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Accounting Policies of Magna Electrocastings Ltd. Company
Mar 31, 2025
1 SIGNIFICANT ACCOUNTING POLICIES A CORPORATE INFORMATION
Magna Electro Castings Limited is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The address of its registered office and principal place of business are disclosed in the introduction to the Annual report. Its shares are listed on the Bombay Stock Exchange- BSE Limited. The Company is engaged in the manufacturing and selling of Cast Iron Components. The Company caters to both domestic and international markets. The financial statements are approved for issue by the Company''s Board of Directors on 30th May, 2025.
B GENERAL INFORMATION AND STATEMENT OF COMPLIANCE WITH IND AS
These Financial Statements (âfinancial statements'') of the Company have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd AS'') as notified by Ministry of Corporate Affairs (âMCA'') under Section 133 of the Companies Act, 2013 (âthe Act'') read with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time and other relevant provisions of the Act. The Company has uniformly applied the accounting policies during the periods presented. The financial statements for the year ended 31st March 2025 were authorised and approved for issue by the Board of Directors on 30th May, 2025.
C BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared on going concern basis in accordance with accounting principles generally accepted in India. The presentation of financial statement is based on Ind AS Schedule III of the Companies Act, 2013.
The Financial Statements have been prepared & presented on the historical cost convention and on accrual basis, except for the following materials in the Balance Sheet:
⢠Financial assets are measured either at fair value or at amortised cost depending on their classification;
⢠Employee defined benefit assets/ liabilities are recognised as the net total of fair value of plan assets, adjusted for actuarial gains/losses and the present value of defined benefit obligations;
⢠Right-of-use of Assets are recognised at the present value of lease payments that are not paid as on that date.
D MATERIAL ACCOUNTING POLICIES
|
Material Accounting policies |
Para |
Reference in Balance Sheet & Profit and Loss Notes |
|
1. Property, Plant and Equipment |
a |
2 |
|
2. Inventory |
b |
10 |
|
3. Impairment of Non-Financial assets |
c |
2,4,5,6,36 |
|
4. Revenue Recognition |
d |
29 |
|
5. Financial Instruments |
e |
7,8,11,12,13,14,18,19,22,23,24,25 |
a. PROPERTY, PLANT AND EQUIPMENT
Property, Plant and Equipment (PPE), being fixed assets are tangible items that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and are expected to be used for more than a period of twelve months.
Land is carried at cost. All other items of Property, Plant and Equipment (PPE) are measured at cost, less accumulated depreciation and accumulated impairment losses, if any.
Initial Cost: Initial cost of an item of PPE comprises its purchase price, including import duties and nonrefundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its location and working condition necessary for it to be capable of operating in the manner intended by the Management and estimated costs of dismantling and removing the item and restoring the site on which it is located. Excess of net sale proceeds of items produced over the cost of testing are reduced from Directly attributable costs.
Items such as spare parts, stand-by equipment and servicing equipment are capitalized when they meet the definition of Property, Plant and Equipment.
If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE.
Depreciation: Depreciation on PPE are provided under Straight line method as per the useful lives and manner prescribed under Schedule II to the Companies Act, 2013. The Management believes that the estimated useful lives as per the provisions of Schedule II to the Companies Act, 2013, wherever adopted, are realistic and reflect fair approximation of the period over which the assets are likely to be used.
The Company has used the following information to provide depreciation on its Property, Plant and Equipment:
|
Class of Assets |
Useful Lives |
|
Buildings - Factory |
30 Years |
|
Plant & Machinery |
|
|
- Power Generation Plant |
22 Years |
|
- Other than Power Generation Plant - Triple Shift |
7.5 Years |
|
Furniture & Fittings |
10 Years |
|
Office Equipment |
5 Years |
|
Air Conditioner |
5 Years |
|
Computer |
3 Years |
|
Computer Server |
6 Years |
|
Vehicles - Two Wheelers |
10 Years |
|
Vehicles - Other than Two Wheelers |
8 Years |
Inventories are valued at the lower of cost and net realizable value exclusive of applicable GST which is utilized as Input Tax Credit. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and appropriate proportion of variable and fixed overhead expenditure. Overhead expenditures are being allocated on the basis of normal operating capacity
Raw materials are valued at weighted average cost. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
Cost of Finished Goods and Work in Progress is taken as cost of the materials and other cost of manufacture upto various stage of completion. Stores and spares are valued at cost on First in First out basis.
The Net realisable value of work-in-progress is determined with reference to the selling prices of related finished products.
Raw Material, components and other supplies held for use in the production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realisable value. The comparison of cost and net realisable value is made on item-by-item basis.
Stores & Spares which do not meet the definition of PPE are accounted as inventories.
The Company periodically assesses whether there is any indication that an asset or a group of assets may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. For an asset or group of assets the recoverable amount is higher of the fair value less cost of disposal and value in use. If such recoverable amount of the asset is less than its carrying amount, the carrying amount is reduced to its recoverable amount. 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 if 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 depreciable historical cost. An impairment loss is reversed only to the extent that the amount of asset does not exceed the net book value that would have been determined if no impairment loss had been recognized.
Revenue is measured based on the transaction price specified in the contract with the customer. It excludes discounts, incentives, volume, rebates, Goods and service tax and amount collected on behalf of thrid parties.
Revenue from contracts with customers are recognized when the company satisfies the performance obligation by transfer of control to the customer of the promised goods or services.
Revenue from sale of goods are recognized when the control of goods are transferred to the customer at an amount that reflects the consideration which the company expects to be entitled in exchange for those goods.
The company assesses promises in the contract that has separate performance obligations to which a portion of the transaction price is allocated. In determining the transaction price of the goods, the company considers the effect of variable consideration, the existence of significant financing components, non-cash consideration and consideration payable to the customer, if any.
Unbilled revenue is recorded for the goods that have been dispatched and supplementary invoices are yet to be raised. Revenue is measured at the fair value of the consideration received or receivable.
Other Operating Revenues comprise of income from ancillary activities incidental to the operations of the Company and is recognised when the right to receive the income is established as per the terms of the contract.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through Statement of Profit and Loss (FVTPL)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognised immediately in Statement of Profit and Loss.
Our Company has not entered any contract for purchase of financial derivative and hedging during the year.
E OTHER ACCOUNTING POLICIESa. PROPERTY, PLANT AND EQUIPMENT
Recognition & Measurement: All Property, Plant & Equipment(âPPE'') are stated at cost of acquisiton/installation as adjusted for import duty waivers and foreign exchange losses or gains less accumulated depreciation and impairment losses
Subsequent costs and disposal: Subsequent expenditure related to an item of PPE is added to its book value only if it increases the future economic benefits from the existing asset beyond its previously assessed standard of performance/life.
All other expenses on existing PPE, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Derecognition: The carrying amount of an item of PPE is derecognised on disposal or when no future economic benefits are expected from its use or disposal.
Gains and losses on disposal of an item of PPE are determined by comparing the proceeds from disposal with the carrying amount of PPE, and are recognized net within other income/other expenses in statement of profit and loss.
Capital-work-in-progress: Assets in the course of construction are capitalized in capital-work-in-progress account. At the point when an asset is capable of operating in the manner intended by management, the cost of construction is transferred to the appropriate category of Property, Plant and Equipment. Costs (net of income) associated with the commissioning of an asset are capitalised until the period of commissioning has been completed and the asset is ready for its intended use.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, if there has been a significant change in the expected pattern of consumption of future economic benefits embodied in the asset, depreciation is charged prospectively to reflect the changed pattern.
b. INTANGIBLE ASSETS AND AMORTISATION
An intangible asset is an identifiable non-monetary asset without physical substance.
Intangible assets are recognised only if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.
Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
The Company as a lessor: Assets subject to operating leases are included in PPE. Lease income on an operating lease is recognised in the statement of profit and loss on a straight line basis over the term of the relevant lease except to the extent that the lease payments are structured to compensate for the expected inflationary cost. Costs including depreciation are recognised as an expense in the statement of profit and loss.
The Company as a lessee: The Company''s lease asset classes primarily consist of lease for buildings. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses
whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from the use of the asset throughout the period of the lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low value leases. For these short term and low-value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-inuse) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if the Company changes its assessment of whether it will exercise an extension or a termination option.
Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
Cash and cash equivalents comprise cash at bank and on hand and short-term, highly liquid 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.
Grants and subsidies from the government are recognised when there is reasonable assurance that
(i) the Company will comply with the conditions attached to them, and
(ii) the grant/subsidy will be received.
When the grant or subsidy relates to revenue, it is recognised as income on a systematic basis in profit or loss over the periods necessary to match them with the related costs, which they are intended to compensate.
Where the grant relates to an asset, it is recognised as deferred income and released to income in equal amounts over the expected useful life of the related asset and presented within other income. When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset.
f. FINANCIAL INSTRUMENTS(i) Financial Assets
Initial Recognition and Measurement: The Company initially recognises loans and advances, deposits, debt securities issues and subordinated liabilities on the date on which they originate. All other financial instruments (including regular way purchases and sales of financial assets) are recognised on the trade date, which is the
date on which the Company becomes a party to the contractual provisions of the instrument. A financial asset or liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. Trade receivable that do not have significant financing component are initially recognized at transaction value.
Classification of financial assets: On initial recognition, a financial asset is classified to be measured at amortised cost, fair value through other comprehensive income (FVTOCI) or fair value through profit and loss (FVTPL). A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated at FVTPL:
i) The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument is classified as FVTOCI only if it meets both of the following conditions and is not recognised at FVTPL;
i) The asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the Other Comprehensive Income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Equity investments (other than investments in subsidiaries and joint ventures):
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS 103 applies are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by instrument basis. The classification is made on initial recognition and is irrevocable. If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to Statement of Profit and Loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.
All other financial assets are classified as measured at FVTPL. In addition, on initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVTOCI as at FVTPL if doing so eliminates or significantly reduces and accounting mismatch that would otherwise arise.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains and losses arising on remeasurement recognized in statement of profit or loss. The net gain or loss recognized in statement of profit or loss incorporates any dividend or interest earned on the financial asset and is included in the âother income'' line item. Dividend on financial assets at FVTPL is recognized when:
a) The Company''s right to receive the dividends is established,
b) It is probable that the economic benefits associated with the dividends will flow to the entity,
c) The dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
Investment in Subsidiaries, Associates and Joint ventures:
The Company''s investment in equity instruments of Subsidiaries, Associates and Joint venture are accounted for at cost as per Ind AS 27.
Derecognition of financial assets: The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Impairment: The Company assesses at each reporting date whether a financial asset (or a group of financial assets) is impaired based on evidence or information that is available without undue cost or effort. Expected credit losses are assessed and loss allowances recognised if the credit quality of the financial asset has deteriorated significantly since initial recognition.
Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognizes lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month expected credit losses or at an amount equal to the life time expected credit losses, if the credit risk on the financial asset has increased significantly since initial recognition.
(ii) Financial liabilities and equity instruments
Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.
Recognition and initial Measurement
A financial liability is classified as held for trading if:
i) It has been incurred principally for the purpose of repurchasing it in the near term; or
ii) on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
iii) it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
i) such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
ii) the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
iii) it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL in accordance with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in Statement of Profit and Loss. The net gain or loss recognised in Statement of Profit and Loss incorporates any interest paid on the financial liability and is included in the âother gains and losses'' line item in the Statement of Profit and Loss. The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in Statement of Profit and Loss.
The measurement of financial liabilities depends on their classification, as described below:
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the Effective Interest Rate (EIR) method. Gains and losses are recognized in profit or loss when the liabilities are de-recognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
Trade and other payables
These amounts represent liabilities for goods or services provided to the Company which are unpaid at the end of the reporting period. Trade and other payables are presented as current liabilities when the payment is due within a period of 12 months from the end of the reporting period. For all trade and other payables classified as current, the carrying amounts approximate fair value due to the short maturity of these instruments. Other payables falling due after 12 months from the end of the reporting period are presented as non-current liabilities and are measured at amortized cost unless designated as fair value through profit and loss at the inception.
Other financial liabilities at fair value through profit or loss:
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Gains or losses on liabilities held for trading are recognized in the profit or loss.
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities:
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange of substantially different terms of debt instruments with
a lender is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
g. 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 measures financial instruments at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the Financial Statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
⢠Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
⢠Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable, or
⢠Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable.
Dividend income from investments is recognised when the Company''s right to receive payment has been established.
Interest Income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset or shorter period, where appropriate to the gross carrying amount of the financial asset or to the amortized cost of a financial asset. When calculating the effective interest rate, the company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. Interest income is included in other income in the statement of profit and loss. The expected cash flows are reassessed ^^n^^earjy^asis^nd^hangesJf^ny^re^ccounted
j. FOREIGN CURRENCY TRANSACTIONS Functional and presentation currency
The Financial Statements are presented in Indian Rupee ('' which is also the functional and presentation currency of the Company.
Transactions in foreign currencies are translated into the functional currency (i.e.,'') of the Company at the exchange rates at the dates of the transactions or an average rate if the average rate approximates the actual rate at the date of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction.
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the statement of profit and loss in the year in which they arise.
k. EMPLOYEE BENEFITSRetirement benefit costs and termination benefits:
(i) Defined Contribution Plan: A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separate entity. The Company makes specified monthly contributions towards Provident Fund and Employee State Insurance. The Company''s contribution is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service. Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.
(ii) Defined Benefit Plan: The cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur. Re-measurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.
Past service cost is recognised in profit or loss in the period of a plan amendment.
Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
a) service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
b) net interest expense or income; and
c) re-measurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item âEmployee benefits expenses''. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the statement of financial position represents the actual deficit or surplus in the Company''s defined benefit plans. The Company presents the above liability/(asset) as current and non-current in the Balance Sheet as per actuarial valuation by the independent actuary and also considering whether the Company will contribute this amount to the gratuity fund within the next twelve months.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services upto the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
Other long term employee benefit
The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of the expected future payments to be made in respect of services provided by employee upto the end of reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Measurements as a result of experience adjustments and changes in actuarial assumptions are recognized in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as Short term employee benefit.
The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the period-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Company presents the leave as a current liability in the balance sheet to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Where Company has the unconditional legal and contractual right to defer the settlement for a period beyond 12 months, the same is presented as non-current liability.
Borrowing cost includes interest expense as per Effective Interest Rate (EIR) and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Basic earnings per share is computed by dividing the profit / (loss) after tax attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares including the treasury shares held by the Company to satisfy the exercise of the share options by the employees.
Income tax expense represents the sum of the current tax and deferred tax.
(i) Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in other comprehensive income / equity and not in the statement of profit and loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
(ii) Deferred tax is provided, using the balance sheet method, on all deductible temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes and on carry forward of unused tax credits and unused tax loss.Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to 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. Tax relating to items recognized outside profit or loss is recognised outside profit or loss (either in other comprehensive income or equity)
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred tax assets (including Minimum Alternate Tax credit available) is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered. 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.
Presentation of current and deferred tax:
Current and deferred tax are recognized as income or expense in the Statement of Profit and Loss, except when they relate to items that are recognized in Other Comprehensive Income, in which case, the current and deferred tax income/expense are recognized in Other Comprehensive Income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
Provisions are recognised when the Company has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources, that can be reliably estimated, will be required to settle such an obligation such as incremental costs relating to Direct labour and materials and allocation of other costs such as depreciation charge for an item of PPE used. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
p. CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the Financial Statements.
Contingent assets are not recognised but disclosed in the Financial Statements when an inflow of economic benefits is probable.
Investment property is a land and/or building, held to earn rentals or for capital appreciation or both, rather than for use in the production or supply of goods or services or for administrative purposes; or sale in the ordinary course of business. Investment properties (if any), are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any. The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in Statement of profit and loss as incurred. Investment properties are depreciated using the straight-line method over their estimated useful lives.
F SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
In the course of applying the policies outlined in all notes under section D & E above, the Company is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future period, if the revision affects current and future period.
Assumptions and Estimation Uncertainty:
(i) Useful Lives of Property, Plant and Equipment:
Management reviews the useful lives of property, plant and equipment at least once a year. Such lives are dependent upon an assessment of both the technical lives of the assets and also their likely economic lives based on various internal and external factors including relative efficiency and operating costs. Accordingly, depreciable lives are reviewed annually using the best information available to the Management.
(ii) Impairment:
Determining whether the assets are impaired requires an estimate in the value in use of the assets. The value in use calculation requires the Management to estimate the future cash flows expected to arise from the asset and
a suitable discount rate in order to calculate present value. When the actual cash flows are less than expected, a material impairment loss may arise.
(iii) Provisions and Contingencies:
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events that can reasonably be estimated. The timing of recognition requires application of judgement to existing facts and circumstances which may be subject to change. The amounts are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
(iv) Fair Value Measurement:
When the fair values of financial assets or financial liabilities recorded or disclosed in the Financial Statements cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgements include consideration of inputs such as liquidity risk, credit risk and volatility. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in note 41.
(v) Taxes:
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
(vi) Defined Benefit Obligation:
The costs of providing Gratuity and other post-employment benefits are charged to the Statement of Profit and Loss in accordance with Ind AS 19 âEmployee benefits'' over the period during which benefit is derived from the employees'' services. The costs are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates. The same is disclosed in Note. 40, âEmployee benefits ''.
Mar 31, 2024
1 SIGNIFICANT ACCOUNTING POLICIES A CORPORATE INFORMATION
Magna Electro Castings Limited is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The address of its registered office and principal place of business are disclosed in the introduction to the Annual report. Its shares are listed on the Bombay Stock Exchange- BSE Limited. The Company is engaged in the manufacturing and selling of Cast Iron Components. The Company caters to both domestic and international markets. The financial statements are approved for issue by the Company''s Board of Directors on 29th May, 2024.
B GENERAL INFORMATION AND STATEMENT OF COMPLIANCE WITH IND AS
These Financial Statements (âfinancial statements'') of the Company have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd AS'') as notified by Ministry of Corporate Affairs (âMCA'') under Section 133 of the Companies Act, 2013 (âthe Act'') read with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time and other relevant provisions of the Act. The Company has uniformly applied the accounting policies during the periods presented. The financial statements for the year ended 31st March, 2024 were authorised and approved for issue by the Board of Directors on 29th May, 2024.
C BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared on going concern basis in accordance with accounting principles generally accepted in India. The presentation of financial statement is based on Ind AS Schedule III of the Companies Act, 2013.
The Financial Statements have been prepared & presented on the historical cost convention and on accrual basis, except for the following materials in the Balance Sheet:
⢠Financial assets are measured either at fair value or at amortised cost depending on their classification;
⢠Employee defined benefit assets/ liabilities are recognised as the net total of fair value of plan assets, adjusted for actuarial gains/losses and the present value of defined benefit obligations;
⢠Right-of-use of Assets are recognised at the present value of lease payments that are not paid as on that date.
D MATERIAL ACCOUNTING POLICIES
|
Material Accounting policies |
Para |
Reference in Balance Sheet & Profit and Loss Notes |
|
1. Property, Plant and Equipment |
a |
2 |
|
2. Inventory |
b |
10 |
|
3. Impairment of Non-Financial assets |
c |
2,4,5,6,7,35 |
|
4. Revenue Recognition |
d |
28 |
|
5. Financial Instruments |
e |
8,14,18,22,24 |
a. PROPERTY,PLANT AND EQUIPMENT
Property, Plant and Equipment (PPE), being fixed assets are tangible items that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes and are expected to be used for more than a period of twelve months.
Land is carried at cost. All other items of Property, Plant and Equipment (PPE) are measured at cost, less accumulated depreciation and accumulated impairment losses, if any.
Initial Cost: Initial cost of an item of PPE comprises its purchase price, including import duties and nonrefundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its location and working condition necessary for it to be capable of operating in the manner intended by the Management and estimated costs of dismantling and removing the item and restoring the site on which it is located. Excess of net sale proceeds of items produced over the cost of testing are reduced from Directly attributable costs.
Items such as spare parts, stand-by equipment and servicing equipment are capitalized when they meet the definition of Property, Plant and Equipment.
If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE.
Depreciation: Depreciation on PPE are provided under Straight line method as per the useful lives and manner prescribed under Schedule II to the Companies Act, 2013. The Management believes that the estimated useful lives as per the provisions of Schedule II to the Companies Act, 2013, wherever adopted, are realistic and reflect fair approximation of the period over which the assets are likely to be used.
The Company has used the following information to provide depreciation on its Property, Plant and Equipment:
|
Class of Assets |
Useful Lives |
|
Buildings - Factory |
30 Years |
|
Plant & Machinery |
|
|
- Power Generation Plant |
22 Years |
|
- Other than Power Generation Plant - Triple Shift |
7.5 Years |
|
Furniture & Fittings |
10 Years |
|
Office Equipment |
5 Years |
|
Air Conditioner |
5 Years |
|
Computer |
3 Years |
|
Computer Server |
6 Years |
|
Vehicles - Two Wheelers |
10 Years |
|
Vehicles - Other than Two Wheelers |
8 Years |
b. INVENTORIES
Inventories are valued at the lower of cost and net realizable value exclusive of applicable GST which is utilized as Input Tax Credit. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and appropriate proportion of variable and fixed overhead expenditure. Overhead expenditures are being allocated on the basis of normal operating capacity.
Raw materials are valued at weighted average cost. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
Cost of Finished Goods and Work in Progress is taken as cost of the materials and other cost of manufacture upto various stage of completion. Stores and spares are valued at cost on First in First out basis.
The Net realisable value of work-in-progress is determined with reference to the selling prices of related finished products.
Raw Material, components and other supplies held for use in the production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the
finished products will exceed their net realisable value. The comparison of cost and net realisable value is made on item-by-item basis.
Stores & Spares which do not meet the definition of PPE are accounted as inventories.
c. IMPAIRMENT OF ASSETS
The Company periodically assesses whether there is any indication that an asset or a group of assets may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. For an asset or group of assets the recoverable amount is higher of the fair value less cost of disposal and value in use. If such recoverable amount of the asset is less than its carrying amount, the carrying amount is reduced to its recoverable amount. 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 if 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 depreciable historical cost. An impairment loss is reversed only to the extent that the amount of asset does not exceed the net book value that would have been determined if no impairment loss had been recognized.
d. REVENUE RECOGNITION
Revenue is measured based on the transaction price specified in the contract with the customer. It excludes discounts, incentives, volume, rebates, Goods and service tax and amount collected on behalf of thrid parties.
Revenue from contracts with customers are recognized when the company satisfies the performance obligation by transfer of control to the customer of the promised goods or services.
Revenue from sale of goods are recognized when the control of goods are transferred to the customer at an amount that reflects the consideration which the company expects to be entitled in exchange for those goods.
The company assesses promises in the contract that has separate performance obligations to which a portion of the transaction price is allocated. In determining the transaction price of the goods, the company considers the effect of variable consideration, the existence of significant financing components, non-cash consideration and consideration payable to the customer, if any.
Unbilled revenue is recorded for the goods that have been dispatched and supplementary invoices are yet to be raised. Revenue is measured at the fair value of the consideration received or receivable.
Other Operating Revenues comprise of income from ancillary activities incidental to the operations of the Company and is recognised when the right to receive the income is established as per the terms of the contract.
e. FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through Statement of Profit and Loss (FVTPL)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognised immediately in Statement of Profit and Loss.
Our Company has not entered any contract for purchase of financial derivative and hedging during the year.
E OTHER ACCOUNTING POLICIES
a. PROPERTY, PLANT AND EQUIPMENT
Recognition & Measurement: All Property, Plant & Equipment(âPPE'') are stated at cost of acquisiton/installation as adjusted for import duty waivers and foreign exchange losses or gains less accumulated depreciation and impairment losses
Subsequent costs and disposal: Subsequent expenditure related to an item of PPE is added to its book value only if it increases the future economic benefits from the existing asset beyond its previously assessed standard of performance/life.
All other expenses on existing PPE, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Derecognition: The carrying amount of an item of PPE is derecognised on disposal or when no future economic benefits are expected from its use or disposal.
Gains and losses on disposal of an item of PPE are determined by comparing the proceeds from disposal with the carrying amount of PPE, and are recognized net within other income/other expenses in statement of profit and loss.
Capital-work-in-progress: Assets in the course of construction are capitalized in capital-work-in-progress account. At the point when an asset is capable of operating in the manner intended by management, the cost of construction is transferred to the appropriate category of Property, Plant and Equipment. Costs (net of income) associated with the commissioning of an asset are capitalised until the period of commissioning has been completed and the asset is ready for its intended use.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, if there has been a significant change in the expected pattern of consumption of future economic benefits embodied in the asset, depreciation is charged prospectively to reflect the changed pattern.
b. INTANGIBLE ASSETS AND AMORTISATION
An intangible asset is an identifiable non-monetary asset without physical substance.
Intangible assets are recognised only if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.
Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
c. LEASES
The Company as a lessor: Assets subject to operating leases are included in PPE. Lease income on an operating lease is recognised in the statement of profit and loss on a straight line basis over the term of the relevant lease except to the extent that the lease payments are structured to compensate for the expected inflationary cost. Costs including depreciation are recognised as an expense in the statement of profit and loss.
The Company as a lessee: The Company''s lease asset classes primarily consist of lease for buildings. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses
whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from the use of the asset throughout the period of the lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low value leases. For these short term and low-value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-inuse) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if the Company changes its assessment of whether it will exercise an extension or a termination option.
Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
d. CASH AND CASH EQUIVALENTS:
Cash and cash equivalents comprise cash at bank and on hand and short-term, highly liquid 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. GOVERNMENT GRANTS
Grants and subsidies from the government are recognised when there is reasonable assurance that
(i) the Company will comply with the conditions attached to them, and
(ii) the grant/subsidy will be received.
When the grant or subsidy relates to revenue, it is recognised as income on a systematic basis in profit or loss over the periods necessary to match them with the related costs, which they are intended to compensate.
Where the grant relates to an asset, it is recognised as deferred income and released to income in equal amounts over the expected useful life of the related asset and presented within other income. When the Company receives grants of non-monetary assets, the asset and the grant are recorded at fair value amounts and released to profit or loss over the expected useful life in a pattern of consumption of the benefit of the underlying asset.
f. FINANCIAL INSTRUMENTS
(i) Financial Assets
Initial Recognition and Measurement: The Company initially recognises loans and advances, deposits, debt
securities issues and subordinated liabilities on the date on which they originate. All other financial instruments (including regular way purchases and sales of financial assets) are recognised on the trade date, which is the date on which the Company becomes a party to the contractual provisions of the instrument. A financial asset or liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. Trade receivable that do not have significant financing component are initially recognized at transaction value.
Classification of financial assets: On initial recognition, a financial asset is classified to be measured at amortised cost, fair value through other comprehensive income (FVTOCI) or fair value through profit and loss (FVTPL). A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated at FVTPL:
i) The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument is classified as FVTOCI only if it meets both of the following conditions and is not recognised at FVTPL;
i) The asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the Other Comprehensive Income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Equity investments (other than investments in subsidiaries and joint ventures):
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS 103 applies are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The Company makes such election on an instrument-by instrument basis. The classification is made on initial recognition and is irrevocable. If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to Statement of Profit and Loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.
All other financial assets are classified as measured at FVTPL. In addition, on initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVTOCI as at FVTPL if doing so eliminates or significantly reduces and accounting mismatch that would otherwise arise.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains and losses arising on remeasurement recognized in statement of profit or loss. The net gain or loss recognized in statement of profit or loss incorporates any dividend or interest earned on the financial asset and is included in the âother income'' line item. Dividend on financial assets at FVTPL is recognized when:
a) The Company''s right to receive the dividends is established,
b) It is probable that the economic benefits associated with the dividends will flow to the entity,
c) The dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
Investment in Subsidiaries, Associates and Joint ventures:
The Company''s investment in equity instruments of Subsidiaries, Associates and Joint venture are accounted for at cost as per Ind AS 27.
Derecognition of financial assets: The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
Impairment: The Company assesses at each reporting date whether a financial asset (or a group of financial assets) is impaired based on evidence or information that is available without undue cost or effort. Expected credit losses are assessed and loss allowances recognised if the credit quality of the financial asset has deteriorated significantly since initial recognition.
Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognizes lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month expected credit losses or at an amount equal to the life time expected credit losses, if the credit risk on the financial asset has increased significantly since initial recognition.
(ii) Financial liabilities and equity instruments
Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.
Recognition and initial Measurement
A financial liability is classified as held for trading if:
i) It has been incurred principally for the purpose of repurchasing it in the near term; or
ii) on initial recognition it is part of a portfolio of identified financial instruments that the Company manages
together and has a recent actual pattern of short-term profit-taking; or
iii) it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
i) such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
ii) the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
iii) it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL in accordance with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in Statement of Profit and Loss. The net gain or loss recognised in Statement of Profit and Loss incorporates any interest paid on the financial liability and is included in the âother gains and losses'' line item in the Statement of Profit and Loss. The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in Statement of Profit and Loss.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the Effective Interest Rate (EIR) method. Gains and losses are recognized in profit or loss when the liabilities are de-recognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
Trade and other payables
These amounts represent liabilities for goods or services provided to the Company which are unpaid at the end of the reporting period. Trade and other payables are presented as current liabilities when the payment is due within a period of 12 months from the end of the reporting period. For all trade and other payables classified as current, the carrying amounts approximate fair value due to the short maturity of these instruments. Other payables falling due after 12 months from the end of the reporting period are presented as non-current liabilities and are measured at amortized cost unless designated as fair value through profit and loss at the inception.
Other financial liabilities at fair value through profit or loss:
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Gains or losses on liabilities held for trading are recognized in the profit or loss.
Other financial liabilities:
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities:
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange of substantially different terms of debt instruments with a lender is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
g. 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.
h. Fair value measurement
The Company measures financial instruments at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the Financial Statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
⢠Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
⢠Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement
is directly or indirectly observable, or
⢠Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable.
i. REVENUE RECOGNITION
Dividend income from investments is recognised when the Company''s right to receive payment has been established.
Interest Income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset or shorter period, where appropriate to the gross carrying amount of the financial asset or to the amortized cost of a financial asset. When calculating the effective interest rate, the company estimates the expected cash flows by considering
all the contractual terms of the financial instrument but does not consider the expected credit losses. Interest income is included in other income in the statement of profit and loss. The expected cash flows are reassessed on a yearly basis and changes, if any, are accounted prospectively.
j. FOREIGN CURRENCY TRANSACTIONS Functional and presentation currency
The Financial Statements are presented in Indian Rupee ('' which is also the functional and presentation currency of the Company.
(a) Initial recognition
Transactions in foreign currencies are translated into the functional currency (i.e.,'') of the Company at the exchange rates at the dates of the transactions or an average rate if the average rate approximates the actual rate at the date of the transactions.
(b) Conversion
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction.
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the statement of profit and loss in the year in which they arise.
k. EMPLOYEE BENEFITS
Retirement benefit costs and termination benefits:
(i) Defined Contribution Plan: A defined contribution plan is a post-employment benefit plan under which the Company pays specified contributions to a separate entity. The Company makes specified monthly contributions towards Provident Fund and Employee State Insurance. The Company''s contribution is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service. Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.
(ii) Defined Benefit Plan: The cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. Re-measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the statement of financial position with a charge or credit recognised in other comprehensive income in the period in which they occur. Re-measurement recognised in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.
Past service cost is recognised in profit or loss in the period of a plan amendment.
Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
a) service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
b) net interest expense or income; and
c) re-measurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item âEmployee benefits expenses''. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the statement of financial position represents the actual deficit or surplus in the Company''s defined benefit plans. The Company presents the above liability/(asset) as current and non-current in the Balance Sheet as per actuarial valuation by the independent actuary and also considering whether the Company will contribute this amount to the gratuity fund within the next twelve months.
A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
Short term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services upto the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
Other long term employee benefit
The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of the expected future payments to be made in respect of services provided by employee upto the end of reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Measurements as a result of experience adjustments and changes in actuarial assumptions are recognized in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as Short term employee benefit.
The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the period-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Company presents the leave as a current liability in the balance sheet to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Where Company has the unconditional legal and contractual right to defer the settlement for a period beyond 12 months, the same is presented as non-current liability.
l. BORROWING COST
Borrowing cost includes interest expense as per Effective Interest Rate (EIR) and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
m. EARNINGS PER SHARE
Basic earnings per share is computed by dividing the profit / (loss) after tax attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares including the treasury shares held by the Company to satisfy the exercise of the share options by the employees.
n. TAXATION
Income tax expense represents the sum of the current tax and deferred tax.
(i) Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in other comprehensive income / equity and not in the statement of profit and loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
(ii) Deferred tax is provided, using the balance sheet method, on all deductible temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes and on carry forward of unused tax credits and unused tax loss.Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to 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. Tax relating to items recognized outside profit or loss is recognised outside profit or loss (either in other comprehensive income or equity)
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred tax assets (including Minimum Alternate Tax credit available) is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered. 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.
Presentation of current and deferred tax:
Current and deferred tax are recognized as income or expense in the Statement of Profit and Loss, except when they relate to items that are recognized in Other Comprehensive Income, in which case, the current and deferred tax income/expense are recognized in Other Comprehensive Income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
o. PROVISIONS
Provisions are recognised when the Company has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources, that can be reliably estimated, will be required to settle such an obligation such as incremental costs relating to Direct labour and materials and allocation of
other costs such as depreciation charge for an item of PPE used. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
p. CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the Financial Statements.
Contingent assets are not recognised but disclosed in the Financial Statements when an inflow of economic benefits is probable.
q. INVESTMENT PROPERTY
Investment property is a land and/or building, held to earn rentals or for capital appreciation or both, rather than for use in the production or supply of goods or services or for administrative purposes; or sale in the ordinary course of business. Investment properties (if any), are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any. The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in Statement of profit and loss as incurred. Investment properties are depreciated using the straight-line method over their estimated useful lives.
F SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
In the course of applying the policies outlined in all notes under section D & E above, the Company is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future period, if the revision affects current and future period.
Assumptions and Estimation Uncertainty:
(i) Useful Lives of Property, Plant and Equipment:
Management reviews the useful lives of property, plant and equipment at least once a year. Such lives are dependent upon an assessment of both the technical lives of the assets and also their likely economic lives based on various internal and external factors including relative efficiency and operating costs. Accordingly, depreciable lives are reviewed annually using the best information available to the Management.
(ii) Impairment:
Determining whether the assets are impaired requires an estimate in the value in use of the assets. The value in use calculation requires the Management to estimate the future cash flows expected to arise from the asset and a suitable discount rate in order to calculate present value. When the actual cash flows are less than expected, a material impairment loss may arise.
(iii) Provisions and Contingencies:
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events that can reasonably be estimated. The timing of recognition requires application of judgement to existing facts and circumstances which may be subject to change. The amounts are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
(iv) Fair Value Measurement:
When the fair values of financial assets or financial liabilities recorded or disclosed in the Financial Statements cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgements include consideration of inputs such as liquidity risk, credit risk and volatility. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in note 40.
(v) Taxes:
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
(vi) Defined Benefit Obligation:
The costs of providing Gratuity and other post-employment benefits are charged to the Statement of Profit and Loss in accordance with Ind AS 19 âEmployee benefits'' over the period during which benefit is derived from the employees'' services. The costs are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates. The same is disclosed in Note. 39, âEmployee benefits ''.
Mar 31, 2018
1. Significant accounting policies
1.1 Statement of compliance
The financial statements have been prepared as a going concern in accordance with Indian Accounting Standards (Ind AS) notified under the Section 133 of the Companies Act, 2013 (âthe Actâ) read with the Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act.
Upto the year ended 31st March, 2017, the Company prepared financial statements in accordance with the requirements of previous GAAR which includes standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act.
These are Companyâs first Ind AS based financial statements. The date of transition to Ind AS is 1st April, 2016. The Company has opted certain exemptions while first-time adoption of Ind As based Financial statement (refer transition note no. 41 in Financial Statement)
1.2 Basis of preparation and presentation
The financial statements have been prepared on the historical cost convention on accrual basis except for certain financial instruments which are measured at fair value at the end of each reporting period, as explained in the accounting policies mentioned below. Historical cost is generally based on the fair value of the consideration given in exchange of goods or services. The principal accounting policies are set out below:
All assets and liabilities have been classified as current or noncurrent according to the Companyâs operating cycle and other criteria set out in the Act. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current and noncurrent classification of assets and liabilities.
1.3 Going concern
The Board of Directors have considered the financial position of the Company at 31st March, 2018 and projected cash flows and financial performance ofthe Companyfor at least twelve months from the date of approval of these financial statements as well as planned cost and cash improvement actions, and believe that the plan for sustained profitability remains on course.
The board of directors have taken actions to ensure that appropriate long-term cash resources are in place atthe date of signing the accounts to fund the Companyâs operations.
1.4 Use of estimates and judgments
The preparation of financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the date of these financial statements and the reported amount of revenues and expenses for the years presented. Actual results may differ from the estimates.
Estimates and underlying assumptions are reviewed at each balance sheet date. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods affected. Below are the significant estimates made
1) Estimation of employee benefit obligation note no: 17
1.5 Revenue recognition
The Company recognizes revenue when the amount of revenue and its related cost can be reliably measured and it is probable that future economic benefits will flow to the entity and specific criteria in relation to significant risk.
1.5.1 Sale of goods
Revenue from sale of products is recognised when the products are delivered to the customer or when delivered to the carrier, when risks and rewards of ownership pass to the customer, as per terms of contract.
Revenue is measured at the fair value ofthe consideration received or receivable and net of returns, trade allowances and rebates. It includes excise duty but excludes Value Added Tax, Sales Tax and Goods and Services Tax (GST).
1.5.2 Income from service
Income from services is accounted overthe period of rendering of services.
1.6 Foreign currencies
1.6.1 Functional and presentation currency
Items included in the financial statements are measured using the currency ofthe primary economic environment in which the company operates (âthe functional currencyâ). The financial statements are presented in Indian rupee, which is the Companyâs functional and presentation currency.
1.6.2 Transactions and balances
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.
1.7 Employee Benefits
1.7.1 Shortterm obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end ofthe period in which the employees renderthe related service are recognized in respect of employeesâ services upto the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
1.7.2 Other long term employee benefit
The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of the expected future payments to be made in respect of services provided by employee upto the end of reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end ofthe reporting period that have terms approximating to the terms of the related obligation. Measurements as a result of experience adjustments and changes in actuarial assumptions are recognized in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as Shortterm employee benefit.
The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result ofthe unused entitlement that has accumulated atthe reporting date.
The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the period-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Company presents the leave as a current liability in the balance sheet to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Where Company has the unconditional legal and contractual right to defer the settlement for a period beyond 12 months, the same is presented as non-current liability.
1.7.3. Post-employment obligation
The Company operates the following post-employment schemes:
a) Defined benefit plans such as gratuity for its eligible employees, and
b) Defined contribution plans such as Provident fund.
Defined contribution plan:
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme and pension scheme as expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid.
Defined benefit plan:
The Company has a gratuity defined benefit plans for its employees. The costs of providing benefits under these plans are determined on the basis of actuarial valuation at each year-end. Separate actuarial valuation is carried out for each plan using the projected unit credit method. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and the balance sheet. The Company has funded this with Life Insurance Corporation of India (âLICâ). The contributions made to the LIC are treated as plan assets. The defined benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as reduced bythe fair value of plan assets.
1.7.4 Bonus plans
The Company recognizes a liability and an expense for bonus. The Company recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
1.8 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
1.8.1. Current tax
The income tax expenses or credit is based on taxable profit for the year. Taxable profit differs from profit before taxâ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Companyâs current tax is calculated using tax rates that have been enacted.
1.8.2. Deferred tax
Deferred tax is provided in full, using the balance sheet approach, on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences and incurred tax losses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.
Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neitherthetaxable profit northeaccounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part ofthe asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end ofthe reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, atthe end ofthe reporting period, to recover or settle the carrying amount of its assets and liabilities.
1.8.3 Current and deferred taxfor the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the income taxes are also recognised in other comprehensive income or directly in equity respectively.
1.9 Property, plant and equipment
Property, plant and equipment are stated at cost of acquisition or construction less accumulated depreciation less accumulated impairment, if any.
Such assets are classified to the appropriate categories of property, plant and equipment when completed and readyfor intended use.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. The other repairs and maintenance of revenue nature are charged to profit or loss during the reporting period in which they are incurred.
Transition to Ind AS
On transition to Ind AS, the Company has elected to adopt fair value as its deemed cost for the land and apply Ind-AS 16 retrospectively for other class of assets as at 1st April, 2016.
Depreciation methods, estimated useful lives and residual value.
Depreciation is calculated using the straight-line method on a prorata basis from the month in which each asset is put to use to allocate their cost, net of their residual values, over their estimated useful lives.
Company has ascertained and adopted the useful life ofthe asset as mentioned in the schedule II of Companies Act, 2013
The assetsâ residual values, estimated useful lives and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Gains and losses on disposal are determined by comparing proceeds with carrying amount and are credited / debited to profit or loss.
1.9.1 Investment Property
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs.
Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the company and the cost ofthe item can be measured reliably. All other repairs and maintenance costs are expensed when incurred.
When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.
1.9.1.1 Deemed cost on transition to Ind AS
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its investment property recognised as of 1 April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as ofthe transition date.
1.10. Intangibleassets
Intangible assets are stated at cost of acquisition or construction less accumulated depreciation less accumulated impairment, if any.
1.10.1. Deemed cost on transition to Ind AS
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as of 1st April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed costas ofthe transition date.
1.11. Impairment of tangible and intangibleassets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
1.12. Inventories
Inventories are valued at the lower of cost and net realizable value.
The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and appropriate proportion of variable and fixed overhead expenditure. Overhead expenditures are being allocated on the basis of normal operating capacity.
Raw materials are valued at weighted average cost. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
Semi finished goods cost is taken as cost of the materials and other cost of manufacture upto various stage of completion. Stores and spares are valued at cost on First in First out basis.
1.13. Provisions and contingencies
Provisions: Provisions are recognised when there is a present obligation or constructive obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are determined by discounting the expected future cash flows at a pre tax rate that reflects current market assessment of the time value of money and the risks specific to the liability
Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
1.14. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial instruments (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss. Subsequently, financial instruments are measured according to the category in which they are classified.
1.15. Financial assets
1.15.1. Classification of financial assets
Classification of financial assets depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
The Company classifies its financial assets in the following measurement categories: those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and those measured at amortised cost
Debt instruments
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which The company classifies its debt instruments:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/ (losses). Interest income from these financial assets is included in other income using the effective interest rate method.
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.
Equity instruments
The Company subsequently measures all equity investments at fair value. Where the Companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss.
Dividends from such investments are recognised in profit or loss as other income when the companyâs right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain or losses in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fairvalue.
1.15.2. Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost less provision for impairment.
1.15.3. Cash and cash equivalents
In the cash flow statement, cash and cash equivalents includes cash in hand, cheques and drafts in hand, balances with bank and deposits held at call with financial institutions, short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet and forms part of financing activities in the cash flow statement. Book overdraft are shown within other financial liabilities in the balance sheet and forms part of operating activities in the cash flow statement.
1.15.4. Impairment of financial assets
The Company assesses impairment based on expected credit losses (ECL) model to the following:
- Financial assets measured at amortized cost
- Financial assets measured at fair value through other comprehensive income
- Expected credit loss are measured through a loss allowance at an amount equal to:
- The twelve month expected credit losses (expected credit losses that result from those default events on the financial instruments that are possible within twelve months after the reporting date); or
- Full lifetime expected credit losses (expected credit losses that result from all possible default events overthe life ofthe financial instrument).For trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
1.16. Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest rate method or at fair value through profit or loss.
1.16.1. Tradeandotherpayables
Trade and other payables represent liabilities for goods or services provided to the Company prior to the end of financial year which are unpaid.
1.16.2. Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest rate method.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
1.16.3. Foreign exchange gains or losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in profit or loss.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the exchange rate at the end of the reporting period. For financial liabilities that are measured as at fair value through profit or loss, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
1.18. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker.
1.19. Leases
Leases of property, plant and equipment where the Company, as a lessee has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the leaseâs inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments.The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases. Contingent rents are payable as perthe agreed terms.
Where Company is lessor in case of an operating lease the lease income is recognised on a straight line basis over the tenor.
1.20. Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period oftimetoget ready fortheir intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Other borrowing costs are expensed in the period in which they are incurred.
1.21. Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.
Government grants relating to the purchase of property, plant and equipment are included in noncurrent liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives ofthe related assets and presented with in other income.
1.22. Earning Per Share
Basic earnings per share have been computed by dividing the net income by the weighted average number of shares outstanding during the year. Diluted earnings per share has been computed using the weighted average number of shares and diluted potential shares, except where the result would be anti-dilutive.
Mar 31, 2016
Significant Accounting Policies:
1. Basis of preparation
The financial statements of the Company have been prepared under the historical cost convention and on mercantile basis as a going concern in accordance with the applicable accounting standards notified under the Companies (Accounting Standards) and the relevant provisions of the Companies Act.
The accounting policies adopted in the preparation of the financial statements are consistent with the those of the previous year.
2. (a) Fixed Assets :
Fixed Assets are stated at cost, net of cenvat and includes all direct, indirect expenses and allocable borrowing costs relating thereto.
Depreciation on fixed assets is provided on straight line method adopting the useful lives of the respective fixed assets, and the residual value in accordance with Schedule II to the Companies Act, 2013. In respect of additions during the year, depreciation is prorated to the number of days used.
( b) Borrowing Costs
Borrowing costs directly attributable to the acquisition of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs includes interest and other ancillary costs, if any, that the Company incurs in connection with the borrowing of funds for acquisition of assets.
(c) Inventories
Inventories are valued at lower of cost and net realizable value Cost is determined as under:
Raw materials and components are valued using Weighted Average Cost.
Finished goods Cost inclusive of excise duty, wherever applicable.
Semi finished goods cost is taken as cost of the materials and other cost of manufacture up to the various stages of completion.
Stores and spares are valued at cost on First in First out basis.
(d) Revenue recognition:
Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of goods have been passed on to the buyer, usually on delivery of goods. Sales are accounted net of duties and taxes. Material consumption is net of Cenvat. Excise duty in respect of goods manufactured other than what is in stock at the close of the year is accounted at the time of removal of goods from the factory for sale.
Value of Power generated by Wind Energy Generators and exported to to the Grid is treated as reduction in power charges to the extent it is adjusted in the bills by the TNEB and the excess, if any, as sale of energy to the TNEB.
(e) Foreign Currency transactions:
Foreign currency transactions are recorded at the rate of exchange prevailing on the date of respective transactions. Resultant gain or loss at the time of realization /payment /restatement is charged to the statement of Profit and Loss. The carrying value of foreign currency assets and liabilities are restated at the yearend rates.
(f) Impairment of Assets:
Impairment in the value of fixed assets is recognized to the extent that the recoverable amount of an asset is less than its carrying value and is charged to the statement of Profit and Loss, as prescribed in AS 28.
(g) Retirement and other employee benefits:
Contributions to the provident fund are charged to the statement of Profit and Loss for the year when the contributions are due for payment.
The Company has set up an Employees Group Gratuity Trust Fund under Group Gratuity (cash accumulation) Scheme of Life Insurance Corporation of India. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year end.
The Company also provides benefits in the form of leave encashment and medical reimbursement which are recognized in the statement of Profit and Loss.
(h) Taxation:
Tax expense comprises of current and deferred tax.
Provision for taxation is made in terms of the Income Tax Act,1961 in respect of of income liable to tax at either special or normal rates. In accordance with the Accounting Standard 22.
Mar 31, 2015
1. Basis of Preparation
The financial statements of the Company have been prepared under the
historical cost convention and on mercantile basis as a going concern
in accordance with the applicable accounting standards notified under
the Companies (Accounting Standards) and the relevant provisions of the
Companies Act.
The accounting policies adopted in the preparation of the financial
statements are consistent with the those of the previous year.
2. (a) Fixed Assets :
Fixed Assets are stated at cost, net of cenvat, and includes all direct
indirect expenses and allocable borrowing costs relating thereto.
Depreciation on fixed assets is provided on straight line method
adopting the useful lives of the respective fixed assets, and the
residual value in accordance with Schedule II to the Companies Act,
2013. In respect of additions during the year, depreciation is prorated
to the number of days used.
(b) Borrowing Costs
Borrowing costs directly attributable to the acquisition of an asset
that necessarily takes a substantial period of time to get ready for
its intended use are capitalised as part of the cost of the respective
asset. All other borrowing costs are expensed in the period they occur.
Borrowing costs includes interest and other ancillary costs, if any,
that the Company incurs in connection with the borrowing of funds for
acquisition of assets.
(c) Inventories
Inventories are valued at lower of cost and net realisable value Cost
is determined as under:
Raw materials and components are valued using Weighted Average Cost.
Finished goods Cost inclusive of excise duty, wherever applicable.
Semi finished goods cost is taken as cost of the materials and other
cost of manufacture upto the various stages of completion.
Stores and spares are valued at cost on First in First out basis.
(d) Revenue Recognition:
Revenue from sale of goods is recognised when all the significant risks
and rewards of ownership of goods have been passed on to the buyer,
usually on delivery of goods. Sales are accounted net of duties and
taxes. Material consumption is net of Cenvat. Excise duty in respect of
goods manufactured other than what is in stock at the close of the year
is accounted at the time of removal of goods from the factory for sale.
Value of Power generated by Wind Energy Generators and exported to to
the Grid is treated as reduction in power charges to the extent it is
adjusted in the bills by the TNEB and the excess, if any, as sale of
energy to the TNEB.
(e) Foreign Currency Transactions:
Foreign currency transactions are recorded at the rate of exchange
prevailing on the date of respective transactions. Resultant gain or
loss at the time of realisation /payment /restatement is charged to the
statement of Profit and Loss. The carrying value of foreign currency
assets and liabilities are restated at the year end rates.
(f) Impairment of Assets:
Impairment in the value of fixed assets is recognised to the extent
that the recoverable amount of an asset is less than its carrying value
and is charged to the statement of Profit and Loss, as prescribed in AS
28.
(g) Retirement and Other Employee Benefits:
Contributions to the provident fund are charged to the statement of
Profit and Loss for the year when the contributions are due for
payment.
The Company has set up an Employees Group Gratuity Trust Fund under
Group Gratuity (cash accumulation) Scheme of Life Insurance Corporation
of India. The cost of providing benefits under this plan is determined
on the basis of actuarial valuation at each year end.
The Company also provides benefits in the form of leave encashment and
medical reimbursement which are recognised in the statement of Profit
and Loss.
(h) Taxation:
Tax expense comprises of current and deferred tax.
Provision for taxation is made in terms of the Income Tax Act,1961 in
respect of of income liable to tax at either special or normal rates.
In accordance with the Accounting Standard 22.
Deferred income taxes reflects the impact of current year timing
difference between taxable income and accounting income for the year
and reversal of timing difference for the earlier years. Deferred tax
is measured using the tax rates as at the reporting date.
Minimum Alternate tax (MAT) paid in a year is charged to the statement
of Profit and Loss as current tax. MAT credit is recognised as an asset
only to the extent that the Company will pay normal income tax during
the specified period. The said asset is created by way of a credit to
the statement of Profit and loss and shown as MAT credit Entitlement.
The Company reviews the MAT credit entitlement asset every year and
writes down the asset to the extent the Company does not have
convincing evidence that it will pay normal tax during the specified
period.
(i) Segment Reporting:
Identification of Segments
The Company's operating businesses are organised and managed separately
according to the nature of business. The Company at present has two
operating segments namely Foundry division and Wind Energy division.
Inter Segment Transfers
The Company generally accounts for inter segment transfers at cost.
(j) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period by the weighted average number of equity shares
outstanding during the period.
Mar 31, 2014
1. Basis of preparation
The financial statements of the Company have been prepared under the
historical cost convention and on mercantile basis as a going concern
in accordance with the applicable accounting standards notified under
the Companies (Accounting Standards) and the relevant provisions of the
Companies Act,1956.
The accounting policies adopted in the preparation of the financial
statements are consistent with the those of the previous year.
2. Summary of significant accounting policies (a) Fixed Assets :
Fixed Assets are stated at cost, net of cenvat, and includes all direct
and indirect expenses and allocable borrowing costs relating thereto .
Depreciation on fixed assets has been calculated on straight line basis
at the rates prescribed under Schedule XIV to the Companies Act, 1956,
prorated to the number of days used during the year in accordance with
the provisions of Section 205(2)(b) of the Act. In respect of assets
costing Rs. 5000/- or less, hundred percent depreciation is provided.
( b) Borrowing Costs
Borrowing costs directly attributable to the acquisition of an asset
that necessarily takes a substantial period of time to get ready for
its intended use are capitalised as part of the cost of the respective
asset. All other borrowing costs are expensed in the period they occur.
Borrowing costs includes interest and other ancillary costs, if any,
that the Company incurs in connection with the borrowing of funds for
acquisition of assets.
(c) Inventories
Inventories are valued at lower of cost and net realisable value Cost
is determined as under:
Raw materials and components are valued using Weighted Average Cost.
Finished goods Cost inclusive of excise duty, wherever applicable.
Semi finished goods cost is taken as cost of the materials and other
cost of manufacture upto the various stages of completion.
Stores and spares are valued at cost on First in First out basis.
(d) Revenue recognition:
Revenue from sale of goods is recognised when all the significant risks
and rewards of ownership of goods have been passed on to the buyer,
usually on delivery of goods. Sales are accounted net of duties and
taxes. Material consumption is net of Cenvat.Excise duty in respect of
goods manufactured other than what is in stock at the close of the year
is accounted at the time of removal of goods from the factory for sale.
Value of Power generated by Wind Energy Generators and exported to to
the Grid is treated as reduction in power charges to the extent it is
adjusted in the bills by the TNEB and the excess, if any, as sale of
energy to the TNEB.
(e) Foreign Currency transactions:
Foreign currency transactions are recorded at the rate of exchange
prevailing on the date of respective transactions. Resultant gain or
loss at the time of realisation /payment /restatement is charged to the
statement of Profit and Loss. The carrying value of foreign currency
assets and liabilities are restated at the year end rates.
(f) Impairment of Assets:
Impairment in the value of fixed assets is recognised to the extent
that the recoverable amount of an asset is less than its carrying value
and is charged to the statement of Profit and Loss, as prescribed in AS
28.
(g) Retirement and other employee benefits:
Contributions to the provident fund are charged to the statement of
Profit and Loss for the year when the contributions are due for
payment.
The Company has set up an Employees Group Gratuity Trust Fund under
Group Gratuity (cash accumulation) Scheme of Life Insurance Corporation
of India. The cost of providing benefits under this plan is determined
on the basis of actuarial valuation at each year end.
The Company also provides benefits in the form of leave encashment and
medical reimbursement which are recognised in the statement of Profit
and Loss.
(h) Taxation:
Tax expense comprises of current and deferred tax.
Provision for taxation is made in terms of the Income Tax Act,1961 in
respect of of income liable to tax at either special or normal rates,
in accordance with the Accounting Standard 22.
Deferred income taxes reflects the impact of current year timing
difference between taxable income and accounting income for the year
and reversal of timing difference for the earlier years.Deferred tax is
measured using the tax rates as at the reporting date.
Minimum Alternate tax (MAT) paid in a year is charged to the statement
of Profit and Loss as current tax. MAT credit is recognised as an asset
only to the extent that the Company will pay normal income tax during
the specified period. The said asset is created by way of a credit to
the statement of Profit and loss and shown as MAT credit Entitlement.
The Company reviews the MAT credit entitlement asset every year and
writes down the asset to the extent the Company does not have
convincing evidence that it will pay normal tax during the specified
period.
(i) Segment reporting:
Identification of segments
The Company''s operating busineses are organised and managed separately
according to the nature of business. The Company at present has two
operating segments namely Foundry division and Wind Energy division.
Inter segment transfers
The Company generally accounts for intersegment transfers at cost.
(j) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period by the weighted average number of equity shares
outstanding during the period.
Mar 31, 2013
(a) Fixed Assets:
Fixed Assets are stated at cost,net of cenvat, and includes all direct
and indirect expenses and allocable borrowing costs relating thereto.
Depreciation on fixed assets has been calculated on straight line basis
at the rates prescribed under Schedule XIV to the Companies Act, 1956,
prorated to the number of days used during the year in accordance with
the provisions of Section 205(2)(b) of the Act. In respect of assets
costing Rs. 5000/- or less, hundred percent depreciation is provided.
(b) Borrowing Costs
Borrowing costs directly attributable to the acquisition of an asset
that necessarily takes a substantial period of time to get ready for
its intended use are capitalised as part of the cost of the respective
asset. All other borrowing costs are expensed in the period they occur.
Borrowing costs includes interest and other ancillary costs, if any,
that the Company incurs in connection with the borrowing of funds for
acquisition of assets.
(c) Inventories
Inventories are valued at lower of cost and net realisable value
Cost is determined as under:
Raw materials and components are valued using Weighted Average Cost.
Finished goods Cost inclusive of excise duty, wherever applicable.
Semi finished goods cost is taken as cost of the materials and other
cost of manufacture upto the various stages of completion.
Stores and spares are valued at cost on First in First out basis.
(d) Revenue recognition:
Revenue from sale of goods is recognised when all the significant risks
and rewards of ownership of goods have been passed on to the buyer,
usually on delivery of goods. Sales are accounted net of duties and
taxes. Material consumption is net of Cenvat.Excise duty in respect of
goods manufactured other than what is in stock at the close of the year
is accounted at the time of removal of goods from the factory for sale.
Value of Power generated by Wind Energy Generators and exported to to
the Grid is treated as reduction in power charges to the extent it is
adjusted in the bills by the TNEB and the excess, if any, as sale of
energy to theTNEB.
(e) Foreign Currency transactions:
Foreign currency transactions are recorded at the rate of exchange
prevailing on the date of respective transactions. Resultant gain or
loss at the time of realisation /payment /restatement is charged to the
statement of Profit and Loss. The carrying value of foreign currency
assets and liabilities are restated at the year end rates.
(f) Impairment of Assets:
Impairment in the value of fixed assets is recognised to the extent
that the recoverable amount of an asset is less than its carrying value
and is charged to the statement of Profit and Loss, as prescribed in AS
28.
(g) Retirement and other employee benefits:
Contributions to the provident fund are charged to the statement of
Profit and Loss for the year when the contributions are due for
payment.
The Company has set up an Employees Group Gratuity Trust Fund under
Group Gratuity (cash accumulation) Scheme of Life Insurance Corporation
of India. The cost of providing benefits under this plan is determined
on the basis of actuarial valuation at each year end.
The Company also provides benefits in the form of leave encashment and
medical reimbursement which are recognised in the statement of Profit
and Loss.
(h) Taxation:
Tax expense comprises of current and deferred tax.
Provision for taxation is made in terms of the Income Tax Act, 1961 in
respect of of income liable to tax at either special or normal rates,
in accordance with the Accounting Standard 22.
Deferred income taxes reflects the impact of current year timing
difference between taxable income and accounting income for the year
and reversal of timing difference for the earlier years.Deferred tax is
measured using the tax rates as at the reporting date.
Minimum Alternate tax (MAT) paid in a year is charged to the statement
of Profit and Loss as current tax. MAT credit is recognised as an asset
only to the extent that the Company will pay normal income tax during
the specified period. The said asset is created by way of a credit to
the statement of Profit and loss and shown as MAT credit Entitlement.
The Company reviews the MAT credit entitlement asset every year and
writes down the asset to the extent the Company does not have
convincing evidence that it will pay normal tax during the specified
period.
(i) Segment reporting:
Identification of segments
The Company''s operating busineses are organised and managed separately
according to the nature of business. The Company at present has two
operating segments namely Foundry division and Wind Energy division.
Inter segment transfers
The Company generally accounts for intersegment transfers at cost.
(j) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period by the weighted average number of equity shares
outstanding during the period.
Mar 31, 2012
(a) Fixed Assets :
Fixed Assets are stated at cost, net of cenvat, and includes all direct
indirect expenses and allocable borrowing costs relating thereto .
Depreciation on fixed assets has been calculated on straight line basis
at the rates prescribed under Schedule XIV to the Companies Act, 1956,
prorated to the number of days used during the year in accordance with
the provisions of Section 205(2)(b) of the Act. In respect of assets
costing Rs. 5000/- or less, hundred percent depreciation is provided.
(b) Borrowing Costs
Borrowing costs directly attributable to the acquisition of an asset
that necessarily takes a substantial period of time to get ready for
its intended use are capitalised as part of the cost of the respective
asset. All other borrowing costs are expensed in the period they occur.
Borrowing costs includes interest and other ancillary costs, if any,
that the Company incurs in connection with the borrowing of funds for
acquisition of assets.
(c) Inventories
Inventories are valued at lower of cost and net realisable value Cost
is determined as under:
Raw materials and components are valued using Weighted Average Cost.
Finished goods Cost inclusive of excise duty, wherever applicable
Semi finished goods cost is taken as cost of the materials and other
cost of manufacture upto the various stages of completion.
Stores and spares are valued at cost on First in First out basis.
(d) Revenue recognition:
Revenue from sale of goods is recognised when all the significant risks
and rewards of ownership of goods have been passed on to the buyer,
usually on delivery of goods. Sales are accounted net of duties and
taxes. Material consumption is net of Cenvat.Excise duty in respect of
goods manufactured other than what is in stock at the close of the year
is accounted at the time of removal of goods from the factory for sale.
Value of Power generated by Wind Energy Generators and exported to to
the Grid is treated as reduction in power charges to the extent it is
adjusted in the bills by the TNEB and the excess, if any, as sale of
energy to the TNEB.
(e) Foreign Currency transactions:
Foreign currency transactions are recorded at the rate of exchange
prevailing on the date of respective transactions. Resultant gain or
loss at the time of realisation /payment /restatement is charged to the
statement of Profit and Loss. The carrying value of foreign currency
assets and liabilities are restated at the year end rates.
(f) Impairment of Assets:
includes cost of raw materials and other manufacturing costs,
Impairment in the value of fixed assets is recognised to the extent
that the recoverable amount of an asset is less than its carrying value
and is charged to the statement of Profit and Loss, as prescribed in AS
28.
(g) Retirement and other employee benefits:
Contributions to the provident fund are charged to the statement of
Profit and Loss for the year when the contributions are due for
payment.
The Company has set up an Employees Group Gratuity Trust Fund under
Group Gratuity (cash accumulation) Scheme of Life Insurance Corporation
of India. The cost of providing benefits under this plan is determined
on the basis of actuarial valuation at each year end.
The Company also provides benefits in the form of leave encashment and
medical reimbursement which are recognised in the statement of Profit
and Loss.
(h) Taxation:
Tax expense comprises of current and deferred tax.
Provision for taxation is made in terms of the Income Tax Act,1961 in
respect of income liable to tax at either special or normal rates. In
accordance with the Accounting Standard 22.
Deferred income taxes reflects the impact of current year timing
difference between taxable income and accounting income for the year
and reversal of timing difference for the earlier years. Deferred tax
is measured using the tax rates as at the reporting date.
Minimum Alternate tax (MAT) paid in a year is charged to the statement
of Profit and Loss as current tax. MAT credit is recognised as an asset
only to the extent that the Company will pay normal income tax during
the specified period. The said asset is created by way of a credit to
the statement of Profit and loss and shown as MAT credit Entitlement.
The Company reviews the MAT credit entitlement asset every year and
writes down the asset to the extent the Company does not have
convincing evidence that it will pay normal tax during the specified
period.
(i) Segment reporting:
Identification of segments
The Company's operating businesses are organised and managed separately
according to the nature of business. The Company at present has two
operating segments namely Foundry division and Wind Energy division.
Inter segment transfers
The Company generally accounts for intersegment transfers at cost.
(j) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period by the weighted average number of equity shares
outstanding during the period.
Mar 31, 2010
I) Method of Accounting:
The accounts of the Company are prepared under the historical cost
convention and on mercantile basis as a going concern in accordance
with the applicable accounting standards referred to in Section 211
(3C) of the Companies Act, 1956.
ii) Revenue Recognition:
Sales are accounted net of Duties & Taxes. Material consumption is net
of Cenvat. Excise duty in respect of goods manufactured other than what
is in stock at the close of the year is accounted at the time of
removal of goods from the factory for sale.
iii) Accounting for Fixed Assets:
a. Fixed Assets are stated at cost net of Cenvat including all direct
and indirect expenses and allocable borrowing costs relating thereto.
b. Depreciation has been provided under Straight Line Method at the
rates prescribed in Schedule XIV to the Companies Act, 1956 prorated to
the number of days used during the year in accordance with the
provisions of Section 205 (2)(b) of Act. In respect of assets costing
Rs.5,000/- or less hundred percent depreciation is provided.
iv) Valuation of Inventories :-
Valued at lower of cost and net realizable value
a) Raw Material and Components are valued using Weighted Average Cost.
b) Cost of finished goods are determined as cost of raw material and
other manufacturing cost on historical basis inclusive of excise duty
wherever applicable.
c) In respect of semi-finished goods cost is taken as cost of the
materials and other cost of manufacture upto the various stages of
completion.
d) Stores and spares are valued at cost on First in First Out basis.
v) Foreign currency transactions:
Foreign currency transactions are recorded at the rate of exchange
prevailing on the date of respective transactions. Resultant gain or
loss at the time of realization/payment/restatement is charged to
Profit & Loss A/c. The carrying value of foreign currency assets and
liabilities are restated at the year end rates.
vi) Impairment of Assets :
Impairment in the value of fixed assets is recognized to the extent
that the recoverable amount of an asset is less than its carrying value
and will be charged to Profit & Loss account as prescribed by ICAI in
AS 28.
vii) a) The Company has set up an Employees Group Gratuity Trust Fund
under Group Gratuity (Cash Accumulation) Scheme of Life Insurance
Corporation of India. Provision has been made for payment of Gratuity
up to 31.03.2010 based on actuarial valuation.
b) The Company also provides benefits in the form of leave encashment
and medical reimburse- ment. Necessary provision has been made in the
books of account.
viii) Taxation:
Provision for taxation is made in terms of the Income tax Act, 1961 in
respect of Income liable to tax at either special or normal rates.In
accordance with the Accounting Standard 22, the deferred tax for the
timing differences between the book profits and taxable income for the
year is accounted for, using the tax rates substantively enacted as of
the balance sheet date.
ix) The value of Power Generated by Wind Energy Generators and exported
to the Grid is treated as reduction in the power charges to the extent
it is adjusted in the bills by the TNEB and the excess, if any as sale
of electricity.
x) Lease Rent :
The Companys leasing arrangements are operating lease and cancelable
in future. The lease rentals paid or received under such agreements are
accounted in Profit and Loss Account.
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