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Accounting Policies of Panasonic Energy India Company Ltd. Company
Mar 31, 2025
Material accounting policies
a) Property, plant and equipment (PPE)
Recognition and measurement
Items of PPE are measured at cost less accumulated depreciation and accumulated impairment losses, if any.
Cost of an item of PPE comprises its purchase price, including import duties and non-refundable purchase taxes,
after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working
condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on
which it is located.
Capital work-in-progress is stated at cost. All the direct expenditure related to implementation including
incidental expenditure incurred during the period of implementation of a project, till it is commissioned, is
accounted as Capital work-in-progress and after commissioning the same is transferred / allocated to the
respective item of PPE. Pre-operative costs, being indirect in nature, are expensed to the Statement of Profit and
Loss as and when incurred.
If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items
(major components) of PPE.
Any gain or loss on disposal of an item of PPE is recognised in the Statement of Profit and Loss.
Subsequent expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the
expenditure will flow to the Company.
b) Depreciation
Depreciation on property, plant & equipment has been provided on Straight Line Method /Written Down Value
method as per the useful life prescribed in schedule II of the Companies Act, 2013 for respective PPE except for
below assets where useful life is determined by the Management of the Company basis internal technical
assessment. In respect of PPE purchased or ready to use during the year, depreciation is provided on pro-rata
basis from the date on which such asset is purchased or ready to use. Freehold land is not depreciated.
Leasehold land is amortised over the period of lease.
The residual value, useful life and method of depreciation of PPE are reviewed at each reporting date and
adjusted prospectively, as appropriate.
c) Intangible assets
Recognition and measurement
Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the
assets will flow to the Company and the cost of the asset can be measured reliably. Intangible assets are initially
measured at cost. Such intangible assets are subsequently measured at cost less accumulated amortisation
and any accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is recognised in the Statement of Profit and Loss as
incurred.
Amortisation
Intangible assets are amortised over the estimated period of benefit i.e. 3 to 5 years.
d) Impairment of non-financial assets
The Company''s non-financial assets, other than inventories and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then the
asset''s recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash¬
generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that
are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less
costs to sell. Value in use is based on the estimated future cash flows, 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 CGU (or the asset).
The Company''s corporate assets (e.g., central office building for providing support to various CGUs) do not
generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is
determined for the CGUs to which the corporate asset belongs.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable
amount. Impairment losses are recognised in the Statement of Profit and Loss except for properties previously
revalued with the revaluation surplus taken to Other Comprehensive Income (OCI). For such properties, the
impairment is recognised in OCI up to the amount of any previous revaluation surplus.
An impairment loss in respect of assets for which impairment loss has been recognised in prior periods, the
Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer
exists. An impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss
had been recognized.
e) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
Financial assets
Initial recognition and measurement
All the financial assets are recognized initially at fair value, plus in the case of financial assets not recorded at fair
value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial
assets. However, trade receivable that do not contain a significant financing component are measured at
transaction price.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified into:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other comprehensive income (FVTOCI);
c) Financial assets measured at fair value through statement of profit and loss (FVTPL).
The Company classifies its financial assets in the above mentioned categories based on:
a) The Company''s business model for managing the financial assets;
b) The contractual cash flows characteristics of the financial asset.
Financial assets measured at amortised cost
A financial asset is measured at amortised cost if both of the following conditions are met:
a) The financial asset is held within a business model whose objective is to hold financial assets in order to
collect contractual cash flows; and
b) The contractual terms of the financial assets give rise on specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the principal amount outstanding.
Financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and
loss. The losses arising from impairment are recognised in the statement of profit and loss. This category
generally applies to trade and other receivables.
Financial assets measured at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at fair value through other comprehensive income if both of the following conditions
are met:
a) The financial asset is held within a business model whose objective is achieved by both collecting the
contractual cash flows and selling financial assets; and
b) The asset''s contractual cash flows represent SPPI.
Financial assets measured at fair value through the statement of profit and loss (FVTPL)
FVTPL is a residual category. Any financial asset, which does not meet the criteria for categorization as at
amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to designate a
financial asset, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election
is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as
''accounting mismatch'').
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
primarily derecognised (i.e. removed from the Company''s balance sheet) when:
a) The contractual rights to the cash flows from the financial asset have expired, or
b) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a ''pass-through
''arrangement; and either:
i) The Company has transferred substantially all the risks and rewards of the asset, or
ii) The Company has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.
Impairment of financial assets
The Company assesses impairment based on expected credit loss (ECL) model to the following:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other comprehensive income
Expected credit losses are measured through a loss allowance at an amount equal to:
a) The 12 month''s 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
b) Full time expected credit losses (expected credit losses that result from all possible default events over the
life of the financial instrument).
The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables.
Under the simplified approach, the Company uses a provision matrix to determine impairment loss allowance on
the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the
expected life of the trade receivable which is adjusted for management''s estimates. At every reporting date, the
historical observed default rates are updated and changes in the forward-looking estimates are analysed.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through statement of
profit and loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an
effective hedge, as appropriate. All financial liabilities are recognised initially at fair value.
The Company''s financial liabilities include trade and other payables.
Subsequent measurement
a) Financial liabilities measured at amortised cost;
b) Financial liabilities subsequently measured at fair value through statement of profit and loss (FVTPL)
Trade and other payables
These amounts represent liability for goods and services provided to the Company prior to the end of financial
year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due
within 12 months after the reporting period. They are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method.
Derecognition
A financial liability is derecognised 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 recognised in the Statement of Profit and Loss.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when, and
only when, there is a legally enforceable right to offset the recognised amount and there is intention either to
settle on net basis or to realise the assets and to settle the liabilities simultaneously.
f) Inventories
Inventories are valued at cost or net realizable value, whichever is lower. The comparison of cost vs NRV is made
on item to item basis. The basis of determining cost for various categories of inventories is as follows:
g) Employee Benefits
i) Short-term employee benefits
Employee benefits payable wholly within twelve months of rendering the service are classified as short-term
employee benefits and are recognised in the period in which the employee renders the related service.
ii) Post-employment benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the Company makes specified
contributions towards Government administered provident fund scheme. The contributions are charged to the
Statement of Profit and Loss of the year, when the contributions to the respective funds are due. There are no
obligations other than the contributions payable to the respective fund.
Defined benefit plans
All employees are covered under Employees'' Gratuity Scheme, which is a defined benefit plan. The Company
contributes to a fund maintained with Life Insurance Corporation of India (LIC) on the basis of the year-end
liability determined based on actuarial valuation using the Projected Unit Cost Method. Remeasurements of the
net defined benefit liability, which comprise actuarial gains/losses, the return on plan assets (excluding interest)
and the effect of the asset ceiling (if any, excluding interest) are recognized in Other Comprehensive Income. Net
interest expense and other expenses related to defined benefit plans are recognised in the Statement of Profit
and Loss.
In respect of all employees, the Company makes contributions determined based on specified percentage of
salaries, towards Provident Fund to a Company managed Provident Fund Trust. These contributions are
charged to Statement of Profit and Loss as they accrue. The Company has an obligation to fund any shortfall in
the Trust Fund, as determined based on the year end actuarial valuation using the projected unit credit method.
Short- term employee benefits
Provision for short-term employee benefits comprise of compensated absences. These are measured on the
basis of year-end actuarial valuation in line with the Company''s policy for compensated absences.
Remeasurement gains or losses are recognized in the Statement of Profit and Loss in the period in which they
arise.
h) Revenue recognition
Sale of products
Nature and timing of satisfaction of performance obligations, including significant payment terms: The timing of
transfer of control is driven by the individual terms of contracts. Invoices are usually payable within agreed credit
terms.
Revenue is recognised when a customer obtains control of the goods which is driven by the individual terms of
contracts. For contracts that permit the customer to return an item, revenue is recognised to the extent that it is
highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur.
Other income
Interest income or expense is recognised using the effective interest method.In calculating interest income, the
effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired).
Export incentives
Export incentives are accounted on accrual basis based in shipment of eligible exports and there is no significant
uncertainty regarding realization.
Claims
Insurance and other claims are accounted to the extent lodged with the appropriate authorities and only when it is
reasonably certain that the ultimate collection will be made.
i) Foreign currency transactions
Transactions and balances:
Transactions denominated in foreign currencies are translated into functional currency at the exchange rates
prevailing at the time of transaction.
Monetary items denominated in foreign currencies at the year-end are translated into the functional currency at
the exchange rate prevailing on the balance sheet date.
Non-monetary items are carried at historical cost using the exchange rates on the date of transaction, other than
those measured at fair value. 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.
Any income or expense on account of foreign exchange difference either on settlement or on translation is
recognized in the Statement of Profit and Loss.
j) Taxes
Income tax comprises current and deferred tax. It is recognised in the Statement of Profit and Loss except to the
extent that it relates to a business combination or to an item recognised directly in equity or in other
comprehensive income.
Current Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any
adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the
best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to
income taxes. It is measured using Income tax rates (and tax laws) enacted or substantively enacted by the
reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the
recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Deferred Tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred
tax is also recognised in respect of carried forward tax losses and tax credits.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available
against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit
may not be available. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date to
evaluate if the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the year when the asset is realised or the
liability is settled, based on the Income tax laws that have been enacted or substantively enacted by the reporting
date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the
Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different
tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and
liabilities will be realised simultaneously.
Mar 31, 2024
Note 1
Company overview
Panasonic Energy India Company Limited (''the Company'') is a company domiciled in India and incorporated under the provisions of Companies Act, 1956. The Company has its registered office at GIDC Makarpura, Vadodara - 390010, Gujarat. The Company is engaged in business of manufacturing dry cell batteries.
Note 2
Basis of preparation of Ind AS financial statements Statement of compliance
These financial statements have been prepared in accordance with Indian Accounting Standards (''Ind AS'') as per the Companies (Indian Accounting Standards) Rules, 2015 prescribed under Section 133 of Companies Act, 2013 (''the Act'')and other relevant provision of the act, read with Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time.
Functional and presentation currency
These financial statements are presented in Indian Rupees (INR) which is the Company''s functional currency. Basis of measurement
These financial statements have been prepared on the historical cost basis except for defined benefit plans - net defined benefit (asset) / liabilities which have been measured at fair value based on principles of Ind AS 19 -"Employee benefits" and certain financial assets and liabilities are measured at fair value (refer note 34) for list of financial assets and liabilities measured at fair value.
The Company adopted Disclosures of Accounting policies (Amendments to Ind As 1) from 1 April 2023, although the amendments did not result in any changes in the accounting policies themselves, they impacted the accounting policy information disclosed in the financial statements.
The amendments require the disclosure of ''material'' rather than ''significant'' accounting policies. The amendments also provide guidance on the application of materiality to disclosure of accounting policies, assisting the entities to provide useful, entity-specific accounting policy information that users need to understand other information in the financial statement.
Current/Non-current classification
Based on the time involved between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has identified twelve months as its operating cycle for determining current and non-current classification of assets and liabilities in the balance sheet.
Use of estimates and judgement
The preparation and presentation of financial statements requires the Company''s Management (''the Management'') to make certain judgments, estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Such estimates and assumptions are based on Management''s evaluation of relevant facts and circumstances as on the date of financial statements. The actual outcome may differ from these estimates. Management believes these assumptions are reasonable and prudent.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to the accounting estimates are recognised prospectively.
Significant accounting judgments, estimates and assumptions
The preparation of financial statements in conformity with Ind AS requires Management to make estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities. Actual results could differ from those estimates.
Estimates and judgments are reviewed on an ongoing basis. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstance. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.
a) Impairment of Property, Plant and Equipment (PPE)
The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant decline in asset''s value, significant changes in the technological, market, economic or legal environment, market interest rates etc.) and internal factors (obsolescence or physical damage of an asset, poor economic performance of the asset etc.) which could result in significant change in recoverable amount of the PPE.
b) Determination of the estimated useful lives
Useful lives of all PPE are based on the estimation done by the Management which is in line with the useful lives as prescribed in Part ''C'' of Schedule II to the Act. In cases, where the useful lives are different from those prescribed in Schedule II and in case of intangible assets, they are estimated by Management based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers'' warranties and maintenance support.
c) Current and deferred taxes
Significant management judgment is required to determine the amount of current and deferred taxes that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
d) Employee benefits
Management''s estimate of the Company''s obligation is determined based on actuarial valuation. 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, these liabilities are highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds. Future salary increases and gratuity increases are based on expected future inflation rates for India.
Refer note 37 for details of the key assumptions used in determining the accounting of these plans.
e) Management Estimate Related Provisions and Contingent Liability
Provisions & Contingent Liabilities: The Company exercises judgement in measuring and recognizing provisions and the exposures to contingent liabilities which is related to pending litigation or other outstanding claims. If a loss arising from these litigations and/or claims is probable and can be reasonably estimated, the management record the amount of the estimated loss. If a loss is reasonably possible, but not probable, the management discloses the nature of the significant contingency and, if quantifiable, the possible loss that could result from the resolution of the matter. As additional information becomes available, the management reassess any potential liability related to these litigations and claims and may need to revise the estimates. Such revisions or ultimate resolution of these matters could materially impact the results of operations, cash flows or financial statements of the Company.
Note 3
Material accounting policies
a) Property, plant and equipment (PPE)
Recognition and measurement
Items of PPE are measured at cost less accumulated depreciation and accumulated impairment losses, if any. Cost of an item of PPE comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
Capital work-in-progress is stated at cost. All the direct expenditure related to implementation including incidental expenditure incurred during the period of implementation of a project, till it is commissioned, is accounted as Capital work-in-progress and after commissioning the same is transferred / allocated to the respective item of PPE. Pre-operative costs, being indirect in nature, are expensed to the Statement of Profit and Loss as and when incurred.
If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE.
Any gain or loss on disposal of an item of PPE is recognised in the Statement of Profit and Loss.
Subsequent expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
b) Depreciation
Depreciation on tangible assets has been provided on Straight Line Method /Written Down Value method as per the useful life prescribed in schedule II of the Companies Act, 2013 for respective PPE except for below assets where useful life is determined by the Management of the Company basis internal technical assessment. In respect of PPE purchased or ready to use during the year, depreciation is provided on pro-rata basis from the date on which such asset is purchased or ready to use. Freehold land is not depreciated. Leasehold land is amortised over the period of lease.
|
Assets description |
Useful life (in years) |
|
Buildings |
10 |
|
Plant and Machinery |
15-20 |
|
Dies |
20 |
|
Electrical installations |
10-20 |
|
Furniture and fixtures |
10-20 |
|
Intangible Assets |
3-5 |
The residual value, useful life and method of depreciation of PPE are reviewed at each reporting date and adjusted prospectively, as appropriate.
c) Intangible assets
Recognition and measurement
Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of the asset can be measured reliably. Intangible assets are initially measured at cost. Such intangible assets are subsequently measured at cost less accumulated amortisation and any accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in the Statement of Profit and Loss as incurred.
Amortisation
Intangible assets are amortised over the estimated period of benefit i.e. 3 to 5 years.
d) Impairment of non-financial assets
The Company''s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cashgenerating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, 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 CGU (or the asset).
The Company''s corporate assets (e.g., central office building for providing support to various CGUs) do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the Statement of Profit and Loss except for properties previously revalued with the revaluation surplus taken to Other Comprehensive Income (OCI). For such properties, the impairment is recognised in OCI up to the amount of any previous revaluation surplus.
An impairment loss in respect of assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognized.
e) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All the financial assets are recognized initially at fair value, plus in the case of financial assets not recorded at fair value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial assets. However, trade receivable that do not contain a significant financing component are measured at transaction price.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified into:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other comprehensive income (FVTOCI);
c) Financial assets measured at fair value through statement of profit and loss (FVTPL).
The Company classifies its financial assets in the above mentioned categories based on:
a) The Company''s business model for managing the financial assets;
b) The contractual cash flows characteristics of the financial asset.
Financial assets measured at amortised cost
A financial asset is measured at amortised cost if both of the following conditions are met:
a) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
b) The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and
loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade and other receivables.
Financial assets measured at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
a) The financial asset is held within a business model whose objective is achieved by both collecting the contractual cash flows and selling financial assets; and
b) The asset''s contractual cash flows represent SPPI.
Financial assets measured at fair value through the statement of profit and loss (FVTPL)
FVTPL is a residual category. Any financial asset, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to designate a financial asset, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch'').
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company''s balance sheet) when:
a) The contractual rights to the cash flows from the financial asset have expired, or
b) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through ''arrangement; and either:
i) The Company has transferred substantially all the risks and rewards of the asset, or
ii) The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
The Company assesses impairment based on expected credit loss (ECL) model to the following:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other comprehensive income Expected credit losses are measured through a loss allowance at an amount equal to:
a) The 12 month''s 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
b) Full time expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables. Under the simplified approach, the Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable which is adjusted for management''s estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through statement of profit and loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value.
The Company''s financial liabilities include trade and other payables.
Subsequent measurement
a) Financial liabilities measured at amortised cost;
b) Financial liabilities subsequently measured at fair value through statement of profit and loss (FVTPL) Trade and other payables
These amounts represent liability for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Derecognition
A financial liability is derecognised 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 recognised in the Statement of Profit and Loss.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when, and only when, there is a legally enforceable right to offset the recognised amount and there is intention either to settle on net basis or to realise the assets and to settle the liabilities simultaneously.
f) Inventories
Inventories are valued at cost or net realizable value, whichever is lower. The basis of determining cost for various categories of inventories is as follows:
|
Inventory |
Cost Formula |
|
Raw materials & traded goods |
First-In-First-Out basis. - Further it includes- expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their present location and condition |
|
Material, traded goods in transit |
At Cost to date |
|
Work-in-process |
At raw material cost plus conversion cost, wherever applicable |
|
Finished goods |
Cost represents material, labour and manufacturing expenses and other incidental costs to bring the inventory in present location and condition. |
|
Stores, Spares and Tools |
First-In-First-Out basis. |
g) Employee Benefits
i) Short-term employee benefits
Employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits and are recognised in the period in which the employee renders the related service.
ii) Post-employment benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the Company makes specified contributions towards Government administered provident fund scheme. The contributions are charged to the Statement of Profit and Loss of the year, when the contributions to the respective funds are due. There are no obligations other than the contributions payable to the respective fund.
Defined benefit plans
All employees are covered under Employees'' Gratuity Scheme, which is a defined benefit plan. The Company
contributes to a fund maintained with Life Insurance Corporation of India (LIC) on the basis of the year-end liability determined based on actuarial valuation using the Projected Unit Cost Method. Remeasurements of the net defined benefit liability, which comprise actuarial gains/losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest) are recognized in Other Comprehensive Income. Net interest expense and other expenses related to defined benefit plans are recognised in the Statement of Profit and Loss.
In respect of all employees, the Company makes contributions determined based on specified percentage of salaries, towards Provident Fund to a Company managed Provident Fund Trust. These contributions are charged to Statement of Profit and Loss as they accrue. The Company has an obligation to fund any shortfall in the Trust Fund, as determined based on the year end actuarial valuation using the projected unit credit method.
Long- term employee benefits
Provision for long-term employee benefits comprise of compensated absences. These are measured on the basis of year-end actuarial valuation in line with the Company''s policy for compensated absences. Remeasurement gains or losses are recognized in the Statement of Profit and Loss in the period in which they arise.
h) Revenue recognition
Sale of goods
Revenue is recognised upon transfer of control of promised goods to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods. Revenue from the sale of goods is recognised at the point in time when control is transferred to the customer which is usually on dispatch / delivery.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, price concessions, incentives, and returns, if any, as specified in the contracts with the customers. Revenue excludes taxes collected from customers on behalf of the government. Accruals for discounts/incentives and returns are estimated (using the most likely method) based on accumulated experience and underlying schemes and agreements with customers. Due to the short nature of credit period given to customers, there is no financing component in the contract.
Interest income is accounted for on a time proportion basis taking into account the amount outstanding and the rate applicable.
Export incentives
Export incentives are accounted on accrual basis based in shipment of eligible exports and there is no significant uncertainty regarding realization.
Claims
Insurance and other claims are accounted to the extent lodged with the appropriate authorities and only when it is reasonably certain that the ultimate collection will be made.
i) Foreign currency transactions
Transactions and balances:
Transactions denominated in foreign currencies are translated into functional currency at the exchange rates prevailing at the time of transaction.
Monetary items denominated in foreign currencies at the year-end are translated into the functional currency at the exchange rate prevailing on the balance sheet date.
Non-monetary items are carried at historical cost using the exchange rates on the date of transaction, other than those measured at fair value. 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.
Any income or expense on account of foreign exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.
j) Taxes
Income tax comprises current and deferred tax. It is recognised in the Statement of Profit and Loss except to the extent that it relates to a business combination or to an item recognised directly in equity or in other comprehensive income.
Current Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using Income tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Deferred Tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and tax credits.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date to evaluate if the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on the Income tax laws that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
k) 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, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the Statement of Profit and Loss net of any reimbursements.
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.
Contingent liability is disclosed in the case of:
a) A present obligation arising from the past events, when it is not probable that an outflow of resources will be required to settle the obligation;
b) A present obligation arising from the past events, when no reliable estimate is possible;
c) A possible obligation arising from the past events, unless the probability of outflow of resources is remote.
Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets.
Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.
Final dividend on shares is recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company''s Board of Directors.
l) Leases
Company as a lessee Ind AS 116 - Leases:
Ind AS 116 Leases replaces existing lease accounting guidance i.e. Ind AS 17 Leases. It sets out principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases, except short-term leases and leases for low-value items, under a single on-balance sheet lease accounting model. 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 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 costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the site on which it is located, less any lease incentives received. Certain lease arrangements include the option to extend or terminate the lease before the end of the lease term.
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 of the right-of-use asset or the end of the lease term. The estimated useful lives of rightof-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 remeasurements 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 incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole.
Lease payments included in the measurement of the lease liability comprises of fixed payments, including insubstance fiixed payments, amounts expected to be payable under a residual value guarantee and the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option.
The lease liability is subsequently remeasured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if Company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the rightofuse asset or is recorded in the Statement of Profit andLoss if the carrying amount of the right-of-use asset has been reduced to zero.
Lease liability and the right of use asset have been separately presented in the balance sheet and lease payments have been classified as financing activities.
The Company has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of less than or equal to 12 months with no purchase option and assets with low value leases. The Company recognises the lease payments associated with these leases as an expense in Statement of Profit and Loss over the lease term. The related cash flows are classified as operating activities.
m) Fair Value Measurement
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as under, based on the lowest level input that is significant to the fair value measurement as a whole:
⢠Level I - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
⢠Level II - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
⢠Level III - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The Company does not have any financial instruments which are measured at fair value. The market rate used for this purpose is based on Level III valuation techniques.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes (Refer Note 34):
1. Disclosures for valuation methods, significant estimates and assumptions
2. Quantitative disclosures of fair value measurement hierarchy
3. Financial instruments (including those carried at amortised cost)
n) OperatingSegments
The Company''s Chairman and Managing Director alongwith Board of Directors allocate resources and assess the performance of the Company. Thus, they are the Chief Operating Decision Maker (CODM). The CODM monitor the operating results of the business as one segment, hence no separate segments need to be disclosed.
o) Dividend
The Company recognises a liability to pay dividend to equity holders when the distribution is authorised, and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
p) Earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.
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 shares, and the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
q) Share capital
The paid-up equity capital of the company as on March 31,2024 was INR 750 lakhs. The said shares is listed on the BSE Limited. There was no change in the paid-up capital of the company, during the year under audit.
Note 4
New and revised Indian Accounting Standards in issue but not yet effective
Ministry of Corporate Affairs (''MCAâ) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year March 31,2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
Mar 31, 2018
Significant accounting policies
a) Property, plant and equipment (PPE)
Recognition and measurement
Items of PPE are measured at cost, which includes capitalised borrowing costs, less accumulated depreciation and accumulated impairment losses, if any. Cost of an item of PPE comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
Capital work-in-progress is stated at cost. All the direct expenditure related to implementation including incidental expenditure incurred during the period of implementation of a project, till it is commissioned, is accounted as Capital work-in-progress and after commissioning the same is transferred / allocated to the respective item of PPE. Preoperating costs, being indirect in nature, are expensed to the Statement of Profit and Loss as and when incurred.
If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE.
Any gain or loss on disposal of an item of PPE is recognised in Statement of Profit and Loss.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its PPE recognised as at 01 April, 2016 measured as per the previous Indian GAAP and use that carrying value as the deemed cost of the PPE.
Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
b) Depreciation
Depreciation on tangible assets has been provided on straight line method / written down value method as per the useful life of respective PPE, as determined by the management of the Company. In respect of PPE purchased or put to use during the year, depreciation is provided on pro-rata basis from the date on which such asset is purchased or put to use. Freehold land is not depreciated. Leasehold land is amortised over the period of lease.
The residual value, useful life and method of depreciation of PPE are reviewed at each reporting date and adjusted prospectively, as appropriate.
c) Intangible assets
Recognition and measurement
Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of the asset can be measured reliably.
Intangible assets are initially measured at cost. Such intangible assets are subsequently measured at cost less accumulated amortisation and any accumulated impairment losses.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its intangible assets recognised as at 01 April, 2016 measured as per the previous Indian GAAp and use that carrying value as the deemed cost of the intangible assets.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in Statement of Profit and Loss as incurred.
Amortisation
Intangible assets are amortised over the estimated period of benefit i.e. 3 to 5 years.
Impairment of non-financial assets
The Company''s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, 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 CGU (or the asset).
The Company''s corporate assets (e.g., central office building for providing support to various CGUs) do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit and loss except for properties previously revalued with the revaluation surplus taken to Other Comprehensive Income (OCI). For such properties, the impairment is recognised in OCI up to the amount of any previous revaluation surplus.
An impairment loss in respect of assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognized.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
A financial asset is recognised in the balance sheet when the Company becomes party to the contractual provisions of the instrument. At initial recognition, the Company measures a financial asset at its fair value plus or minus, in the case of a financial asset not at fair value through statement of profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified into:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other comprehensive income (FVTOCI);
c) Financial assets measured at fair value through statement of profit and loss (FVTPL)
The Company classifies its financial assets in the above mentioned categories based on:
a) The Company''s business model for managing the financial assets;
b) The contractual cash flows characteristics of the financial asset.
Financial assets measured at amortised cost
A financial asset is measured at amortised cost if both of the following conditions are met:
a) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows;
b) The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade and other receivables.
Financial assets measured at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
a) The financial asset is held within a business model whose objective is achieved by both collecting the contractual cash flows and selling financial assets;
b) The asset''s contractual cash flows represent SPPI.
Financial assets measured at fair value through the statement of profit and loss (FVTPL)
FVTPL is a residual category. Any financial asset, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to designate a financial asset, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch'').
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company''s balance sheet) when:
a) The contractual rights to the cash flows from the financial asset have expired, or
b) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either:
i) The Company has transferred substantially all the risks and rewards of the asset, or
ii) The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
The Company assesses impairment based on expected credit loss (ECL) model to the following:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other comprehensive income Expected credit losses are measured through a loss allowance at an amount equal to:
a) The 12 month''s 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
b) Full time expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables or contract revenue receivables. Under the simplified approach, the Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable which is adjusted for management''s estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through statement of profit and loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables and short term borrowings.
Subsequent measurement
a) Financial liabilities measured at amortised cost;
b) Financial liabilities subsequently measured at fair value through statement of profit and loss (FVTPL)
Trade and other payables
These amounts represent liability for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Derecognition
A financial liability is derecognised 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 recognised in the Statement of Profit and Loss.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when, and only when, there is a legally enforceable right to offset the recognised amount and there is intention either to settle on net basis or to realise the assets and to settle the liabilities simultaneously.
f) Inventories
Inventories are valued at cost or net realizable value, whichever is lower. The basis of determining cost for various categories of inventories is as follows:
g) Employee Benefits
i) Short-term employee benefits
Employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits and are recognised in the period in which the employee renders the related service.
ii) Post-employment benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the Company makes specified contributions towards Government administered provident fund scheme. The contributions are charged to the Statement of Profit and Loss of the year, when the contributions to the respective funds are due. There are no obligations other than the contributions payable to the respective fund.
Defined benefit plans
All employees are covered under Employees'' Gratuity Scheme, which is a defined benefit plan. The Company contributes to a fund maintained with Life Insurance Corporation of India (LIC) on the basis of the year-end liability determined based on actuarial valuation using the Projected Unit Cost Method. Remeasurements of the net defined benefit liability, which comprise actuarial gains / losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest) are recognized in Other comprehensive income. Net interest expense and other expenses related to defined benefit plans are recognised in the Statement of Profit and Loss.In respect of all employees, the Company makes contributions determined based on specified percentage of salaries, towards Provident Fund to a Company managed Provident Fund Trust. These contributions are charged to Statement of Profit and Loss as they accrue. The Company has an obligation to fund any shortfall in the Trust Fund, as determined based on the year end actuarial valuation using the projected unit credit method.
Long- term employee benefits
Provision for long-term employee benefits comprise of compensated absences. These are measured on the basis of year-end actuarial valuation in line with the Company''s rules for compensated absences. Remeasurement gains or losses are recognized in profit or loss in the period in which they arise.
h) Revenue recognition Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable including excise duty. However, revenue is accounted net of returns, related discounts / volume rebates and Goods and Services Tax (GST).
Interest income
Interest income is accounted for on a time proportion basis taking into account the amount outstanding and the rate applicable.
Export incentives
Export incentives are accounted on accrual basis based in shipment of eligible exports and there is no significant uncertainty regarding realization.
Claims
Insurance and other claims are accounted to the extent lodged with the appropriate authorities and only when it is reasonably certain that the ultimate collection will be made.
i) Foreign Currency Transactions
Transactions and Balances:
Transactions denominated in foreign currencies are translated into functional currency at the exchange rates prevailing at the time of transaction.
Monetary items denominated in foreign currencies at the year-end are translated into the functional currency at the exchange rate prevailing on the balance sheet date.
Non-monetary items are carried at historical cost using the exchange rates on the date of transaction, other than those measured at fair value. 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.
Any income or expense on account of foreign exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.
j) Taxes
Income tax comprises current and deferred tax. It is recognised in Statement of Profit and Loss except to the extent that it relates to a business combination or to an item recognised directly in equity or in other comprehensive income.
Current Tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using Income tax rates (and Income tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
Deferred Tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and tax credits.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date to evaluate if the related tax benefit will be realised.
Deferred Tax is measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on the Income Tax Law that have been enacted or substantively enacted by the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
k) 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, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent liability is disclosed in the case of:
a) A present obligation arising from the past events, when it is not probable that an outflow of resources will be required to settle the obligation;
b) A present obligation arising from the past events, when no reliable estimate is possible;
c) A possible obligation arising from the past events, unless the probability of outflow of resources is remote.
Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets. Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.
l) Leases
Company as a lessee
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to Statement of Profit and Loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
m) Fair Value Measurement
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as under, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level I - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
- Level II - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
- Level III - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The Company does not have any financial instruments which are measured at fair value. The market rate used for this purpose is based on Level III valuation techniques.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes (Refer Note 34):
1. Disclosures for valuation methods, significant estimates and assumptions
2. Quantitative disclosures of fair value measurement hierarchy
3. Financial instruments (including those carried at amortised cost)
n) Segment reporting
The Company''s Board of Directors allocate resources and assess the performance of the Company. Thus, they are the Chief Operating Decision Maker (CODM). The CODM monitor the operating results of the business as one segment, hence no separate segments need to be disclosed.
Mar 31, 2017
i) Basis of preparation of financial statements
The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles in India. The applicable mandatory Accounting Standards (as amended) prescribed under Section 133 of the Companies Act, 2013 read with Rule 7of the Companies (Accounts) Rule, 2014 have been followed in preparation of these financial statements.
ii) Use of estimates
The preparation of financial statements requires the management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities as at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Management believes that these estimates and assumptions are reasonable and prudent. However, actual results could differ from estimates. Differences between the actual results and the estimates are recognized in the period in which the same are known/materialized.
iii) Revenue recognition
a. Sales
Revenue from sale of goods is recognized when the significant risks and rewards in respect of ownership are transferred to the buyer under the terms of contract. Sales are inclusive of excise duty but are net of sales returns, sales tax and rate difference adjustments if any.
b. Interest Income
Interest on investments is booked on a time proportion basis taking into account the amounts invested and the rate of interest.
c. Insurance Claims
Insurance and other claims are recognized only when it is reasonably certain that the ultimate collection will be made.
d. Export incentives
Export incentives are accrued in the year when the right to receive credit is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate realization/ utilization of such benefits/ duty credit.
e. Other Income
Other income is recognized on accrual basis except when realization of such income is uncertain.
iv) Property, Plant & Equipment
Property, Plant & Equipment (PPE) comprises of Tangible assets and Capital Work in progress. PPE are stated at cost, net of tax/duty credit availed, if any, after reducing accumulated depreciation until the date of the Balance Sheet. The cost of PPE comprises of its purchase price or its construction cost (net of applicable tax credit, if any), any cost directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended by the management and decommissioning costs. Direct costs are capitalized until the asset is ready for use and includes borrowing cost capitalized in accordance with the Company''s accounting policy. Capital work in progress includes the cost of PPE that are not yet ready for the intended use.
An item of PPE is de-recognized upon disposal or when no future economic benefits are expected to arise from the continued use of the PPE. Any gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the PPE and is recognized in the Statement of Profit and Loss.
The Company has provided for depreciation using straight line method for PPE lying at Pithampur Unit and reducing balance method for PPE lying at Vadodara Unit.
Leasehold land is amortized over the period of lease.
The estimated useful lives and residual values are reviewed on an annual basis and if necessary, changes in estimates are accounted for prospectively.
Depreciation on additions/deletions to PPE during the year is provided for on pro-rata basis with reference to the date of additions/deletions.
An item of PPE is de-recognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognized in the Statement of Profit and Loss.
v) Intangible Assets and amortization
Intangible Assets are recognized only if it is probable that the future economic benefits that are attributable to the assets will flow to the enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets not ready for the intended use, if any, are disclosed as Intangible assets under development. Intangible assets are amortized over the estimated period of benefit, not exceeding ten years.
vi) Impairment of assets
The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit and Loss. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.
viii) Foreign Currency Transactions
Foreign currency transactions are recorded at the rate of exchange prevailing on the date of the transactions. At the year end, all the monetary assets and liabilities denominated in foreign currency are restated at the closing exchange rates. Exchange differences resulting from the translation of such monetary assets and liabilities and also the exchange differences on settlement of foreign currency transactions are recognized in the Statement of Profit and Loss.
ix) Research & Development
Expenditure on design and production of prototypes relating to research and development has been charged to statement of profit and loss. Capital expenditure relating to research and development is treated as fixed assets.
x) 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 Statement of Profit and Loss on accrual basis.
xi) Taxes on Income
a. Current Tax
Provision for Income Tax is ascertained on the basis of assessable profit computed in accordance with the provisions of Income Tax Act, 1961.
b. Deferred Tax
Deferred tax assets and liabilities are recognized for future tax consequence attributable to timing differences between taxable income and accounting income that are measured at relevant enacted tax rates. However, deferred tax assets on the timing differences when unabsorbed depreciation and losses carried forward exist, are recognized only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. At each balance sheet date the company reassesses unrecognized deferred tax assets, to the extent they become reasonably certain or virtually certain of realization, as the case may be.
xii) Employee Benefits
a. Post-employment benefits
i Defined Contribution plan
Company''s contribution paid/payable for the year to defined contribution retirement benefit schemes are charged to Statement of Profit and Loss.
ii Defined Benefit plan
Company''s liabilities towards defined benefit schemes are determined using the Projected Unit Credit Method. Actuarial valuations under the Projected Unit Credit Method are carried out at the balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise it is amortized on straight-line basis over the remaining average period until the benefits become vested.
The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as reduced by the fair value of plan assets.
b. Short-term employee benefits.
Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized undiscounted during the period employee renders services. These benefits include special allowance.
c. Long term employee benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as an actuarially determined liability at present value of the defined benefit obligation at the balance sheet date.
xiii) Provisions, Contingent liabilities and Contingent assets
The Company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made. Contingent assets are neither recognized, nor disclosed.
Mar 31, 2015
I) Basis of preparation of financial statements
The financial statements are prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India. The applicable mandatory Accounting Standards
specified under Section 133 of the Companies Act, 2013 read with Rule 7
of the Companies (Accounts) Rule, 2014 of India have been followed in
preparation of these financial statements.
ii) Use of estimates
The preparation of financial statements requires the management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities as at the date of
the financial statements and the reported amount of revenues and
expenses during the reporting period. Management believes that these
estimates and assumptions are reasonable and prudent. However, actual
results could differ from estimates. Differences between the actual
results and the estimates are recognised in the period in which the
same are known/materialised.
iii) Revenue recognition
a. Sales
Revenue from sale of goods is recognized when the significant risks and
rewards in respect of ownership of products are transferred to the
buyer under the terms of contract. Sales are inclusive of excise duty
but are net of sales returns, sales tax and rate difference adjustments
if any.
b. Interest Income
Interest on investments is booked on a time proportion basis taking
into account the amounts invested and the rate of interest.
c. Insurance Claims
Insurance and other claims are recognised only when it is reasonably
certain that the ultimate collection will be made.
d. Export incentives
Export incentives are accrued in the year when the right to receive
credit is established in respect of exports made and are accounted to
the extent there is no significant uncertainty about the measurability
and ultimate realization/ utilization of such benefits/ duty credit.
e. Other Income
Other income is recognized on accrual basis except when realisation of
such income is uncertain.
iv) Fixed Assets
Fixed Assets are stated at cost, net of tax/duty credit availed, if
any, after reducing accumulated depreciation until the date of the
Balance Sheet. Direct cost are capitalized until the asset are ready
for use and include financial cost relating to any borrowing
attributable to acquisition. Capital work in progress includes the cost
of fixed assets that are not yet ready for the intended use.
v) Depreciation & Amortization
The Company has provided for depreciation using straight line method
for fixed assets lying at Pithampur unit and written down value method
for fixed assets lying at Vadodara Unit over the useful life of the
fixed assets as prescribed under Part C of Schedule II of the Companies
Act, 2013 except in the case of following assets which are depreciated
based on useful life derived by technical evaluation:
Asset Description Assets Useful life (in Years)
Plant and Machinery 20
Leasehold land is amortised over the period of lease.
vi) Intangible Assets and amortisation
Intangible assets are recognized only if it is probable that the future
economic benefits that are attributable to the assets will flow to the
enterprise and the cost of the assets can be measured reliably. The
intangible assets are recorded at cost and are carried at cost less
accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortized over the estimated period of benefit,
not exceeding ten years.
vii) Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount.The reduction is treated as an impairment loss and is recognized
in the Statement of Profit and Loss. If at the balance sheet date there
is an indication that if previously assessed impairment loss no longer
exists, the recoverable amount is reassessed and the asset is reflected
at the recoverable amount.
viii) Inventories
Inventories are valued at cost or net realizable value, whichever is
lower. The basis of determining cost for various categories of
inventories is as follows:
Inventories Cost Formula
Raw materials First-in-first-out basis.
Material & consumables At Invoice price.
in transit
Work-in-process At raw material cost plus conversion cost,
wherever applicable.
Finished goods Cost represents material, labour and
manufacturing expenses and other incidental
costs to bring the inventory in present
location and condition.
Consumable stores, First-in-first-out basis.
spares and tools
ix) Foreign Currency Transactions
Foreign currency transactions are recorded at the rate of exchange
prevailing on the date of the transactions. At the year end, all the
monetary assets and liabilities denominated in foreign currency are
restated at the closing exchange rates. Exchange differences resulting
from the translation of such monetary assets and liabilities and also
the exchange differences on settlement of foreign currency transactions
are recognized in the Statement of Profit and Loss.
x) Research & Development
Expenditure on the design and production of prototypes relating to
research & development has been charged to the Statement of Profit &
loss. Capital expenditure relating to research & development is treated
as fixed assets.
xi) 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 Statement of Profit
and Loss on accrual basis.
xii) Taxes on Income
a. Current Tax
Provision for Income Tax is ascertained on the basis of assessable
profit computed in accordance with the provisions of Income Tax Act,
1961.
b. Deferred Tax
Deferred tax assets and liabilities are recognised for future tax
consequence attributable to timing differences between taxable income
and accounting income that are measured at relevant enacted tax rates.
However, deferred tax assets on the timing differences when unabsorbed
depreciation and losses carried forward exist, are recognised only to
the extent that there is virtual certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized. At each balance sheet date the Company reassesses
unrecognised deferred tax assets, to the extent they become reasonably
certain or virtually certain of realisation, as the case may be.
xiii) Employee Benefits
a. Post-employment benefits
i Defined Contribution plan
Company's contribution paid/payable for the year to defined
contribution retirement benefit schemes are charged to Statement of
Profit and Loss.
ii Defined Benefit plan
Company's liabilities towards defined benefit schemes are determined
using the Projected Unit Credit Method. Actuarial valuations under the
Projected Unit Credit Method are carried out at the balance sheet date.
Actuarial gains and losses are recognized in the Statement of Profit
and Loss in the period of occurrence of such gains and losses. Past
service cost is recognized immediately to the extent that the benefits
are already vested and otherwise it is amortized on straight-line basis
over the remaining average period until the benefits become vested.
The retirement benefit obligation recognized in the balance sheet
represents the present value of the defined benefit obligation as
reduced by the fair value of plan assets.
b. Short-term employee benefits
Short-term employee benefits expected to be paid in exchange for the
services rendered by employees are recognized undiscounted during the
period employee renders services. These benefits include special
allowance.
c. Long term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related services are recognized as an actuarially determined liability
at present value of the defined benefit obligation at the balance sheet
date.
xiv) Government Grants
State subsidy received from Madhya Pradesh State Industrial Development
Corporation for setting up unit in the specified backward area has been
credited to Capital state subsidy reserves account.
xv) Provisions, Contingent liabilities and Contingent assets
The Company recognizes a provision when there is a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation that the likelihood of outflow of
resources is remote, no provision or disclosure is made. Contingent
assets are neither recognised, nor disclosed.
Mar 31, 2014
I) Basis of preparation of financial statements
The financial statements are prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India. The applicable mandatory Accounting Standards
notified under the Companies Act, 1956 read with the general circular
15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs
in respect of section 133 of the Companies Act, 2013 and requirements
of the Companies Act, 1956 and the Companies Act, 2013 (to the extent
notified) of India have been followed in preparation of these financial
statements.
ii) Use of estimates
The preparation of financial statements requires the management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities as at the date of
the financial statements and the reported amount of revenues and
expenses during the reporting period. Management believes that these
estimates and assumptions are reasonable and prudent. However, actual
results could differ from estimates. Differences between the actual
results and the estimates are recognised in the period in which the
same are known/materialised.
iii) Revenue recognition
a. Sales
Revenue from sale of goods is recognized when the significant risks and
rewards in respect of ownership of products are transferred to the
buyer under the terms of contract. Sales are inclusive of excise duty
but are net of sales returns, sales tax and rate difference adjustments
if any.
b. Interest Income
Interest on investments is booked on a time proportion basis taking
into account the amounts invested and the rate of interest.
c. Insurance Claims
Insurance and other claims are recognised only when it is reasonably
certain that the ultimate collection will be made.
d. Export incentives
Export incentives are accrued in the year when the right to receive
credit is established in respect of exports made and are accounted to
the extent there is no significant uncertainty about the measurability
and ultimate realization/ utilization of such benefits/ duty credit.
e. Other Income
Other income is recognized on accrual basis except when realisation of
such income is uncertain.
iv) Fixed Assets
Fixed Assets are stated at cost, net of tax/duty credit availed, if
any, after reducing accumulated depreciation until the date of the
Balance Sheet. Direct cost are capitalized until the asset are ready
for use and include financial cost relating to any borrowing
attributable to acquisition. Capital work in progress includes the cost
of fixed assets that are not yet ready for the intended use.
v) Depreciation
Depreciation on tangible assets has been provided as under:
Vadodara Unit:
Leasehold land is amortised over the period of lease.
Depreciation on fixed assets has been provided on written down method
as per the rates prescribed in Schedule
XIV to the Companies Act, 1956. Depreciation on additions/deletion
during the year is provided on pro-rata basis.
Pithampur Unit:
Leasehold land is amortised over the period of lease.
Depreciation on fixed assets has been provided on straight line method
as per the rates prescribed in Schedule XIV to the Companies Act, 1956.
Depreciation on additions/deletion during the year is provided on
pro-rata basis.
vi) Intangible Assets and amortisation
Intangible assets are recognized only if it is probable that future
economic benefits that are attributable to the assets will flow to the
enterprise and the cost of assets can be measured reliably. The
intangible assets are recorded at cost and are carried at cost less
accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortized over the estimated period of benefit,
not exceeding ten years.
vii) Impairment of assets
The company assesses at each Balance Sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the Statement of Profit & Loss. If at the Balance Sheet
date, there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount.
viii) Investments
Investments are either classified as current or long term based on the
management contention at the time of purchase. Long term investments
are shown at cost. However, when there is decline, other than temporary
in the value of long term investment, the carrying amount is reduced to
recognise the decline. Current investments are stated at lower of cost
or market value.
x) Employee Benefits
a. Post-employment benefits
i Defined Contribution plan
The company''s contribution to defined contribution plan paid/payable
for the year is charged to the Statement of Profit and loss.
ii Defined Benefit plan
The liabilities towards defined benefit schemes are determined using
the Projected Unit Credit method. Actuarial valuations under the
Projected Unit Credit method are carried out at the balance sheet date.
Actuarial gains and losses are recognized in the Statement of Profit
and Loss in the period of occurrence of such gains and losses. Past
service cost is recognized immediately to the extent that the benefits
are already vested and otherwise it is amortized on straight-line basis
over the remaining average period until the benefits become vested. The
retirement benefit obligation recognised in the balance sheet
represents the present value of the defined benefit obligation as
reduced by the plan assets.
b. Short-term employee benefits.
Short-term employee benefits expected to be paid in exchange for the
services rendered by employees are recognised undiscounted during the
period employee renders services. These benefits include salary, wages,
bonus, performance incentives etc.
c. Long term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related services are recognized as an actuarially determined liability
at present value of the defined benefit obligation at the balance sheet
date as reduced by plan assets.
xi) 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 Statement of Profit
and Loss.
xii) Foreign Currency Transactions
Foreign currency transactions during the year are recorded at the rate
of exchange prevailing on the date of the transactions. At the year
end, all the monetary assets and liabilities denominated in foreign
currency are restated at the closing exchange rates. Exchange
differences resulting from the settlement of such transactions and from
the translation of such monetary assets and liabilities are recognised
in the Statement of Profit and Loss.
xiii) Government Grants
State subsidy received from Madhya Pradesh State Industrial Development
Corporation for setting up unit in the specified backward area has been
credited to capital state subsidy reserves account.
xiv) Research & Development
Expenditure on design and production of prototypes relating to research
and development has been charged to statement of profit and loss.
Capital expenditure relating to research and development is treated as
fixed assets.
xv) Taxes on Income
a. Current Tax
The provision for taxation is ascertained on the basis of assessable
profits computed in accordance with the provisions of the Income-tax
Act, 1961.
b. Deferred Tax
Deferred tax assets and liabilities are recognized on timing
differences, being the differences between taxable income and
accounting income, that originate in one period and are capable of
reversal in one or more subsequent periods using tax rates that have
been enacted or substantively enacted at the balance sheet date.
Deferred tax assets, other than on unabsorbed depreciation and carried
forward losses, are recognised only if there is reasonable certainty
that they will be realised in the future. Deferred tax assets in
respect of unabsorbed depreciation and carry forward losses are
recognized if there is virtual certainty that there will be sufficient
future taxable income available to realize such losses. Deferred Tax
assets are reviewed at each balance sheet date for their reliability.
xvi) Provisions, contingent liabilities and contingent assets
The company recognizes a provision when there is a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation that the likelihood of outflow of
resources is remote, no provision or disclosure is made. Contingent
assets are neither recognised nor disclosed.
Mar 31, 2013
I) Basis of preparation of financial statements
The financial statements are prepared as per historical cost convention
and in accordance with the generally accepted accounting principles in
India, the provisions of the Companies Act, 1956 and the applicable
accounting standards.
ii) Use of estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period.
Differences between the actual results and the estimates are recognized
in the period in which the same are known / materialized.
iii) Revenue recognition
a. Sales
Sales are recognized on shipment or dispatch to customer, net of sales
return and discounts and exclusive of VAT/CST and other charges.
b. Other Income
Other Income is recognized only when it is reasonably certain that the
ultimate collection will be made.
Insurance Claims lodged with the insurance company in respect of risks
covered are accounted for as and when admitted by the insurance
company.
c. Interest Income
Interest income is booked on a time proportion basis taking into
account the amounts invested and the rate of interest.
iv) Fixed Assets
Fixed Assets are stated at cost, net of CENVAT / VAT credit, if any,
after reducing accumulated depreciation until the date of Balance
Sheet. Direct costs are capitalized until the assets are ready for use
and include financing costs relating to any borrowing attributable to
acquisition. Capital work-in-progress includes the cost of fixed assets
that are not yet ready for the intended use and the cost of assets not
put to use before the balance sheet date.
v) Depreciation
Depreciation on tangible assets has been provided as under:
Vadodara Unit:
Cost of leasehold land is amortized over the period of lease.
On assets purchased prior to January 1st, 1987 on written down value
method at the rates specified under the Income Tax Rules and on assets
purchased subsequent to January 1st, 1987 on written down value method
at the rates specified in Schedule XIV of the Companies Act, 1956, on
pro-rata basis.
Pithampur Unit:
Cost of leasehold land is amortized over the period of lease.
Depreciation is provided on straight-line method at the rates specified
in Schedule XIV of the Companies Act, 1956, on pro-rata basis, and in
case of capitalization of exchange fluctuations, over the remaining
life of such assets.
vi) Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the Statement of Profit and Loss. If at the balance sheet
date there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount.
vii) Intangible Assets
Intangible Assets are recognized only if it is probable that the future
economic benefits that are attributable to the assets will flow to the
enterprise and the cost of the assets can be measured reliably. The
intangible assets are recorded at cost and are carried at cost less
accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortized over the estimated period of benefit,
not exceeding ten years.
viii) Investments
Investments meant for long term are carried at cost together with all
incidental cost of acquisition. However, when there is decline, other
than temporary in the value of a long term investments, the carrying
amount is reduced to recognize the decline.
ix) Inventories
Inventories are valued at cost or net realizable value, whichever is
lower. The basis of determining cost for various categories of
inventories is as follows -
x) Foreign Currency Transactions
Foreign currency transactions are recorded at the rate of exchange
prevailing on the date of the transactions. At the year end, all the
monetary assets and liabilities denominated in foreign currency are
restated at the closing exchange rates. Exchange differences resulting
from the translation of such monetary assets and liabilities and also
the exchange differences on settlement of foreign currency transactions
are recognized in the Statement of Profit and Loss.
xi) Research & Development
Expenditure on the design and production of prototypes relating to
research & development has been charged to profit & loss account.
Capital expenditure relating to research & development is treated as
fixed assets.
xii) 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 Statement of Profit
and Loss on accrual basis.
xiii) Taxation
a. Current Tax
Provision for Income Tax is ascertained on the basis of assessable
profit computed in accordance with the provisions of Income Tax Act,
1961.
b. Deferred Tax
Deferred tax assets and liabilities are recognised for future tax
consequence attributable to timing differences between taxable income
and accounting income that are measured at relevant enacted tax rates.
However, deferred tax assets on the timing differences when unabsorbed
depreciation and losses carried forward exist, are recognised only to
the extent that there is virtual certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized. At each balance sheet date the company reassesses
unrecognised deferred tax assets, to the extent they become reasonably
certain or virtually certain of realisation, as the case may be.
xiv) Employee Benefits
a. Post-employment benefits
i Defined Contribution plan
Company''s contribution paid/payable for the year to defined
contribution retirement benefit schemes are charged to Statement of
Profit and Loss.
ii Defined Benefit plan
Company''s liabilities towards defined benefit schemes are determined
using the Projected Unit Credit Method. Actuarial valuations under the
Projected Unit Credit Method are carried out at the balance sheet date.
Actuarial gains and losses are recognized in the Statement of Profit
and Loss in the period of occurrence of such gains and losses. Past
service cost is recognized immediately to the extent that the benefits
are already vested and otherwise it is amortized on straight-line basis
over the remaining average period until the benefits become vested.
The retirement benefit obligation recognized in the balance sheet
represents the present value of the defined benefit obligation as
reduced by the fair value of plan assets.
b. Short-term employee benefits
Short-term employee benefits expected to be paid in exchange for the
services rendered by employees are recognized undiscounted during the
period employee renders services. These benefits include special
allowance.
c. Long term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related services are recognized as an actuarially determined liability
at present value of the defined benefit obligation at the balance sheet
date.
xv) Government Grants
State subsidy received from Madhya Pradesh State Industrial Development
Corporation for setting up unit in the specified backward area has been
credited to Capital State Subsidy Reserves Account.
xvi) Provisions, contingent liabilities and contingent assets
The Company recognizes a provision when there is a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation that the likelihood of outflow of
resources is remote, no provision or disclosure is made. Contingent
assets are neither recognised,nor disclosed.
Mar 31, 2012
I) Basis of preparation of financial statements
The financial statements are prepared as per historical cost convention
and in accordance with the generally accepted accounting principles in
India, the provisions of the Companies Act, 1956 and the applicable
accounting standards.
ii) Use of estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period.
Differences between the actual results and the estimates are recognized
in the period in which the same are known/materialized.
iii) Revenue recognition
a. Sales
Sales are recognized on invoicing of goods.
b. Other Income
Other Income is recognized only when it is reasonably certain that the
ultimate collection will be made.
Insurance claims lodged with the insurance company in respect of risks
covered are accounted for as and when admitted by the insurance
company.
c. Interest Income
Interest income is booked on a time proportion basis taking into
account the amounts invested and the rate of interest.
iv) Fixed Assets
Fixed Assets are stated at cost, net of CENVAT / VAT credit, if any,
after reducing accumulated depreciation until the date of Balance
Sheet. Direct costs are capitalized until the assets are ready for use
and include financing costs relating to any borrowing attributable to
acquisition. Capital work-in-progress includes the cost of fixed assets
that are not yet ready for the intended use and the cost of assets not
put to use before the balance sheet date.
v) Depreciation
Depreciation on tangible assets has been provided as under:
Vadodara unit:
Cost of leasehold land is amortized over the period of lease.
On assets purchased prior to January 1st, 1987 on written down value
method at the rates specified under the Income Tax Rules and on assets
purchased subsequent to January 1st, 1987 on written down value method
at the rates specified in Schedule XIV of the Companies Act, 1956, on
pro-rata basis.
Pithampur unit:
Cost of leasehold land is amortized over the period of lease.
Depreciation is provided on straight-line method at the rates specified
in Schedule XIV of the Companies Act, 1956, on pro-rata basis, and in
case of capitalization of exchange fluctuations, over the remaining
life of such assets.
vi) Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the statement of profit and loss. If at the balance sheet
date there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount.
vii) Intangible assets
Intangible assets are recognized only if it is probable that the future
economic benefits that are attributable to the assets will flow to the
enterprise and the cost of the assets can be measured reliably. The
intangible assets are recorded at cost and are carried at cost less
accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortized over the estimated period of benefit,
not exceeding ten years.
viii) Investments
Investments meant for long term are carried at cost together with all
incidental cost of acquisition. However, when there is decline, other
than temporary in the value of a long term investments, the carrying
amount is reduced to recognize the decline.
x) Foreign Currency Transactions
Foreign currency transactions are recorded at the rate of exchange
prevailing on the date of the transactions. At the year end, all the
monetary assets and liabilities denominated in foreign currency are
restated at the closing exchange rates. Exchange differences resulting
from the translation of such monetary assets and liabilities and also
the exchange differences on settlement of foreign currency transactions
are recognized in the statement of profit and loss.
xi) Research & Development
Expenditure on the design and production of prototypes relating to
research & development has been charged to profit & loss account.
Capital expenditure relating to research & development is treated as
fixed assets.
xii) 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 statement of profit
and loss. on accrual basis.
xiii) Taxation
a. Current tax
Provision for income tax is ascertained on the basis of assessable
profit computed in accordance with the provisions of Income Tax Act,
1961.
b. Deferred tax
Deferred tax assets and liabilities are recognised for future tax
consequence attributable to timing differences between taxable income
and accounting income that are measured at relevant enacted tax rates.
However, deferred tax assets on the timing differences when unabsorbed
depreciation and losses carried forward exist, are recognised only to
the extent that there is virtual certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized. At each balance sheet date the company reassesses
unrecognised deferred tax assets, to the extent they become reasonably
certain or virtually certain of realisation, as the case may be.
xiv) Employee benefits
a. Post-employment benefits
i Defined contribution plan
Company's contribution paid/payable for the year to defined
contribution retirement benefit schemes are charged to the statement of
profit and loss.
ii Defined benefit plan
Company's liabilities towards defined benefit schemes are determined
using the Projected Unit Credit Method. Actuarial valuations under the
Projected Unit Credit Method are carried out at the balance sheet date.
Actuarial gains and losses are recognized in the statement of profit
and loss in the period of occurrence of such gains and losses. Past
service cost is recognized immediately to the extent that the benefits
are already vested and otherwise it is amortized on straight-line basis
over the remaining average period until the benefits become vested.
The retirement benefit obligation recognized in the balance sheet
represents the present value of the defined benefit obligation as
reduced by the fair value of plan assets.
b. Short-term employee benefits
Short-term employee benefits expected to be paid in exchange for the
services rendered by employees are recognized undiscounted during the
period employee renders services. These benefits include special
allowance.
c. Long term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related services are recognized as an actuarially determined liability
at present value of the defined benefit obligation at the balance sheet
date.
xv) Government grants
State subsidy received from Madhya Pradesh State Industrial Development
Corporation for setting up unit in the specified backward area has been
credited to Capital State Subsidy Reserves Account.
xvi) Provisions contingent liabilities and contingent assets
The Company recognizes a provision when there is a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation that the likelihood of outflow of
resources is remote, no provision or disclosure is made. Contingent
assets are neither recognised nor disclosed.
b. Right, preferences and restrictions attached to shares
For all matters submitted to vote in a shareholders meeting of the
Company every holder of an equity share as reflected in the records of
the Company on the date of the shareholders meeting shall have one vote
in respect of each share held. Any dividend declared by the company
shall be paid to each holder of equity shares in proportion to the
number of shares held to total equity shares outstanding as on that
date. In the event of liquidation of the Company all preferential
amounts if any shall be discharged by the Company. The remaining assets
of the Company shall be distributed to the holders of equity shares in
proportion to the number of shares held to the total equity shares
outstanding as on that date.
The amount due to Micro & Small Enterprise, as defined under the
"Micro Small and Medium Enterprise Development Act, 2006" stated
above is based on the information available with the Company. Payment
made to suppliers beyond the due dates during the year was Rs 45.64 Lacs
(Previous Year Rs 20.85 Lacs). No interest during the year has been paid
to Micro and Small Enterprise on delayed payments. Further interest
accrued and remaining unpaid at the year end Rs 0.25 Lacs (Previous year
Rs 0.24 Lacs) is not provided in the books as the management is of the
opinion that due to contractual terms they will not be required to pay
the same.
Mar 31, 2011
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements are prepared as per historical cost convention
and in accordance with the generally accepted accounting principles in
India, the provisions of the Companies Act, 1956 and the applicable
accounting standards.
2. USE OF ESTIMATES
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period.
Differences between the actual results and the estimates are recognized
in the period in which the same are known/materialized.
3. REVENUE RECOGNITION
Sales are recognized on invoicing of goods.
Other income is recognized only when it is reasonably certain that the
ultimate collection will be made.
Insurance claims lodged with the insurance company in respect of risks
covered are accounted for as and when admitted by the insurance
company.
Interest income is booked on a time proportion basis taking into
account the amounts invested and the rate of interest.
4. FIXED ASSETS
Fixed Assets are stated at cost, net of CENVAT/VAT credit, if any,
after reducing accumulated depreciation until the date of balance
sheet. Direct costs are capitalized until the assets are ready for use
and include financing costs relating to any borrowing attributable to
acquisition. Capital work-in-progress includes the cost of fixed assets
that are not yet ready for the intended use, advances paid to acquire
fixed assets and the cost of assets not put to use before the balance
sheet date.
5. INTANGIBLE ASSETS
Intangible assets are recognized only if it is probable that the future
economic benefits that are attributable to the assets will flow to the
enterprise and the cost of the assets can be measured reliably. The
intangible assets are recorded at cost and are carried at cost less
accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortized over the estimated period of benefit,
not exceeding ten years.
6. DEPRECIATION
Depreciation on tangible assets has been provided as under:
Vadodara unit
Cost of leasehold land is amortized over the period of lease.
On assets purchased prior to January 1st, 1987 on written down value
method at the rates specified under the Income tax rules and on assets
purchased subsequent to January 1st, 1987 on written down value method
at the rates specified in Schedule XIV of the Companies Act, 1956, on
pro-rata basis.
Pithampur unit
Cost of leasehold land is amortised over the period of lease.
Depreciation is provided on straight-line method at the rates specified
in schedule XIV of the Companies Act, 1956, on pro-rata basis, and in
case of capitalization of exchange fluctuations, over the remaining
life of such assets.
7. INVESTMENTS
Investments meant for long term are carried at cost together with all
incidental cost of acquisition. However, when there is decline, other
than temporary in the value of a long term investments, the carrying
amount is reduced to recognize the decline.
8. VALUATION OF INVENTORIES
Inventories are valued at cost or net realizable value, whichever is
lower. The basis of determining cost for various categories of
inventories is as follows -
Raw materials First-In-First-Out basis.
Material & Consumables
in transit At invoice price.
Work-in-process At raw material cost plus conversion cost,
wherever applicable.
Finished goods Cost represents material, labour and manu
facturing expenses and other incidental
costs to bring the inventory in present
location and condition.
Consumable stores,
Spares and Tools First-In-First-Out basis.
9. FOREIGN CURRENCY TRANSACTIONS
Foreign currency transactions are recorded at the rate of exchange
prevailing on the date of the transactions. At the year end, all the
monetary assets and liabilities denominated in foreign currency are
restated at the closing exchange rates. Exchange differences resulting
from the translation of such monetary assets and liabilities and also
the exchange differences on settlement of foreign currency transactions
are recognized in the profit and loss account.
10. RESEARCH AND DEVELOPMENT
Expenditure on the design and production of prototypes relating to
research & development has been charged to profit & loss account.
Capital expenditure relating to research & development is treated as
fixed assets.
11. EMPLOYEE BENEFITS
a) Post-employment benefits
i) Defined Contribution plan Company's contribution paid/payable for
the year to defined contribution retirement benefit schemes are charged
to profit & loss account.
ii) Defined Benefit plan Company's liabilities towards defined benefit
schemes are determined using the projected unit credit method.
Actuarial valuations under the projected unit credit method are carried
out at the balance sheet date. Actuarial gains and losses are
recognized in the profit & loss account in the period of occurrence of
such gains and losses. Past service cost is recognized immediately to
the extent that the benefits are already vested and otherwise it is
amortized on straight-line basis over the remaining average period
until the benefits become vested.
The retirement benefit obligation recognized in the balance sheet
represents the present value of the defined benefit obligation as
reduced by the fair value of plan assets.
b) Short-term employee benefits.
Short-term employee benefits expected to be paid in exchange for the
services rendered by employees are recognized undiscounted during the
period employee renders services. These benefits include special
allowance.
c) Long term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related services are recognized as an actuarially determined liability
at present value of the defined benefit obligation at the balance sheet
date.
12. TAXATION
Provision for income tax is ascertained on the basis of assessable
profit computed in accordance with the provisions of Income Tax Act,
1961.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences being differences between taxable incomes and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods.
Deferred tax assets are recognized only if there is a reasonable
certainty that they will be realized and are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date.
13. PROVISIONS & CONTINGENT LIABILITIES
The Company recognizes a provision when there is a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation that the likelihood of outflow of
resources is remote, no provision or disclosure is made.
14. GOVERNMENT GRANT
State subsidy received from Madhya Pradesh State Industrial Development
Corporation for setting up unit in the specified backward area has been
credited to Capital state subsidy reserves account.
15. IMPAIRMENT OF ASSETS
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the profit & loss account. If at the balance sheet date
there is an indication that if a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount.
16. 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 & loss
account on accrual basis.
Mar 31, 2010
1. Basis of preparation of financial statements
The financial statements are prepared as per historical cost convention
and in accordance with the generally accepted accounting principles in
India, the provisions of the Companies Act, 1956 and the applicable
accounting standards.
2. Use of estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period.
Differences between the actual results and the estimates are recognized
in the period in which the same are known/materialized.
3. Revenue recognition
Sales are recognized on invoicing of goods.
Other income is recognized only when it is reasonably certain that the
ultimate collection will be made.
Insurance claims lodged with the insurance company in respect of risks
covered are accounted for as and when admitted by the insurance
company.
Interest income is booked on a time proportion basis taking into
account the amounts invested and the rate of interest.
Dividend incomes on Investments are accounted for when the right to
receive the payment is established.
4. Fixed assets
Fixed Assets are stated at cost, net of CENVAT / VAT credit, if any,
after reducing accumulated depreciation until the date of Balance
Sheet. Direct costs are capitalized until the assets are ready for use
and include financing costs relating to any borrowing attributable to
acquisition. Capital work-in-progress includes the cost of fixed assets
that are not yet ready for the intended use, advances paid to acquire
fixed assets and the cost of assets not put to use before the Balance
Sheet date.
5. Intangible assets
Intangible Assets are recognized only if it is probable that the future
economic benefits that are attributable to the assets will flow to the
enterprise and the cost of the assets can be measured reliably. The
intangible assets are recorded at cost and are carried at cost less
accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortized over the estimated period of benefit,
not exceeding ten years.
6. Depreciation
Depreciation on tangible assets has been provided as under:
Vadodara unit
Cost of leasehold land is amortized over the period of lease.
On assets purchased prior to 1st January, 1987 on written down value
method at the rates specified under the Income Tax Rules and on assets
purchased subsequent to 1st January, 1987 on written down value method
at the rates specified in Schedule XIV of the Companies Act, 1956, on
pro-rata basis.
Pithampur unit
Cost of leasehold land is amortised over the period of lease.
Depreciation is provided on straight-line method at the rates specified
in Schedule XIV of the Companies Act, 1956, on pro-rata basis, and in
case of capitalization of exchange fluctuations, over the remaining
life of such assets.
7. Investments
Investments meant for long term are carried at cost together with all
incidental cost of acquisition. However, when there is decline, other
than temporary in the value of a long term investments, the carrying
amount is reduced to recognize the decline.
8. Valuation of inventories
Inventories are valued at cost or net realizable value, whichever is
lower. The basis of determining cost for various categories of
inventories is as follows -
Raw Materials First-In-First-Out basis.
Material & Consumables in Transit At invoice price.
Work-in-process At raw material cost plus conversion cost, wherever
applicable.
Finished Goods
Cost represents material, labour and manufacturing expenses and other
incidental costs to bring the inventory in present location and
condition.
Consumable Stores, Spares and Tools First-In-First-Out basis.
9. Foreign currency transactions
Foreign currency transactions are recorded at the rate of exchange
prevailing on the date of the transactions. At the year end, all the
monetary assets and liabilities denominated in foreign currency are
restated at the closing exchange rates. Exchange differences resulting
from the translation of such monetary assets and liabilities and also
the exchange differences on settlement of foreign currency transactions
are recognized in the Profit and Loss Account.
10. Research and development
Expenditure on the design and production of prototypes relating to
research & development has been charged to Profit and Loss Account.
Capital expenditure relating to research & development is treated as
fixed assets.
11. Employee benefits
a) Post-employment benefits
i) Defined contribution plan
Companys contribution paid/payable for the year to defined
contribution retirement benefit schemes are charged to Profit and Loss
Account.
ii) Defined benefit plan
Companys liabilities towards defined benefit schemes are determined
using the Projected Unit Credit Method. Actuarial valuations under the
Projected Unit Credit Method are carried out at the Balance Sheet date.
Actuarial gains and losses are recognized in the Profit and Loss
account in the period of occurrence of such gains and losses. Past
service cost is recognized immediately to the extent that the benefits
are already vested and otherwise it is amortized on straight-line basis
over the remaining average period until the benefits become vested.
The retirement benefit obligation recognized in the balance sheet
represents the present value of the defined benefit obligation as
reduced by the fair value of plan assets. ,,
b) Short-term employee benefits
Short-term employee benefits expected to be paid in exchange for the
services rendered by employees are recognized undiscounted during the
period employee renders services. These benefits include special
allowance.
c) Long term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related services are recognized as an actuarially determined liability
at present value of the defined benefit obligation at the Balance Sheet
date.
The company has deferred the expenses of Voluntary Retirement Benefits
over its payback period but not beyond 31st March, 2010.
12. Taxation
Provision for Income Tax is ascertained on the basis of assessable
profit computed in accordance with the provisions of Income Tax Act,
1961.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences being differences between taxable incomes and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods.
Deferred tax assets are recognized only if there is a reasonable
certainty that they will be realized and are reviewed for the
appropriateness of their respective carrying values at each Balance
Sheet date.
13. Provisions & contingent liabilities
The Company recognizes a provision when there is a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation that the likelihood of outflow of
resources is remote, no provision or disclosure is made.
14. Government grant
State subsidy received from Madhya Pradesh State Industrial Development
Corporation for setting up unit in the specified backward area has been
credited to Capital State Subsidy Reserve Account.
15. Impairment of assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the Profit and Loss Account. If at the Balance Sheet date
there is an indication that if a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount.
16. Leases
Assets acquired on lease where a significant portion of the risks and
rewards of ownership are retained by the lessor are classified as
operating lease. Lease rentals are charged to the Profit and Loss
Account on accrual basis.
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