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Accounting Policies of National Plastic Industries Ltd. Company
Mar 31, 2025
A. CORPORATE INFORMATION
National Plastic Industries Limited (âthe Companyâ) is a listed entity incorporated in India.
The addresses of its registered office and principal place of business are disclosed in the introduction to the annual report.
B. MATERIAL ACCOUNTING POLICIESB.1 BASIS OF PREPARATION AND PRESENTATION
The financial statements have been prepared on the historical cost basis except for Defined Benefit Plan - Plan Assets which has been measured at fair value amount.
The financial statements of the Company have been prepared to comply with the Indian Accounting standards (âInd ASâ), including the rules notified under the relevant provisions of the Companies Act, 2013.
Companyâs financial statements are presented in Indian Rupees (RS), which is also its functional currency.
The financial statements of the Company have been prepared to comply with the Indian Accounting standards (âInd ASâ), including the rules notified under the relevant provisions of the Companies Act, 2013.
B.2 USE OF ESTIMATES AND JUDGEMENTS
The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures of contingent liabilities as at the date of the financial statements and the reported amounts of income and expense for the periods presented.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and future periods are affected.
Key sources of estimation of uncertainty at the date of the financial statement, which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are in respect of impairment of investments, useful lives of property, plant and equipment, valuation of deferred tax assets and fair value measurement of financial instruments, these are discussed below. Key sources of estimation of uncertainty in respect of revenue recognition, employee benefits and provisions and contingent liabilities have been discussed in their respective polices.
Useful lives of property, plant and equipment
The company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods.
Valuation of deferred tax assets
The Company reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy has been explained under note 2(i).
Fair value measurement of financial instruments
When the fair value 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 Discounted Cash Flow 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. Judgments include consideration of inputs such as liquidity risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
B.3 SUMMARY OF MATERIAL ACCOUNTING POLICIES
(a) Property, plant and equipment
Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets.
Subsequent costs are included in the assetâs carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Expenses incurred relating to construction of factory extension at Silvassa, Patna and Nellore during the construction stage prior to its intended use are disclosed under Capital Work - in - Progress.
|
Sr. |
Particular |
Useful Life |
||
|
No |
(in Years) |
|||
|
1 |
Land |
30 |
||
|
2 |
Buildings |
30 |
||
|
3 |
Plant & Machinery |
15 |
||
|
4 |
Dies & Moulds |
15 |
||
|
5 |
Furniture & Fixtures |
10 |
||
|
6 |
Vehicles |
8 |
||
|
7 |
Office Equipment |
8 |
||
|
8 |
Electrical Installation |
10 |
||
|
9 |
Others |
5 |
||
Depreciation on property, plant and equipment is provided using straight line method. Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Gains or losses arising from de-recognition of a property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.
(b) Leases
Effective from 1 April 2019, the Company has applied Ind AS 116, which replaces the existing lease standard, Ind AS 17 Leases and other interpretations. The Company has applied Ind AS 116 using the modified retrospective approach and has accordingly not restated the comparative information. The Company at the inception of a contract, assesses whether a contract, is or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Ind AS 116 introduces a single balance sheet lease accounting model for lessees. A lessee recognizes a right-of use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. The Company has elected not to recognizes right-of-use of assets and lease liabilities for short term leases that have a lease term of 12 months or less and leases of low value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight line basis over the lease term. Lessor accounting remains similar to the accounting under the previous standard i.e. lessor continues to classify leases as finance or operating lease. This policy is applied to contracts entered into, or changed, on or after 1 April 2019. For contracts entered into before 1 April 2019, 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.
As a lessee
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct cost incurred and an estimate of cost to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight line method from the commencement date to the earlier of the end of the useful life or the end of the lease term. The estimated useful life of the right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Companyâs incremental borrowing rate. The lease payments shall include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payment of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is re-measured to reflect any reassessment or modification, or if there are changes in insubstance fixed payments. When the lease liability is re-measured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero. On the Balance Sheet, right-of-use assets have been included in property, plant and equipment and lease liabilities have been included in borrowings and other financial liabilities.
In the comparative period, leases of property, plant and equipment where the Company, as lessee, had substantially all the risks and rewards of ownership was classified as finance leases. Finance leases are capitalized at the leaseâs inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Leases in which a significant portion of the risks and rewards of ownership was not transferred to the Company as lessee was classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) was charged to profit or loss on a straight-line basis over the period of the lease unless the payments was structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
Lease income from operating leases, where the Company is a lessor, is recognized in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflation.
(c) Inventory
Items of Inventories are measured at lower of cost and net realizable value after providing for obsolescence, if any, except in case of by-products which are valued at net realizable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads net of recoverable taxes incurred in bringing them to their respective present location and condition.
(d) Impairment of non-financial assets - property, plant and equipment and intangible assets
IND AS 36 on Impairment of Assets requires every company to test for the impairment of its PPE annually. Due to the nature of business and products of the Company, the molding process of production, the assets do not have a very high risk of impairment. Further Management has view that Molding machines do not get impaired on their own as they host the molds through which the molding of plastic and other products happen. Molds have a useful life in terms capacity of no of items to be produced. However, the Company maintains the molds very well as a result; the molds outlive their useful life.
(e) Provisions
Provisions are recognized 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.
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 recognized as a finance cost.
(f) Employee Benefits Expense 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 as an expense during the period when the employees render the services.
The Company pays gratuity to the employees whoever has completed five years of service with the Company at the time of resignation/superannuation. The gratuity is paid @15 daysâ salary for every completed year of service as per the Payment of Gratuity Act 1972.
The liability in respect of gratuity and other post-employment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employeesâ services.
Re-measurement of defined benefit plans in respect of post-employment are charged to the Other Comprehensive Income.
(g) Tax Expenses
The tax expense for the period comprises current and deferred tax. Tax is recognized in Statement of Profit and Loss, except to the extent that it relates to items recognized in the comprehensive income or in equity. In which case, the tax is also recognized in other comprehensive income or equity.
Current Tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the reporting period.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of Deferred tax liabilities and assets are reviewed at the end of each reporting period.
(h) Foreign currencies transactions and translation
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in Statement of Profit and Loss.
Effective from April 1, 2018, the Company has applied IND AS 115 which establishes a comprehensive framework for determining whether, how much and when the revenue is to be recognized. IND AS 115 replaces IND AS 18 Revenue and IND AS 11 Construction Contracts. Para D35 of IND AS 101 First Time Adoption of IND AS states that a first time adopter is not required to restate contracts that were completed before the earliest reporting period. Since Company does not have any kind of continuing contracts, the Company has adopted IND AS 115 using the prospective method.
IND AS 115 prescribes a five step model for revenue recognition;
1) Identifying the Contract with the Customer
2) Identifying the Performance Obligation
3) Determining the Transaction Price
4) Allocating the Transaction Price to the Performance Obligation
5) Recognizing the Revenue proportionately.
The Company earns revenue primarily from sale of household furniture.
Accordingly, revenue from domestic sale of goods is recognized when the performance obligations (i.e. delivery of the goods) are completed to the buyer.
Company follows industry practice of providing a right to return the defective products / parts and replaces the same. As required under the para 55 of IND AS 115, return liability has been recognized on the basis of expected returns which in turn have been computed on the basis of average returns of the Company over the past three years.
Revenue from export sale of goods is recognized when the performance obligations (i.e. loading of the goods on the vessel) are completed in case of Free on Board (FOB) contracts. In cases of Export sales under Cost including Freight contracts (CIF) Company recognizes the revenue as per the general industry practice (i.e. loading the goods on the vessel date). However, Company has ensured that the delivery of all the revenue recognized as at the reporting date have actually reached the desired destination before finalization of the accounts thereby ensuring the completeness of performance obligation.
Revenue from rendering of services is recognized when the performance of agreed contractual task has been completed.
Revenue from sale of goods is measured at the transaction price mutually decided at the time of execution of the contracts / Purchase Orders with the customers. The rates for the goods or services differ from customer to customer.
Revenue from operations includes sale of goods, services, goods and service tax (GST) and adjusted for discounts (net).
Interest income from a financial asset is recognized using effective interest rate method.
|
Significant Judgements in applying IND AS 115 |
|||
|
Timing of satisfaction of performance obligation |
Since the Company is purely in the business of sale of furniture the timing of satisfaction of the performance obligation is clearly the date on which the intended goods are delivered to the customer |
||
|
Timing of satisfaction of performance obligation (Export Sales) |
In case of FOB sales, the timing of satisfaction of performance obligation would be date of loading of the goods on the vessel. |
||
|
Timing of satisfaction of performance obligation (Export Sales) |
In case of CIF sales, Company has taken a judgement based on current industry practice to consider these transaction in same line as that of FOB sales. |
||
|
Transaction price & the amounts allocated to the performance obligations |
Individual contracts / purchase orders are executed with each customer categorically specifying the individual unit rate decided after mutual negotiations. |
||
|
Method of recognizing revenue |
Output Method |
||
|
Reason for selection of Output method |
As stipulated in Para B15, since the measurement of performance obligation can be directly evidenced, output method of revenue recognition is adopted. |
||
Grants received towards depreciable assets has been recognized as income over the period of useful life of the assets through which it is depreciated.
Grants received towards non depreciable assets has been recognized as income over the period in which expenses have been incurred to realize income from those assets.
(k) Financial instruments
i) Financial Assets
A. Initial recognition and measurement
All financial assets and liabilities are initially recognized at fair value. 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 adjusted to the fair value on initial recognition. Purchase and sale of financial assets are recognized using trade date accounting.
B. Subsequent measurement
a) Financial assets carried at amortized cost (AC)
A financial asset is 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 amount outstanding.
Impairment of financial assets
In accordance with Ind AS 109, the Company uses âExpected Credit Lossâ (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).
Expected credit losses are measured through a loss allowance at an amount equal to:
* The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
* Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument)
For trade receivables Company applies âsimplified approachâ which requires expected lifetime losses to be recognized from initial recognition of the receivables. The Company has its own adopted policy to determine impairment loss on the portfolio of trade receivables. At every reporting date this policy is reviewed and changes in the forward looking estimates are analyzed.
A. Initial recognition and measurement
All financial liabilities are recognized at fair value and in case of loans, net of directly attributable cost. Fees of recurring nature are directly recognized in the Statement of Profit and Loss as finance cost.
B. Subsequent measurement
Financial liabilities are carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
iii) De-recognition 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 de-recognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Companyâs Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
C. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the Companyâs financial statements requires management to make judgement, estimates and assumptions that affect the reported amount of revenue, expenses, assets and liabilities and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities.
a) Depreciation / amortization and useful lives of property plant and equipment / intangible assets
Property, plant and equipment / intangible assets are depreciated / amortized over their estimated useful lives, after taking into account estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation / amortization to be recorded during any reporting period. The useful lives and residual values are based on the Companyâs historical experience with similar assets and take into account anticipated technological changes. The depreciation / amortization for future periods is revised if there are significant changes from previous estimates.
b) Recoverability of trade receivable
Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.
c) Provisions
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
d) Impairment of non-financial assets
Due to the nature of business and products of the Company, the molding process of production, the assets do not have a very high risk of impairment. Further Management has view that Molds do not get impaired on their own as they host the molds through which the molding of plastic and other products happen. Molds have a useful life in terms capacity of no of items to be produced. However, the Company maintains the molds very well as a result; the molds outlive their useful life.
D. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES New and amended standards
* There have been no new Standards made applicable for the FY 2024-25 and as a result there is nothing to disclose under this section.
Mar 31, 2024
A. CORPORATE INFORMATION
National Plastic Industries Limited (âthe Companyâ) is a listed entity incorporated in India.
The addresses of its registered office and principal place of business are disclosed in the introduction to the annual report.
B. MATERIAL ACCOUNTING POLICIESB.1 BASIS OF PREPARATION AND PRESENTATION
The financial statements have been prepared on the historical cost basis except for Defined Benefit Plan - Plan Assets which has been measured at fair value amount.
The financial statements of the Company have been prepared to comply with the Indian Accounting standards (âInd AS''), including the rules notified under the relevant provisions of the Companies Act, 2013.
Company''s financial statements are presented in Indian Rupees (RS), which is also its functional currency.
The financial statements of the Company have been prepared to comply with the Indian Accounting standards (âInd AS''), including the rules notified under the relevant provisions of the Companies Act, 2013.
B.2 USE OF ESTIMATES AND JUDGEMENTS
The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures of contingent liabilities as at the date of the financial statements and the reported amounts of income and expense for the periods presented.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and future periods are affected.
Key sources of estimation of uncertainty at the date of the financial statement, which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are in respect of impairment of investments, useful lives of property, plant and equipment, valuation of deferred tax assets and fair value measurement of financial instruments, these are discussed below. Key sources of estimation of uncertainty in respect of revenue recognition, employee benefits and provisions and contingent liabilities have been discussed in their respective polices.
Useful lives of property, plant and equipment
The company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods.
Valuation of deferred tax assets
The Company reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy has been explained under note 2(i).
Fair value measurement of financial instruments
When the fair value 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 Discounted Cash Flow 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. Judgments include consideration of inputs such as liquidity risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
B.3 SUMMARY OF MATERIAL ACCOUNTING POLICIES
(a) Property, plant and equipment
Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Expenses incurred relating to construction of factory extension at Silvassa, Patna and Nellore during the construction stage prior to its intended use are disclosed under Capital Work - in - Progress.
Depreciation on property, plant and equipment is provided using straight line method. Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013.
|
Sr. No |
Particular |
Useful Life (in Years) |
||
|
1 |
Land |
30 |
||
|
2 |
Buildings |
30 |
||
|
3 |
Plant & Machinery |
15 |
||
|
4 |
Dies & Moulds |
15 |
||
|
5 |
Furniture & Fixtures |
10 |
||
|
6 |
Vehicles |
8 |
||
|
7 |
Office Equipment |
8 |
||
|
8 |
Electrical Installation |
10 |
||
|
9 |
Others |
5 |
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Gains or losses arising from de-recognition of a property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.
(b) Leases
Effective from 1 April 2019, the Company has applied Ind AS 116, which replaces the existing lease standard, Ind AS 17 Leases and other interpretations. The Company has applied Ind AS 116 using the modified retrospective approach and has accordingly not restated the comparative information. The Company at the inception of a contract, assesses whether a contract, is or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Ind AS 116 introduces a single balance sheet lease accounting model for lessees. A lessee recognises a right-of use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. The Company has elected not to recognises right-of-use of assets and lease liabilities for short term leases that have a lease term of 12 months or less and leases of low value assets. The Company recognises the lease payments associated with these leases as an expense on a straight line basis over the lease term. Lessor accounting remains similar to the accounting under the previous standard i.e. lessor continues to classify leases as finance or operating lease. This policy is applied to contracts entered into, or changed, on or after 1 April 2019. For contracts entered into before 1 April 2019, 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.
As a lessee
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct cost incurred and an estimate of cost to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight line method from the commencement date to the earlier of the end of the useful life or the end of the lease term. The estimated useful life of the right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s incremental borrowing rate. The lease payments shall include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payment of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is re-measured to reflect any reassessment or modification, or if there are changes in insubstance fixed payments. When the lease liability is re-measured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero. On the Balance Sheet, right-of-use assets have been included in property, plant and equipment and lease liabilities have been included in borrowings and other financial liabilities.
In the comparative period, leases of property, plant and equipment where the Company, as lessee, had substantially all the risks and rewards of ownership was classified as finance leases. Finance leases are capitalized at the lease''s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Leases in which a significant portion of the risks and rewards of ownership was not transferred to the Company as lessee was classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) was charged to profit or loss on a straight-line basis over the period of the lease unless the payments was structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
Lease income from operating leases, where the Company is a lessor, is recognized in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflation.
(c) Inventory
Items of Inventories are measured at lower of cost and net realizable value after providing for obsolescence, if any, except in case of by-products which are valued at net realizable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads net of recoverable taxes incurred in bringing them to their respective present location and condition.
(d) Impairment of non-financial assets - property, plant and equipment and intangible assets
IND AS 36 on Impairment of Assets requires every company to test for the impairment of its PPE annually. Due to the nature of business and products of the Company, the molding process of production, the assets do not have a very high risk of impairment. Further Management has view that Molding machines do not get impaired on their own as they host the molds through which the molding of plastic and other products happen. Molds have a useful life in terms capacity of no of items to be produced. However, the Company maintains the molds very well as a result; the molds outlive their useful life.
(e) Provisions
Provisions are recognized 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.
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 recognized as a finance cost.
(f) Employee Benefits Expense 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 as an expense during the period when the employees render the services.
The Company pays gratuity to the employees whoever has completed five years of service with the Company at the time of resignation/superannuation. The gratuity is paid @15 days'' salary for every completed year of service as per the Payment of Gratuity Act 1972.
The liability in respect of gratuity and other post-employment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees'' services.
Re-measurement of defined benefit plans in respect of post-employment are charged to the Other Comprehensive Income.
(g) Tax Expenses
The tax expense for the period comprises current and deferred tax. Tax is recognized in Statement of Profit and Loss, except to the extent that it relates to items recognized in the comprehensive income or in equity. In which case, the tax is also recognized in other comprehensive income or equity.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the reporting period.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of Deferred tax liabilities and assets are reviewed at the end of each reporting period.
(h) Foreign currencies transactions and translation
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in Statement of Profit and Loss.
Effective from April 1, 2018, the Company has applied IND AS 115 which establishes a comprehensive framework for determining whether, how much and when the revenue is to be recognized. IND AS 115 replaces IND AS 18 Revenue and IND AS 11 Construction Contracts. Para D35 of IND AS 101 First Time Adoption of IND AS states that a first time adopter is not required to restate contracts that were completed before the earliest reporting period. Since Company does not have any kind of continuing contracts, the Company has adopted IND AS 115 using the prospective method.
IND AS 115 prescribes a five step model for revenue recognition;
1) Identifying the Contract with the Customer
2) Identifying the Performance Obligation
3) Determining the Transaction Price
4) Allocating the Transaction Price to the Performance Obligation
5) Recognizing the Revenue proportionately.
The Company earns revenue primarily from sale of household furniture.
Accordingly, revenue from domestic sale of goods is recognized when the performance obligations (i.e. delivery of the goods) are completed to the buyer.
Company follows industry practice of providing a right to return the defective products / parts and replaces the same. As required under the para 55 of IND AS 115, return liability has been recognized on the basis of expected returns which in turn have been computed on the basis of average returns of the Company over the past three years.
Revenue from export sale of goods is recognized when the performance obligations (i.e. loading of the goods on the vessel) are completed in case of Free on Board (FOB) contracts. In cases of Export sales under Cost including Freight contracts (CIF) Company recognises the revenue as per the general industry practice (i.e loading the goods on the vessel date). However, Company has ensured that the delivery of all the revenue recognized as at the reporting date have actually reached the desired destination before finalization of the accounts thereby ensuring the completeness of performance obligation.
Revenue from rendering of services is recognized when the performance of agreed contractual task has been completed.
Revenue from sale of goods is measured at the transaction price mutually decided at the time of execution of the contracts / Purchase Orders with the customers. The rates for the goods or services differ from customer to customer.
Revenue from operations includes sale of goods, services, goods and service tax (GST) and adjusted for discounts (net).
Interest income from a financial asset is recognized using effective interest rate method.
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Significant Judgements in applying IND AS 115 |
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Timing of satisfaction of performance obligation |
Since the Company is purely in the business of sale of furniture the timing of satisfaction of the performance obligation is clearly the date on which the intended goods are delivered to the customer |
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Timing of satisfaction of performance obligation (Export Sales) |
In case of FOB sales, the timing of satisfaction of performance obligation would be date of loading of the goods on the vessel. |
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Timing of satisfaction of performance obligation (Export Sales) |
In case of CIF sales, Company has taken a judgement based on current industry practice to consider these transaction in same line as that of FOB sales. |
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Transaction price & the amounts allocated to the performance obligations |
Individual contracts / purchase orders are executed with each customer categorically specifying the individual unit rate decided after mutual negotiations. |
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Method of recognizing revenue |
Output Method |
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Reason for selection of Output method |
As stipulated in Para B15, since the measurement of performance obligation can be directly evidenced, output method of revenue recognition is adopted. |
Grants received towards depreciable assets has been recognized as income over the period of useful life of the assets through which it is depreciated.
Grants received towards non depreciable assets has been recognized as income over the period in which expenses have been incurred to realize income from those assets.
(k) Financial instruments
i) Financial Assets
A. Initial recognition and measurement
All financial assets and liabilities are initially recognized at fair value. 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 adjusted to the fair value on initial recognition. Purchase and sale of financial assets are recognized using trade date accounting.
B. Subsequent measurement
a) Financial assets carried at amortized cost (AC)
A financial asset is 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 amount outstanding.
Impairment of financial assets
In accordance with Ind AS 109, the Company uses âExpected Credit Loss'' (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).
Expected credit losses are measured through a loss allowance at an amount equal to:
* The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
* Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument)
For trade receivables Company applies âsimplified approach'' which requires expected lifetime losses to be recognized from initial recognition of the receivables. The Company has its own adopted policy to determine impairment loss on the portfolio of trade receivables. At every reporting date this policy is reviewed and changes in the forward looking estimates are analyzed.
A. Initial recognition and measurement
All financial liabilities are recognized at fair value and in case of loans, net of directly attributable cost. Fees of recurring nature are directly recognized in the Statement of Profit and Loss as finance cost.
B. Subsequent measurement
Financial liabilities are carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
iii) De-recognition 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 de-recognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company''s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
C. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the Company''s financial statements requires management to make judgement, estimates and assumptions that affect the reported amount of revenue, expenses, assets and liabilities and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities.
a) Depreciation / amortization and useful lives of property plant and equipment / intangible assets
Property, plant and equipment / intangible assets are depreciated / amortized over their estimated useful lives, after taking into account estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation / amortization to be recorded during any reporting period. The useful lives and residual values are based on the Company''s historical experience with similar assets and take into account anticipated technological changes. The depreciation / amortization for future periods is revised if there are significant changes from previous estimates.
b) Recoverability of trade receivable
Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.
c) Provisions
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
d) Impairment of non-financial assets
Due to the nature of business and products of the Company, the molding process of production, the assets do not have a very high risk of impairment. Further Management has view that Molds do not get impaired on their own as they host the molds through which the molding of plastic and other products happen. Molds have a useful life in terms capacity of no of items to be produced. However, the Company maintains the molds very well as a result; the molds outlive their useful life.
D. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES New and amended standards
* There have been no new Standards made applicable for the FY 2023-24 and as a result there is nothing to disclose under this section.
Mar 31, 2018
A. SIGNIFICANT ACCOUNTING POLICIES
A.1 BASIS OF PREPARATION AND PRESENTATION
The financial statements have been prepared on the historical cost basis except for Defined Benefit Plan - Plan Assets which has been measured at fair value amount.
The financial statements of the Company have been prepared to comply with the Indian Accounting standards (âInd ASâ), including the rules notified under the relevant provisions of the Companies Act, 2013.
Upto the year ended March 31, 2017, the Company has prepared its financial statements in accordance with the requirement of Generally Accepted Accounting Principles (GAAP) in India, which includes Standards notified under the Companies (Accounting Standards) Rules, 2006 and considered as âPrevious GAAPâ.
These financial statements are the Companyâs first Ind AS standalone financial statements.
Companyâs financial statements are presented in Indian Rupees (Rs.), which is also its functional currency.
A.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Property, plant and equipment
Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Expenses incurred relating to construction of factory extension at Silvasa , Patna and Nellore during the construction stage prior to its intended use are disclosed under Capital Work - in -Progress.
Depreciation on property, plant and equipment is provided using straight line method Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Gains or losses arising from derecognition of a property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
(b) Leases
Company does not have any financial lease . All the leases of the Company falls under the category of operating leases.
Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term except where another systematic basis is more representative of time pattern in which economic benefits from the leased assets are consumed.
(c) Inventory
Items of Inventories are measured at lower of cost and net realisable value after providing for obsolescence, if any, except in case of by-products which are valued at net realisable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs including manufacturing overheads net of recoverable taxes incurred in bringing them to their respective present location and condition.
(d) Impairment of non-financial assets - property, plant and equipment and intangible assets
IND AS 36 on Impairment of Assets requires every company to test for the impairment of its PPE annually. Due to the nature of business and products of the Company, the moulding process of production, the assets do not have a very high risk of impairment. Further Management has view that Moulding machines do not get impaired on their own as they host the moulds through which the moulding of plastic and other products happen. Moulds have a useful life in terms capacity of no of items to be produced. However, the Company maintains the moulds very well as a result; the moulds outlive their useful life.
(e) 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.
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
(f) Employee Benefits Expense 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 as an expense during the period when the employees render the services.
Defined Benefit Plans
The Company pays gratuity to the employees whoever has completed five years of service with the Company at the time of resignation/superannuation. The gratuity is paid @15 days salary for every completed year of service as per the Payment of Gratuity Act 1972.
The liability in respect of gratuity and other post-employment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employeesâ services.
Re-measurement of defined benefit plans in respect of post-employment are charged to the Other Comprehensive Income.
(g) Tax Expenses
The tax expense for the period comprises current and deferred tax. Tax is recognised in Statement of Profit and Loss, except to the extent that it relates to items recognised in the comprehensive income or in equity. In which case, the tax is also recognised in other comprehensive income or equity.
Current Tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the reporting period.
Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of Deferred tax liabilities and assets are reviewed at the end of each reporting period.
(h) Foreign currencies transactions and translation
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in Statement of Profit and Loss.
(i) Revenue recognition
Revenue from sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated cost can be estimated reliably, there is no continuing effective control or managerial involvement with the goods, and the amount of revenue can be measured reliably.
Revenue from rendering of services is recognised when the performance of agreed contractual task has been completed.
Revenue from sale of goods is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Revenue from operations includes sale of goods, services, service tax, excise duty , goods and service tax (GST) and adjusted for discounts (net), and gain/loss on corresponding hedge contracts.
Interest income
Interest income from a financial asset is recognised using effective interest rate method.
(j) Government Grants
Grants received towards depreciatiable assets has been recognised as income over the period of useful life of the assets through which it is depreciated.
Grants received towards non depreciatiable assets has been recognised as income over the period in which expenses have been incurred to realise income from those assets.
(k) Financial instruments
i) Financial Assets
A. Initial recognition and measurement
All financial assets and liabilities are initially recognized at fair value. 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 adjusted to the fair value on initial recognition. Purchase and sale of financial assets are recognised using trade date accounting.
B. Subsequent measurement
a) Financial assets carried at amortised cost (AC)
A financial asset is measured at amortised 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 amount outstanding.
Impairment of financial assets
In accordance with Ind AS 109, the Company uses âExpected Credit Lossâ (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).
Expected credit losses are measured through a loss allowance at an amount equal to:
* The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
* Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument)
For trade receivables Company applies âsimplified approachâ which requires expected lifetime losses to be recognised from initial recognition of the receivables.
The Company has its own adopted policy to determine impairment loss on the portfolio of trade receivables. At every reporting date this policy is reviewed and changes in the forward looking estimates are analysed.
ii) Financial liabilities
A. Initial recognition and measurement
All financial liabilities are recognized at fair value and in case of loans, net of directly attributable cost. Fees of recurring nature are directly recognised in the Statement of Profit and Loss as finance cost.
B. Subsequent measurement
Financial liabilities are carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
iii) 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 a financial liability) is derecognized from the Companyâs Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the Companyâs financial statements requires management to make judgement, estimates and assumptions that affect the reported amount of revenue, expenses, assets and liabilities and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities
a) Depreciation / amortisation and useful lives of property plant and equipment / intangible assets
Property, plant and equipment / intangible assets are depreciated / amortised over their estimated useful lives, after taking into account estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation / amortisation to be recorded during any reporting period. The useful lives and residual values are based on the Companyâs historical experience with similar assets and take into account anticipated technological changes. The depreciation / amortisation for future periods is revised if there are significant changes from previous estimates.
b) Recoverability of trade receivable
Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.
c) Provisions
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
d) Impairment of non-financial assets
Due to the nature of business and products of the Company, the moulding process of production, the assets do not have a very high risk of impairment. Further Management has view that Moulds do not get impaired on their own as they host the moulds through which the moulding of plastic and other products happen. Moulds have a useful life in terms capacity of no of items to be produced. However, the Company maintains the moulds very well as a result; the moulds outlive their useful life.
G FIRST TIME ADOPTION OF IND AS
The Company has adopted Ind AS with effect from April 1, 2017 with comparatives being restated. Accordingly the impact of transition has been provided in the Opening Reserves as at April 1, 2016. The figures for the previous period have been restated, regrouped and reclassified wherever required to comply with the requirement of Ind AS and Schedule III.
i) Fair value as deemed cost exemption
The Company has elected to measure items of property, plant and equipment and intangible assets at its fair value at the transition date.
Mar 31, 2016
a) Corporate information
The company is engaged in manufacturing plastic injection moulded articles and mattresses. The company is having manufacturing plants at Silvassa, Patna and Nellore.
b) Significant accounting policies (Illustrative)
i) 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 the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. 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.
ii) Use of estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.
iii) Inventories
Inventories are valued at the lower of cost (on FIFO basis) and the net realizable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty.
iv) Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
v) Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
vi) Depreciation and amortization
Depreciation has been provided as per provisions in Schedule II of the Companies Act 2013 based on useful life of the fixed assets as specified in Part C of the said schedule.
Leasehold land is amortized over the duration of the lease Assets costing less than Rs.5,000 each are fully depreciated in the year of capitalization
vii) Revenue recognition
Sale of goods
Sales are recognized on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty , sales tax and value added tax. Trade discounts and returns has been disclosed separately under Other Expenditure.
viii) Other income
Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.
ix) Tangible 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. Exchange differences arising on restatement / settlement of long-term foreign currency borrowings relating to acquisition of depreciable fixed assets are charged to profit and loss account. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalized and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure relating to fixed assets is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.
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.
x) Pre Operative Expenditure
All expenses prior to commencement of the new projects are treated as pre operative expenses and shall be capitalized to the value of major fixed assets of the relevant project in appropriate manner, direct or indirect, upon commencement of commercial production at such projects.
xi) Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and its integral foreign operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet date
Foreign currency monetary items (other than derivative contracts) of the Company outstanding at the Balance Sheet date are restated at the year-end rates. Exchange differences arising out of this translation is charged to Profit and Loss Account.
xii) Government grants, subsidies and export incentives
Government grants and subsidies are recognized when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants / subsidy will be received. Government grants and subsidy received towards capital outlay is treated as Capital Reserve.
Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
xiii) Investments
Long-term investments (excluding investment properties), 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 include acquisition charges such as brokerage, fees and duties.
xiv) Employee Retirement benefits
The company has a policy of payment of Gratuity only at the time of retirement and the same has been provided as per provisions of Accounting Standard 15 of Retirement benefit to employees.
xv) Borrowing costs
Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalization of such asset is added to the cost of the assets.
xvi) Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) 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 (including the post tax effect of extraordinary items, if any) 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 profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.
xvii) 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 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 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 recognized for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized only if there is virtual certainty that there will be sufficient future taxable income available to realize such assets. Deferred tax assets are recognized for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. 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.
Current and deferred tax relating to items directly recognized in equity are recognized in equity and not in the Statement of Profit and Loss.
xviii) 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..
xix) Insurance claims
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.
xx) Service tax input credit
Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing / utilizing the credits.
Mar 31, 2014
I) 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
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. 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.
ii) Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
iii) Inventories
Inventories are valued at the lower of cost (on FIFO basis) and the net
realisable value after providing for obsolescence and other losses,
where considered necessary. Cost includes all charges in bringing the
goods to the point of sale, including octroi and other levies, transit
insurance and receiving charges. Work- in-progress and finished goods
include appropriate proportion of overheads and, where applicable,
excise duty.
iv) Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
v) Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
vi) Depreciation and amortisation
Depreciation has been provided on the straight-line method as per the
rates prescribed in Schedule XIV to the Companies Act, 1956 except in
respect of the following categories of assets, in whose case the life
of the assets has been assessed as under:
Leasehold land is amortised over the duration of the lease
Assets costing less than Rs. 5,000/- each are fully depreciated in the
year of capitalisation
vii) Revenue recognition
Sale of goods
Sales are recognised on transfer of significant risks and rewards of
ownership to the buyer, which generally coincides with the delivery of
goods to customers. Sales include excise duty, sales tax and value
added tax. Trade discounts and returns has been disclosed seperately
under Other Expenditure.
viii) Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
ix) Tangible 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. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
charged to profit and loss account. Machinery spares which can be used
only in connection with an item of fixed asset and whose use is
expected to be irregular are capitalised and depreciated over the
useful life of the principal item of the relevant assets. Subsequent
expenditure relating to fixed assets is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.
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.
x) Pre Operative Expenditure
All expenses prior to commencement of the new projects are treated as
pre operative expenses and shall be capitalised to the value of major
fixed assets of the relevant project in approriate manner, direct or
indirect, upon commencement of commercial production at such projects.
xi) Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date
Foreign currency monetary items (other than derivative contracts) of
the Company outstanding at the Balance Sheet date are restated at the
year-end rates. Exchange differences arising out of this translation is
charged to Profit and Loss Account.
xii) Government grants, subsidies and export incentives
Government grants and subsidies are recognised when there is reasonable
assurance that the Company will comply with the conditions attached to
them and the grants / subsidy will be received. Government grants and
subsidy received towards capital outlay is treated as Capital Reserve.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
xiii) Investments
Long-term investments (excluding investment properties), 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 include acquisition charges such as brokerage, fees and
duties.
xiv) Employee Retirement benefits
The company has a policy of payment of Gratuity only at the time of
retirement and the same has been provided as per provisions of
Accounting Standard 15 of Retirement benefit to employees.
xv) Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
xvi) Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) 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 (including the post tax effect of
extraordinary items, if any) 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 profit per share from continuing ordinary
operations. Potential dilutive equity shares are deemed to be converted
as at the beginning of the period, unless they have been issued at a
later date. The dilutive potential equity shares are adjusted for the
proceeds receivable had the shares been actually issued at fair value
(i.e. average market value of the outstanding shares). Dilutive
potential equity shares are determined independently for each period
presented. The number of equity shares and potentially dilutive equity
shares are adjusted for share splits / reverse share splits and bonus
shares, as appropriate.
xvii) 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. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. 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
realisability.
Current and deferred tax relating to items directly recognised in
equity are recognised in equity and not in the Statement of Profit and
Loss.
xviii) 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.
xix) Insurance claims
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that there is no uncertainty
in receiving the claims.
xx) Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilising the credits.
Mar 31, 2013
I) 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
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. 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.
ii) Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
iii) Inventories
Inventories are valued at the lower of cost (on FIFO basis) and the net
realisable value after providing for obsolescence and other losses,
where considered necessary. Cost includes all charges in bringing the
goods to the point of sale, including octroi and other levies, transit
insurance and receiving charges. Work- in-progress and finished goods
include appropriate proportion of overheads and, where applicable,
excise duty.
iv) Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
v) Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
vi) Depreciation and amortisation
Depreciation has been provided on the straight-line method as per the
rates prescribed in Schedule XIV to the Companies Act, 1956 except in
respect of the following categories of assets, in whose case the life
of the assets has been assessed as under:
Leasehold land is amortised over the duration of the lease
Assets costing less than Rs. 5,000/- each are fully depreciated in the
year of capitalisation
vii) Revenue recognition Sale of goods
Sales are recognised on transfer of significant risks and rewards of
ownership to the buyer, which generally coincides with the delivery of
goods to customers. Sales include excise duty , sales tax and value
added tax. Trade discounts and returns has been disclosed seperately
under Other Expenditure.
viii) Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
ix) Tangible 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. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
charged to profit and loss account. Machinery spares which can be used
only in connection with an item of fixed asset and whose use is
expected to be irregular are capitalised and depreciated over the
useful life of the principal item of the relevant assets. Subsequent
expenditure relating to fixed assets is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.
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.
x) Pre Operative Expenditure
All expenses prior to commencement of the new projects are treated as
pre operative expenses and shall be capitalised to the value of major
fixed assets of the relevant project in approriate manner, direct or
indirect,upon commencement of commercial production at such projects.
xi) Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date
Foreign currency monetary items (other than derivative contracts) of
the Company outstanding at the Balance Sheet date are restated at the
year-end rates.Exchange differences arising out of this translation is
charged to Profit and Loss Account.
xii) Government grants, subsidies and export incentives
Government grants and subsidies are recognised when there is reasonable
assurance that the Company will comply with the conditions attached to
them and the grants / subsidy will be received. Government grants and
subsidy received towards capital outlay is treated as Capital Reserve.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
xiii) Investments
Long-term investments (excluding investment properties), 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 include acquisition charges such as brokerage, fees and
duties.
xiv) Employee Retirement benefits
The company has a policy of payment of Gratuity only at the time of
retirement and the same has been provided as per actual calculations as
per Payment of Gratuity Act, 1972.
xv) Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
xvi) Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) 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 (including the post tax effect of
extraordinary items, if any) 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 profit per share from continuing ordinary
operations. Potential dilutive equity shares are deemed to be converted
as at the beginning of the period, unless they have been issued at a
later date. The dilutive potential equity shares are adjusted for the
proceeds receivable had the shares been actually issued at fair value
(i.e. average market value of the outstanding shares). Dilutive
potential equity shares are determined independently for each period
presented. The number of equity shares and potentially dilutive equity
shares are adjusted for share splits / reverse share splits and bonus
shares, as appropriate.
xvii) 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. Deferred tax assets are recognised for timing
differences of other items only to the extent that reasonable certainty
exists that sufficient future taxable income will be available against
which these can be realised. 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 realisability.
Current and deferred tax relating to items directly recognised in
equity are recognised in equity and not in the Statement of Profit and
Loss.
xviii) 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..
xix) Insurance claims
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that there is no uncertainty
in receiving the claims.
xx) Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilising the credits.
Mar 31, 2012
I) 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
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. 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.
ii) Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
iii) Inventories
Inventories are valued at the lower of cost (on FIFO basis) and the net
realisable value after providing for obsolescence and other losses,
where considered necessary. Cost includes all charges in bringing the
goods to the point of sale, including octroi and other levies, transit
insurance and receiving charges. Work-in-progress and finished goods
include appropriate proportion of overheads and, where applicable,
excise duty.
iv) Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
v) Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
vi) Depreciation and amortisation
Depreciation has been provided on the straight-line method as per the
rates prescribed in Schedule XIV to the Companies Act, 1956 except in
respect of the following categories of assets, in whose case the life
of the assets has been assessed as under:
Leasehold land is amortised over the duration of the lease.
Assets costing less than Rs. 5,000 each are fully depreciated in the year
of capitalisation.
vii) Revenue recognition Sale of goods
Sales are recognised on transfer of significant risks and rewards of
ownership to the buyer, which generally coincides with the delivery of
goods to customers. Sales include excise duty, sales tax and value
added tax. Trade discounts and returns has been disclosed seperately
under Other Expenditure.
viii) Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
ix) Tangible 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. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
charged to profit and loss account. Machinery spares which can be used
only in connection with an item of fixed asset and whose use is
expected to be irregular are capitalised and depreciated over the
useful life of the principal item of the relevant assets. Subsequent
expenditure relating to fixed assets is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.
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.
x) Pre Operative Expenditure
All expenses prior to commencement of the new projects are treated as
pre operative expenses and shall be capitalised to the value of major
fixed assets of the relevant project in appropriate manner, direct or
indirect, upon commencement of commercial production at such projects.
xi) Foreign currency transactions and translations Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date.
Foreign currency monetary items (other than derivative contracts) of
the Company outstanding at the Balance Sheet date are restated at the
year-end rates. Exchange differences arising out of this translation is
charged to Profit and Loss Account.
xii) Government grants, subsidies and export incentives
Government grants and subsidies are recognised when there is reasonable
assurance that the Company will comply with the conditions attached to
them and the grants / subsidy will be received. Government grants and
subsidy received towards capital outlay is treated as Capital Reserve.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
xiii) Investments
Long-term investments (excluding investment properties), 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 include acquisition charges such as brokerage, fees and
duties.
xiv) Employee Retirement benefits
The company has a policy of payment of Gratuity only at the time of
retirement and the same has been provided as per actual calculations as
per Payment of Gratuity Act, 1972.
xv) Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
xvi) Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) 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 (including the post tax effect of extraordinary
items, if any) 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 profit per share from continuing ordinary operations. Potential
dilutive equity shares are deemed to be converted as at the beginning
of the period, unless they have been issued at a later date. The
dilutive potential equity shares are adjusted for the proceeds
receivable had the shares been actually issued at fair value (i.e.
average market value of the outstanding shares). Dilutive potential
equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are
adjusted for share splits / reverse share splits and bonus shares, as
appropriate.
xvii) 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. Deferred tax assets are recognised for timing
differences of other items only to the extent that reasonable certainty
exists that sufficient future taxable income will be available against
which these can be realised. 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 realisability.
Current and deferred tax relating to items directly recognised in
equity are recognised in equity and not in the Statement of Profit and
Loss.
xviii) 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.
xix) Insurance claims
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that there is no uncertainty
in receiving the claims.
xx) Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilising the credits.
Mar 31, 2010
A. Basis of Accounting
The financial statements are prepared in accordance with requirements
of the Companies Act 1956 under historical cost convention on an
accrual basis.
b. Fixed Assets and Capital Work-in-Progress
Fixed assets are recorded at cost of acquisition inclusive of relevant
levies, transportation and other expenses incidential to acquisition
and installation.
c. Depreciation on Fixed Assets
Depreciation on fixed assets has been provided on straight line method
at the rate and in the manner specified in Schedule XIV of the
Companies Act, 1956
d. Inventories
Inventories are valued as under :- i. Raw Material - At cost (on first
in first out basis).
ii. Finished Goods - At cost Raw material cost & share of appropriate
overheads or net realisable value, whichever is lower.
The Excise duty in respect of closing inventory of finished goods is
included as part of finished goods.
iii. Traded Items- At cost.
iv. Semi - Finished Goods- At cost Raw material cost & share of
appropriate overheads.
e. Sales
A) Sales net off Sales Tax, Excise Duty, Sales Return (On Approval)
B) Export Sales is accounted at value prevailing on the transaction
date. Unrealised bills at the year end are restated at the rates
prevailing at the year end.
f. Export Benefits
Export benefits / Incentives are accounted on accrual basis.
g. Provision for taxation
Deferred Tax resulting from timing differences between book profit &
the tax profit is accounted for under the liability method at the
effecting Current Rate of Tax applicable to the year in which such
timing differences are expected to be reversed.
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Block for 12 hours
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Block for 24 hours
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Don't block
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