to the Profit &
Loss Account. Gratuity and Leave Encashment are accounted for on the
basis of actuarial valuation in accordance with AS-15(Revised) issued
by NACAS.
7. Investments:
Long Term Investments are stated at cost unless there is a permanent
fall in value thereof.
8. Taxation:
(i) CENVAT credit is accounted for by reducing the purchase cost of
related materials / services.
(ii) In concurrence with the opinion of the ICAI, the Minimum
Alternative Tax is considered as current tax for the year in which it
arises and is charged to profit & loss account accordingly. In the year
in which the MAT credit becomes eligible to be recognized as an asset,
the said assets is created by way of a credit to the profit and loss
account and shown as 'MAT credit entitlement' under Loans &
Advances.
(iii) Deferred tax resulting from timing differences between book and
tax profits is accounted for under the liability method, at the current
rate of tax, to the extent that the timing differences are expected to
crystallize. Deferred tax assets are recognized only to the extent
there is reasonable certainty that the assets can be realized in
future.
9. Earnings per Share:
Basic EPS is computed using the weighted average number of equity
shares outstanding during the year in accordance with AS-20.
Mar 31, 2010
1. General:
(i) The financial statements have been prepared under the historical
cost convention, on the accrual basis of accounting & comply with the
Companies (Accounting Standards) Rules 2006 issued by the Central
Government, in consultation with the National Advisory Committee on
Accounting Standards (NACAS) and relevant provisions of the Companies
Act, 1956.
(ii) The financial statements are prepared in accordance with accounting
principles generally accepted (GAAP) in India. The accounting treatment
and presentation in financial statements have been governed by their
substance over form.
2. Revenue Recognition:
(i) Revenue from sale of manufactured goods is recognised on dispatch
to customers.
(ii) Revenue from consignment sales is recognised after the subsequent
sale by consignment agents to customers.
(iii) Sales are inclusive of Excise Duty but net of rebate & discounts.
(iv) Interest Receivable on Inter-Corporate Deposits, due to
uncertainty of realization, is consistently accounted for on cash
basis.
3. Fixed Assets and Depreciation:
(i) Fixed assets (other than those which have been revalued) are stated
at cost, net of CENVAT less accumulated depreciation except Leasehold
Land which is being stated at revalued cost.
(ii) Depreciation is provided on Straight Line Method at the rates
prescribed in Schedule XIV to the Companies Act, 1956.
(iii) Depreciation on additions / deletions to fixed assets is provided
on prorata basis from the date of addition / till the date of deletion.
(iv) Leasehold Land à Acquisition cost of leasehold land is amortised
over the period of lease including the revalued portion.
(v) The cost of Fixed Assets taken on Financial Lease is capitalized
and amortised by way of depreciation.
(vi) Depreciation on the addition due to revaluation of Fixed Assets is
amortised against the revaluation reserve.
(vii) Assets under installation / construction as at the balance sheet
date are shown as Capital work- in-progress and are valued at cost.
However advances paid towards acquisition of assets are not included
under Capital work-in-progress.
4. Foreign Currency Transactions:
(i) Monetary assets and liabilities related to foreign currency
transactions remaining unsettled at the end of the year are translated
at year-end rates.
(ii) Any income or expense on account of exchange difference, either on
settlement or on translation at balance sheet date, is recognized in
the Profit and loss as per the revised ASÃ11.
5. Inventory Valuation:
(i) Inventory of Stores & Spares, Raw Materials, Chemicals & Catalyst
and Fuel Oil is valued at cost or net realizable value, whichever is
lower.
(ii) Finished goods & Stock-in-process are valued at cost or net
realisable value whichever is lower.
(iii) The cost of bought out inventory is computed on the basis of
weighted average method.
(iv) Scrap/Waste is valued at net realizable value.
6. Employees Retirement Benefits:
The Companys contribution to Provident Fund is charged to the Profit &
Loss Account. Gratuity and Leave Encashment are accounted for on the
basis of actuarial valuation in accordance with AS-15(Revised) issued
by NACAS.
7. Investments:
Long Term Investments are stated at cost unless there is a permanent
fall in value thereof.
8. Taxation:
(i) CENVAT credit is accounted for by reducing the purchase cost of
related materials / services.
(ii) In concurrence with the opinion of the ICAI, the Minimum
Alternative Tax is considered as current tax for the year in which it
arises and is charged to Profit & loss account accordingly. In the year
in which the MAT credit becomes eligible to be recognised as an asset,
the said assets is created by way of a credit to the Profit and loss
account and shown as MAT credit entitlement under Loans & Advances.
(iii) Deferred tax resulting from timing differences between book and
tax Profits is accounted for under the liability method, at the current
rate of tax, to the extent that the timing differences are expected to
crystallize. Deferred tax assets are recognized only to the extent
there is reasonable certainty that the assets can be realized in
future.
9. Earnings per Share:
Basic EPS is computed using the weighted average number of equity
shares outstanding during the year in accordance with AS-20.
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