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Accounting Policies of Mawana Sugars Ltd. Company
Mar 31, 2025
1. Company Overview
Mawana Sugars Limited (âthe Companyâ) is a public limited Company domiciled and incorporated in India under the provisions of the Companies Act, 2013. Its shares are listed on two recognized stock exchanges in India. The registered office of the Company is situated at 5th floor, Kirti Mahal, 19 Rajendra Place, New Delhi 110008. As at March 31, 2025, Mr. Krishna Shriram (including shares held as trustee of Enterprise Trust) owns 63.49% of equity share capital of the Company.
Major products along with principal places of business of the Company are as under:
|
Products |
Principal Places |
|
Sugar (Sugar and Power) |
Mawana Sugars Works, Uttar Pradesh Nanglamal Sugar Complex, Uttar Pradesh |
|
Industrial Alcohol (Ethanol) |
Nanglamal Sugar Complex, Uttar Pradesh |
The standalone financial statements were approved by the Board of Directors and authorised for issue on May 24, 2025. 2. Material accounting policies
The accounting policies, as set out below, have been consistently applied, by the Company, to all the years presented in the financial statements.
The separate financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the financial statement.
The financial statements have been prepared on an accrual basis and under the historical cost basis, except for the following assets and liabilities which have been measured at fair value- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments),
- Defined benefit plans - plan assets measured at fair value,
- Investment in other debt instruments (i.e. preference shares)
The preparation of financial statements requires the use of certain significant accounting estimates and judgements. It also requires the management to exercise judgement in applying the Companyâs accounting policies. The areas where estimates are significant to the standalone financial statements, or areas involving a higher degree of judgement or complexity, are disclosed in note 2.3.
All the amounts included in the financial statements are reported in crore of Indian Rupees (âRupeesâ or âRs.â), except number of shares, face value of share, earning per share or wherever otherwise indicated.
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standard) Amendment Rules 2024, to amend the following Ind AS which are effective from April 01, 2024.
(i) Insurance Contracts - Ind AS 117
The Ministry of Corporate Affairs (MCA) notified the Ind AS 117, Insurance Contracts, vide notification dated August 12, 2024, under the Companies (Indian Accounting Standards) Amendment Rules, 2024, which is effective from annual reporting periods beginning on or after April 01, 2024.
Ind AS 117 Insurance Contracts is a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. Ind AS 117 replaces Ind AS 104 Insurance Contracts. Ind AS 117 applies to all types of insurance contracts, regardless of the type of entities that issue them as well as to certain guarantees and financial instruments with discretionary participation features; a few scope exceptions will apply. Ind AS 117 is based on a general model, supplemented by:
⢠A specific adaptation for contracts with direct participation features (the variable fee approach)
⢠A simplified approach (the premium allocation approach) mainly for short-duration contracts
The application of Ind AS 117 does not have material impact on the Companyâs separate financial statements as the Company has not entered any contracts in insurance contracts covered under Ind AS 117.
(ii) Lease Liability in a Sale and Leaseback - Amendments to Ind AS 116
The MCA notified the Companies (Indian Accounting Standards) Second Amendment Rules, 2024, which amend Ind AS 116, Leases, with respect to Lease Liability in a Sale and Leaseback.
The amendment specifies the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction, to ensure the seller-lessee does not recognise any amount of the gain or loss that relates to the right of use it retains.
The amendment is effective for annual reporting periods beginning on or after April 01,2024 and must be applied retrospectively to sale and leaseback transactions entered into after the date of initial application of Ind AS 116.
The amendments do not have a material impact on the Companyâs financial statements.
Apart from these, consequential amendments and editorials have been made to other Ind AS like Ind AS 1, Ind AS 7 and Ind AS 107.
2.2 Summary of Material Accounting Policies
(i) Basis of classification of Current and non-current
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
(ii) Foreign currencies
(a) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (âfunctional currencyâ).
The financial statements are presented in Indian Rupees which is the functional and presentation currency of the Company.
(b) Initial recognition
Transactions in foreign currencies are initially recorded in the functional currency at the spot exchange rates prevailing at the date of the transaction when it first qualifies for recognition.
(c) Translation on reporting date
Foreign currency monetary items are translated using the functional currency spot rates of exchange at the reporting date. Non-monetary items that are measured in terms of historical cost denominated in a foreign currency are translated using the exchange rate at the date of the initial transaction.
(d) Exchange differences
Exchange differences arising on translation or settlement of monetary items are recognised in the statement of profit and loss.
(iii) Fair value measurement
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 participantâs 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, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised 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
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement
is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Companyâs management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for distribution in discontinued operation.
External valuers are involved for valuation of significant assets, and significant liabilities, if any.
At each reporting date, the management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Companyâs accounting policies. For this analysis, the management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The management, in conjunction with the Companyâs external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
(iv) Revenue from contracts with customer
Revenue from sale of goods is recognised at the point in time when control of the goods is transferred to the customer, generally on delivery of the goods. The normal credit term is around 30 days upon delivery. The Company has concluded that it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to the customer.
Revenue from sale of power is recognised on a basis as per the contract terms based on actual power sold for the year. The normal credit term is 7 to 60 days upon delivery.
In determining the transaction price for sale of goods, the Company considers the effect of variable consideration, the existence of significant financing components and consideration payable to the customer (if any).
If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods and services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Contract balancesContract assets
A contract asset is initially recognized for revenue earned from sale of goods because the receipt of consideration is conditional on successful completion when control of the goods is transferred to the customer, generally on delivery of the goods. Upon delivery of goods and acceptance by the customer, the amount recognized as contract assets is reclassified to trade receivables.
Contract assets are subject to impairment assessment. Refer to accounting policies on impairment of financial assets in section (xx)(e) Financial instruments - initial recognition and subsequent measurement.
A receivable represents the Companyâs right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section (xx)(a) Financial instruments - initial recognition and subsequent measurement.
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.
The Company pays sales commission to agents for each contract that they obtain for sale of goods. The Company has elected to apply the optional practical expedient for costs to obtain a contract which allows the Company to immediately expense sales commission (included under other expenses) because the amortisation period of the asset that the Company otherwise would have used is one year or less.
(v) Government grant
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.
When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. The loan or assistance is initially recognised and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
The Company receives interest subvention from the government on the loans which are availed at market rate of interest from the Banks. The interest subvention is netted off from the interest expenses.
For the outstanding loans received from the Government at the interest rate below the current market rates, is recognised at carrying value of previous GAAP as on date of transition on account of mandatory exemption available for the first time adoption under IndAS 01.
(vi) Taxes
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 recognised outside profit and loss is recognised outside profit and loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity. 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. The Company shall reflect the effect of uncertainty for each uncertain tax treatment by using either most likely method or expected value method, depending on which method predicts better resolution of the treatment.
Deferred Tax
Deferred tax is recognised using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses, if any. Deferred tax assets are recognized 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 utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.
The Company offsets deferred tax assets and deferred tax liabilities if and only if a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities related to income taxes levied by the same taxation authorities.
Goods and Service tax (GST)/Sales/Value added taxes on acquisition of assets or on incurring expenses:
When GST amount incurred on purchase of assets or services is not recoverable from the taxation authority, the GST paid is recognised as part of cost of acquisition of the asset or part of the expense item, as applicable. Otherwise, expenses and assets are recognised net of the amount of GST paid. The net amount of GST recoverable from or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
(vii) Property, plant and equipment (âPPEâ)
On transition to Ind AS i.e. April 1,2016, the Company had elected to continue with the carrying value of all its property, plant and equipment (PPE) recognized as at the transition date measured as per the Indian GAAP and use that carrying value as the deemed cost of the PPE.
An item of PPE is recognised as an asset, if and only if, it is probable that the future economic benefits associated with the item will flow to the Company and its cost can be measured reliably.
PPE are initially recognised at cost, net of accumulated depreciation and accumulated impairment loss, if any. Capital work in progress is stated at cost, net of impairment loss, if any. Cost comprises the purchase price, including import duties and non- refundable purchase taxes, and any directly attributable cost of bringing the asset to its working condition for its intended use Such cost includes borrowing costs for long-term construction projects if the recognition criteria are met.
Subsequent expenditure related to an item of property, plant and equipment is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance., Freehold land is carried at historical cost. When significant parts are required to be replaced at regular intervals, the Company recognises such parts as separate component of assets and depreciates separately based on their specific useful life. When an item of PPE is replaced, then its carrying amount is de-recognised and cost of the new item of PPE is recognised.
Items of stores and spares that meet the definition of PPE are capitalized at cost. Otherwise, such items are classified as inventories. They are depreciated over the remaining useful life of related plant and equipment or useful life of insurance/capital/ critical spares, whichever is lower.
The expenditure those are incurred after the item of PPE has been put to use, such as repairs and maintenance, are charged to the statement of profit and loss in the period in which such costs are incurred. However, in situations where such expenditure can be measured reliably, and is probable that future economic benefits associated with it will flow to the Company, it is included in the assetâs carrying value or as a separate asset, as appropriate.
Depreciation on property, plant and equipment is provided on written down value basis using the rates as specified in Part C of Schedule II of the Companies Act, 2013, as set out below:
|
Assets |
Useful life (Years) |
|
Buildings (including Roads) |
5-60 |
|
Plant & Equipment |
10-40 |
|
Office Equipment (including Data Processing Equipment) |
3-6 |
|
Furniture and Fixtures |
10 |
|
Motor Vehicles |
8 |
|
The management has estimated the useful life of following assets is different from those indicated in Schedule II: |
|
|
Assets |
Useful life (Years) |
|
Building-Green house type shed of Bio-compost yard |
25 |
|
Building-Polythene membrane |
5 |
|
Components of certain plant and equipment |
3 to 15 |
The useful lives, residual values and depreciation method of PPE are reviewed, and adjusted appropriately, at each reporting date. The effect of any change in the estimated useful lives, residual values and / or depreciation method are accounted for prospectively, and accordingly the depreciation is calculated over the PPEâs remaining revised useful life. The cost and the accumulated depreciation for PPE sold, scrapped, retired or otherwise disposed off are de-recognised from the balance sheet and the resulting gains / (losses) are included in the statement of profit and loss within other expenses / other income.
The cost of capital work-in-progress is presented separately in the balance sheet.
(viii) Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets with finite lives are amortised on a written down value basis over the estimated useful economic life. The estimated useful life and amortisation method are reviewed at the end of each reporting period.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised on the straight-line method as per the useful life assessed based on expected future benefit, taking into account the nature of the asset, the estimated usage of the asset:
|
As per management estimate |
|
|
Software |
3 years |
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
|
As per management estimate |
|
|
Brand |
indefinite |
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss. when the asset is derecognised.
(ix) Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitâs (CGU) fair value less costs to sell and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
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. In determining fair value less costs of disposal, recent market transactions are taken into account, if available, and if no such transactions can be identified, an appropriate valuation model is used.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Companyâs CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. Impairment losses, if any, are recognized in Statement of Profit and Loss as a component of depreciation and amortisation expense.
Impairment losses of continuing operations, including impairment on inventories, are recognized in the statement of profit and loss.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the assetâs or CGUâs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the assetâs recoverable amount since the last impairment loss was recognised. The reversal is limited to the extent the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognized in the statement of profit and loss when the asset is carried at the revalued amount, in which case the reverse is treated as a revaluation increase.
(x) Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term taken from related parties leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
i) Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date. Right-of-use assets are depreciated on a straight-line basis from the commencement date over the shorter of the lease term and the estimated useful lives of the assets.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (ix) Impairment of non-financial assets.
ii) Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments)
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. The cost and the accumulated depreciation for Right of use assts where the lease gets matured or disposed off before maturity are de-recognised from the balance sheet and the resulting gains / (losses) are included in the statement of profit and loss within other expenses / other income. Lease liabilities and Right-of-use assets have been presented as a separate line in the balance sheet. Lease payments have been classified as cash used in financing activities.
iii) Short-term leases except leases taken from related parties and leases of low-value assets
The Company has elected not to recognise right-of-use assets and lease liabilities for short term leases except leases taken from related parties of all assets that have a lease term of 12 months or less and leases of low-value assets. In case of lease contracts with related parties, there exist economic incentive for the Company to continue using the leased premises for a period longer than the 11 months and considering the contract is with the related parties, it does not foresee non-renewal of the lease term for future periods, thus basis the substance and economics of the arrangements, management believes that under Ind AS 116, the lease terms in the arrangements with related parties have been determined considering the period for which management has an economic incentive to use the leased asset (i.e. reasonable certain to use the asset for the said period of economic incentive). Such assessment of incremental period is based on management assessment of various factors including the remaining useful life of the asset as on the date of transition. The management has assessed period of arrangements with related parties as 2 years. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease.
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset is classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset, i.e., asset given on lease, and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
(xi) Inventories
Inventories are valued at the lower of cost and net realisable value.
The Cost is determined as follows:
(a) Stores and spares, Packing Materials, Raw Materials and Stock in trade: Moving weighted average method
(b) Work-in-progress: Material cost on weighted average method and appropriate manufacturing overheads is included on absorption costing basis.
(c) Finished goods (manufactured/produced): Material cost on weighted average method and appropriate manufacturing overheads is included on absorption costing.
(d) (i) By products (Bagasse,â Câ Heavy Molasses and Pressmud) included under raw materials, finished
goods and work-in-progress: Net realisable Value.
(ii) By products (B Heavy molasses) included under finished goods and work in progress, whose cost is not identifiable, are valued by allocating the costs between the products on the relative sales value of each product at the completion of the production, considering it as a rational and consistent basis.
Materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost includes the necessary cost incurred in bringing inventory to its present location and condition necessary for use.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
(xii) Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
(xiii) Non-Current Asset held for sale
The Company classifies non-current assets and disposal groups as held for sale/ distribution to owners if their carrying amounts will be recovered principally through a sale/ distribution rather than through continuing use. Actions required to complete the sale/ distribution should indicate that it is unlikely that significant changes to the sale/ distribution will be made or that the decision to sell/ distribute will be withdrawn. Management must be committed to the sale/ distribution expected within one year from the date of classification.
For these purposes, sale transactions include exchanges of non-current assets for other non-current assets when the exchange has commercial substance. The criteria for held for sale/ distribution classification is regarded met only when the assets or disposal group is available for immediate sale/ distribution in its present condition, subject only to terms that are usual and customary for sales/ distribution of such assets (or disposal groups), its sale/ distribution is highly probable; and it will genuinely be sold, not abandoned. The Company treats sale/ distribution of the asset or disposal group to be highly probable when:
⢠The appropriate level of management is committed to a plan to sell the asset (or disposal group),
⢠An active programme to locate a buyer and complete the plan has been initiated (if applicable),
⢠The asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
⢠The sale is expected to qualify for recognition as a completed sale within one year from the date of classification, and
⢠Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Non-current assets held for sale/for distribution to owners and disposal groups are measured at the lower of their carrying amount and the fair value less costs to sell/distribute. Assets and liabilities classified as held for sale/ distribution are presented separately in the balance sheet.
Property, plant and equipment and intangible assets once classified as held for sale/ distribution to owners are not depreciated or amortised.
(xiv) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production 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 include interest and amortization of ancillary cost incurred in connection with the arrangement of borrowing.
(xv) Contingent assets and liabilities
A contingent liability is a
(a) a present obligation that arises from past events but is not recognized because
- it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or
- the amount of the obligation cannot be measured with sufficient reliability.
The Company does not recognize a contingent liability but discloses its existence and other required disclosures in notes to the financial statements, unless the possibility of any outflow in settlement is remote
A contingent asset is a possible asset that arises 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 enterprise.
(xvi) Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders of the Company by the weighted average number of the equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, net profit or loss for the year attributable to equity shareholders of the Company and the weighted average number of shares outstanding during the year are adjusted for the effect of all dilutive potential equity shares.
(xvii) Employee benefits
The Companyâs employee benefits mainly include wages, salaries, bonuses, contribution to plans, defined benefit plans, compensated absences and share-based payments. The employee benefits are recognised in the year in which the associated services are rendered by the Company employees.
(a) Defined contribution plans
The Companyâs contribution to provident fund, pension scheme, employee state insurance corporation, etc. are considered as defined contribution plans and are recognised in profit or loss as and when the services are rendered by employees. The Company has no further obligations under these plans beyond its periodic contributions.
(b) Defined benefit plans
For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. The said plan requires a lump-sum payment to eligible employees (meeting the required vesting service condition) at retirement or termination of employment, based on a pre-defined formula.
The obligation towards the said benefits is recognised in the balance sheet, at the present value of the defined benefit obligations less the fair value of plan assets (being the funded portion). The present value of the said obligation is determined by discounting the estimated future cash outflows, using interest rates of government bonds.
The interest income / (expense) are calculated by applying the above mentioned discount rate to the plan assets and defined benefit obligations liability. The net interest income / (expense) on the net defined benefit liability is recognised in the statement of profit and loss. However, the related re-measurements of the net defined benefit liability are recognised directly in the other comprehensive income in the period in which they arise. The said re-measurements comprise of actuarial gains and losses (arising from experience adjustments and changes in actuarial assumptions), the return on plan assets (excluding interest). Remeasurements are not re-classified to the statement of profit and loss in any of the subsequent periods, however, included in retained earnings in the statement of change in equity and in the balance sheet.
(c) Compensated Absences Benefits
The employees of the Company are entitled to compensated absences. Compensated absences benefit comprises of encashment and availment of leave balances that were earned by the employees over the period of past employment. The Company provides for the liability towards the said benefit on the basis of actuarial valuation carried out annually as at the reporting date, using the projected-unit-credit method. The related re-measurements are recognised in the statement of profit and loss in the period in which they arise.
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 purpose. Such long term compensated absences are provided for based on actuarial valuation using the projected unit credit method at the year end. 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 noncurrent liability.
(xviii) Research and Development
Revenue Expenditure on research and development is expensed out under respective heads of account in the year in which it is incurred.
Development expenditure is recognised as an asset at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and asset is available for use. It is amortised over the period of expected future benefits.
(xix) Segment Reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
The Companyâs operating segments are established on the basis of those components of the Company that are evaluated regularly by the Board of Directors (âthe Chief Operating Decision Makerâ as defined in IND AS 108 - Operating Segments). These have been identified taking into account nature of products and services, the differing risks and returns and the internal business reporting systems. The analysis of geographical segments is based on the locations of customers.
(xx) 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.
(a) Financial assets
Initial recognition and measurement
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All the financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted for at trade date.
Non-derivative financial instruments
i) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and 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 outstanding.
ii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair value through profit or loss.
Investment in Subsidiaries and Associates
Investment in Subsidiaries and Associates is carried at deemed cost in the separate financial statements. Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
(b) Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through profit or loss. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate the fair value due to the short maturity of these instruments.
i) Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortization.
ii) Borrowings
On initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised 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 amortisation is included as finance costs in the statement of profit and loss.
(c) Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under IND AS 109. A financial liability (or a part of the financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expired.
(d) Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realized.
For all other financial instruments the carrying amounts approximate fair value due to the short maturity of those instruments
(e) Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized as an impairment gain or loss in statement of profit or loss.
(f) Reclassification
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Companyâs senior management determines change in the business model as a result of external or internal changes which are significant to the Companyâs operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
(g) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the standalone balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
(xxi) Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits and liquid fund investments with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
(xxii) Dividend
The Company recognises a liability to make distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
(xxiii) Business Combinations
Business combinations are accounted for using the acquisition method as prescribed under Ind AS 103 -Business Combinations. The cost of a business combination is measured as the aggregate of the consideration transferred, measured at acquisition-date fair values, and the amount of any non-controlling interest in the acquiree. The Company measures non-controlling interest either at fair value or at the proportionate share of the acquireeâs identifiable net assets on a transaction-by-transaction basis.
The identifiable assets acquired, and liabilities assumed in a business combination are recognized at their acquisition-date fair values. Any goodwill arising from the business combination is initially measured as the excess of the aggregate of the consideration transferred, amount of non-controlling interest, and the fair value of any previously held equity interest in the acquiree over the net identifiable assets acquired. If the aggregate consideration is lower than the fair value of net assets acquired, the difference is recognized in Other Comprehensive Income and accumulated in Capital Reserve, subject to reassessment.
Acquisition-related costs are expensed in the period in which the costs are incurred and the services are received.
Business combinations involving entities or businesses under common control are accounted for using the pooling of interests method, whereby the assets and liabilities of the combining entities are reflected at their carrying amounts, and no goodwill is recognized. The difference, if any, between the consideration paid and the net assets acquired is recorded in capital reserve.
The management considering the relevant events after the reporting date has evaluated the likely impact of prevailing uncertainty relating to imposition or enhancement of reciprocal tariffs and believes that there are no material impact on the financial statement of the Company for the year ended March 31, 2025, however, the management will continue to monitor the situation from the perspective of potential impact of the operations of the Company.
2.3. Significant accounting judgements, estimates and assumptions
The preparation of the Companyâs financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
a) Contingencies
Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgments and the use of estimates regarding the outcome of future events.
b) Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation method is used. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the assetâs performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the Company.
c) Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. 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 taxab
Mar 31, 2024
1. Company Overview
Mawana Sugars Limited (âthe Company'') is a public limited Company domiciled and incorporated in India under the provisions of the Companies Act, 2013. Its shares are listed on two recognized stock exchanges in India. The registered office of the Company is situated at 5th floor, Kirti Mahal, 19 Rajendra Place, New Delhi 110008. As at March 31,2024, Mr. Krishna Shriram (including shares held as trustee of Enterprise Trust) owns 63.49% of equity share capital of the Company.
Major products along with principal places of business of the Company are as under:
|
Products |
Principal Places |
|
Sugar (Sugar and Power) |
Mawana Sugars Works, Uttar Pradesh Nanglamal Sugar Complex, Uttar Pradesh |
|
Industrial Alcohol (Ethanol) |
Nanglamal Sugar Complex, Uttar Pradesh |
The standalone financial statements were approved by the Board of Directors and authorised for issue on May 25, 2024.
2. Material accounting policies
The accounting policies, as set out below, have been consistently applied, by the Company, to all the years presented in the financial statements.
The separate financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the financial statement.
The financial statements have been prepared on an accrual basis and under the historical cost basis, except for the following assets and liabilities which have been measured at fair value- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments),
- Defined benefit plans - plan assets measured at fair value,
- Investment in other debt instruments (i.e. preference shares)
The preparation of financial statements requires the use of certain significant accounting estimates and judgements. It also requires the management to exercise judgement in applying the Company''s accounting policies. The areas where estimates are significant to the standalone financial statements, or areas involving a higher degree of judgement or complexity, are disclosed in note 2.3.
All the amounts included in the financial statements are reported in crore of Indian Rupees (âRupees'' or âRs.''), except number of shares, face value of share, earning per share or wherever otherwise indicated.
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standard) Amendment Rules 2023 dated March 23, 2023, to amend the following Ind AS which are effective from April 01,2023.
(i) Definition of Accounting Estimates - Amendments to Ind AS
The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. It has also been clarified how entities use measurement techniques and inputs to develop accounting estimates.
The amendments has no impact on the Company''s standalone financial statements.
(ii) Disclosure of Accounting Policies - Amendments to Ind AS 1
The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their âsignificant'' accounting policies with a requirement to disclose their âmaterial'' accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.
The amendments have an impact on the Company''s disclosures of accounting policies, but not on the measurement, recognition or presentation of any items in the Company''s financial statements.
(iii) Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to Ind AS 12
The amendments narrow the scope of the initial recognition exception under Ind AS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases.
The Company previously recognised for deferred tax on leases on a net basis. As a result of these amendments, the Company has recognised a separate deferred tax asset in relation to its lease liabilities and a deferred tax liability in relation to its right-of-use assets. Since, these balances qualify for offset as per the requirements of paragraph 74 of Ind AS 12, there is no impact in the balance sheet. There was also no impact on the opening retained earnings as at April 01,2023.
Apart from these, consequential amendments and editorials have been made to other Ind AS like Ind AS 101, Ind AS 102, Ind AS 103, Ind AS 107, Ind AS 109, Ind AS 115 and Ind AS 34.
2.2 Summary of Material Accounting Policies(i) Basis of classification of Current and non-current
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
(ii) Foreign currencies(a) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (âfunctional currency'').
The financial statements are presented in Indian Rupees which is the functional and presentation currency of the Company
Transactions in foreign currencies are initially recorded in the functional currency at the spot exchange rates prevailing at the date of the transaction when it first qualifies for recognition.
(c) Translation on reporting date
Foreign currency monetary items are translated using the functional currency spot rates of exchange at the reporting date. Non-monetary items that are measured in terms of historical cost denominated in a foreign currency are translated using the exchange rate at the date of the initial transaction.
(d) Exchange differences
Exchange differences arising on translation or settlement of monetary items are recognised in the statement of profit and loss
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, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised 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
-Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Company''s management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for distribution in discontinued operation.
External valuers are involved for valuation of significant assets, and significant liabilities, if any.
At each reporting date, the management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company''s accounting policies. For this analysis, the management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The management, in conjunction with the Company''s external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
(iv) Revenue from contracts with customer
Revenue from sale of goods is recognised at the point in time when control of the goods is transferred to the customer, generally on delivery of the goods. The normal credit term is around 30 days upon delivery. In determining the transaction price for sale of goods, the Company considers the effect of variable consideration, the existence of significant financing components and consideration payable to the customer (if any).
If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Some contracts, if any, for the sale of goods provide customers with a right of return and volume rebates. The rights of return and volume rebates give rise to variable consideration.
a) Right of return
Certain sales contract generally provide customer a right to return an item for a limited period of time. Revenue is recognized when goods are delivered at the customer''s premise and have been accepted by the customer. For contracts permitting the customer to return an item, revenue is recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Thus, the amount of revenue recognized is adjusted for expected returns, which are estimated based on the historical data for a specific type of customer. In these circumstances, a refund liability and a right to receive returned goods (and corresponding adjustment to cost of sales) are recognized. The entity measures right to receive returned goods at the carrying amount of the inventory sold less any expected costs to recover goods. The refund liability and return assets (right to receive returned goods) are resented separately on the face of the Balance Sheet. The Company reviews its estimate of expected returns at each reporting date and updates the amounts of the asset and liability accordingly.
b) Volume rebate
The Company provides retrospective volume rebates to certain customers once the quantity of products purchased during the period exceeds a threshold specified in the contract. Rebates are offset against amounts payable by the customer. To estimate the variable consideration for the expected future rebates, the Company applies the most likely amount method for contracts with a single-volume threshold and the expected value method for contracts with more than one volume threshold. The selected method that best predicts the amount of variable consideration is primarily driven by the number of volume thresholds contained in the contract. The Company then applies the requirements on constraining estimates of variable consideration and recognises a refund liability for the expected future rebates.
II) Significant financing component
Generally, the Company receives short-term advances from its customers. Using the practical expedient in Ind AS 115, the Company does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised goods to the customer and when the customer pays for that goods will be one year or less
III) Contract balances Contract assets
A contract asset is initially recognized for revenue earned from sale of goods because the receipt of consideration is conditional on successful completion when control of the goods is transferred to the customer, generally on delivery of the goods. Upon delivery of goods and acceptance by the customer,
the amount recognized as contract assets is reclassified to trade receivables.
Contract assets are subject to impairment assessment. Refer to accounting policies on impairment of financial assets in section (ix) Financial instruments - initial recognition and subsequent measurement.
A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section (xx) Financial instruments - initial recognition and subsequent measurement
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.
The Company pays sales commission to agents for each contract that they obtain for sale of goods. The Company has elected to apply the optional practical expedient for costs to obtain a contract which allows the Company to immediately expense sales commission (included under other expenses) because the amortisation period of the asset that the Company otherwise would have used is one year or less.
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset
When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. The loan or assistance is initially recognised and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
The Company receives interest subvention from the government on the loans which are availed at market rate of interest from the Banks. The interest subvention is netted off from the interest expenses.
For the outstanding loans received from the Government at the interest rate below the current market rates, is recognised at carrying value of previous GAAP as on date of transition on account of mandatory exemption available for the first time adoption under Ind AS 01.
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 recognised outside profit and loss is recognised outside profit and
loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity. 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. The Company shall reflect the effect of uncertainty for each uncertain tax treatment by using either most likely method or expected value method, depending on which method predicts better resolution of the treatment.
Deferred tax is recognised using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses, if any. Deferred tax assets are recognized 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 utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.
The Company offsests deferred tax assets and deferred tax liabilities if and only if a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities related to income taxes levied by the same taxation authorities.
Goods and Service tax (GST)/Sales/Value added taxes on acquisition of assets or on incurring expenses.
When GST amount incurred on purchase of assets or services is not recoverable from the taxation authority, the GST paid is recognised as part of cost of acquisition of the asset or part of the expense item, as applicable. Otherwise, expenses and assets are recognised net of the amount of GST paid. The net amount of GST recoverable from or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
(vii) Property, plant and equipment (âPPEâ)
On transition to Ind AS i.e. 1st April 2016, the Company had elected to continue with the carrying value of all its property, plant and equipment (PPE) recognized as at the transition date measured as per the Indian GAAP and use that carrying value as the deemed cost of the PPE.
An item of PPE is recognised as an asset, if and only if, it is probable that the future economic benefits associated with the item will flow to the Company and its cost can be measured reliably.
PPE are initially recognised at cost, net of accumulated depreciation and and accumulated impairment
loss, if any. Capital work in progress is stated at cost, net of impairment loss, if any. Cost comprises the purchase price, including import duties and non- refundable purchase taxes, and any directly attributable cost of bringing the asset to its working condition for its intended use Such cost includes borrowing costs for long-term construction projects if the recognition criteria are met.
Subsequent expenditure related to an item of property, plant and equipment is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance., Freehold land is carried at historical cost. When significant parts are required to be replaced at regular intervals, the Company recognises such parts as separate component of assets and depreciates separately based on their specific useful life. When an item of PPE is replaced, then its carrying amount is de-recognised and cost of the new item of PPE is recognised.
Items of stores and spares that meet the definition of PPE are capitalized at cost. Otherwise, such items are classified as inventories. They are depreciated over the remaining useful life of related plant and equipment or useful life of insurance/capital/ critical spares, whichever is lower.
The expenditure those are incurred after the item of PPE has been put to use, such as repairs and maintenance, are charged to the statement of profit and loss in the period in which such costs are incurred. However, in situations where such expenditure can be measured reliably, and is probable that future economic benefits associated with it will flow to the Company, it is included in the asset''s carrying value or as a separate asset, as appropriate.
Depreciation on property, plant and equipment is provided on written down value basis using the rates as specified in Part C of Schedule II of the Companies Act, 2013, as set out below:
|
Assets |
Useful life (Years) |
|
Buildings (including Roads) |
5-60 |
|
Plant & Equipment |
10-40 |
|
Office Equipment (including Data Processing Equipment) |
3-6 |
|
Furniture and Fixtures |
10 |
|
Motor Vehicles |
8 |
The management has estimated the useful life of following assets is different from those indicated in Schedule II:
|
Assets |
Useful life (Years) |
|
Building-Green house type shed of Bio-compost yard |
25 |
|
Building-Polythene membrane |
5 |
|
Components of certain plant and equipment |
3 to 15 |
The useful lives, residual values and depreciation method of PPE are reviewed, and adjusted appropriately, at each reporting date. The effect of any change in the estimated useful lives, residual values and / or depreciation method are accounted for prospectively, and accordingly the depreciation is calculated over the PPE''s remaining revised useful life. The cost and the accumulated depreciation for PPE sold, scrapped, retired or otherwise disposed off are de-recognised from the balance sheet and the resulting gains / (losses) are included in the statement of profit and loss within other expenses / other income.
The cost of capital work-in-progress is presented separately in the balance sheet.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets with finite lives are amortised on a written down value basis over the estimated useful economic life. The estimated useful life and amortisation method are reviewed at the end of each reporting period.
Intangible assets are amortised on the straight-line method as per the useful life assessed based on expected future benefit, taking into account the nature of the asset, the estimated usage of the asset:
|
As per management estimate |
|
|
Software |
- 3 years |
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss. when the asset is derecognised.
(ix) Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs to sell and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
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. In determining fair value less costs of disposal, recent market transactions are taken into account, if available, and if no such transactions can be identified, an appropriate valuation model is used.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. Impairment losses, if any, are recognized in Statement of Profit and Loss as a component of depreciation and amortisation expense.
Impairment losses of continuing operations, including impairment on inventories, are recognized in the statement of profit and loss.
After impairment, depreciation is avoided on the revised carrying amount of the asset over its remaining useful life.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited to the extent the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognized in the statement of profit and loss when the asset is carried at the revalued amount, in which case the reverse is treated as a revaluation increase.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company applies a single recognition and measurement approach for all leases, except for shortterm taken from related parties leases and leases of low-value assets. The Company recognises lease
liabilities to make lease payments and right-of-use assets representing the right to use the underlying
assets.
i) Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date. Right-of-use assets are depreciated on a straight-line basis from the commencement date over the shorter of the lease term and the estimated useful lives of the assets.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (ix) Impairment of non-financial assets.
ii) Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments)
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. The cost and the accumulated depreciation for Right of use assts where the lease gets matured or disposed off before maturity are de-recognised from the balance sheet and the resulting gains / (losses) are included in the statement of profit and loss within other expenses / other income. Lease liabilities and Right-of-use assets have been presented as a separate line in the balance sheet. Lease payments have been classified as cash used in financing activities.
iii) Short-term leases except leases taken from related parties and leases of low-value assets
The Company has elected not to recognise right-of-use assets and lease liabilities for short term leases except leases taken from related parties of all assets that have a lease term of 12 months or less and leases of low-value assets. In case of lease contracts with related parties, there exist economic incentive for the Company to continue using the leased premises for a period longer than the 11 months and considering the contract is with the related parties, it does not foresee non-renewal of the lease term for future periods, thus basis the substance and economics of the arrangements, management believes that under Ind AS 116, the lease terms in the arrangements with related parties have been determined considering the period for which management has an economic incentive to use the leased asset (i.e. reasonable certain to use the asset for the said period of economic incentive). Such assessment of incremental period is based on management assessment of various factors including the remaining useful life of the asset as on the date of transition. The management has assessed period of arrangements with related parties as 2 years. The Company recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease.
(xi) Inventories
Inventories are valued at the lower of cost and net realisable value.
The Cost is determined as follows:
(a) Stores and spares, Packing Materials, Raw Materials and Stock in trade: Moving weighted average method
(b) Work-in-progress: Material cost on weighted average method and appropriate manufacturing overheads is included on absorption costing basis.
(c) Finished goods (manufactured/produced): Material cost on weighted average method and appropriate manufacturing overheads is included on absorption costing.
(d) (i) By products (Bagasse,''C'' Heavy Molasses and Pressmud) included under raw materials,
finished goods and work-in-progress: Net realisable Value.
(ii) By products (B Heavy molasses) included under finished goods and work in progress, whose cost is not identifiable, are valued by allocating the costs between the products on the relative sales value of each product at the completion of the production, considering it as a rational and consistent basis.
Materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost includes the necessary cost incurred in bringing inventory to its present location and condition necessary for use.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement
(xiii) Non-Current Asset held for sale
The Company classifies non-current assets and disposal groups as held for sale/ distribution to owners if their carrying amounts will be recovered principally through a sale/ distribution rather than through continuing use. Actions required to complete the sale/ distribution should indicate that it is unlikely that significant changes to the sale/ distribution will be made or that the decision to sell/ distribute will be withdrawn. Management must be committed to the sale/ distribution expected within one year from the date of classification.
For these purposes, sale transactions include exchanges of non-current assets for other non-current assets when the exchange has commercial substance. The criteria for held for sale/ distribution classification is regarded met only when the assets or disposal group is available for immediate sale/ distribution in its present condition, subject only to terms that are usual and customary for sales/ distribution of such assets (or disposal groups), its sale/ distribution is highly probable; and it will genuinely be sold, not abandoned. The Company treats sale/ distribution of the asset or disposal group to be highly probable when:
⢠The appropriate level of management is committed to a plan to sell the asset (or disposal group),
⢠An active programme to locate a buyer and complete the plan has been initiated (if applicable),
⢠The asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value,,
⢠The sale is expected to qualify for recognition as a completed sale within one year from the date of classification, and
⢠Actions required to complete the plan indicate that it is unlikely that significant changes to the plan
will be made or that the plan will be withdrawn.
Non-current assets held for sale/for distribution to owners and disposal groups are measured at the lower of their carrying amount and the fair value less costs to sell/ distribute. Assets and liabilities classified as held for sale/ distribution are presented separately in the balance sheet.
Property, plant and equipment and intangible assets once classified as held for sale/ distribution to owners are not depreciated or amortised.
Borrowing costs directly attributable to the acquisition, construction or production 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 include interest and amortization of ancillary cost incurred in connection with the arrangement of borrowing.
(xv) Contingent assets and liabilities
A contingent liability is a possible obligation that arises from past events and 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 enterprise.
A contingent asset is a possible asset that arises 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 enterprise.
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders of the Company by the weighted average number of the equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, net profit or loss for the year attributable to equity shareholders of the Company and the weighted average number of shares outstanding during the year are adjusted for the effect of all dilutive potential equity shares.
The Company''s employee benefits mainly include wages, salaries, bonuses, contribution to plans, defined benefit plans, compensated absences and share-based payments. The employee benefits are recognised in the year in which the associated services are rendered by the Company employees.
(a) Defined contribution plans
The Company''s contribution to provident fund, pension scheme, employee state insurance corporation, etc. are considered as defined contribution plans and are recognised in profit or loss as and when the services are rendered by employees. The Company has no further obligations under these plans beyond its periodic contributions
For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. The said plan requires a lump-sum payment to eligible employees (meeting the required vesting service condition) at retirement or termination of employment, based on a pre-defined formula.
The obligation towards the said benefits is recognised in the balance sheet, at the present value of the defined benefit obligations less the fair value of plan assets (being the funded portion). The present value of the said obligation is determined by discounting the estimated future cash outflows, using interest rates of government bonds.
The interest income / (expense) are calculated by applying the above mentioned discount rate to the plan assets and defined benefit obligations liability. The net interest income / (expense) on the net defined benefit liability is recognised in the statement of profit and loss. However, the related remeasurements of the net defined benefit liability are recognised directly in the other comprehensive income in the period in which they arise. The said re-measurements comprise of actuarial gains and losses (arising from experience adjustments and changes in actuarial assumptions), the return on plan assets (excluding interest). Re-measurements are not re-classified to the statement of profit and loss in any of the subsequent periods, however, included in retained earnings in the statement of change in equity and in the balance sheet.
(c) Compensated Absences Benefits
The employees of the Company are entitled to compensated absences. Compensated absences benefit comprises of encashment and availment of leave balances that were earned by the employees over the period of past employment. The Company provides for the liability towards the said benefit on the basis of actuarial valuation carried out annually as at the reporting date, using the projected-unit-credit method. The related re-measurements are recognised in the statement of profit and loss in the period in which they arise.
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 purpose. Such long term compensated absences are provided for based on actuarial valuation using the projected unit credit method at the year end. 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.
(xviii) Research and Development
Revenue Expenditure on research and development is expensed out under respective heads of account in the year in which it is incurred.
Development expenditure is recognised as an asset at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and asset is available for use. It is amortised over the period of expected future benefits
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
The Company''s operating segments are established on the basis of those components of the Company that are evaluated regularly by the Board of Directors (âthe Chief Operating Decision Maker'' as defined in IND AS 108 - Operating Segments). These have been identified taking into account nature of products
and services, the differing risks and returns and the internal business reporting systems. The analysis of geographical segments is based on the locations of customers.
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.
(a) Financial assetsInitial recognition and measurement
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All the financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted for at trade date.
Non-derivative financial instruments
i) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and 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 outstanding.
ii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair value through profit or loss.
Investment in Subsidiaries and Associates
Investment in Subsidiaries and Associates is carried at deemed cost in the separate financial statements.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through profit or loss. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate the fair value due to the short maturity of these instruments.
i) Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortization.
On initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised 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 amortisation is included as finance costs in the statement of profit and loss.
(c) Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under IND AS 109. A financial liability (or a part of the financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expired.
(d) Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realized.
For all other financial instruments the carrying amounts approximate fair value due to the short maturity of those instruments
(e) Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized as an impairment gain or loss in statement of profit or loss.
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
(g) Offsetting of financial instrument
Financial assets and financial liabilities are offset and the net amount is reported in the standalone balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
(xxi) Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits and liquid fund investments with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
The Company recognises a liability to make cash distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity
2.3. Significant accounting judgements, estimates and assumptions
The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgments and the use of estimates regarding the outcome of future events
b) Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation method is used. The value in use calculation is based on a DCF model.
The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the Company.
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. 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.
d) Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and other post-employment medical benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting da
Mar 31, 2018
1.A. Summary of significant accounting policies
The accounting policies, as set out below, have been consistently applied, by the Company, to all the years presented in the financial statements.
(i) Basis of preparation
The separate financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standard) (Amendment) Rules, 2016. The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under Section 133 of the Companies Act 2013 (âthe Actâ).
The financial statements of the Company for all periods upto and including the year ended March 31, 2017 were prepared in accordance with accounting standards notified under Section 133 of the Companies Act, 2013 and Companies (Accounting Standard) Rules, 2006 (as amended), read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).
These financial statements for the year ended March 31, 2018 are the first financial statements of the Company prepared in accordance with Ind AS. Refer note 52 for an explanation of how the transition from previous GAAP (Indian GAAP) to Ind AS has affected the Company''s financial position, financial performance and cash flows.
The financial statements have been prepared on an accrual basis and under the historical cost basis, except for the following assets and liabilities which have been measured at fair value
- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments),
- Defined benefit plans - plan assets measured at fair value,
- Investment in other debt instruments (i.e. preference shares)
The preparation of financial statements requires the use of certain significant accounting estimates and judgements. It also requires the management to exercise judgement in applying the Company''s accounting policies. The areas where estimates are significant to the consolidated financial statements, or areas involving a higher degree of judgement or complexity, are disclosed in note 2B.
All the amounts included in the financial statements are reported in millions of Indian Rupees (âRupees'' or âRs.''), except per share data and unless stated otherwise and rounded off to nearest Rupees.
(ii) Basis of classification of Current and non-current
The Company presents assets and liabilities in the balance sheet based on current/non-current classification.
An asset has been classified as current when it is:
i) Expected to be realised in or intended to be sold or consumed in normal operating cycle
ii) Held primarily for the purpose of trading
iii) Expected to be realised within twelve months after the reporting period, or
iv) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability has been classified as current when:
i) It is expected to be settled in normal operating cycle
ii) It is held primarily for the purpose of trading
iii) It is due to be settled within twelve months after the reporting period, or
iv) There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current.
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
(iii) Foreign currencies
(a) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (âfunctional currency'').
The financial statements are presented in Indian Rupees which is the functional and presentation currency of the Company.
(b) Initial recognition
Transactions in foreign currencies are initially recorded in the functional currency at the spot exchange rates prevailing at the date of the transaction when it first qualifies for recognition.
(c) Translation on reporting date
Foreign currency monetary items are translated using the functional currency spot rates of exchange at the reporting date. Non-monetary items that are measured in terms of historical cost denominated in a foreign currency are translated using the exchange rate at the date of the initial transaction. Non-monetary items measured at fair value denominated in a foreign currency are, translated using the exchange rates that existed when the fair value was determined.
(d) Exchange differences
Exchange differences arising on translation or settlement of monetary items are recognised in the statement of profit and loss.
The equity items denominated in foreign currencies are translated at historical cost.
(iv) Fair value measurement
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, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised 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
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Company''s management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for distribution in discontinued operation.
External valuers are involved for valuation of significant assets, and significant liabilities, if any.
At each reporting date, the management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company''s accounting policies. For this analysis, the management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The management, in conjunction with the Company''s external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
(v) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made.
Revenue is measured at the fair value of the consideration received or receivable net of discounts, returns, rebates etc, taking into account contractually defined terms of payment. Revenue includes excise duty but excludes sales tax, value added tax and goods and service tax.
The following recognition criteria described below must also be met before revenue is recognised:
(a) Sale of goods is recognised when the significant risks and rewards of ownership of the goods have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. Revenue is measured net of returns, trade discounts and volume rebates, if any.
(b) Sale of power is recognized when the power is delivered by the Company at the delivery point in conformity with the parameters and technical limits and fulfilment of other conditions specified in the Power Purchase agreement. Sale of power is accounted for as per tariff specified in Power Purchase agreement.
(c) Renewable Energy Certificate (REC) is recognised as income on sale of REC.
(d) Interest income is recognized on a time proportion basis considering the amount outstanding and the rate applicable. For all debt instruments measured at amortized cost, interest income is recorded using the effective interest rate (EIR) method. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
(vi) Government grant
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.
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 i.e. by equal annual instalment. When loans or similar assistance are provided by governments or related institutions, with an interest rate below the current applicable market rate, the effect of this favourable interest is regarded as a government grant. The loan or assistance is initially recognised and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received. The loan is subsequently measured as per the accounting policy applicable to financial liabilities.
For the outstanding loans received from the Government at the interest rate below the current market rates, is recognized at carrying value of previous GAAP as on date of transition on account of mandatory exemption available for the first time adoption under Ind AS 101.
(vii) Income taxes
Tax expense comprises of current income tax and deferred tax. Current income tax expense are measured at the amount expected to be recovered from or paid to the taxation authorities in accordance with the Income Tax Act, 1961 enacted in India. 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 recognised outside profit and loss is recognised outside profit and loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
Deferred tax is recognised using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses, if any. Deferred tax assets are recognized 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 utilized
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities.
Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognises MAT credit available as an asset only to the extent there is reasonable certainty that the Company will pay normal tax during the specified period i.e the period for which the MAT credit is allowed to be carried forward. In the year in which the Company recognises MAT credit as an asset, the said asset is created by way of credit to the Statement of Profit and Loss and shown as âMAT credit entitlementâ and grouped under Deferred Tax Assets. The Company reviews the âMAT credit entitlementâ asset at each reporting date and writes down the asset to the extent the Company does not have reasonable certainty that it will pay normal tax during the specified period.
(viii) Property, plant and equipment (âPPEâ)
On transition to Ind AS i.e. 1st April 2016, the Company has elected to continue with the carrying value of all its property, plant and equipment (PPE) recognized as at 1st April 2016 measured as per the Indian GAAP and use that carrying value as the deemed cost of the PPE.
An item of PPE is recognised as an asset, if and only if, it is probable that the future economic benefits associated with the item will flow to the Company and its cost can be measured reliably.
Capital work in progress and PPE are initially recognised at cost. The initial cost of PPE comprises its purchase price (including non-refundable duties and taxes and excluding any trade discounts and rebates), and any directly attributable cost of bringing the asset to its working condition and location for its intended use.
Subsequent to initial recognition, freehold land is carried at historical cost and other items of PPE are stated at cost less accumulated depreciation and any impairment losses, if any. When significant parts are required to be replaced at regular intervals, the Company recognises such parts as separate component of assets and depreciates separately based on their specific useful life. When an item of PPE is replaced, then its carrying amount is de-recognised and cost of the new item of PPE is recognised.
Items of stores and spares that meet the definition of PPE are capitalized at cost. Otherwise, such items are classified as inventories. They are depreciated over the remaining useful life of related plant and equipment or useful life of insurance/capital/ critical spares, whichever is lower.
The expenditures those are incurred after the item of PPE has been put to use, such as repairs and maintenance, are charged to the statement of profit and loss in the period in which such costs are incurred. However, in situations where such expenditure can be measured reliably, and is probable that future economic benefits associated with it will flow to the Company, it is included in the asset''s carrying value or as a separate asset, as appropriate.
Depreciation on property, plant and equipment is provided on straight line basis using the rates as specified in Part C of Schedule II of the Companies Act, 2013, as set out below:
The useful lives, residual values and depreciation method of PPE are reviewed, and adjusted appropriately, at each reporting date. The effect of any change in the estimated useful lives, residual values and / or depreciation method are accounted for prospectively, and accordingly the depreciation is calculated over the PPE''s remaining revised useful life. The cost and the accumulated depreciation for PPE sold, scrapped, retired or otherwise disposed off are de-recognised from the balance sheet and the resulting gains / (losses) are included in the statement of profit and loss within other expenses / other income.
The cost of capital work-in-progress is presented separately in the balance sheet.
(ix) Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if available, and if no such transactions can be identified, an appropriate valuation model is used.
The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. Impairment losses, if any, are recognized in Statement of Profit and Loss as a component of depreciation and amortisation expense.
Impairment losses of continuing operations, including impairment on inventories, are recognized in the statement of profit and loss.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited to the extent the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognized in the statement of profit and loss when the asset is carried at the revalued amount, in which case the reverse is treated as a revaluation increase.
(x) Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to 1 April 2016, the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.
Company as a lessee
a) A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease. Finance leases are capitalised at the commencement of the lease at fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s general policy on the borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
b) Leases, where the lessor effectively retains substantially all the risks and rewards of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term, unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
(xi) Inventories
Inventories are valued at the lower of cost and net realisable value.
The Cost is determined as follows:
(a) Stores and spares, Packing Materials, Raw Materials: Moving weighted average method
(b) Work-in-progress: Material cost on weighted average method and appropriate manufacturing overheads is included on absorption costing basis.
(c) Finished goods (manufactured): Material cost on weighted average method and appropriate manufacturing overheads is included on absorption costing basis.
(d) By products included under finished goods: Net realisable Value
Materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost includes the necessary cost incurred in bringing inventory to its present location and condition necessary for use.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
(xii) Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost
(xiii) Non-Current Asset held for sale:
The Company classifies non-current assets and disposal groups as held for sale/ distribution to owners if their carrying amounts will be recovered principally through a sale/ distribution rather than through continuing use. Actions required to complete the sale/ distribution should indicate that it is unlikely that significant changes to the sale/ distribution will be made or that the decision to sell/ distribute will be withdrawn. Management must be committed to the sale/ distribution expected within one year from the date of classification.
For these purposes, sale transactions include exchanges of non-current assets for other non-current assets when the exchange has commercial substance. The criteria for held for sale/ distribution classification is regarded met only when the assets or disposal group is available for immediate sale/ distribution in its present condition, subject only to terms that are usual and customary for sales/ distribution of such assets (or disposal groups), its sale/ distribution is highly probable; and it will genuinely be sold, not abandoned. The Company treats sale/ distribution of the asset or disposal group to be highly probable when:
- The appropriate level of management is committed to a plan to sell the asset (or disposal group),
- An active programme to locate a buyer and complete the plan has been initiated (if applicable),
- The asset (or disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value,
- The sale is expected to qualify for recognition as a completed sale within one year from the date of classification , and
- Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
Non-current assets held for sale/for distribution to owners and disposal groups are measured at the lower of their carrying amount and the fair value less costs to sell/ distribute. Assets and liabilities classified as held for sale/ distribution are presented separately in the balance sheet.
Property, plant and equipment and intangible assets once classified as held for sale/ distribution to owners are not depreciated or amortised.
xiv) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production 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 include interest and amortization of ancillary cost incurred in connection with the arrangement of borrowing.
xv) Contingent assets and liabilities
A contingent liability is a possible obligation that arises from past events and 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 enterprise.
A contingent asset is a possible asset that arises 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 enterprise.
xvi) Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders of the Company by the weighted average number of the equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, net profit or loss for the year attributable to equity shareholders of the Company and the weighted average number of shares outstanding during the year are adjusted for the effect of all dilutive potential equity shares.
(xvii) Employee benefits
The Company''s employee benefits mainly include wages, salaries, bonuses, contribution to plans, defined benefit plans, compensated absences and share-based payments. The employee benefits are recognised in the year in which the associated services are rendered by the Company employees.
(a) Defined contribution plans
The Company''s contribution to provident fund, pension scheme, employee state insurance corporation, etc. are considered as defined contribution plans and are recognised in profit or loss as and when the services are rendered by employees. The Company has no further obligations under these plans beyond its periodic contributions.
(b) Defined benefit plans
For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. The said plan requires a lump-sum payment to eligible employees (meeting the required vesting service condition) at retirement or termination of employment, based on a pre-defined formula.
The obligation towards the said benefits is recognised in the balance sheet, at the present value of the defined benefit obligations less the fair value of plan assets (being the funded portion). The present value of the said obligation is determined by discounting the estimated future cash outflows, using interest rates of government bonds.
The interest income / (expense) are calculated by applying the above mentioned discount rate to the plan assets and defined benefit obligations liability. The net interest income / (expense) on the net defined benefit liability is recognised in the statement of profit and loss. However, the related re-measurements of the net defined benefit liability are recognised directly in the other comprehensive income in the period in which they arise. The said re-measurements comprise of actuarial gains and losses (arising from experience adjustments and changes in actuarial assumptions), the return on plan assets (excluding interest). Re-measurements are not re-classified to the statement of profit and loss in any of the subsequent periods, however, included in retained earnings in the statement of change in equity and in the balance sheet.
(c) Compensated Absences Benefits
The employees of the Company are entitled to compensated absences. Compensated absences benefit comprises of encashment and availment of leave balances that were earned by the employees over the period of past employment. The Company provides for the liability towards the said benefit on the basis of actuarial valuation carried out annually as at the reporting date, using the projected-unit-credit method. The related re-measurements are recognised in the statement of profit and loss in the period in which they arise.
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 purpose. Such long term compensated absences are provided for based on actuarial valuation using the projected unit credit method at the year end. 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.
(xviii) Research and Development
Revenue Expenditure on research and development is expensed out under respective heads of account in the year in which it is incurred.
Development expenditure is recognised as an asset at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and asset is available for use. It is amortised over the period of expected future benefits.
(xix) 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.
(a) Financial assets
Initial recognition and measurement
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All the financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value through profit or loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted for at trade date.
Subsequent measurement
Non-derivative financial instruments
i) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and 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 outstanding.
ii) Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates that are solely payments of principal and interest on principal amount outstanding. Further in cases where the Company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments the subsequent changes in fair value are recognized in other comprehensive income.
iii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair value through profit or loss.
(b) Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through profit or loss. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate the fair value due to the short maturity of these instruments.
i) Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortization.
ii) Borrowings
On initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised 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 amortisation is included as finance costs in the statement of profit and loss.
(c) Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under IND AS 109. A financial liability (or a part of the financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expired.
(d) Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realized.
For all other financial instruments the carrying amounts approximate fair value due to the short maturity of those instruments
(e) Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized as an impairment gain or loss in statement of profit or loss.
(f) Reclassification
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
(g) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the standalone balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
(xx) Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits and liquid fund investments with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
(xxi) Cash dividend
The Company recognises a liability to make cash distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
2.B. Significant accounting judgements, estimates and assumptions
The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
a) Contingencies
Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgments and the use of estimates regarding the outcome of future events.
b) Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the Company.
c) Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. 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.
d) Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and other post-employment medical benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds.
The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the respective countries.
Further details about gratuity obligations are given in note 34.
e) Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet 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 judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
Changes in assumptions about these factors could affect the reported fair value of financial instruments.
(f) Useful life of Property, plant and equipment
The management estimates the useful life and residual value of property, plant and equipment based on technical evaluation. These assumptions are reviewed at each reporting date.
3. Standards issued but not effective:
The amendments to standards that are issued, but not yet effective, up to the date of issuance of the financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.
The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and Companies (Indian Accounting Standards) Amendment Rules, 2018 amending the following standard:
Ind AS 115 Revenue from Contracts with Customers
Ind AS 115 was issued on 28 March 2018 and establishes a five-step model to account for revenue arising from contracts with customers. Under Ind AS 115, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The new revenue standard will supersede all current revenue recognition requirements under Ind AS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 April 2018. The Company plans to adopt the new standard on the required effective date using the full retrospective method.
The Company is in the process of making an assessment of the impact of Ind-AS 115 upon initial application, which is subject to changes arising from a more detailed ongoing analysis.
Mar 31, 2017
1. (A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Basis of accounting and preparation of financial statements:
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act 2013. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous period.
b) Use of Estimates:
The preparation of the financial statements in conformity with Indian GAAP requires the Management of the Company to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the years in which the results are known / materialize.
c) Fixed assets:
Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date.
Fixed assets acquired and put to use for project purpose are capitalized and depreciation thereon is included in the project cost till the project ready for its intended use.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.
d) Depreciation and amortization:
i. Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in the Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice.
ii. Depreciation is calculated on a pro-rata basis from the date of acquisition/ installation of the asset and in case of assets costing up to Rs. 5,000, each such asset is fully depreciated in the year of purchase.
e) Investments:
Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments includes acquisition charges such as brokerage, fees and duties.
f) Inventories:
Inventories are valued at lower of cost and net realizable value.
Cost of inventory is ascertained on the âweighted average'' basis. Further, in respect of manufactured inventories i.e. process stocks and finished goods, an appropriate share of manufacturing expenses is included on absorption costing basis including excise duty.
g) Revenue recognition:
Sale of goods is recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the dispatch of goods to customers. Sales include excise duty but exclude sales tax and value added tax.
Renewable Energy Certificate (REC) is to be recognized as income on sale of REC.
h) Research and development expenditure:
Revenue expenditure on research and development is expensed out under the respective heads of account in the year in which it is incurred.
i) Employee benefits:
Defined contribution plans
The Company''s contribution to provident fund, pension scheme, employee state insurance corporation, etc. are considered as defined contribution plans and are charged as an expense as it falls due based on the amount of contribution required to be made and when services are rendered by the employees. For the provident fund trusts administrated by the Company, it is liable to meet the shortfall, if any, in payment of interest at the rates prescribed by the Central Government and is recognized in the financial year of actual payment.
Defined benefit plans
For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognized in the statement of profit and loss in the year in which they occur. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.
Long-term employee benefits
Compensated absences which are not expected to occur within twelve months after the end of the year in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the balance sheet date. Long Service Awards are recognized as a liability at the present value of the defined benefit obligation as at the balance sheet date.
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service.
j) Taxes on Income:
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the balance sheet when it is probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one year and are capable of reversal in one or more subsequent years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability.
k) Foreign exchange transactions:
Initial recognition
Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet date
Foreign currency monetary items (i.e. receivables, payables, loans etc) of the Company outstanding at the Balance Sheet date are restated at the year-end rates.
Treatment of exchange differences
The exchange differences arising on the settlement of monetary items or on reporting these items at rates different from rates at which these were initially recorded/reported in previous financial statements are recognized as income/ expense in the year in which they arise.
Accounting of forward contracts
In case of forward contracts, the premium or discount arising at the inception of such contracts is amortized as income or expense over the life of the contract. Further exchange difference on such contracts i.e. difference between the exchange rate at the reporting/settlement date and the exchange rate on the date of inception of contract/the last reporting date, is recognized as income/expense during the year.
l) Pre-operative expenses:
Pre-operative expenses, pending allocation represents indirect expenditure incurred during the construction years which are allocated to capital/revenue on commissioning of the project.
m) Operating Lease:
Operating Lease receipts and payments are recognized as income or expense in the Statement of Profit and Loss on a systematic basis over the lease term.
n) Cash flow statement:
Cash flows are reported using the indirect method, whereby profit/(loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
o) Earnings per share:
Basic earnings per share are computed by dividing the profit/(loss) after tax by the weighted average number of equity shares outstanding during the period. 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 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.
p) Impairment of assets:
The carrying values of assets/cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset in earlier accounting years no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss.
q) Provisions and contingencies:
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the âNotes to the financial statements''.
r) Operating cycle:
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Dec 31, 2014
A) Basis of accounting and preparation of financial statements:
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
Section 211(3C) of the Companies Act, ("the 1956 Act") (which continue
to be applicable in respect of Section 133 of the Companies Act, 2013
("the 2013 Act") read with rule 7 of the Companies (Accounts) Rules,
2014) and the relevant provisions of the 1956 Act/ 2013 Act, as
applicable. The financial statements have been prepared on accrual
basis under the historical cost convention. The accounting policies
adopted in the preparation of the financial statements are consistent
with those followed in the previous year.
b) Use of Estimates:
The preparation of the financial statements in conformity with Indian
GAAP requires the Management of the Company to make estimates and
assumptions considered in the reported amounts of assets and
liabilities (including contingent liabilities) and the reported income
and expenses during the period. The Management believes that the
estimates used in preparation of the financial statements are prudent
and reasonable. Future results could differ due to these estimates and
the differences between the actual results and the estimates are
recognised in the periods in which the results are known / materialise.
c) Fixed assets:
Fixed assets are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets up
to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date.
Fixed assets acquired and put to use for project purpose are
capitalised and depreciation thereon is included in the project cost
till the project ready for its intended use.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
d) Depreciation and amortization:
i. The Company follows the straight-line method of depreciation
(SLM).
ii. The rates of depreciation charged on all fixed assets are those
specified in Schedule XIV to the Companies Act, 1956.
iii. On assets sold/discarded during the period, depreciation is
provided up to the date of sale/ discard.
iv. Depreciation is calculated on a pro-rata basis from the date of
acquisition/ installation of the asset and in case of assets costing up
to Rs. 5,000 each such asset is fully depreciated in the financial year
of purchase.
e) Investments:
Long-term investments are carried individually at cost less provision
for diminution, other than temporary, in the value of such investments.
Current investments are carried individually, at the lower of cost and
fair value. Cost of investments includes acquisition charges such as
brokerage, fees and duties.
f) Inventories:
Inventories are valued at lower of cost and net realisable value.
Cost of inventory is ascertained on the ''weighted average'' basis.
Further, in respect of manufactured inventories i.e. process stocks
and finished goods, an appropriate share of manufacturing expenses is
included on absorption costing basis including excise duty.
g) Revenue recognition:
Sale of goods are recognized, net of returns and trade discounts, on
transfer of significant risks and rewards of ownership to the buyer,
which generally coincides with the dispatch of goods to customers.
Sales include excise duty but exclude sales tax and value added tax.
Renewable Energy Certificate (REC) is to be recognised as income on
sale of REC.
h) Research and development expenditure:
Revenue expenditure on research and development is expensed out under
the respective heads of account in the year in which it is incurred.
i) Employee benefits:
Defined contribution plans
The Company''s contribution to provident fund, pension scheme, employee
state insurance corporation, etc. are considered as defined
contribution plans and are charged as an expense as it falls due based
on the amount of contribution required to be made and when services are
rendered by the employees.
Defined benefit plans
For defined benefit plans in the form of gratuity fund, the cost of
providing benefits is determined using the Projected Unit Credit
method, with actuarial valuations being carried out at each balance
sheet date. Actuarial gains and losses are recognised in the statement
of profit and loss in the period in which they occur. The retirement
benefit obligation recognised in the balance sheet represents the
present value of the defined benefit obligation, as reduced by the fair
value of scheme assets. Any asset resulting from this calculation is
limited to past service cost, plus the present value of available
refunds and reductions in future contributions to the schemes.
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognised
during the year when the employees render the service.
j) Taxes on Income:
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the balance sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets.
k) Foreign exchange transactions:
Initial recognition
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date
Foreign currency monetary items (i.e. receivables, payables, loans etc)
of the Company outstanding at the Balance Sheet date are restated at
the year-end rates.
Treatment of exchange differences
The exchange differences arising on the settlement of monetary items or
on reporting these items at rates different from rates at which these
were initially recorded/reported in previous financial statements are
recognised as income/ expense in the financial year in which they
arise.
Accounting of forward contracts
In case of forward contracts, the premium or discount arising at the
inception of such contracts is amortised as income or expense over the
life of the contract. Further exchange difference on such contracts
i.e. difference between the exchange rate at the reporting/settlement
date and the exchange rate on the date of inception of contract/the
last reporting date, is recognised as income/expense during the period.
l) Pre-operative expenses:
Pre-operative expenses, pending allocation represents indirect
expenditure incurred during the construction periods which are
allocated to capital/revenue on commissioning of the project.
m) Operating Lease:
Operating Lease receipts and payments are recognized as income or
expense in the Statement of Profit and Loss on a Systematic basis over
the lease term.
n) Cash flow statement:
Cash flows are reported using the indirect method, whereby profit /
(loss) before tax is adjusted for the effects of transactions of
non-cash nature and any deferrals or accruals of past or future cash
receipts or payments. The cash flows from operating, investing and
financing activities of the Company are segregated based on the
available information.
o) Earnings per share:
Basic earnings per share are computed by dividing the profit / (loss)
after tax 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 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.
p) Impairment of assets:
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognized for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss.
q) Provisions and contingencies:
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the ''Notes to the financial statements''.
r) Operating cycle:
Based on the nature of products / activities of the Company and the
normal time between acquisition of assets and their realisation in cash
or cash equivalents, the Company has determined its operating cycle as
12 months for the purpose of classification of its assets and
liabilities as current and non-current.
Sep 30, 2013
A) Basis of accounting and preparation of fnancial statements:
The fnancial statements of the Company have been prepared in accordance
with the Generally Accepted Accounting Principles in India (Indian
GAAP) to comply with the Accounting Standards notifed under the
Companies (Accounting Standards) Rules, 2006 (as amended and which
continue to be applicable in respect of Section 133 of the Companies
Act, 2013 in terms of General Circular 15/2013 dated 13 September 2013
of the Ministry of Corporate Affairs) and the relevant provisions of
the Companies Act, 1956. The fnancial statements have been prepared on
accrual basis under the historical cost convention. The accounting
policies adopted in the preparation of the fnancial statements are
consistent with those followed in the previous period.
b) Use of Estimates:
The preparation of the fnancial statements in conformity with Indian
GAAP requires the Management of the Company to make estimates and
assumptions considered in the reported amounts of assets and
liabilities (including contingent liabilities) and the reported income
and expenses during the fnancial year. The Management believes that the
estimates used in preparation of the fnancial statements are prudent
and reasonable. Future results could differ due to these estimates and
the differences between the actual results and the estimates are
recognised in the periods in which the results are known / materialise.
c) Fixed assets:
Fixed assets are stated at cost of acquisition/ construction less
accumulated depreciation. The cost includes all pre- operative expenses
relating to construction period in the case of new projects and
expansion of existing factories.
d) Depreciation and amortization:
i. The Company follows the straight-line method of depreciation (SLM).
ii. The rates of depreciation charged on all fxed assets are those
specifed in Schedule XIV to the Companies Act, 1956. iii. On assets
sold/discarded during the fnancial year, depreciation is provided up to
the date of sale/ discard. i v. Depreciation is calculated on a
pro-rata basis from the date of acquisition/ installation of the asset
and in case of assets costing up to Rs. 5,000 each such asset is fully
depreciated in the fnancial year of purchase.
e) Investments:
Long-term investments are carried individually at cost less provision
for diminution, other than temporary, in the value of such investments.
Costs of investments include acquisition charges such as brokerage,
fees and duties.
f) Inventories:
Stores and spares are valued at cost or under.
Raw materials, components, work-in-progress and fnished goods are
valued at lower of cost and net realisable value.
Cost of inventory is ascertained on the ''weighted average'' basis.
Further, in respect of manufactured inventories i.e. process stocks and
fnished goods, an appropriate share of manufacturing expenses is
included on absorption costing basis including excise duty.
g) Revenue recognition:
Sale of goods is recognised at the point of despatch of fnished goods
to customers. Sales are inclusive of excise duty and exclusive of sales
tax.
Income from Certifed Emission Reductions (CER) is recognized as income
on sale of CER''s.
h) Research and development expenditure:
Revenue expenditure on research and development is expensed out under
the respective heads of account in the period in which it is incurred.
i) Employee benefts:
Company''s contribution paid/payable during the fnancial year to
provident fund, superannuation fund and employees'' state insurance
corporation are recognised in the Statement of Proft and Loss. For the
provident fund trusts administrated by the Company, it is liable to
meet the shortfall, if any, in payment of interest at the rates
prescribed by the Central Government and is recognised in the fnancial
year of actual payment. Provision for gratuity and compensated absences
are determined on an actuarial basis at the end of fnancial year and
are charged to revenue.
j) Income-tax:
Provision for current taxation is ascertained on the basis of
assessable profts computed in accordance with the provisions of the
Income tax Act, 1961.
Deferred tax is recognised, subject to the consideration of prudence,
on timing differences, being the differences between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets are
recognised on unabsorbed depreciation and carry forward of losses based
on virtual certainty that suffcient future taxable income will be
available against which such deferred asset can be realized.
k) Foreign exchange transactions:
Transactions in foreign currency are recorded on initial recognition at
the exchange rates prevailing at the time of the transaction.
Monetary items (i.e. receivables, payables, loans etc) denominated in
foreign currency are reported using the closing exchange rate on each
balance sheet date.
The exchange differences arising on the settlement of monetary items or
on reporting these items at rates different from rates at which these
were initially recorded/reported in previous fnancial statements are
recognised as income/ expense in the fnancial year in which they arise.
In case of forward contracts, the premium or discount arising at the
inception of such contracts is amortised as income or expense over the
life of the contract. Further exchange difference on such contracts
i.e. difference between the exchange rate at the reporting/settlement
date and the exchange rate on the date of inception of contract / the
last reporting date, is recognised as income/expense during the period.
l) Share/Debenture issue expenses and premium on redemption of
debentures/ redeemable cumulative preference shares are written-off
against share premium account.
m) Pre-operative expenses:
Pre-operative expenses, pending allocation represents indirect
expenditure incurred during the construction period which are allocated
to capital / revenue on commissioning of the project.
n) Operating Lease:
Operating Lease receipts and payments are recognized as income or
expense in the Statement of Proft and Loss on a straight - line basis
over the lease term.
o) Cash fow statement:
Cash fows are reported using the indirect method, whereby proft /
(loss) before tax is adjusted for the effects of transactions of
non-cash nature and any deferrals or accruals of past or future cash
receipts or payments. The cash fows from operating, investing and
fnancing activities of the Company are segregated based on the
available information.
p) Earnings per share:
Basic earnings per share are computed by dividing the proft / (loss)
after tax by the weighted average number of equity shares outstanding
during the fnancial year. Diluted earnings per share is computed by
dividing the proft / (loss) after tax as adjusted for dividend,
interest and other charges to expense or income 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. Potential
equity shares are deemed to be dilutive only if their conversion to
equity shares would decrease the net proft per share.
q) Impairment of assets:
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash fows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognized for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Proft and Loss.
r) Provisions and contingencies:
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outfow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefts) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to refect the current best estimates. Contingent liabilities
are disclosed in the Notes.
s) Operating cycle:
Based on the nature of products / activities of the Company and the
normal time between acquisition of assets and their realisation in cash
or cash equivalents, the Company has determined its operating cycle as
12 months for the purpose of classifcation of its assets and
liabilities as current and non-current.
Mar 31, 2011
The financial statements have been prepared in accordance with
applicable Accounting Standards and relevant presentational
requirements of the Companies Act, 1956 and are based on the historical
cost convention. The significant accounting policies followed are
stated below:
(a) Fixed assets:
Fixed assets are stated at cost of acquisition/ construction less
accumulated depreciation. The cost includes all pre-operative expenses
relating to construction period in the case of new projects and
expansion of existing factories.
(b) Depreciation:
i. The Company follows the straight-line method of depreciation (SLM).
ii. The rates of depreciation charged on all fixed assets are those
specified in Schedule XIV to the Companies Act, 1956.
iii. On assets sold/discarded during the period/year, depreciation
is provided up to the date of sale/ discard.
iv. Depreciation is calculated on a pro-rata basis from the date of
acquisition/ installation of the asset and in case of assets costing
up to Rs. 5,000 each such asset is fully depreciated in the period/year
of purchase.
(c) Investments:
Long term investments valued at cost unless there is a decline in value
other than temporary.
(d) Inventories:
Stores and spares are valued at cost or under.
Raw materials, components, work-in-progress and finished goods are
valued at lower of cost and net realisable value.
Cost of inventory is ascertained on the 'weighted average' basis.
Further, in respect of manufactured inventories i.e. process stocks and
finished goods, an appropriate share of manufacturing expenses is
included on absorption costing basis including excise duty.
(e) Revenue recognition:
Sale of goods is recognised at the point of despatch of finished goods
to customers. Sales are inclusive of excise duty and exclusive of
sales tax.
Income from Certified Emission Reductions (CER) is recognized as income
on sale of CER's.
(f) Research and development expenditure:
Revenue expenditure on research and development is expensed out under
the respective heads of account in the period/year in which it is
incurred.
(g) Employee benefits:
Company's contribution paid/payable during the period/year to provident
fund, superannuation fund and employees' state insurance corporation
are recognised in the profit and loss. For the provident fund trusts
administrated by the Company, the Company is liable to meet the
shortfall, if any, in payment of interest at the rates prescribed by
the Central Government, such shortfall is recognised in the year of
actual payment. Provision for gratuity and compensated absences are
determined on an actuarial basis at the end of period/ year and are
charged to revenue each period/year.
(h) Income-tax:
Provision for current taxation is ascertained on the basis of
assessable profits computed in accordance with the provisions of the
Income tax Act, 1961.
Deferred tax is recognised, subject to the consideration of prudence,
on timing differences, being the differences between taxable income and
accounting income that originate in one period and are capable of being
reversal in one or more subsequent periods. Deferred Tax assets are
recognised on unabsorbed depreciation and-carry forward of losses based
on virtual certainty that sufficient future taxable income will be
available against which such deferred asset can be realized.
(i) Foreign exchange transactions:
Transactions in foreign currency are recorded on initial recognition at
the exchange rates prevailing at the time of the transaction.
Monetary items (i.e. receivables, payables, loans etc) denominated in
foreign currency are reported using the closing exchange rate on each
balance sheet date.
The exchange differences arising on the settlement of monetary items or
on reporting these items at rates different from rates at which these
were initially recorded/reported in previous financial statements are
recognised as income/expense in the period/year in which they arise.
In case of forward contracts, the premium or discount arising at the
inception of such contracts is amortised as income or expense over the
life of the contract. Further exchange difference on such contracts
i.e. difference between the exchange rate at the reporting/ settlement
date and the exchange rate on the date of inception of contract/the
last reporting date, is recognised as income/expense during the
period/year. (j) Share/Debenture issue expenses and premium on
redemption of debentures/ redeemable cumulative preference shares are
written- off against share premium account.
(k) Pre-operative expenses:
Pre-operative expenses, pending allocation represents indirect
expenditure incurred during the construction period which will be
allocated to capital/ revenue on commissioning of the project.
(I) Operating Lease:
Operating Lease receipts and payments are recognized as income or
expense in the profit and loss account on a straight - line basis over
the lease term.
(m) Use of Estimates
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balance of assets and liabilities, revenues and expenses and
disclosures relating to contingent liabilities. The management believes
that the estimates used in preparation of the financial statements are
prudent and reasonable. Future results could differ from these
estimates. Any revision to accounting estimates is recognised
prospectively in the current and future periods.
Sep 30, 2009
The financial statements have been prepared in accordance with
applicable Accounting Standards and relevant presentational
requirements of the Companies Act, 1956 and are based on the historical
cost convention. The significant accounting policies followed are
stated below:
(a) Fixed assets:
Fixed assets are stated at cost of acquisition/ construction less
accumulated depreciation. The cost includes all pre-operative expenses
relating to construction period in the case of new projects and
expansion of existing factories.
(b) Depreciation:
(i) The Company follows the straight-line method of depreciation (SLM).
(ii) The rates of depreciation charged on all fixed assets are those
specified in Schedule XIV to the Companies Act, 1956. (iii) On assets
sold/discarded during the year/period, depreciation is provided up to
the date of sale/ discard. (iv) Depreciation is calculated on a
pro-rata basis from the date of acquisition/ installation of the asset
and in case of assets costing up to Rs. 5,000 each such asset is fully
depreciated in the year/period of purchase.
(c) Investments:
Investments are stated at cost less provision for permanent diminution
in value of long-term investments, if any.
(d) Inventories:
Stores and spares are valued at cost or under.
Raw materials, components, work-in-progress and finished goods are
valued at lower of cost and net realisable value.
Cost of inventory is ascertained on the weighted average basis.
Further, in respect of manufactured inventories i.e. process stocks and
finished goods, an appropriate share of manufacturing expenses is
included on absorption costing basis including excise duty.
(e) Revenue recognition:
Sale of goods is recognised at the point of despatch of finished goods
to customers. Sales are inclusive of excise duty and exclusive of sales
tax.
Income from Certified Emission Reductions (CER) is recognized as income
on sale of CERs.
(f) Research and development expenditure:
Revenue expenditure on research and development is expensed out under
the respective heads of account in the year/period in which it is
incurred.
(g) Employee benefits:
Companys contribution paid/payable during the year/period to provident
fund, superannuation fund and employees state insurance corporation
are recognised in the profit and loss. For the provident fund trusts
administrated by the Company, the Company is liable to meet the
shortfall, if any, in payment of interest at the rates prescribed by
the Central Government, such shortfall is recognised in the year of
actual payment. Provision for gratuity and compensated absences are
determined on an actuarial basis at the end of year/ period and are
charged to revenue each year/period.
(h) Income-tax:
Provision for current taxation is ascertained on the basis of
assessable profits computed in accordance with the provisions of the
Income tax Act, 1961.
Deferred tax is recognised, subject to the consideration of prudence,
on timing differences, being the differences between taxable income and
accounting income that originate in one period and are capable of being
reversal in one or more subsequent periods. Deferred Tax assets are
recognised on unabsorbed depreciation and carry forward of losses based
on virtual certainty that sufficient future taxable income will be
available against which such deferred asset can be realized.
(i) Foreign exchange transactions:
Transactions in foreign currency are recorded on initial recognition at
the exchange rates prevailing at the time of the transaction.
Monetary items (i.e. receivables, payables, loans etc) denominated in
foreign currency are reported using the closing exchange rate on each
balance sheet date.
The exchange differences arising on the settlement of monetary items or
on reporting these items at rates different from rates at which these
were initially recorded/reported in previous financial statements are
recognised as income/expense in the year/period in which they arise.
In case of forward contracts, the premium or discount arising at the
inception of such contracts is amortised as income or expense over the
life of the contract. Further exchange difference on such contracts
i.e. difference between the exchange rate at the reporting/ settlement
date and the exchange rate on the date of inception of contract/the
last reporting date, is recognised as income/expense during the
year/period.
(j) Share/Debenture issue expenses and premium on redemption of
debentures/ redeemable cumulative preference shares are written- off
against share premium account.
(k) Pre-operative expenses:
Pre-operative expenses, pending allocation represents indirect
expenditure incurred during the construction period which will be
allocated to capital/ revenue on commissioning of the project.
(l) Operating Lease:
Operating Lease receipts and payments are recognized as income or
expense in the profit and loss account on a straight - line basis over
the lease term.
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Stocks To Buy Today, Dec 19: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Friday -
Stocks To Buy Today, Dec 18: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Thursday -
Stocks To Buy Today, Dec 17: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Wednesday -
Stocks To Buy Today, Dec 16: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Tuesday -
India Stock Market Weekly Review: Nifty and Sensex Fall as Caution Spreads -
Stocks To Buy Today, Dec 15: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Monday
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Stocks To Buy Today, Dec 12: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Friday -
Market Outlook 2026: Kotak Securities Sees Nifty 50 at 30,000; THESE 4 Sectors Lead Rally, Gold To Stay Strong -
Stocks To Buy Today, Dec 10: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Wednesday -
D-Street Bleeds For 2nd Day! Sensex Slumps 678 Pts; Nifty Cracks 25,800; Why Stock Market Is Falling Today? -
Stocks To Buy Today, Dec 9: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Tuesday -
Stocks To Buy Today, Dec 8: Top 4 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Monday -
Stock Market Alert! Major Pre-Open Session Change From Dec 8: Full Timings, Rules & All You Need To Know -
Bank Nifty Surges: RBI’s 25 bps Rate Cut Triggers Strong Upside in Major Banking Stocks -
Closing Bell: Sensex Ends 158 pts Higher, Nifty Climbs Above 26,000; Hero MotoCorp, HAL Up 2% Each -
Stocks To Buy Today, Dec 4: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Thursday
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