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Accounting Policies of NHC Foods Ltd. Company
Mar 31, 2024
1 Corporate Information
NHC Foods Limited (NHC) (âthe Companyâ) (CIN : L15122GJ1992PLC076277) is a public company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India.
The Company is engaged in the business of Whole & Ground Spices, Lentils, Pulses, Grains, Oil Seeds and various other Agri - products and Assorted Food Products. Currently NHC Foods Limited is Exporting the above-mentioned Commodities to more than 60 Countries World-wide.
The financial statements were authorized for issue by the board of directors on May 17, 2024.
2 Significant Accounting Policies2.1 Basis of preparation of financial statements
(a) These financial statements have been prepared in accordance with Indian Accounting Standard (Ind AS) as notified under section 133 of the Companies Act, 2013 (âthe Actâ) read with Companies (Indian Accounting Standard) Rules 2015 and relevant amendment rules issued thereafter
The financial statements have been prepared on a historical cost convention on the accrual basis of accounting except for certain financial assets and liabilities (including derivative instruments) which are measured at fair values at end of each reporting period, as stated in Summary of significant accounting policies below
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy as mentioned in note (b) below.
(b) Application of New Accounting pronouncements
Pursuant to issuance of the Companies (Indian Accounting Standards) Amendment Rules, 2019 and the Companies (Indian Accounting Standards) Second Amendment Rules, 2019, Ind AS 116 - âLeasesâ (IndAS 116) supersedes Ind AS 17 - âLeasesâ. The Companyhas adopted Ind AS 116 using the modified retrospective approach with effect from 1st April, 2019.
2.2 Use of Estimates and Judgements:
The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. The application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note 2.4. Accounting estimates could change from period to period
2.3 Summary of significant Accounting Policies (a) Foreign currency translation(i) Functional and presentation currency
Items included in the financial statements of the entity are measured using the currency of the primary economic environment in which the entity operates (âthe functional currencyâ). The financial statements are presented in Indian rupee (INR), which is entityâs functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other gains/(losses).
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
(b) Property, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
Subsequent expenditure related to an item of property, plant and equipment is added to its book value only if it increases the future benefits from its previously assessed standard of performance. All other expenses on existing property, plant and equipment, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Borrowing costs directly attributable to acquisition of property, plant and equipment which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
Advances paid towards the acquisition of Property, plant and equipment are disclosed as âCapital advancesâ under Other Non Current Assets and the cost of assets not ready to be put to use as at the balance sheet date are disclosed as âCapital work-in-progressâ.
An item of property, plant and equipment and any significant part initially recognized is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the Property, plant and equipment is de-recognized.
Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction period is capitalized to the extent to which the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure (including borrowing costs) incurred during the construction period which is neither related to the construction activity nor is incidental thereto is charged to the statement of profit and loss.
(c) Depreciation methods, estimated useful lives and residual value
Depreciation is calculated on straight line basis using the useful lives estimated by the management, which are equal to those prescribed under Schedule II to the Companies Act, 2013.
The residual values are not more than 5% of the original cost of the asset.
The assetsâ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated recoverable amount.
Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Statement of Profit and Loss.
Amortisation methods and periods
Intangible assets comprising of goodwill is amortized on a straight line basis over the useful life of twenty years which is estimated by the management.
(e) Impairment of non financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
Impairment losses are recognized in the statement of profit and loss. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
The Company, as a lessee, recognizes a right-of-use asset and a lease liability for its leasing arrangements,if the contract conveys the right to control the use of an identified asset, and the Company has substantially all of the economic benefits from use of the asset and has right to direct the use of the identified asset.
Effective April 1,2019, the Company adopted Ind AS 116 âLeasesâ and applied the standard to the lease contract existing on April 1, 2019 using the modified retrospective approach. Accordingly, comparatives for the year ended March 31,2019 have not been retrospectively adjusted. The standard permits a choice on initial adoption, on a lease-by-lease basis, to measure the right-of-use (ROU) asset at either its carrying amount as if Ind AS 116 had been applied since the commencement of the lease, or an amount equal to the lease liability adjusted for accruals or prepayments. The Company has elected to measure the right-of-use asset equal to the lease liability, with the result of no net impact on retained earnings and no restatement of prior period comparatives.
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 costs which comprise the initial amount of lease liability adjusted for any lease payments made before the commencement date. The right of use asset is subsequently depreciated using the straight-line method of the balance lease term. In addition, the right of use asset is periodically reduced by impairment loss, if any and adjusted for certain Remeasurements of 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. Generally, the Company uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the amounts expected to be payable over the period of lease. The lease liability is measured at amortized cost using effective interest rate method. It is remeasured when there is a change in future lease payments arising from change in the index or rate
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments (including interest) have been classified as financing cash flows
Short-term leases and leases of low-value assets
The Company has elected not to recognize right-to-use assets and lease liabilities for short term lease that have a lease term of 12 months or less and leases of low-value assets. The Company recognize the lease payments associated with these leases as an expenses on a straight-line basis over the lease term.
When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease
To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance
lease; if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset. The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term.Contingent rents are recognised as revenue in the period in which they are earned.
The accounting policies applicable to the Company as a lessor in the comparative period were not different from Ind AS 116
Raw materials, Stores and spares and packing materials are valued at lower of cost and net realizable value.
However, these items are considered to be realizable at cost if the finished products, in which they will be used, are expected to be sold at or above cost.
Work-in-progress, finished goods and stock-in-trade are valued at lower of cost and net realizable value. Finished goods and Work-in-progress include costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of inventories is calculated on FIFO basis.
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties including taxes. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services.
Effective April 1,2018, the Company adopted Ind AS 115 âRevenue from Contracts with Customersâ using the cumulative catch-up transition method, applied to contracts that were not completed as of April 1,2018. In accordance with the cumulative catch-up transition method , the comparatives have not been retrospectively adjusted. The effect on adoption of Ind AS 115 was insignificant.
The following are the specific revenue recognition criteria:
a) Revenue from sale of goods is recognized when all the significant risk and rewards of ownership of the goods have been passed to the buyer.
b) Revenue from services are recognised as they are rendered based on agreements/ arrangements with the concerned parties.
Contract balancesContract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
A receivable represents the Companyâs right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due)
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract.
Assets and liabilities arising from rights of return Right of return assets
Right of return asset represents the Companyâs right to recover the goods expected to be returned by customers. The asset is measured at the former carrying amount of the inventory, less any expected costs to recover the goods,
including any potential decreases in the value of the returned goods. The Company updates the measurement of the asset recorded for any revisions to its expected level of returns, as well as any additional decreases in the value of the returned products. This is disclosed along with inventories.
A refund liability is the obligation to refund some or all of the consideration received (or receivable) from the customer and is measured at the amount the Company ultimately expects it will have to return to the customer. The Company updates its estimates of refund liabilities (and the corresponding change in the transaction price) at the end of each reporting period.
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue 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.
The Company collects taxes such as sales tax/value added tax, service tax, etc on behalf of the Government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from the aforesaid revenue/ income.
Interest income, including income arising from other financial instruments measured at amortized cost, is recognized using the effective interest rate method.
Revenue is recognised when the companyâs right to receive the payment is established, which is generally when shareholders approve the dividend.
e) Commission income is recognised as and when the terms of the contract are fulfilled.f) Other items of income are accounted as and when the right to receive arises.(i) Taxes(i) Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the company operates and generates taxable income.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred income tax is recognized using the balance sheet approach, deferred tax is recognized on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.
Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
(iii) Minimum Alternate Tax (MAT)
MAT payable for a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available in the statement of profit and loss as deferred tax with a corresponding asset only to the extent that there is probable certainty that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. The said asset is shown as âMAT Credit Entitlementâ under Deferred Tax. The Company reviews the same at each reporting date and writes down the asset to the extent the Company does not have the probable certainty that it will pay normal tax during the specified period.
Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments, which give rise to a financial asset of one entity and financial liability or equity of another entity.
Financial assets and financial liabilities are initially measured at fair value. T ransaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss and ancillary costs related to borrowings) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in Statement of Profit and Loss.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (âFVOCIâ) or fair value through profit or loss (âFVTPLâ) on the basis of following:
- the entityâs business model for managing the financial assets and
- the contractual cash flow characteristics of the financial asset.
A financial asset shall be classified and measured at amortised cost if both of the following conditions are met:
The financial asset is held within a business model whose objective is to hold financial assets 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.
(ii) Fair Value through other comprehensive income
A financial asset shall be classified and measured at fair value through OCI if both of the following conditions are met:
The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(iii) Fair Value through Profit or Loss
A financial asset shall be classified and measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through OCI.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification and Subsequent Measurement: Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or âother financial liabilitiesâ.
(i) Financial Liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL. Gains or Losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
(ii) Other Financial Liabilities:
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. The Company recognises a loss allowance for expected credit losses on financial asset. In case of trade receivables, the Company follows the simplified approach permitted by Ind AS 109 - Financial Instruments for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risk. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.
Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
Equity investment in subsidiaries,
The company has remitted Indian Rupees Rs.576.68/- Lakhs, equivalent to USD 6.91 Lakhs, for the purpose of acquiring 2540 shares out of 2640 in M/s Intra Metal Trading L.L.C, located within the free trade zone of the United Arab Emirates and same has been disclosed in to financials âNon Trade investmentsâ. as of the aforementioned date, both the issuance, registration, and allotment of shares for M/s Intra Metal Trading L.L.C are still in process. The acquisition itself has not yet been completed even on the date of the signing the financials. Due to the ongoing nature of this transaction, the management has taken the decision to refrain from preparing the consolidated financial statements for the period ended March 31,2024. This decision is based on the uncertainty surrounding the completion timeline of the acquisition and establish control over the entity
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
(k) Financial liabilities and equity instruments Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company are recognised at the proceeds received.
(l) Convertible financial instrument
Convertible instruments are separated into liability and equity components based on the terms of the contract. On issuance of the convertible instruments, the fair value of the liability component is determined using a market rate for an equivalent non-convertible instrument. This amount is classified as a financial liability measured at amortised cost (net of transaction costs) until it is extinguished on conversion or redemption.
The remainder of the proceeds is allocated to the conversion option that is recognised and included in equity since conversion option meets Ind AS 32 criteria for fixed to fixed classification. Transaction costs are deducted from equity, net of associated income tax. The carrying amount of the conversion option is not remeasured in subsequent years.
Transaction costs are apportioned between the liability and equity components of the convertible instrument based on the allocation of proceeds to the liability and equity components when the instruments are initially recognised.
(m) Employee benefits(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
(ii) Other long-term employee benefit obligations
The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
(iii) Post-employment obligations
The company operates the following post-employment schemes:
(a) defined benefit plans viz. gratuity,
(b) defined contribution plans viz. provident fund.
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
The company pays provident fund contributions to publicly administered provident funds as per local regulations. The company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
Termination benefits are payable when employment is terminated by the company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits.
(n) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources, that can be reliably estimated, will be required to settle such an obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Unwinding of the discount is recognised in the Statement of Profit and Loss as a finance cost. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate.
A present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non -occurrence of one or more uncertain future events not wholly within the control of the Company.
Claims against the Company where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities.
Contingent assets are not recognised in financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognised.
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Other borrowing costs are expensed in the period in which they are incurred.
(p) Segment Reporting - Identification of Segments
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the companyâs chief operating decision maker to make decisions for which discrete financial information is available. Based on the management
approach as defined in Ind AS 108, the chief operating decision maker evaluates the Companyâs performance and allocates resources based on an analysis of various performance indicators by geographic segments.
(q) Earnings per share Basic earnings per share
Basic earnings per share is calculated by dividing:
- the profit attributable to owners of the company
- by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
- the after income tax effect of interest and other financing costs associated with dilutive potential equity
- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
(r) Current/non current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The company classifies all other liabilities as non-current.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The company has identified twelve months as its operating cycle.
Cash and cash equivalents in the Balance Sheet comprise cash at bank and in hand and short-term deposits with banks having original maturity of three months or less which are subject to insignificant risk of changes in value.
Cash Flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest Rupee as per the requirement of Schedule III, unless otherwise stated.
(w) Events after reporting date
Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the Balance Sheet date of material size or nature are only disclosed.
2.4 Key Significant accounting judgements, estimates and assumptions
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 relating to 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 recognised 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 statements, 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 non current assets, useful lives of property, plant and equipment, valuation of deferred tax assets, provisions and contingent liabilities and fair value measurement. etc are as under:
(i) Impairment of non - financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at armâs length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the assetâs performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to disclosure of fair value of investment property recorded by the Company.
(ii) Useful lives of property, plant and equipment
The useful lives and residual values of Companyâs assets are determined by the management at the time the asset is acquired and reviewed at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.
This reassessment may result in change in depreciation expense in future period
The company tax jurisdiction is india. Significant judgements are involved In estimating budgeted profit for the purpose of paying advance tax,determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.
(iv) Valuation of deferred tax assets
The Company reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy for the same has been explained under Note (i) above.
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
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 require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.
Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an armâs length transaction at the reporting date.
2.5 Recent accounting pronouncements
On 24th march 2021, the Ministry of Corporate Affairs (âMCAâ) through a notification, amended schedule III Of companies act 2013. The amendments revise Division I,N,IM of schedule III and are applicable from 1st april 2021. Key amendments relating to division II which relate to companies whose financial statements are required to comply with companies (Indian Accounting Standards) Rules 2015 are:
⢠lease liabilities should be separately disclosed under the head âfinancial liabilitiesâ, duly distinguished as current or non current.
⢠Certain additional disclosures in the statement of changes in equity such as changes in equity share capital due to prior period errors and restated balances at the beginning of the current reporting period.
⢠Specified format for disclosure of shareholding of promoters.
⢠Specified format for ageing schedule of trade receivables, trade payables, capital work in progress and intangible assest under development
⢠If a company has not used funds for the specific purpose for which it was borrowed from banks and financial institutions, then disclosure of details of where it has been used.
⢠Specific disclosure under âadditional regulatory requirementâ such as compliance with approved schemes of arrangements, compliance with number of layers of companies, title deeds of immovable property not held in name of company, loan and advances to promoters, directors, key managerial personnel(KMP) and related parties, details of benami property held etc.
⢠Additional disclosures relating to Corporate Social Resposibility (CSR), undisclosed income and Crypto or virtual currency specified under the head âadditional informationâ in the notes forming part of the financial statements.
Mar 31, 2015
1.1 Basis of Accounting
Financial statements have been prepared in accordance with Generally
Accepted Accounting Principles in India (Indian GAAP) under the
historical cost convention on an accrual basis in compliance with all
material aspects of the Accounting Standards (AS) specified under
Section 133 of the Companies Act, 2013 read with Rule 7 of the
Companies (Accounts) Rules, 2014.
1.2 Use of Estimates
Preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting year. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
1.3 Fixed Assets
Tangible fixed assets are stated at cost, less accumulated depreciation
and impairment loss, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use.
Borrowing costs attributable to acquisition and construction of
qualifying assets are capitalized as a part of the cost of such assets
up to the date when such assets are ready for its intended use.
All other borrowing costs are recognized as an expense in the period in
which they are incurred.
Intangible assets are stated at acquisition cost, net of accumulated
amortization and accumulated impairment losses, if any.
1.4 Depreciation and Amortisation
Pursuant to the enactment of the Companies Act, 2013 ("the Act"), the
company has, effective from April 1, 2014 reassessed the useful life of
its fixed assets and has computed depreciation with reference to the
useful life of the assets as recommended in schedule II of the Act, an
amount of 1,668,143/- has been adjusted with opening reserves during
the year ended March 31, 2015 and depreciation for the year ended March
31, 2015 is higher by 16,70,602/-
Goodwill on amalgamation is amortized over a period of 20 years as per
the approved court scheme.
Fixed assets, individually costing less than Rs. Five thousands are
fully depreciated in the year of purchase.
Depreciation on the fixed assets added/ disposed off/ discarded during
the period is provided on pro-rata basis with reference to the month of
addition/ disposal/ discarding.
1.3 Leases
Leases where significant portion of risk and reward of ownership are
retained by the Lessor are classified as operating leases and lease
rental thereof are charged to the Statement of Profit and Loss as per
the terms of agreement which is representative of the time pattern of
the user's benefit.
1.4 Impairment of Assets
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
assets exceeds its recoverable value. An impairment loss, if any, is
charged to the Statement of Profit and Loss in the year in which an
asset is identified as impaired. Reversal of impairment losses
recognized in prior years is recorded when there is an indication that
the impairment losses recognized for the assets no longer exist or have
decreased.
1.5 Investments
Current Investments are carried at lower of cost and fair value
computed on individual investment basis. Long- term investments are
stated at cost after deducting provisions made, if any, for other than
temporary diminution in value.
1.6 Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sales are recognized when significant risk and rewards of ownership of
the goods have passed to the buyer which coincides with delivery and
are recorded net of trade discounts and VAT. Interest income is
recognized on time proportion basis taking into account the amount
outstanding and the applicable rate.
Commission income is recognised as and when the terms of the contract
are fulfilled. Other items of income are accounted as and when the
right to receive arises.
1.7 Taxation
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the Income
Tax Act, 1961.
Current tax assets and current tax liabilities are offset when there is
a legally enforceable right to set off the recognized amounts, and
there is an intention to settle the asset and the liability on a net
basis.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for, using the tax rates and laws
that have been substantively enacted as of the Balance Sheet date.
Deferred tax assets arising from timing differences are recognized to
the extent there is reasonable certainty that these would be realized
in future.
The carrying amount of deferred tax assets are reviewed at each Balance
Sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain that
sufficient future taxable income will be available against which
deferred tax asset can be realized. Any such write-down is reversed to
the extent that it becomes reasonably certain that sufficient future
taxable income will be available. In case of unabsorbed losses and
unabsorbed depreciation deferred tax assets thereon are recognized only
if there is virtual certainty supported by convincing evidence that
they can be realized against future taxable profit. At each Balance
Sheet date, the Company reassesses the unrecognized deferred tax
assets.
Minimum alternate tax (MAT) credit is recognized as an asset only when
and to the extent there is convincing evidence that the Company will
pay normal Income Tax during the specified period in the year, in which
the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in the Guidance Note
issued by the ICAI, the said asset is created by way of a credit to the
Statement of Profit and Loss and shows as MAT Credit Entitlement. The
Company reviews the same at each Balance Sheet date and writes down the
carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that the Company will pay
normal Income Tax during the specified period.
1.8 Employee Benefits
Defined Contribution Plan:
Retirement benefits in the form of Provident Fund are a defined
contribution scheme and the contributions are charged to the statement
of Profit and Loss of the year when the contributions to the respective
funds are due.
Defined Benefit Plan:
Post employment and other long term employee benefits are recognized as
an expense in the Statement of Profit and Loss for the year in which
the employee has rendered services. The expense is recognized at the
present value of the amounts payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to Statement of
Profit and Loss.
The Company does not have a policy of encashment of unexpired leave.
1.9 Foreign Currency Transactions
Transactions in foreign currencies are accounted at the prevailing
rates of exchange on the date of transaction. Monetary items
denominated in foreign currencies, are restated at the prevailing rates
of exchange at the Balance Sheet date. All gains and losses arising out
of fluctuations in exchange rates are accounted for in the Statement of
Profit and Loss.
Exchange difference on forward exchange contracts, entered into for
hedging foreign exchange fluctuation risk in respect of an underlying
asset/liability are recognized in the Statement of Profit and Loss in
the reporting period in which the exchange rate changes.
Premium/Discount on forward exchange contracts are recognized as an
expense/income over the life of the contract.
1.10 Inventories
Raw materials, Stores and spares and packing materials are valued at
lower of cost and net realizable value. However, these items are
considered to be realizable at cost if the finished products, in which
they will be used, are expected to be sold at or above cost.
Work-in-progress, finished goods and stock-in-trade are valued at lower
of cost and net realizable value. Finished goods and Work-in-progress
include costs of conversion and other costs incurred in bringing the
inventories to their present location and condition. Cost of
inventories is calculated on FIFO basis.
1.11 Capital Issue/Preliminary and Pre-Operative Expense
These expenses are charged to the Statement of Profit and Loss account
in the period in which incurred.
1.12 Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources
will be required to settle the obligations and a reliable estimate can
be made. Contingent Liabilities are not recognized, but are disclosed
in the notes.
Contingent Assets are neither recognized nor disclosed in the financial
statements.
Mar 31, 2014
1.1 Basis of Accounting
Financial statements have been prepared in accordance with Generally
Accepted Accounting Principles in India (Indian GAAP) under the
historical cost convention on an accrual basis in compliance with all
material aspects of the Accounting Standards (AS) notified under the
Companies Act, 1956 (''The Act'') read with general circular 15/2013
dated September 13, 2013 of the Ministry of Corporate Affairs in
respect of Section 133 of the Companies Act, 2013 and the relevant
provisions of the Companies Act, 1956 (to the extent applicable) and
Companies Act, 2013 (to the extent notified).
1.2 Use of Estimates
Preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting year. Although these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
1.3 Fixed Assets
Tangible fixed assets are stated at cost, less accumulated depreciation
and impairment loss, if any. Cost comprises the purchase price and any
attributable cost of bringing the asset to its working condition for
its intended use.
Borrowing costs attributable to acquisition and construction of
qualifying assets are capitalized as a part of the cost of such assets
up to the date when such assets are ready for its intended use.
All other borrowing costs are recognized as an expense in the period in
which they are incurred.
Intangible assets are stated at acquisition cost, net of accumulated
amortization and accumulated impairment losses, if any.
1.4 Depreciation and Amortisation
Depreciation on tangible assets is provided on Straight line method at
the rates and in the manner prescribed under Schedule XIV to the
Companies Act, 1956.
Goodwill on amalgamation is amortized over a period of 20 years as per
the approved court scheme.
Fixed assets, individually costing less than Rs. Five thousands are
fully depreciated in the year of purchase.
Depreciation on the fixed assets added/disposed off/discarded during
the period is provided on pro-rata basis with reference to the month of
addition/ disposal/ discarding.
1.5 Leases
Leases where significant portion of risk and reward of ownership are
retained by the Lessor are classified as operating leases and lease
rental thereof are charged to the Statement of Profit and Loss as per
the terms of agreement which is representative of the time pattern of
the user''s benefit.
1.6 Impairment of Assets
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is treated as impaired when the carrying cost of the
assets exceeds its recoverable value. An impairment loss, if any, is
charged to the Statement of Profit and Loss in the year in which an
asset is identified as impaired. Reversal of impairment losses
recognized in prior years is recorded when there is an indication that
the impairment losses recognized for the assets no longer exist or have
decreased.
1.7 Investments
Current Investments are carried at lower of cost and fair value
computed on individual investment basis. Long- term investments are
stated at cost after deducting provisions made, if any, for other than
temporary diminution in value.
1.8 Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sales are recognized when significant risk and rewards of ownership of
the goods have passed to the buyer which coincides with delivery and
are recorded net of trade discounts and VAT.
Interest income is recognized on time proportion basis taking into
account the amount outstanding and the applicable rate
Commission income is recognised as and when the terms of the contract
are fulfilled.
Other items of income are accounted as and when the right to receive
arises.
1.9 Taxation
Provision for current tax is made on the basis of estimated taxable
income for the current accounting year in accordance with the
Income-Tax Act, 1961.
Current tax assets and current tax liabilities are offset when there is
a legally enforceable right to set off the recognized amounts, and
there is an intention to settle the asset and the liability on a net
basis.
The deferred tax for timing differences between the book and tax
profits for the year is accounted for, using the tax rates and laws
that have been substantively enacted as of the Balance Sheet date.
Deferred tax assets arising from timing differences are recognized to
the extent there is reasonable certainty that these would be realized
in future.
The carrying amount of deferred tax assets are reviewed at each Balance
Sheet date. The Company writes down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain that
sufficient future taxable income will be available against which
deferred tax asset can be realized. Any such write-down is reversed to
the extent that it becomes reasonably certain that sufficient future
taxable income will be available. In case of unabsorbed losses and
unabsorbed depreciation deferred tax assets thereon are recognized only
if there is virtual certainty supported by convincing evidence that
they can be realized against future taxable profit. At each Balance
Sheet date, the Company reassesses the unrecognized deferred tax
assets.
Minimum alternate tax (MAT) credit is recognized as an asset only when
and to the extent there is convincing evidence that the Company will
pay normal Income Tax during the specified period in the year, in which
the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in the Guidance Note
issued by the ICAI, the said asset is created by way of a credit to the
Statement of Profit and Loss and shows as MAT Credit Entitlement. The
Company reviews the same at each Balance Sheet date and writes down the
carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that the Company will pay
normal Income Tax during the specified period.
1.10 Employee Benefits
Defined Contribution Plan:
Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to the statement
of Profit and Loss of the year when the contributions to the respective
funds are due.
Defined Benefit Plan:
Post employment and other long term employee benefits are recognized as
an expense in the Statement of Profit and Loss for the year in which
the employee has rendered services. The expense is recognized at the
present value of the amounts payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to Statement of
Profit and Loss.
The Company does not have a policy of encashment of unexpired leave.
1.11 Foreign Currency Transactions
Transactions in foreign currencies are accounted at the prevailing
rates of exchange at the date of transaction. Monetary items
denominated in foreign currencies, are restated at the prevailing rates
of exchange at the Balance Sheet date. All gains and losses arising out
of fluctuations in exchange rates are accounted for in the Statement of
Profit and Loss.
Exchange differenced on forward exchange contracts, entered into for
hedging foreign exchange fluctuation risk in respect of an underlying
asset/liability are recognized in the Statement of Profit and Loss in
the reporting period in which the exchange rate Changes.
Premium/Discount on forward exchange contracts are recognized as an
expense/income over the life of the contract.
1.12 Inventories
Raw materials, Stores and spares and packing materials are valued at
lower of cost and net realizable value. However, these items are
considered to be realizable at cost if the finished products, in which
they will be used, are expected to be sold at or above cost.
Work-in-progress, finished goods and stock-in-trade are valued at lower
of cost and net realizable value. Finished goods and Work-in-progress
include costs of conversion and other costs incurred in bringing the
inventories to their present location and condition. Cost of
inventories is calculated on FIFO basis.
1.13 Capital Issue/Preliminary and Pre-Operative Expense
These expenses are charged to the Statement of Profit and Loss account
in the period in which incurred.
1.14 Provisions, Contingent Liabilities And Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized, but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
Mar 31, 2012
1.1 Basis of Accounting
The Company maintains its accounts on accrual basis following the
historical cost convention in accordance with generally accepted
accounting principles (GAAP) in compliance with the provisions of
Companies Act, 1956 and the Accounting Standards as specified in the
Companies (Accounting Standard) Rules 2006 (as amended) and other
relevant provisions of the Companies Act, 1956.
1.2 Use of Estimates:
The preparation of financial statements in conformity with GAAP
requires that the management of the Company to make estimates and
assumptions that affect the reported amounts of income and expenses of
the period, the reported balances of assets and liabilities and the
disclosures relating to contingent liabilities as of the date of the
financial statements. Difference, if any, between the actual results
and estimates is recognised in the period in which the results are
known.
1.3 Fixed Assets
Fixed assets are stated at their cost net of tax/duty credits availed,
if any, less accumulated depreciation and accumulated amortizations.
Costs comprise the purchase price and any attributable costs of
bringing the assets to its working condition, for its intended use.
Borrowing costs that are attributable to the acquisition, construction
or production of a qualifying asset are capitalized as part of the cost
of such asset till such time as the asset is ready for its intended use
or sale.
All other borrowing costs are recognized as an expense in the period in
which they are incurred
1.4 Depreciation and Amortisation
Depreciation on tangible assets is provided on Straight line method at
the rates prescribed under Schedule XIV to the Companies Act, 1956.
Goodwill on amalgamation is amortized over a period of 20 years as per
the approved court scheme.
1.5 Leases
Assets acquired on leases where a significant portion of the risks and
rewards of ownership are retained by the lessor are classified as
Operating leases. Lease rentals are charged to the Profit and Loss
Account on accrual basis.
1.6 Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use.
In assessing value in use, the Company has measured its 'value in use'
on the basis of undiscounted cash flows of next five years projections
estimated based on current prices.
After impairment, depreciation is provided on the revised carrying
amount of the asset over its remaining useful life.
1.7 Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. All other investments are classified as
long term investments. Long term investments are carried at Cost.
However provision for diminution in value is made to recognize a
decline other than temporary in the value of investment.
1.8 Revenue Recognition
Revenue is recognized based on the nature of activity when
consideration can be reasonably measured and there exists reasonable
certainty of its recovery.
- Sale of Goods:
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer. The company collects
Sales Tax and Value Added Tax (VAT) on behalf of the Government and
therefore these are not economic benefit flowing to the company and
hence excluded from revenue by the reporting date.
- Commission:
Commission income is recognised as and when the terms of the contract
are fulfilled.
- Interest Income:
Interest income is recognised pro-rata on accrual basis on the basis of
amount outstanding and rate applicable.
- Other items of income are accounted as and when the right to receive
arises.
1.9 Taxes on Income
Taxes on income for the current period is determined on the basis of
taxable income and tax credits computed in accordance with the
provisions of the Income Tax Act, 1961 and based on the expected
outcome of assessments/appeals.
Minimum alternate tax (MAT) paid in accordance to the tax laws, which
gives rise to future economic benefits in the form of adjustment of
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 the future economic benefit associated with it will
flow to the company and the asset can be measured reliably.
Deferred tax is recognized on timing differences between the income
accounted in financial statements and the taxable income for the year
and quantified using the tax rates and laws enacted or substantively
enacted as on the Balance Sheet date.
Deferred tax assets relating to unabsorbed depreciation/business
losses/losses under the head 'Capital gains' are recognized and carried
forward to the extent there is virtual certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized.
Other deferred tax assets are recognised and carried forward to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against such deferred tax assets can
be realized.
1.10 Employee Benefits
- Defined Contribution Plan:
Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to the Profit and
Loss Account of the period when the contributions to the respective
funds are due.
- Defined Benefit Plan
Gratuity Liability for eligible employees are defined benefit
obligation and are provided for on the basis of an actuarial valuation
on projected unit credit method made at the end of each financial
period. Obligation is measured at the present value of estimated future
cash flows using discounted rate that is determined by reference to
market yields at the Balance Sheet date on Government Securities where
the currency and terms of the Government Securities are consistent with
the currency and estimated terms of the defined benefit obligation.
The Company does not have a policy of encashment of unexpired leave.
Actuarial gains/losses are immediately taken to Profit and Loss account
and are not deferred
1.11 Foreign Currency Transactions
Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting company's monetary items at rates different from those at
which they were initially recorded during the period are recognised as
income or as expenses in the period in which they arise
1.12 Inventories
Inventories are valued as follows:- a) Raw material : At cost b)
Finished goods and work in Progress: At the lower of cost and net
realizable value.
Cost includes purchase cost plus custom duty, freight and insurance, if
any. Net realizable value is the estimated selling price in the
ordinary course of business, less estimated selling costs of completion
and estimated costs necessary to make the sale.
1.13 Capital Issue/Preliminary and Pre-Operative Expense
These expenses are charged to the profit and loss account in the period
in which incurred.
1.14 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
Mar 31, 2010
1.1 BASIS FOR PREPARING FINANCIAL STATEMENTS
The Financial Statements have been prepared to comply in all material
aspects with applicable accounting principles in India, the Accounting
Standards issued by the Institute of the Chartered Accountants of India
and the relevant provisions of the Companies Act 1956. The financial
statements have been prepared under the historical cost convention on
accrual basis. The accounting policies have been consistently applied
by the company and are consistent with those used in the previous year.
1.2 REVENUE RECOGNITION
Export Sales are accounted on the basis of amount realized from the
bills discounted with bank. Bills for collection are accounted at the
actual rate realized on the due date of realization.
Claims and duty drawback are accounted as and when they are admitted
for by concern authorities.
DEPB, VKUY licenses are accounted on accrual basis.
Interest revenue is recognized on a time proportion basis taking into
account the amount outstanding and the rate/s applicable.
1.3 USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of the contingent liabilities on the
date of the financial statements.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods. Difference between the actual results and estimates is
recognized in the period in which the results are known/ materialized
1.4 FIXED ASSETS & DEPRECIATION / AMORTIZATION
Fixed assets are stated at their cost less accumulated depreciation.
Costs comprise the purchase price and any attributable cost of bringing
the assets to its working conditions, for its intended use.
Depreciation is charged on SLM basis as per the rate prescribed in the
schedule XIV of the Companies Act 1956.
1.5 INVESTMENT
Investments intended to be held for not more than a year are classified
as current Investments and valued at lower of cost and fair value.
Long term Investments are stated at cost. Provision for diminution in
value is made only if in the opinion of management such a decline is
other than temporary.
1.6 INVENTORIES
Stock-in-Trade has been valued at purchase cost which is determined on
FIFO basis.
Closing stock of Export incentives, entitlements & licenses etc are
valued at approximate market value.
1.7 FOREIGN CURRENCY
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of transaction. Current Assets and Current
Liabilities are translated at the rates prevailing as at the year end.
The difference on the account of such transaction and on actual
settlement is taken to the profit and loss account.
1.8 RETIREMENT BENEFITS
1.8.1 Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to the Profit and
Loss Account of the period when the contributions to the Respective
funds are due. There are no other obligations other than the
contribution payable to the respective funds.
1.8.2Gratuity liability is a defined benefit obligation and is provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial period.
1.8.3Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per projected
unit credit method
1.8.4Actuarial gains/losses are immediately taken to profit and loss
account and are not deferred.
1.9 CAPITAL ISSUE / PRELIMINARY EXPENDITURE
Capital Issue Expenditure and Preliminary Expenditure are charged to
the Profit & Loss Account in the year in which they are incurred in
accordance with Accounting Standard (AS) 26, Intangible Assets,
issued by the Council of the Institute of Chartered Accountants of
India.
1.10 TAXATION
Tax expense comprises of current, deferred tax. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the period and reversal of timing
differences of earlier years
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognized only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. In situation
where the Company has unabsorbed depreciation and carry forward tax
losses, deferred tax assets are recognized only if there is virtual
certainty supported by convincing evidence that such deferred tax
assets can be realized against future taxable profits.
1.11 IMPAIRMENT OF ASSETS
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. An impairment loss is changed to Profit & Loss
Account in the year in which the asset is impaired and the impairment
loss recognized in prior accounting periods is reversed if there has
been a change in the estimate of recoverable amount. For the purpose of
assessing impairment, assets are grouped at the lowest level of cash
generating units.
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