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Accounting Policies of Pradeep Metals Ltd. Company
Mar 31, 2025
3. Material Accounting Policies
3.1. Presentation and disclosure of standalone financial statement
All assets and liabilities have been classified as current and non-current as per Company''s normal
operating cycle and other criteria set out in the division II of Schedule III of the Companies Act, 2013 for a
company whose financial statements are made in compliance with the Companies (India Accounting
Standards) Rules, 2015.
Based on the nature of products / services and time between acquisition of assets for processing /
rendering of services and their realization in cash and cash equivalents, operating cycle is less than 12
months, however for the purpose of current/ non- current classification of assets and liabilities, period of
12 months have been considered as its normal operating cycle.
The Company presents assets and liabilities in the balance sheet based on current / non-current
classification.
An asset is treated as current when it is:
⢠Expected to be realized or intended to be sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realized within twelve months after the reporting period, or
⢠Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at
least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after
the reporting period.
The Company classifies all other liabilities as non-current.
3.2. Property, Plant and Equipment and Depreciation
Recognition and measurement
Properties, plant and equipment are stated at their cost of acquisition. Cost of an item of property, plant
and equipment includes purchase price including non-refundable taxes and duties, borrowing cost
directly attributable to the qualifying asset, any costs directly attributable to bringing the asset to the
location and condition necessary for its intended use and the present value of the expected cost for the
dismantling/decommissioning of the asset.
Parts (major components) of an item of property, plant and equipment having different useful lives are
accounted as separate items of property, plant and equipment.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Company. All other repair and maintenance costs are recognized in statement of profit and loss as
incurred.
Capital work-in-progress comprises of cost incurred on property, plant and equipment under
construction / acquisition that are not yet ready for their intended use at the Balance Sheet Date.
Depreciation and useful lives
Depreciation on the property, plant and equipment (other than freehold land and capital work in
progress) is provided on a straight-line method (SLM) over their useful lives which is in consonance of
useful life mentioned in Schedule II to the Companies Act, 2013, except for the plant and machinery as
per the table given below, for which on the basis of internal technical assessment made by the
management, the depreciation has been provided considering the useful life of the plant.
The assets which have useful life different than as prescribed under Part C of Schedule II of the
Companies Act, 2013 are as follows:
Building on leasehold lands and improvements to building on leasehold land / premises are amortized
over the period of lease or useful life whichever is lower.
Depreciation methods, useful lives and residual values are reviewed at each financial year end and
adjusted prospectively.
Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance
Sheet date is classified as capital advances under ''''Other non-current assets''''. Cost of assets under
construction / acquisition / not put to use at the Balance sheet date are disclosed under ''''Capital work-in¬
progress''''
De-recognition
An item of property, plant and equipment and any significant part initially recognized is de-recognized
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or
loss arising on de-recognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the
asset is de-recognized.
3.3. Intangible assets and amortization
Recognition and measurement
Intangible assets are recognized only if it is probable that the future economic benefits attributable to
asset will flow to the Company and the cost of asset can be measured reliably. Intangible assets are
stated at cost of acquisition/development less accumulated amortization and accumulated impairment
loss if any.
Cost of an intangible asset includes purchase price including non - refundable taxes and duties,
borrowing cost directly attributable to the qualifying asset and any directly attributable expenditure on
making the asset ready for its intended use.
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from
use or disposal. Gains or losses arising from derecognition of an intangible asset are recognized in the
statement of profit and loss when the asset is derecognized.
Intangible assets under development comprises of cost incurred on intangible assets under
development that are not yet ready for their intended use as at the Balance Sheet date.
In case of assets purchased during the year, amortization on such assets is calculated on pro-rata basis
from the date of such addition
3.4. Research and development costs
Research costs are expensed as incurred. Development expenditures are recognized as an intangible
asset when the Company can demonstrate:
The technical feasibility of completing the intangible asset so that the asset will be available for use
or sale
⢠Its intention to complete and its ability and intention to use or sell the asset
⢠How the asset will generate future economic benefits
⢠The availability of resources to complete the asset
The availability of adequate technical, financial and other resources to complete the development
and to use or sell the intangible asset.
⢠The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less
any accumulated amortization and accumulated impairment losses. Amortization of the asset begins
when development is complete and the asset is available for use. It is amortized over the period of
expected future benefit. Amortization expense is recognized in the statement of profit and loss unless
such expenditure forms part of carrying value of another asset.
3.5. Inventories
Inventories consists of raw materials, consumables, dies, work-in-progress and scrap. Raw materials
and components, packing materials, consumables, stores and spares are valued at lower of cost and
net realizable value. However, materials and other items held for use in the production of inventories are
not written down below cost if the finished products in which they will be incorporated are expected to be
sold at or above cost. The Cost comprises of costs of purchase, duties and taxes (other than those
subsequently recoverable) and other costs incurred in bringing them to their present location and
condition. Cost for raw material is determined on specific identification basis and other materials &
consumables on weighted average method.
Work-in-progress & finished goods is valued at lower of cost and net realizable value. Cost includes
direct materials valued on weighted average basis and costs of conversion which include costs directly
related to the units of production and systematic allocation of fixed and variable production overheads.
Net realizable value is the estimated selling price in the ordinary course of business less estimated costs
of completion and estimated costs necessary to make the sale.
Dies are valued at cost or net realizable value whichever is less. Cost includes material cost and labour
cost. Costs are determined on specific identification basis.
Scrap is valued at net realizable value.
3.6. Revenue recognition
The policy for Revenue as presented in the Company''s financial statements are as under:
o The Company recognizes revenue when the amount can be reliably measured, to the extent it is
probable that future economic benefits will flow to the entity and specific criteria have been met for
each of the Company''s activities as described below
o Sale of goods is recognized upon transfer of control of promised products to customers in an
amount that reflects the consideration which the Company expects to receive in exchange for
those products. Revenue is measured at the transaction price allocated to that performance
obligation, net of Goods and Service Tax (GST), returns and allowances, trade, volume & other
discounts.
o Accumulated experience is used to estimate and provide for turnover discounts, expected cash
discounts, other eligible discounts, expected returns and incentives. No element of financing is
deemed present as the sales are made with normal credit terms.
o Revenue from export sales are recognized upon transfer of control of promised products to
customers usually on the basis of dates of shipping bills or bill of lading depending on the shipment
terms.
o Sale of services is recognized upon rendering of services and revenue from fixed price, fixed time
frame contracts, where the performance obligations are satisfied over time and where there is no
uncertainty as to measurement or collectability of consideration, is recognized over the period of
contract on pro-rata basis.
o Revenue from sales of electricity is recognized when all the significant risks and rewards of
ownership have been passed to the buyer, usually on transmission of electricity based on the data
provided by the electricity department.
o Export incentives / benefits are recognized as income in Statement of Profit and Loss on export of
goods based on fulfilling specified criteria''s and also reasonable certainty of utilizing the benefit by
import of goods/sale of license in open market.
o Revenues from die design and preparation charges are recognized as per the terms of the contract
as and when services are rendered.
⢠Other income
o Income from guarantee commission is recognized as a percentage of guarantee given on
annual basis.
o Dividend income is recognized when the Company''s right to receive the payment is
established, which is generally when shareholders/board of directors approve the dividend as
applicable.
o Interest income is recognized on time proportion basis taking into account the amount
outstanding and rate applicable.
3.7. Investment in subsidiaries
The Company''s investment in instruments of subsidiaries are accounted for at cost less accumulated
impairment. Where an indication of impairment exists, the carrying amount of the investment is
assessed. Where the carrying amount of an investment is greater than its estimated recoverable
amount, it is written down immediately to its recoverable amount and the difference is transferred to the
statement of profit and loss. On disposal of investment, the difference between the net disposal
proceeds and the carrying amount is charged or credited to the statement of profit and loss.
3.8. Government grants
Government grants are recognized in the period to which they relate when there is reasonable
assurance that the grant will be received and that the Company will comply with the attached conditions.
When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the
statement of profit and loss over the periods necessary to match them with the related costs, which they
are intended to compensate. In case of Exports Promotion Capital Goods (EPCG) scheme, government
grants is recognised in the statement of profit and loss over the period of fulfilment of export obligation.
Where the grant relates to an asset, it is deducted from the cost of the asset and the net amount of the
asset is capitalized.
3.9. Foreign currency transaction
Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the
date of the transaction. As at the Balance Sheet date, foreign currency monetary items are translated at
closing exchange rate. Exchange difference arising on settlement or translation of foreign currency
monetary items are recognized as income or expense in the year in which they arise.
Foreign currency non-monetary items which are carried at historical cost are reported using the
exchange rate at the date of transactions. Foreign currency non-monetary items which are measured at
fair value are reported using the exchange rate at the date when the fair value is determined. Exchange
difference arising on fair valuation of non-monetary items is recognized in line with the gain of item that
give rise to such exchange difference (i.e. translation differences on items whose gain or loss is
recognized in statement of profit and loss or other comprehensive income is also recognized in
statement of profit or loss or other comprehensive income respectively).
3.10. Employee benefits
⢠Short term employee benefits
All employee benefits falling due wholly within twelve months of rendering the service are classified
as short-term employee benefits and they are recognized as an expense at the undiscounted
amount in the Statement of Profit and Loss in the period in which the employee renders the related
service.
⢠Post-employment benefits & other long-term benefits
a. Defined contribution plan
The defined contribution plan is a post-employment benefit plan under which the Company
contributes fixed contribution to a Government Administered Fund and will have no obligation
to pay further contribution. The Company''s defined contribution plan comprises of Provident
Fund, Labour Welfare Fund and Employee State Insurance Scheme. The Company''s
contribution to defined contribution plans are recognized in the Statement of Profit and Loss in
the period in which the employee renders the related service.
b. Post-employment benefit and other long-term benefits
The Company has defined benefit plans comprising of gratuity and other long-term benefits in
the form of leave benefits and long service rewards. Company''s obligation towards gratuity
liability is funded plan and is managed by Life Insurance Corporation of India (LIC). The
present value of the defined benefit obligations and certain other long-term employee benefits
[privilege leave and sick leave] is determined based on actuarial valuation using the projected
unit credit method. The rate used to discount defined benefit obligation is determined by
reference to market yields at the Balance Sheet date on Indian Government Bonds for the
estimated term of obligations. Provision for casual leave is made on arithmetic basis.
For gratuity plan, re-measurements comprising of (a) actuarial gains and losses, (b) the effect
of the asset ceiling (excluding amounts included in net interest on the net defined benefit
liability) and (c) the return on plan assets (excluding amounts included in net interest on the
post-employment benefits liability) are recognized immediately in the balance sheet with a
corresponding debit or credit to retained earnings through other comprehensive income in the
period in which they occur. Such re-measurements are not reclassified to statement of profit
and loss in subsequent periods.
The expected return on plan assets is the Company''s expectation of average long-term rate of
return on the investment of the fund over the entire life of the related obligation. Plan assets
are measured at fair value as at the Balance Sheet date.
The interest cost on defined benefit obligation and expected return on plan assets is
recognized under finance cost.
Gains or losses on the curtailment or settlement of defined benefit plan are recognized when
the curtailment or settlement occurs.
Actuarial gains or losses arising on account of experience adjustment and the effect of
changes in actuarial assumptions for other employee benefit plan [other than gratuity] are
recognized immediately in the Statement of Profit and Loss as income or expense.
3.11. Operating Segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker (CODM). Operating Segments are defined as components of an enterprise for
which discrete financial information is available that is evaluated regularly by the CODM, in deciding how
to allocate resources and assessing performance.
3.12. Borrowing cost
Borrowing costs (net of interest income on temporary investments) that are directly attributable to the
acquisition, construction or production of a qualifying asset are capitalized as part of the cost of the
respective asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset
which necessarily takes a substantial period of time to get ready for its intended use or sale. Ancillary
cost of borrowings in respect of loans not disbursed are carried forward and accounted as borrowing cost
in the year of disbursement of loan. All other borrowing costs are expensed in the period in which they
occur. Borrowing costs consist of interest expenses calculated as per effective interest method,
exchange difference arising from foreign currency borrowings to the extent they are treated as an
adjustment to the borrowing cost and other costs that an entity incurs in connection with the borrowing of
funds.
3.13. Taxes on income
Tax expenses for the year comprises of current tax, deferred tax charge or credit and adjustments of
taxes for earlier years. In respect of amounts adjusted outside profit or loss (i.e. in other comprehensive
income or equity), the corresponding tax effect, if any, is also adjusted outside profit or loss.
Provision for current tax is made as per the provisions of Income Tax Act, 1961.
Deferred tax is provided using the liability method on temporary differences between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are
recognized for all deductible temporary differences, carry forward tax losses and allowances to the
extent that it is probable that future taxable profits will be available against which those deductible
temporary differences, carry forward tax losses and allowances can be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date. Deferred tax assets and deferred tax liabilities
are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and
the deferred taxes relate to the same taxation authority.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be
available against which such deferred tax assets can be utilized. In situations where the Company has
unused tax losses and unused tax credits, deferred tax assets are recognized only if it is probable that
they can be utilized against future taxable profits. Deferred tax assets are reviewed for the
appropriateness of their respective carrying amounts at each Balance Sheet date.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes
previously unrecognized deferred tax assets to the extent that it has become probable that future
taxable profit allow deferred tax assets to be recovered.
The Company has adopted the amendments with respect to Deferred Tax related to Assets and
Liabilities arising from a Single Transaction (Amendments to Ind AS 12) from 1st April 2023. The
amendments narrow the scope of the initial recognition exemption to exclude transactions that give rise
to equal and offsetting differences - e.g., leases and decommissioning liabilities. For leases and
decommissioning liabilities, an entity is required to recognise the associated deferred tax assets and
liabilities from the beginning of the earliest comparative period presented, with any cumulative effect
recognised as an adjustment to retained earnings or other components of equity at that date. For all
other transactions, an entity applies the amendments to transactions that occur on or after the beginning
of the earliest period presented.
3.14. Cash and cash equivalent
Cash and cash equivalents include cash in hand, bank balances, deposits with banks (other than on lien)
and all short term and highly liquid investments that are readily convertible into known amounts of cash
and are subject to an insignificant risk of changes in value.
For the purpose of cash flow statement, cash and cash equivalent as calculated above also includes
outstanding bank overdrafts as they are considered an integral part of the Company''s cash
management.
3.15. Cash flow statement
Cash flows are reported using the indirect method, where by net profit before tax is adjusted for the
effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with investing or financing cash flows.
The cash flows from operating, investing and financing activities are segregated.
Mar 31, 2024
1. Background
Pradeep Metals Limited (âthe Companyâ) is a public Company domiciled in India and incorporated under the provisions of Companies Act, 1956. The Company''s shares are listed on Bombay Stock Exchange in India. The Company is engaged in the manufacturing and selling of forged and machined components for various sectors. The Company caters to both domestic and international markets. The registered office and manufacturing facility of the Company is located at Navi Mumbai. The Company''s CIN is L99999MH1982PLC026191.
The financial statements were authorized for issue in accordance with a resolution of the Directors on 17th May 2024.
2. Basis of preparation2.1. Statement of compliance
The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (âthe Act'') read with the Companies (Indian Accounting Standards) Rules, 2015 with relevant amendment rules issued thereafter and guidelines issued by the Securities and Exchange Board of India.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. Further, in accordance with the amendments to the Companies (Indian Accounting Standards) Rules, 2023, the company has disclosed material accounting policies as against the significant accounting policies. Considering the nature of transactions and business operation of the Company, accounting policies related to âLeases'' and âInvestment in equity instrument at FVTOCI'' are not forming part of material accounting policies.
2.2. Basis of preparation and presentation
These standalone financial statements have been prepared on the historical cost convention and on accrual basis except for the following assets and liabilities which have been measured at fair value:
i. Certain financial assets and liabilities (including derivative instruments);
ii. Defined benefit plans - plan assets;
The financial statements are in accordance with Division II of Schedule III to the Act, as applicable to the Company.
2.3. Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (âthe functional currency''). The financial statements are prepared in Indian Rupees which is also the Company''s functional currency. All amounts are rounded to the nearest rupees in Lakhs.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the
principal market for the asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal market or the most advantageous market must be accessible to the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole. The fair value hierarchy is described as below:
Level 1 - Unadjusted quoted price in active markets for identical assets and liabilities.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3 - unobservable inputs for the asset or liability
For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization at the end of each reporting period.
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 fair value hierarchy.
Fair values have been determined for measurement and / or disclosure purpose using methods as prescribed in âInd AS 113 Fair Value Measurementâ.
2.5. Use of significant accounting estimates, judgements and assumptions
The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires management to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosure of contingent liabilities as on the date of financial statements and reported amounts of income and expenses for the periods presented. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and future periods are affected.
Key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions
when they occur. Significant estimates and critical judgement in applying these accounting policies are described below:
i) Property, plant & equipment and Intangible assets
The Company has estimated the useful life, residual value and method of depreciation / amortization of property, plant & equipment and intangible assets based on its internal technical assessment. Property, plant & equipment and intangible assets represent a significant proportion of the asset base of the Company. Further, the Company has estimated that scrap value of property, plant & equipment would be able to cover the residual value & decommissioning costs of property, plant & equipment.
Therefore, the estimates and assumptions made to determine useful life, residual value, method of depreciation / amortization and decommissioning costs are critical to the Company''s financial position and performance.
ii) Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or (Cash Generating Unit) CGU''s fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations involve use of significant estimates and assumptions which includes turnover and earnings multiples, growth rates and net margins used to calculate projected future cash flows, risk-adjusted discount rate, future economic and market conditions.
iii) Impairment of financial assets
The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation based on industry practice, Company''s past history and existing market conditions as well as forward looking estimates at the end of each reporting period.
iv) Contingencies
Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies / claim / litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
v) Income taxes
Provision for tax liabilities require judgements on the interpretation of tax legislation, developments in case law and the potential outcomes of tax audits and appeals which may be
subject to significant uncertainty. Therefore, the actual results may vary from expectations resulting in adjustments to provisions, the valuation of deferred tax assets, cash tax settlements and therefore the tax charge in the statement of profit and loss.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which such deferred tax assets can be utilized. Any increase in probability of future taxable profit will result into recognition of unrecognized deferred tax assets.
vi) Measurement of defined benefit plan & other long-term benefits
The cost of the defined benefit gratuity plan / other long-term benefits and the present value of the gratuity obligation / other long-term benefits are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate; future salary increases and mortality rates. Due to the complexities involved in the valuation and its longterm nature, a defined benefit obligation / other long-term benefits is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The mortality rate is based on publicly available mortality tables for India. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on management policy for increase in basic salary.
vii) Impairment of investment in subsidiaries
In the opinion of the management, investments in subsidiaries are considered long term and strategic in nature and in view of future business growth / asset base, the value of long-term investments are considered good. Impairment is made in the value of investment of subsidiary based on the assessment carried out by the Company.
viii) Provision for inventories
Management reviews the inventory age listing on a periodic basis. This review involves comparison of the carrying value of the aged inventory item with the respective net realisable value. The purpose is to ascertain whether an allowance is required to be made in the financial statements for any obsolete and slow-moving items. Management is satisfied that adequate allowance for absolute and slow-moving inventories has been made in the financial statement.
3. Material Accounting Policies3.1. Presentation and disclosure of standalone financial statement
All assets and liabilities have been classified as current and non-current as per Company''s normal operating cycle and other criteria set out in the division II of Schedule III of the Companies Act, 2013 for a company whose financial statements are made in compliance with the Companies (India Accounting Standards) Rules, 2015.
Based on the nature of products / services and time between acquisition of assets for processing / rendering of services and their realization in cash and cash equivalents, operating cycle is less than 12 months, however for the purpose of current/ non- current classification of assets and liabilities, period of 12 months have been considered as its normal operating cycle.
The Company presents assets and liabilities in the balance sheet based on current / non-current classification.
An asset is treated as current when it is:
⢠Expected to be realized or intended to be sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realized within twelve months after the reporting period, or
⢠Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non-current.
3.2. Property, Plant and Equipment and Depreciation Recognition and measurement
Properties, plant and equipment are stated at their cost of acquisition. Cost of an item of property, plant and equipment includes purchase price including non-refundable taxes and duties, borrowing cost directly attributable to the qualifying asset, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and the present value of the expected cost for the dismantling/decommissioning of the asset.
Parts (major components) of an item of property, plant and equipment having different useful lives are accounted as separate items of property, plant and equipment.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognized in statement of profit and loss as incurred.
Capital work-in-progress comprises of cost incurred on property, plant and equipment under construction / acquisition that are not yet ready for their intended use at the Balance Sheet Date.
Depreciation and useful lives
Depreciation on the property, plant and equipment (other than freehold land and capital work in progress) is provided on a straight-line method (SLM) over their useful lives which is in consonance of useful life mentioned in Schedule II to the Companies Act, 2013, except for the plant and machinery as per the table given below, for which on the basis of internal technical assessment made by the management, the depreciation has been provided considering the useful life of the plant.
The assets which have useful life different than as prescribed under Part C of Schedule II of the Companies Act, 2013 are as follows:
|
Particulars |
Useful life |
|
Machinery for heavy production/press/cranes etc. |
15 Years |
|
Dies |
10 Years |
|
R&D equipment (Microwave) |
2 Years |
|
Other machineries |
8 Years |
|
Second hand CNC machines |
10 Years |
|
Solar power generation plant |
25 Years |
|
Individual assets whose cost does not exceed five thousand rupees |
Nil Depreciated fully in the year of capitalisation |
The useful lives of the property, plant and equipment not covered in table above and are in accordance with schedule II are as follows:
|
Particulars |
Useful life |
|
Factory Building on leasehold land |
Lower of 30 Years or balance lease period |
|
Electrical Installation |
10 Years |
|
Office Equipment |
5 Years |
|
Computers |
3 Years |
|
Furniture & fittings |
10 Years |
|
Motor Vehicles |
8 Years |
|
Windmill |
22 Years |
Building on leasehold lands and improvements to building on leasehold land / premises are amortized over the period of lease or useful life whichever is lower.
Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted prospectively.
Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date is classified as capital advances under ''''Other non-current assets''''. Cost of assets under construction / acquisition / not put to use at the Balance sheet date are disclosed under ''''Capital work-inprogress''''
De-recognition
An item of property, plant and equipment and any significant part initially recognized is de-recognized
upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is de-recognized.
3.3. Intangible assets and amortization
Recognition and measurement
Intangible assets are recognized only if it is probable that the future economic benefits attributable to asset will flow to the Company and the cost of asset can be measured reliably. Intangible assets are stated at cost of acquisition/development less accumulated amortization and accumulated impairment loss if any.
Cost of an intangible asset includes purchase price including non - refundable taxes and duties, borrowing cost directly attributable to the qualifying asset and any directly attributable expenditure on making the asset ready for its intended use.
Intangible assets under development comprises of cost incurred on intangible assets under development that are not yet ready for their intended use as at the Balance Sheet date.
|
Intangible Asset |
Estimated useful life |
|
ERP software |
10 Years |
|
Other Software |
3 Years |
|
Microwave Composite Heating Furnace project (SDF Technology) |
7 years |
In case of assets purchased during the year, amortization on such assets is calculated on pro-rata basis from the date of such addition
3.4. Research and development costs
Research costs are expensed as incurred. Development expenditures are recognized as an intangible asset when the Company can demonstrate:
The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
⢠Its intention to complete and its ability and intention to use or sell the asset
⢠How the asset will generate future economic benefits
⢠The availability of resources to complete the asset
The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.
⢠The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit. Amortization expense is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Inventories consists of raw materials, consumables, dies, work-in-progress and scrap. Raw materials and components, packing materials, consumables, stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. The Cost comprises of costs of purchase, duties and taxes (other than those subsequently recoverable) and other costs incurred in bringing them to their present location and condition. Cost for raw material is determined on specific identification basis and other materials & consumables on weighted average method.
Work-in-progress & finished goods is valued at lower of cost and net realizable value. Cost includes direct materials valued on weighted average basis and costs of conversion which include costs directly related to the units of production and systematic allocation of fixed and variable production overheads. Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. The cost of finished goods also includes excise duty wherever applicable.
Dies are valued at cost or net realizable value whichever is less. Cost includes material cost and labour cost. Costs are determined on specific identification basis.
Scrap is valued at net realizable value.
The policy for Revenue as presented in the Company''s financial statements are as under:
? The Company recognizes revenue when the amount can be reliably measured, to the extent it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Company''s activities as described below
? Sale of goods is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products. Revenue is measured at the transaction price allocated to that performance obligation, net of Goods and Service Tax (GST), returns and allowances, trade, volume & other discounts.
? Accumulated experience is used to estimate and provide for turnover discounts, expected cash discounts, other eligible discounts, expected returns and incentives. No element of financing is deemed present as the sales are made with normal credit terms.
? Revenue from export sales are recognized upon transfer of control of promised products to customers usually on the basis of dates of shipping bills or bill of lading depending on the shipment terms.
? Sale of services is recognized upon rendering of services and revenue from fixed price, fixed time frame contracts, where the performance obligations are satisfied over time and where there is no uncertainty as to measurement or collectability of consideration, is recognized over the period of contract on pro-rata basis.
? Revenue from sales of electricity is recognized when all the significant risks and rewards of ownership have been passed to the buyer, usually on transmission of electricity based on the data provided by the electricity department.
? Export incentives / benefits are recognized as income in Statement of Profit and Loss on export of goods based on fulfilling specified criteria''s and also reasonable certainty of utilizing the benefit by import of goods/sale of license in open market.
? Revenues from die design and preparation charges are recognized as per the terms of the contract as and when services are rendered.
⢠Other income
? Income from guarantee commission is recognized as a percentage of guarantee given on annual basis.
? Dividend income is recognized when the Company''s right to receive the payment is established, which is generally when shareholders/board of directors approve the dividend as applicable.
? Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.
3.7. Investment in subsidiaries
The Company''s investment in instruments of subsidiaries are accounted for at cost less accumulated impairment. Where an indication of impairment exists, the carrying amount of the investment is assessed. Where the carrying amount of an investment is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount and the difference is transferred to the statement of profit and loss. On disposal of investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the statement of profit and loss.
Government grants are recognized in the period to which they relate when there is reasonable assurance that the grant will be received and that the Company will comply with the attached conditions. When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate. In case of Exports Promotion Capital Goods (EPCG) scheme, government grants is recognised in the statement of profit and loss over the period of fulfilment of export obligation. Where the grant relates to an asset, it is deducted from the cost of the asset and the net amount of the asset is capitalized
3.9. Foreign currency transaction
Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. As at the Balance Sheet date, foreign currency monetary items are translated at closing exchange rate. Exchange difference arising on settlement or translation of foreign currency monetary items are recognized as income or expense in the year in which they arise.
Foreign currency non-monetary items which are carried at historical cost are reported using the exchange rate at the date of transactions. Foreign currency non-monetary items which are measured at fair value are reported using the exchange rate at the date when the fair value is determined. Exchange difference arising on fair valuation of non-monetary items is recognized in line with the gain or loss of item that give rise to such exchange difference (i.e. translation differences on items whose gain or loss is recognized in statement of profit and loss or other comprehensive income is also recognized in statement of profit or loss or other comprehensive income respectively).
⢠Short term employee benefits
All employee benefits falling due wholly within twelve months of rendering the service are classified as short-term employee benefits and they are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss in the period in which the employee renders the related service.
⢠Post-employment benefits & other long-term benefits
a. Defined contribution plan
The defined contribution plan is a post-employment benefit plan under which the Company contributes fixed contribution to a Government Administered Fund and will have no obligation to pay further contribution. The Company''s defined contribution plan comprises of Provident Fund, Labour Welfare Fund and Employee State Insurance Scheme. The Company''s contribution to defined contribution plans are recognized in the Statement of Profit and Loss in the period in which the employee renders the related service.
b. Post-employment benefit and other long-term benefits
The Company has defined benefit plans comprising of gratuity and other long-term benefits in the form of leave benefits and long service rewards. Company''s obligation towards gratuity liability is funded plan and is managed by Life Insurance Corporation of India (LIC). The present value of the defined benefit obligations and certain other long-term employee benefits [privilege leave and sick leave] is determined based on actuarial valuation using the projected unit credit method. The rate used to discount defined benefit obligation is determined by reference to market yields at the Balance Sheet date on Indian Government Bonds for the estimated term of obligations. Provision for casual leave is made on arithmetic basis.
For gratuity plan, re-measurements comprising of (a) actuarial gains and losses, (b) the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability) and (c) the return on plan assets (excluding amounts included in net interest on the post-employment benefits liability) are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Such re-measurements are not reclassified to statement of profit and loss in subsequent periods.
The expected return on plan assets is the Company''s expectation of average long-term rate of return on the investment of the fund over the entire life of the related obligation. Plan assets are measured at fair value as at the Balance Sheet date.
The interest cost on defined benefit obligation and expected return on plan assets is recognized under finance cost.
Gains or losses on the curtailment or settlement of defined benefit plan are recognized when the curtailment or settlement occurs.
Actuarial gains or losses arising on account of experience adjustment and the effect of changes in actuarial assumptions for other employee benefit plan [other than gratuity] are recognized immediately in the Statement of Profit and Loss as income or expense.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). Operating Segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the CODM, in deciding how to allocate resources and assessing performance.
Borrowing costs (net of interest income on temporary investments) that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of the respective asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset which necessarily takes a substantial period of time to get ready for its intended use or sale. Ancillary cost of borrowings in respect of loans not disbursed are carried forward and accounted as borrowing cost in the year of disbursement of loan. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest expenses calculated as per effective interest method, exchange difference arising from foreign currency borrowings to the extent they are treated as an adjustment to the borrowing cost and other costs that an entity incurs in connection with the borrowing of funds.
Tax expenses for the year comprises of current tax, deferred tax charge or credit and adjustments of taxes for earlier years. In respect of amounts adjusted outside profit or loss (i.e. in other comprehensive income or equity), the corresponding tax effect, if any, is also adjusted outside profit or loss.
Provision for current tax is made as per the provisions of Income Tax Act, 1961.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized for all deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxation authority.
Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which such deferred tax assets can be utilized. In situations where the Company has unused tax losses and unused tax credits, deferred tax assets are recognized only if it is probable that they can be utilized against future taxable profits. Deferred tax assets are reviewed for the appropriateness of their respective carrying amounts at each Balance Sheet date.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes previously unrecognized deferred tax assets to the extent that it has become probable that future taxable profit allow deferred tax assets to be recovered.
The Company has adopted the amendments with respect to Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to Ind AS 12) from 1st April, 2023. The amendments narrow the scope of the initial recognition exemption to exclude transactions that give rise to equal and offsetting differences - e.g., leases and decommissioning liabilities. For leases and decommissioning liabilities, an entity is required to recognise the associated deferred tax assets and liabilities from the beginning of the earliest comparative period presented, with any cumulative effect recognised as an adjustment to retained earnings or other components of equity at that date. For all other transactions, an entity applies the amendments to transactions that occur on or after the beginning of the earliest period presented.
The Company previously accounted for deferred tax on leases and decommissioning liabilities by applying the âintegrally linked'' approach, resulting in a similar outcome as under the amendments, except that the deferred tax asset or liability was recognised on a net basis. Following the amendments, the Company has recognised a separate deferred tax asset in relation to its lease liabilities and a deferred tax liability in relation to its right-to-use assets as at 1st April 2022 and thereafter.
However, there was no impact on the balance sheet because the balances qualify for offset under paragraph 74 of Ind AS 12. There was also no impact on the opening retained earnings as at 1st April 2022 as a result of the change.
3.14. Cash and cash equivalent
Cash and cash equivalents include cash in hand, bank balances, deposits with banks (other than on lien) and all short term and highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.
For the purpose of cash flow statement, cash and cash equivalent as calculated above also includes outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
Cash flows are reported using the indirect method, where by net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.
3.16. Provisions, contingent liabilities, contingent assets
A provision is recognized when the Company has a present obligation (legal or constructive) as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risk specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
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. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.
The Company does not recognize a contingent asset but discloses its existence in the financial statements if the inflow of economic benefits is probable. However, when the realization of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognized as an asset.
Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.
Basic earnings per share is computed using the net profit for the year attributable to the equity shareholders'' and weighted average number of shares outstanding during the year. The weighted average numbers of shares also includes fixed number of equity shares that are issuable on conversion of compulsorily convertible preference shares, debentures or any other instrument, from the date consideration is receivable (generally the date of their issue) of such instruments.
Diluted earnings per share is computed using the net profit for the year attributable to the shareholder'' and weighted average number of equity and potential equity shares outstanding during the year including share options, convertible preference shares and debentures, except where the result would be anti-dilutive.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss. However, trade receivables that do not contain a significant financing component are measured at transaction price.
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortized cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
⢠the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
⢠the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All other financial assets are subsequently measured at fair value.
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount on initial recognition.
Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognized in profit or loss and is included in the âOther incomeâ line item.
Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the âOther income'' line item. Dividend on financial assets at FVTPL is recognized when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model based on âsimplified approach'' for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the twelve month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in statement of profit and loss.
De-recognition of financial asset
The Company de-recognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
On de-recognition of a financial asset in its entirety, the difference between the asset''s carrying amount
and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset.
On de-recognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.
3.18.2. Financial liability and equity instrument
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs. Repurchase of the Company''s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
All financial liabilities are subsequently measured at amortized cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognized by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
⢠it has been incurred principally for the purpose of repurchasing it in the near term; or
⢠on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
⢠it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration recognized by the Company as an acquirer in a business combination to which Ind AS 103 applies, may be designated as at FVTPL upon initial recognition if:
⢠such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
⢠the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
⢠it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL in accordance with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in the âOther income'' line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognized in other comprehensive income, unless the recognition of the effects of changes in the liability''s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are recognized in profit or loss. The remaining amount of change in the fair value of liability is always recognized in profit or loss. Changes in fair value attributable to a financial liability''s credit risk that are recognized in other comprehensive income are reflected immediately in retained earnings and are not subsequently reclassified to profit or loss.
Gains or losses on financial guarantee contracts and loan commitments issued by the Company that are designated by the Company as at fair value through profit or loss are recognized in profit or loss.
Financial liabilities subsequently measured at amortized cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the âFinance costs'' line item. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability or (where appropriate) a shorter period, to the gross carrying amount on initial recognition.
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
⢠the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
⢠the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 115.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognized gains, losses (including impairment gains or losses) or interest.
De-recognition of financial liabilities
The Company de-recognizes financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability de-recognized and the consideration paid and payable is recognized in profit or loss.
3.19. Recent accounting pronouncements
Ministry of Corporate Affairs (âMCAâ) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31st March, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
Mar 31, 2018
1. Significant Accounting Policies
1.1. Presentation and disclosure of standalone financial statement
All assets and liabilities have been classified as current and non-current as per Company''s normal operating cycle and other criteria set out in the division II of Schedule III of the Companies Act, 2013 for a company whose financial statements are made in compliance with the Companies (Indian Accounting Standards) Rules, 2015.
Based on the nature of products / services and time between acquisition of assets for processing / rendering of services and their realization in cash and cash equivalents, operating cycle is less than 12 months, however for the purpose of current/ non- current classification of assets and liabilities, period of 12 months have been considered as its normal operating cycle.
The Company presents assets and liabilities in the balance sheet based on current / non-current classification.
An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realized within twelve months after the reporting period, or
- Cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non-current.
2.2. Property, Plant and Equipment and Depreciation Recognition and measurement
Under the previous GAAP, property, plant and equipment were carried at historical cost less depreciation and impairment losses, if any. On transition to Ind AS, the Company has availed the optional exemption under Ind AS 101 and accordingly it has used the carrying value as at the date of transition i.e. 1st April 2016 as the deemed cost of the property, plant & equipment under Ind AS.
Properties, plant and equipment are stated at their cost of acquisition. Cost of an item of property, plant and equipment includes purchase price including non-refundable taxes and duties, borrowing cost directly attributable to the qualifying asset, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and the present value of the expected cost for the dismantling/decommissioning of the asset.
Parts (major components) of an item of property, plant and equipment having different useful lives are accounted as separate items of property, plant and equipment.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Capital work-in-progress comprises of cost incurred on property, plant and equipment under construction/ acquisition that are not yet ready for their intended use at the Balance Sheet Date.
Depreciation and useful lives
Depreciation on the property, plant and equipment (other than freehold land and capital work in progress) is provided on a straight-line method (SLM) over their useful lives which is in consonance of useful life mentioned in Schedule II to the Companies Act, 2013, except for the plant and machinery as per the table given below, for which on the basis of internal technical assessment made by the management, the depreciation has been provided considering the useful life of the plant.
The assets which have useful life different than as prescribed under Part C of Schedule II of the Companies Act, 2013 are as follows:
Building on leasehold lands and improvements to building on leasehold land / premises are amortized over the period of lease or useful life whichever is lower.
Leasehold land considered as finance lease is amortized over the period of lease.
Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted prospectively.
De-recognition
An item of property, plant and equipment and any significant part initially recognised is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is de-recognised.
3.3. Intangible assets and amortisation
Recognition and measurement
Under the previous GAAP, intangible assets were carried at historical cost less amortization and impairment losses, if any. On transition to Ind AS, the Company has availed the optional exemption under Ind AS 101 and accordingly it has used the carrying value as at the date of transition i.e. 1st April 2016 as the deemed cost of the intangible assets under Ind AS.
Intangible assets are recognized only if it is probable that the future economic benefits attributable to asset will flow to the Company and the cost of asset can be measured reliably. Intangible assets are stated at cost of acquisition/development less accumulated amortization and accumulated impairment loss if any.
Cost of an intangible asset includes purchase price including non - refundable taxes and duties, borrowing cost directly attributable to the qualifying asset and any directly attributable expenditure on making the asset ready for its intended use.
Intangible assets under development comprises of cost incurred on intangible assets under development that are not yet ready for their intended use as at the Balance Sheet date.
Amortization and useful lives
In case of assets purchased during the year, amortization on such assets is calculated on pro-rata basis from the date of such addition
3.4. Research and development costs
Research costs are expensed as incurred. Development expenditures are recognised as an intangible asset when the Company can demonstrate:
- The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
- Its intention to complete and its ability and intention to use or sell the asset
- How the asset will generate future economic benefits
- The availability of resources to complete the asset
- The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.
- The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation expense is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
3.5. Inventories
Raw materials and components, packing materials, consumables, stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. The Cost comprises of costs of purchase, duties and taxes (other than those subsequently recoverable) and other costs incurred in bringing them to their present location and condition. Cost for raw material is determined on specific identification basis and other materials & consumables on weighted average method.
Work-in-progress & finished goods is valued at lower of cost and net realizable value. Cost includes direct materials valued on weighted average basis and costs of conversion which include costs directly related to the units of production and systematic allocation of fixed and variable production overheads. Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. The cost of finished goods also includes excise duty wherever applicable.
Dies are valued at cost or net realizable value whichever is less. Cost includes material cost and labour cost. Costs are determined on specific identification basis.
Scrap is valued at net realizable value.
3.6. Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government and discounts given to the customers.
Sale of goods
Revenue from the domestic sales is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
Revenue from export sales are recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on the basis of dates of shipping bills or bill of lading depending on the shipment terms. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
Export incentives
Export incentives / benefits are recognised as income in Statement of Profit and Loss on export of goods based on fulfilling specified criteria''s and also reasonable certainty of utilizing the benefit by import of goods/sale of license in open market.
Die design and preparation charges
Revenues from die design and preparation charges are recognized as per the terms of the contract as and when services are rendered.
Sale of electricity-Windmill
Revenue from sales of electricity is recognized when all the significant risks and rewards of ownership have been passed to the buyer, usually on transmission of electricity based on the data provided by the electricity department.
Guarantee Commission
Income from guarantee commission is recognised as a percentage of guarantee given on annual basis.
Dividend Income
Dividend income is recognised when the Company''s right to receive the payment is established, which is generally when shareholders/board of directors approve the dividend as applicable.
Interest Income
Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.
3.7. Investment in subsidiaries
The Company has availed the optional exemption under Ind AS 101 and accordingly it has used the carrying value as at the date of transition i.e. 1st April 2016 as the deemed cost for investment in subsidiaries, associates and jointly controlled entities. The Company''s investment in instruments of subsidiaries are accounted for at costless accumulated impairment.
3.8. Government grants
Government grants are recognized in the period to which they relate when there is reasonable assurance that the grant will be received and that the Company will comply with the attached conditions. When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate. Where the grant relates to an asset, it is recognized as deferred income and is allocated to statement of profit and loss over the periods and in the proportions in which depreciation on those assets is charged.
3.9. Foreign currency transaction
Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. As at the Balance Sheet date, foreign currency monetary items are translated at closing exchange rate. Exchange difference arising on settlement or translation of foreign currency monetary items are recognized as income or expense in the year in which they arise.
Foreign currency non-monetary items which are carried at historical cost are reported using the exchange rate at the date of transactions. Foreign currency non-monetary items which are measured at fair value are reported using the exchange rate at the date when the fair value is determined. Exchange difference arising on fair valuation of non-monetary items is recognised in line with the gain or loss of item that give rise to such exchange difference (i.e. translation differences on items whose gain or loss is recognised in statement of profit and loss or other comprehensive income is also recognised in statement of profit or loss or other comprehensive income respectively).
3.10. Employee benefits
- Short term employee benefits
All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized as an expense at the undiscounted amount in the Statement of Profit and Loss in the period in which the employee renders the related service.
- Post-employment benefits & other long term benefits
a. Defined contribution plan
The defined contribution plan is a post-employment benefit plan under which the Company contributes fixed contribution to a Government Administered Fund and will have no obligation to pay further contribution. The Company''s defined contribution plan comprises of Provident Fund, Labour Welfare Fund and Employee State Insurance Scheme. The Company''s contribution to defined contribution plans are recognized in the Statement of Profit and Loss in the period in which the employee renders the related service.
b. Post-employment benefit and other long term benefits
The Company has defined benefit plans comprising of gratuity and other long term benefits in the form of leave benefits and long service rewards. Company''s obligation towards gratuity liability is funded plan and is managed by Life Insurance Corporation of India (LIC). The present value of the defined benefit obligations and certain other long term employee benefits [privilege leave and sick leave] is determined based on actuarial valuation using the projected unit credit method. The rate used to discount defined benefit obligation is determined by reference to market yields at the Balance Sheet date on Indian Government Bonds for the estimated term of obligations. Provision for casual leave is made on arithmetic basis.
For gratuity plan, re-measurements comprising of (a) actuarial gains and losses, (b) the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability) and (c) the return on plan assets (excluding amounts included in net interest on the post-employment benefits liability) are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Such re-measurements are not reclassified to statement of profit and loss in subsequent periods.
The expected return on plan assets is the Company''s expectation of average long-term rate of return on the investment of the fund over the entire life of the related obligation. Plan assets are measured at fair value as at the Balance Sheet date.
The interest cost on defined benefit obligation and expected return on plan assets is recognised under finance cost.
Gains or losses on the curtailment or settlement of defined benefit plan are recognised when the curtailment or settlement occurs.
Actuarial gains or losses arising on account of experience adjustment and the effect of changes in actuarial assumptions for other employee benefit plan [other than gratuity] are recognized immediately in the Statement of Profit and Loss as income or expense.
3.11. Borrowing cost
Borrowing costs (net of interest income on temporary investments) that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of the respective asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset which necessarily takes a substantial period of time to get ready for its intended use or sale. Ancillary cost of borrowings in respect of loans not disbursed are carried forward and accounted as borrowing cost in the year of disbursement of loan. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest expenses calculated as per effective interest method, exchange difference arising from foreign currency borrowings to the extent they are treated as an adjustment to the borrowing cost and other costs that an entity incurs in connection with the borrowing of funds.
3.12. Leases
The Company determines whether an arrangement contains a lease by assessing whether the fulfillment of a transaction is dependent on the use of a specific asset and whether the transaction conveys the right to use that asset to the Company in return for payment. Where this occurs, the arrangement is deemed to include a lease and is accounted for either as finance or operating lease. Leases are classified as finance leases where the terms of the lease transfers substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Operating lease - Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term except where scheduled increase in rent compensates the Company with expected inflationary costs.
Finance lease - Finance leases are capitalised at the commencement of lease, at the lower of the fair value of the property or the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in the statement of profit and loss over the period of the lease.
3.13. Taxes on income
Tax expenses for the year comprises of current tax, deferred tax charge or credit and adjustments of taxes for earlier years. In respect of amounts adjusted outside profit or loss (i.e. in other comprehensive income or equity), the corresponding tax effect, if any, is also adjusted outside profit or loss.
Provision for current tax is made as per the provisions of Income Tax Act, 1961.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, and deferred tax assets are recognised for all deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxation authority.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which such deferred tax assets can be utilized. In situations where the Company has unused tax losses and unused tax credits, deferred tax assets are recognised only if it is probable that they can be utilized against future taxable profits. Deferred tax assets are reviewed for the appropriateness of their respective carrying amounts at each Balance Sheet date.
At each reporting date, the Company re-assesses unrecognised deferred tax assets. It recognises previously unrecognised deferred tax assets to the extent that it has become probable that future taxable profit allow deferred tax assets to be recovered.
3.14. Cash and cash equivalent
Cash and cash equivalents include cash in hand, bank balances, deposits with banks (other than on lien) and all short term and highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.
For the purpose of cash flow statement, cash and cash equivalent as calculated above also includes outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
3.15. Cash flow statement
Cash flows are reported using the indirect method, where by net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.
3.16. Provisions, contingent liabilities, contingent assets
A provision is recognised when the Company has a present obligation (legal or constructive) as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risk 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. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
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. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.
The Company does not recognize a contingent asset but discloses its existence in the financial statements if the inflow of economic benefits is probable. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognised as an asset. Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.
3.17. Earnings per share
Basic earnings per share is computed using the net profit for the year attributable to the equity shareholders'' and weighted average number of shares outstanding during the year. The weighted average numbers of shares also includes fixed number of equity shares that are issuable on conversion of compulsorily convertible preference shares, debentures or any other instrument, from the date consideration is receivable (generally the date of their issue) of such instruments.
Diluted earnings per share is computed using the net profit for the year attributable to the shareholders'' and weighted average number of equity and potential equity shares outstanding during the year including share options, convertible preference shares and debentures, except where the result would be anti-dilutive. Potential equity shares that are converted during the year are included in the calculation of diluted earnings per share, from the beginning of the year or date of issuance of such potential equity shares, to the date of conversion.
3.18. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
3.18.1.Financial assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost (except for debt instruments that are designated as at fair value through profit or loss on initial recognition):
- the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
- the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All other financial assets are subsequently measured at fair value.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in profit or loss and is included in the
âOther incomeâ line item.
Investments in equity instruments at FVTOCI
On initial recognition, the Company makes an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not applicable if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the âReserve for equity instruments through other comprehensive income''. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
- It has been acquired principally for the purpose of selling it in the near term; or
- On initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
- It is a derivative that is not designated and effective as a hedging instrument or a financial guarantee. Dividends on these investments in equity instruments are recognised in profit or loss when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably. Dividends recognised in profit or loss are included in the âOther income'' line item.
Financial assets at fair value through profit or loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the âOther income'' line item. Dividend on financial assets at FVTPL is recognised when the Company''s right to receive the dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.
Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model based on âsimplified approach'' for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the twelve month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in statement of profit and loss.
De-recognition of financial asset
The Company de-recognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On de-recognition of a financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
On de-recognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
3.18.2.Financial liability and equity instrument Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs. Repurchase of the Company''s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
- it has been incurred principally for the purpose of repurchasing it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for trading or contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies, may be designated as at FVTPL upon initial recognition if:
- such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise;
- the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company''s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or
- it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined contract to be designated as at FVTPL in accordance with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the âOther income'' line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liability''s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss, in which case these effects of changes in credit risk are recognised in profit or loss. The remaining amount of change in the fair value of liability is always recognised in profit or loss. Changes in fair value attributable to a financial liability''s credit risk that are recognised in other comprehensive income are reflected immediately in retained earnings and are not subsequently reclassified to profit or loss.
Gains or losses on financial guarantee contracts and loan commitments issued by the Company that are designated by the Company as at fair value through profit or loss are recognised in profit or loss.
Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the âFinance costs'' line item. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability or (where appropriate) a shorter period, to the gross carrying amount on initial recognition.
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 18.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
Reclassification
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
De-recognition of financial liabilities
The Company de-recognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability de-recognised and the consideration paid and payable is recognised in profit or loss.
3.19. New standards issued but not effective and hence not adopted
* Does not include modification to existing other Ind AS due to issue of new Ind AS.
The Company is assessing the potential impact of above amendments on the financial statements. Management presently is of the view that it would not have a material impact on the financial statements.
Mar 31, 2017
1.1. Corporate information
Pradeep Metals Limited (âthe Companyâ) is a public company domiciled in India. Its shares are listed on BSE Limited in India. The Company is engaged in the manufacturing and selling of forged components. The Company caters to both domestic and international markets. The Company''s CIN is L99999MH1982PLC026191.
1.2. Basis of preparation of financial statements
The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (âGAAPâ) under the historical cost convention on accrual basis. GAAP comprises mandatory Accounting Standards as specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 as amended from time to time and the Companies Act, 2013 and guidelines issued by the Securities and Exchange Board of India.
The accounting policies followed in the preparation of the standalone financial statements are consistent with those followed in the preparation of the standalone financial statements for the year ended 31st March 2016 except for changes to comply with the amendments in accounting standards as per the Companies (Accounting Standards) Amendment Rules, 2016. Refer note no.41 in respect of change in accounting of Dies.
1.3. Presentation and disclosure of financial statement
All assets and liabilities have been classified as current & non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013.
Based on the nature of products / services and time between acquisition of assets for processing / rendering of services and their realization in cash and cash equivalents, operating cycle is less than 12 months. However for the purpose of current / non-current classification of assets & liabilities, period of 12 months has been considered as normal operating cycle.
1.4. Use of estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the application of accounting policies, reported balances of assets and liabilities, disclosure of contingent liabilities as on the date of financial statements and reported amounts of income and expenses during the period. Management believes that the estimates and assumptions used in the preparation of financial statements are prudent and reasonable. Actual results could differ from those estimates. Any difference between the actual results and estimates are recognized in the period in which the results are known / materialize. Any revision to accounting estimates is recognized prospectively in the current and future periods.
1.5. Property, Plant and Equipment
1.5.1. Property, plant and equipment are stated at cost of acquisition / construction less accumulated depreciation and where applicable accumulated impairment losses. Gross carrying amount of all property, plant and equipment are measured using cost model.
1.5.2. Cost of fixed assets includes non-refundable taxes and duties, borrowing cost directly attributable to the qualifying asset (as per Accounting Standard 16 - Borrowing Costs) and any directly attributable costs of bringing the asset to its working condition for its intended use and initial estimate of decommissioning, restoring and similar liabilities. Any trade discounts and rebates are deducted in arriving at the purchase price. Such cost includes the cost of replacing part of the plant and equipment. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
1.5.3. Parts (major components) of an item of property, plant and equipments having different useful lives are accounted as separate items of property, plant and equipments.
1.5.4. Capital work-in-progress comprises of cost incurred on property, plant and equipment under construction / acquisition that are not yet ready for their intended use at the balance sheet date.
1.5.5. Property, plant and equipment are eliminated from financial statement either on disposal or when retired from active use. Assets held for disposal are stated at net realizable value. Losses arising in case of retirement of property, plant and equipment and gains or losses arising from disposal of property, plant and equipment are recognized in the statement of profit and loss in the year of occurrence.
1.5.6. Items of stores and spares (dies) that meet the definition of plant, property and equipment are capitalized at cost and depreciated over their useful life.
1.6. Intangible assets
1.6.1. Intangible assets are recognized only if it is probable that the future economic benefits attributable to asset will flow to the Company and the cost of asset can be measured reliably. Intangible assets are stated at cost of acquisition/ development less accumulated amortization and accumulated impairment loss, if any.
1.6.2. Cost of an intangible asset includes purchase price including non - refundable taxes and duties, borrowing cost directly attributable to the qualifying asset and any directly attributable expenditure on making the asset ready for its intended use.
1.6.3. Intangible assets under development comprises of cost incurred on intangible assets under development that are not yet ready for their intended use as at the Balance Sheet date.
1.6.4. Amortization methods and useful lives are reviewed at each financial year end and adjusted prospectively.
1.6.5. In case of assets purchased during the year, amortization on such assets is calculated on prorata basis from the date of such addition.
1.7. Depreciation / amortization
1.7.1. Depreciation on fixed assets (other than freehold land, leasehold land and capital work in progress) is provided using straight line basis over their useful lives which are in consonance of useful life mentioned in Schedule II of the Companies Act, 2013 except for the items prescribed in 1.7.2 where the useful life is lower than as mentioned in Schedule II based on internal technical assessment made by the management of the Company.
1.7.2. The assets which have useful life different than as prescribed under Part C of Schedule II of the Companies Act, 2013 are as follows:
1.7.4. In case of assets purchased, sold or discarded during the period, depreciation on such assets is calculated on pro-rata basis from the date of such addition or as the case may be, upto the date on which such asset has been sold or discarded.
1.7.5. Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted prospectively.
1.7.6. Leasehold lands are amortized over the period of lease or useful life whichever is lower. Buildings constructed on leasehold land are depreciated over its useful life which matches with the useful life mentioned in Schedule II.
1.7.7. Intangible assets are amortized over their estimated useful lives on straight-line method.
1.8. Research & Development
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product''s technical feasibility and other criteria as set out in paragraph 44 of AS 26 - âIntangible Assets'' have been established, in which case such expenditure is capitalized. The amount capitalized comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilized for research and development are capitalized and depreciated in accordance with the policies stated for Tangible assets.
1.9. Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
Based on the assessment done at each balance sheet date, recognized impairment loss is further provided depending on changes in circumstances. After recognition of impairment loss, the depreciation / amortization charge for the property, plant and equipment / intangible is adjusted in future periods to allocate the asset''s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life. If the conditions leading to recognition of impairment losses no longer exist or have decreased, impairment losses recognized are reversed to the extent it does not exceed the carrying amount that would have been determined after considering depreciation/ amortization had no impairment loss been recognized in earlier years.
1.10. Inventories
1.10.1. Raw materials and components, packing materials, consumables, stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
The Cost comprises of costs of purchase, duties and taxes (other than those subsequently recoverable) and other costs incurred in bringing them to their present location and condition. Cost for raw material is determined on specific identification basis and other materials & consumables on weighted average method.
1.10.2. Work-in-progress & finished goods is valued at lower of cost and net realizable value. Cost includes direct materials valued on weighted average basis and costs of conversion which include costs directly related to the units of production and systematic allocation of fixed and variable production overheads. Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. The cost of finished goods also includes excise duty wherever applicable.
1.10.3. Scrap is valued at net realizable value.
1.11. Investments
Investments are classified into current and long-term investments.
Investments that are readily realizable and intended to be held for not more than a year from the date on which such investments are made are classified as current investments. All other investments are classified as long-term investments.
Current investments are carried at lower of cost and fair value / net asset value determined on category wise for related investments. Long term investments are carried at cost. Provision for diminution in value of long term investments is made to recognize a decline, other than temporary, on an individual investment basis.
The cost of investments comprises of purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Investment transactions are accounted for on a trade date basis. In determining the holding cost of investments and the gain or loss on sale of investments, the âweighted average cost'' method is followed.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.
1.12. Government grant
Government grants available to the Company are considered for inclusion in accounts:
- Where there is reasonable assurance that the Company will comply with the conditions attached to them; and
- Where such benefits have been earned by the Company and it is reasonably certain that the ultimate collection will be made.
The grant received by the company is accounted as deferred income in accordance with Accounting Standard 12 - Government Grants.
1.13. Revenue recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
- Domestic sales of goods are recognized when significant risks and rewards of ownership of the goods have been passed to the buyer which generally coincides with dispatch of goods and are recorded inclusive of excise duty and net of sales tax, rebates and trade discounts and sales returns.
- Exports sales of goods are recognized when significant risks and rewards of ownership of the goods have been passed to the buyer, usually on the basis of dates of shipping bill / bill of lading as per the applicable terms.
- Revenue from job work and tooling charges (die design and preparation charges for customers) are recognized as per the terms of the contract and as and when services are rendered.
- Revenue from sales of electricity is recognized when significant risks and rewards of ownership of the goods have been passed to the buyer, usually on transmission of electricity based on the data provided by the electricity department.
- Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.
- Dividend income on investment is accounted for in the year in which the right to receive the payment is established.
- Income from guarantee commission is recognized as a percentage of guarantee given on annual basis.
- Export incentives / benefits
Export incentives / benefits are recognized as income in Statement of Profit and Loss on export of goods based on fulfilling specified criteria''s and also reasonable certainty of utilizing the benefit by import of goods / sale of license in open market.
1.14. Foreign currency transactions
Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.
As at balance sheet date, foreign currency monetary items are translated at closing exchange rate. Foreign currency non-monetary items are carried at historical cost using exchange rate on the date of transaction. Exchange difference arising on settlement or translation of foreign currency monetary items are recognized as income or expense in the year in which they arise except to the extent exchange differences are regarded as an adjustment to interest cost and treated in accordance with Accounting Standard 16-Borrowing Cost.
The premium or discount arising at the inception of forward exchange contracts, which are not intended for trading or speculation purposes are amortized as income or expense over the life of the contract. Outstanding forward exchange contracts as at the reporting date are translated at closing rate and any exchange difference arising on such contracts are recognized in the Consolidated Statement of Profit and Loss in the year in which exchange rate changes. Any profit or loss on cancellation or renewal of forward exchange contracts are recognized as income or expense of the year.
1.15. Employee benefits
1.15.1. Short term employee benefits
All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized as an expense at undiscounted amount in the Statement of Profit and Loss in the period in which the employee renders the related service.
1.15.2. Post-employment benefits
- Defined Contribution Plan
The Company''s defined contribution plan comprises of Provident Fund, Employee State Insurance Scheme and Employee Pension Scheme. The defined contribution plan is postemployment benefit plan under which the Company contributes fixed contribution amount to a government administered fund and will have no obligation to pay further contribution. The fixed contribution under the schemes is recognized in Statement of Profit and Loss during the period in the period in which employee renders the related service.
- Defined Benefit Plan and other long-term benefits
- The Company has defined benefit plans comprising of gratuity and other long term benefits include leave benefits. For gratuity, the Company has a Group Gratuity-cum-Life Insurance Scheme with Life Insurance Corporation of India (LIC), for future payment of gratuity to employees at retirement, death while in employment or on termination. Leave benefits are non-funded. The present value of the defined benefit obligations and other long term benefits is determined based on actuarial valuation using the projected unit credit method. The rate used to discount defined benefit obligation is determined by reference to market yields at the Balance Sheet date on Indian Government Bonds for the estimated term of obligations. The expected return on plan assets is the Company''s expectation of average long term rate of return on the investment of the fund over the entire life of the related obligation. The rate used to discount defined benefit obligation is determined by reference to market yields at the Balance Sheet date on Indian Government Bonds for the estimated term of obligations.
- Actuarial gains or losses arising on account of experience adjustment and the effect of changes in actuarial assumptions are recognized immediately in the Statement of Profit and Loss as income or expense.
1.16. Borrowing cost
Borrowing costs that are directly attributable to the acquisition, construction or development of a qualifying asset are capitalized as part of the cost of the respective asset till such time the asset is ready for its intended use. A qualifying asset is an asset which necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest, exchange difference arising from foreign currency borrowings to the extent they are treated as an adjustment to the borrowing cost and other costs that an entity incurs in connection with the borrowing of funds.
1.17. Operating lease
Lease arrangements where risks and rewards incidental to ownership of an asset substantially vest with the lessor are classified as operating lease.
Rental expenses on assets obtained under operating lease arrangements are recognized on a straight-line basis as an expense in the Statement of Profit and Loss over the lease term of respective lease arrangement.
1.18. Taxes on income
Tax expenses comprise of current tax, minimum alternate tax, deferred tax charge or credit and adjustments of taxes for earlier years.
Provision for current tax is made as per the provisions of the Income Tax Act, 1961.
Deferred tax charge or credit reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years and are measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. Deferred tax assets are reviewed for the appropriateness of their respective carrying amounts at each balance sheet date.
At each Balance Sheet date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably / virtually certain as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized.
Minimum Alternative Tax (MAT) credit, which is equal to the excess of MAT [calculated in accordance with provisions of section 115JB of the Income tax Act, 1961 (the Act)] over normal income-tax is recognized as an asset by crediting the Statement of Profit and Loss only when and to the extent there is convincing evidence that the Company will be able to avail the said credit against normal tax payable during the period specified under the Act for utilization. The Company reviews the MAT credit entitlement asset at each reporting date for reversal, if any.
1.19. Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank balances, deposits with banks (other than on lien) and all short term and highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.
1.20. Cash flow statement
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.
1.21. Provisions, contingent liabilities and contingent assets
A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value (except (a) retirement benefits and (b) dismantling / decommissioning liabilities that are recognized as cost of Property, Plant and Equipment) and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
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. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.
Contingent assets are neither disclosed nor recognized.
1.22. Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss (after tax) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue and share split, if any.
For the purpose of calculating diluted earnings per share, the net profit or loss (after tax) for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
1.23. Segment reporting
The segments have been identified taking into account the nature of the products / services, geographical locations, nature of risks and returns, internal organization structure and internal financial reporting system. The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
1.24. Prior period items
Prior period items are disclosed separately in the Financial Statement.
Mar 31, 2016
1. Significant accounting policies
1.1. Basis of preparation of financial statements
The financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (âGAAPâ) under the historical cost convention on the accrual basis. GAAP comprises of accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
1.2. Presentation and disclosure of financial statement
All assets and liabilities have been classified as current & non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013.
Based on the nature of products / services and time between acquisition of assets for processing / rendering of services and their realization in cash and cash equivalents, operating cycle is less than
12 months, however for the purpose of current/ non-current classification of assets and liabilities, period of 12 months have been considered as its normal operating cycle.
1.3. Use of estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the application of accounting policies, reported balances of assets and liabilities, disclosure of contingent liabilities as on the date of financial statements and reported amounts of income and expenses during the period. Management believes that the estimates and assumptions used in the preparation of financial statements are prudent and reasonable. Actual results could differ from those estimates. Any difference between the actual results and estimates are recognized in the period in which the results are known / materialize. Any revision to accounting estimates is recognized prospectively in the current and future periods.
1.4. Fixed assets
1.4.1. Tangible assets
Tangible assets are stated at cost of acquisition / construction less accumulated depreciation (amortization wherever applicable) and accumulated impairment losses, if any.
1.4.2. Intangible assets
Intangible assets are recognized only if it is probable that the future economic benefits attributable to asset will flow to the Company and the cost of asset can be measured reliably. Intangible assets are stated at cost of acquisition/ development less accumulated amortization and accumulated impairment loss, if any.
1.4.3. Cost of fixed assets includes non-refundable taxes and duties, borrowing cost directly attributable to the qualifying asset (as per Accounting Standard 16 - Borrowing Costs) and any directly attributable costs of bringing the asset to its working condition for its intended use.
1.4.4. Capital work-in-progress comprises of cost incurred on fixed assets under construction / acquisition that are not yet ready for their intended use at the balance sheet date.
1.5. Depreciation / amortization
1.5.1. Depreciation on fixed assets (other than freehold land and capital work in progress) is provided using straight line basis in accordance with Schedule II of the Companies Act, 2013 except for the plant and machinery for which on the basis of internal technical assessment made by the management, the depreciation has been provided considering the useful life of the plant. The assets which has useful life different than as prescribed under Part C of Schedule II of the Companies Act, 2013 are as follows:
1.5.2. In case of assets purchased, sold or discarded during the period, depreciation on such assets is calculated on pro-rata basis from the date of such addition or as the case may be, up to the date on which such asset has been sold or discarded.
1.5.4. Leasehold land is amortized over the period of lease (i.e. 95 years) or useful life whichever is lower.
1.6. Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life or a reasonable estimate thereof.
Based on the assessment done at each balance sheet date, recognized impairment loss is further provided or reversed depending on changes in circumstances. After recognition of impairment loss or reversal of impairment loss as applicable, the depreciation charge for the fixed asset is adjusted in future periods to allocate the asset''s revised carrying amount, less its residual value (if any), on a systematic basis over its useful life. If the conditions leading to recognition of impairment losses no longer exist or have decreased, impairment losses recognized are reversed to the extent it does not exceed the carrying amount that would have been determined after considering depreciation/ amortization had no impairment loss been recognized in earlier years.
1.7. Inventories
Raw materials and components, packing materials, consumables, stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
The Cost comprises of costs of purchase, duties and taxes (other than those subsequently recoverable) and other costs incurred in bringing them to their present location and condition. Cost for raw material is determined on specific identification basis and other materials & consumables on weighted average method.
1.7.1. Work-in-progress & finished goods is valued at lower of cost and net realizable value. Cost includes direct materials valued on weighted average basis and costs of conversion which include costs directly related to the units of production and systematic allocation of fixed and variable production overheads. Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale. The cost of finished goods also includes excise duty wherever applicable.
1.7.2. Dies are valued at cost or net realizable value whichever is less. Cost includes material cost & labour cost. Costs are determined on specific identification basis.
1.7.3. Scrap is valued at net realizable value.
1.8. Investments
Investments are classified into current and long-term investments.
Investments that are readily realizable and intended to be held for not more than a year from the date on which such investments are made are classified as current investments. All other investments are classified as long-term investments.
Current investments are carried at lower of cost and fair value / net asset value determined on category wise for related investments. Long term investments are carried at cost. Provision for diminution in value of long term investments is made to recognize a decline, other than temporary, on an individual investment basis.
The cost of investments comprises of purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Investment transactions are accounted for on a trade date basis. In determining the holding cost of investments and the gain or loss on sale of investments, the ''weighted average cost'' method is followed.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.
1.9. Revenue recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
-Domestic sales of goods are recognized when significant risks and rewards of ownership of the goods have been passed to the buyer which generally coincides with dispatch of goods and are recorded inclusive of excise duty and net of sales tax, rebates and trade discounts and sales returns.
-Exports sales of goods are recognized when significant risks and rewards of ownership of the goods have been passed to the buyer, usually on the basis of dates of shipping bill / bill of lading.
-Revenue from tooling charges (die design and preparation charges) are recognized as per the terms of the contract as and when services are rendered.
-Revenue from sales of electricity is recognized when significant risks and rewards of ownership of the goods have been passed to the buyer, usually on transmission of electricity based on the data provided by the electricity department.
-Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable.
-Dividend income on investment is accounted for in the year in which the right to receive the payment is established.
-Income from guarantee commission is recognized as a percentage of guarantee given on annual basis.
-Export incentives / benefits
Export incentives / benefits are recognized as income in Statement of Profit and Loss on export of goods based on fulfilling specified criteria''s and also reasonable certainty of utilizing the benefit by import of goods/sale of license in open market.
1.10. Foreign currency transactions
Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.
As at balance sheet date, foreign currency monetary items are translated at closing exchange rate. Foreign currency non-monetary items are carried at historical cost using exchange rate on the date of transaction.
Exchange difference arising on settlement or translation of foreign currency monetary items are recognized as income or expense in the year in which they arise except to the extent exchange differences are regarded as an adjustment to interest cost and treated in accordance with Accounting Standard 16- Borrowing Cost.
1.11. Employee benefits
1.11.1. Short term employee benefits
All employee benefits falling due wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized as an expense at undiscounted amount in the Statement of Profit and Loss in the period in which the employee renders the related service.
1.11.2. Post-employment benefits
- Defined Contribution Plan
The Company''s defined contribution plan comprises of Provident Fund, Employee State Insurance Scheme and Employee Pension Scheme. The defined contribution plan is postemployment benefit plan under which the Company contributes fixed contribution amount to a government administered fund and will have no obligation to pay further contribution. The fixed contribution under the schemes is recognized in Statement of Profit and Loss during the period in the period in which employee renders the related service.
- Defined Benefit Plan and other long-term benefits
o The Company has defined benefit plans comprising of gratuity and other long term benefits include leave benefits. For gratuity, the Company has a Group Gratuity-cum-Life Insurance Scheme with Life Insurance Corporation of India (LIC), for future payment of gratuity to employees at retirement, death while in employment or on termination. Leave benefits are non-funded. The present value of the defined benefit obligations and other long term benefits is determined based on actuarial valuation using the projected unit credit method. The rate used to discount defined benefit obligation is determined by reference to market yields at the Balance Sheet date on Indian Government Bonds for the estimated term of obligations. The expected return on plan assets is the Company''s expectation of average long term rate of return on the investment of the fund over the entire life of the related obligation. The rate used to discount defined benefit obligation is determined by reference to market yields at the Balance Sheet date on Indian Government Bonds for the estimated term of obligations. o Actuarial gains or losses arising on account of experience adjustment and the effect of changes in actuarial assumptions are recognized immediately in the Statement of Profit and Loss as income or expense.
1.12.Borrowing cost
Borrowing costs that are directly attributable to the acquisition, construction or development of a qualifying asset are capitalized as part of the cost of the respective asset till such time the asset is ready for its intended use or sale. A qualifying asset is an asset which necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest, exchange difference arising from foreign currency borrowings to the extent they are treated as an adjustment to the borrowing cost and other costs that an entity incurs in connection with the borrowing of funds.
1.13.Operating lease
Lease arrangements where risks and rewards incidental to ownership of an asset substantially vest with the lessor are classified as operating lease.
Rental expenses on assets obtained under operating lease arrangements are recognized on a straight-line basis as an expense in the Statement of Profit and Loss over the lease term of respective lease arrangement.
1.14.Taxes on income
Tax expenses comprise of current tax, minimum alternate tax, deferred tax charge or credit and adjustments of taxes for earlier years.
Provision for current tax is made as per the provisions of the Income Tax Act, 1961.
Deferred tax charge or credit reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years and are measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. Deferred tax assets are reviewed for the appropriateness of their respective carrying amounts at each balance sheet date.
At each Balance Sheet date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably / virtually certain as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized.
Minimum Alternative Tax (MAT) credit, which is equal to the excess of MAT [calculated in accordance with provisions of section 115JB of the Income tax Act, 1961 (the Act)] over normal income-tax is recognized as an asset by crediting the Statement of Profit and Loss only when and to the extent there is convincing evidence that the Company will be able to avail the said credit against normal tax payable during the period specified under the Act for utilization. The Company reviews the MAT credit entitlement asset at each reporting date for reversal, if any.
1.15.Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank balances, deposits with banks (other than on lien) and all short term and highly liquid investments that are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value.
1.16.Cash flow statement
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
1.17. Provisions, contingent liabilities and contingent assets
A provision is recognized when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
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. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.
Contingent assets are neither disclosed nor recognized.
1.18. Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss (after tax) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue and share split.
For the purpose of calculating diluted earnings per share, the net profit or loss (after tax) for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
1.19.Segment reporting
The segments have been identified taking into account the nature of the products / services, geographical locations, nature of risks and returns, internal organization structure and internal financial reporting system. The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
1.20. Prior period items
Prior period items are disclosed separately in the Financial Statement.
Mar 31, 2015
(1.1.1) Basis for preparation of Accounts
The Financial Statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of the
Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the
1956 Act"), as applicable. The Financial Statements have been
prepared on accrual basis under the historical cost convention. The
accounting policies adopted in the preparation of the financial
statements are consistent with those followed in the previous year.
(1.1.2) System of Accounting
The Company follows the mercantile system of accounting and recognizes
income and expenditure on accrual basis, except income from
investments, which is accounted for on receipt basis.
(1.1.3) Use of Estimates
The preparation of Financial Statements is in accordance with Generally
Accepted Accounting Principles. As per the Management, the best
estimates and assumptions are made, wherever necessary, and reported in
the amount of Assets and Liabilities as on the date of Financial
Statement as well as in the amount of revenue and expenses during the
reporting period. The Management believes that the estimates used in
the preparation of the Financial Statements are prudent and reasonable.
Actual results could differ from these estimates. Any variance is
recognized prospectively in current or future period in which the
results are known or materialized.
(1.1.4) Fixed Assets and Depreciation
The Fixed assets are stated at Cost less depreciation. The Company has
provided depreciation on Straight Line Method based on the useful life
prescribed in Part C of the Schedule II to the Companies Act, 2013
except for Plant and Machinery, for which, on the basis of Internal
Technical Assessment made by the Management, the depreciation has been
provided considering the useful life of the plant as follows:
Description of Assets: Useful life
Machinery for heavy Production Press Cranes etc. 15 Years
Other Machinery 8 Years
(1.1.5) Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are charged to revenue.
(1.1.6) Inventories
a. Raw material is valued at cost. The cost is arrived at on
First-in-First-out basis.
b. Dies and tools, components, stores and spares are valued at cost.
c. Work-in-process and semi-finished goods are valued at lower of cost
or estimated net realizable value.
(1.1.7) Investment
Investments are stated at Cost. Investments made in wholly owned
subsidiary in Pradeep Metals Limited, New York/Pradeep Metals Limited,
Inc., Texas are valued at the rate prevailing on the transaction date.
(1.1.8) Sales
Sales and Other Operating Income are shown at Net of Excise and VAT.
Revenue from sale of
goods is recognized on transfer of significant risks and rewards of
ownership to the buyer.
(1.1.9) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rates of exchange
in force at the time the transactions are effected. Monetary items
denominated in foreign currency are restated using the exchange rates
prevailing at the date of the Balance Sheet. The exchange difference
between the rate prevailing on the date of transaction and on the date
of settlement is recognized as income or expense, as the case may be.
(1.1.10) Provisions, Contingent Liabilities and Contingent Assets
Provisions, to the extent found necessary as per the Management, have
been made based on best estimates and are also recognized in respect of
present liability in respect of the prior activity. Contingent Assets
have not been recognized and hence, not reported.
(1.1.11) Taxes on Income
Tax expense comprises of current tax and deferred tax. Current tax is
measured at the amount expected to be paid at the applicable tax rates.
Deferred income tax reflects the current period timing difference
between taxable income and accounting income for the period and
reversal of timing differences of earlier years/period. Deferred tax
assets are recognized only to the extent that there is reasonable
certainty that sufficient future income will be available for set off.
(1.1.12 Employee Benefits
Contributions payable to the Government Provident Fund, ESIC and
premium paid to Life Insurance Corporation of India under Employees
Group Gratuity Scheme, are charged to revenue. The liabilities in
respect of Leave Encashment at the year end are charged to revenue
based on actuarial value.
(1.1.13) Impairment
At the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indications that an impairment loss may have occurred in accordance
with Accounting Standard (AS-28) which deals with "Impairment of
Assets", notified under the Company''s (Accounting Standards)
Rules,2006. During the period, no such loss was observed and hence, no
provision for impairment loss has been made.
(1.1.14) In respect of Standalone results, the Company has only single
primary business segment i.e. closed Die forging and processing
thereof. Further, the Company has set up a 2.1 MW Wind Mill for captive
use. It has been commissioned in March 2015. It is treated as part of
primary segment and no separate disclosure for Wind Mill segment is
considered necessary.
Mar 31, 2014
(1.1) Basis for preparation of Accounts
These Financial Statements have been prepared to comply in all material
aspects with applicable accounting principles in India, the applicable
Accounting Standards notified under Section 211(3C) of the Companies
Act, 1956. Pursuant to Circular 15/2013 dated 13 September, 2013 read
with Circular 08/2014 dated 4th April, 2014, till the Standards of
Accounting or any addendum thereto are prescribed by Central Government
in consultation and recommendation of the National Financial Reporting
Authority, the existing Accounting Standards notified under the
Companies Act, 1956 shall continue to apply. Consequently, these
Financial Statements have been prepared to comply in all material
aspects with Accounting Standards notified under section 211(3C)
[Companies (Accounting Standards) Rules, 2006, as amended] and other
relevant provisions of the Companies Act, 1956. The Financial
Statements have been prepared under the historical cost convention. The
accounting policies adopted in the preparation of the Financial
Statements are consistent with those followed in the previous year.
(1.2) System of Accounting
The Company generally follows the mercantile system of accounting and
recognizes income and expenditure on accrual basis, except income from
investments, which is accounted for on receipt basis.
(1.3) Use of Estimates
The preparation of Financial Statements is in accordance with Generally
Accepted Accounting Principles. As per the Management, the best
estimates and assumptions are made, wherever necessary, and reported in
the amount of Assets and Liabilities as on the date of Financial
Statement as well as in the amount of revenue and expenses during the
reporting period. The Management believes that the estimates used in
the preparation of the Financial Statements are prudent and reasonable.
Actual results could differ from these estimates. Any variance is
recognized prospectively in current or future period in which the
results are known or materialized.
(1.4) Fixed Assets and Depreciation
Fixed Assets are stated at cost less depreciation. Depreciation on
assets has been provided for on straight line method at the rates
specified in Schedule XIV of the Companies Act, 1956, on continuous
process plant basis.
Depreciation on additions to assets is calculated on pro-rata basis
from the day of asset being put to use.
(1.5) Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are charged to revenue.
(1.6) Inventories
a. Raw material is valued at cost. The cost is arrived at on
First-in-First-out basis.
b. Dies and tools, Components, stores and spares are valued at cost.
c. Work-in-process and semi-finished goods are valued at lower of cost
or estimated net realizable value.
(1.7) Investment
Investments are stated at Cost.
(1.8) Sales
Sales are inclusive of excise duty. Revenue from sale of goods is
recognized on transfer of significant risks and rewards of ownership to
the buyer.
(1.9) Foreign Currency Transactions
Transactions in foreign currency are recorded at the rates of exchange
in force at the time the transactions are effected. Monetary items
denominated in foreign currency are restated using the exchange rates
prevailing at the date of the Balance Sheet. The exchange difference
between the rate prevailing on the date of transaction and on the date
of settlement is recognized as income or expense, as the case may be.
(1.10) Provisions, Contingent Liabilities and Contingent Assets
Provisions, to the extent found necessary as per the Management, have
been made based on best estimates and are also recognized in respect of
present liability in respect of the prior activity. Contingent Assets
have not been recognized and hence, not reported.
(1.11) Taxes on Income
Tax expense comprises of current tax and deferred tax. Current tax is
measured at the amount expected to be paid/recovered from the
applicable tax rates.
Deferred income tax reflect the current period timing differences
between taxable income and accounting income for the period and
reversal of timing differences of earlier years/period. Deferred tax
assets are recognized only to the extent that there is reasonable
certainty that sufficient future income will be available except that
deferred tax assets arising on account of unabsorbed depreciation and
losses are recognized if there is virtual certainty that sufficient
future taxable income will be available to realize the same.
(1.12) Employee Benefits
Contributions payable to the Government Provident Fund, ESIC and
premium paid to Life Insurance Corporation of India under Employees
Group Gratuity Scheme, are charged to revenue. The liabilities in
respect of Leave Encashment at the year end are charged to revenue
based on actuarial value.
(1.13) Impairment
At the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indications that an impairment loss may have occurred in accordance
with Accounting Standard (AS-28) which deals with "Impairment of
Assets", notified under the Company''s (Accounting Standards)Rules,2006.
During the period, no such loss was observed and hence, no provision
for impairment loss has been made.
(1.14) The Company manufactures "Forgings" of various types at one
location only. Hence, Accounting Standard 17 regarding Segment
Reporting notified under the Company''s (Accounting Standards) Rules,
2006, is not applicable to the Company.
(1.15) Preliminary expenses are being amortized in the year in which
the same has been incurred.
Mar 31, 2013
(1.1.1) Basis for preparation of Accounts.
a. The accounts have been prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India and the Accounting Standards notified under the
Companies (Accounting Standards) Rules, 2006 and the relevant
provisions of the Companies Act, 1956.
b. Accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year.
(1.1.2) System of Accounting
The Company generally follows the mercantile system of accounting and
recognizes income and expenditure on accrual basis, except income from
investments, which is accounted for on receipt basis.
(1.1.3) Use of Estimates
The preparation of Financial Statements are in accordance with
generally accepted accounting principles. As per the Management, the
best estimates and assumptions are made, wherever necessary, and
reported in the amount of assets and liabilities as on the date of
financial statement as well as in the amount of revenue and expenses
during the reporting period.
The Management believes that the estimates used in the preparation of
the financial statements are prudent and reasonable. Actual results
could differ from these estimates. Any variance is recognized
prospectively in current or future period in which the results are
known/materialized.
(1.1.4) Fixed Assets and Depreciation
Fixed Assets are stated at cost less depreciation. Depreciation on
assets has been provided for on straight line method at the rates
specified in Schedule XIV of the Companies Act, 1956, on continuous
process plant basis. Depreciation on additions to assets is calculated
on pro-rata basis from the day asset was put to use.
(1.1.5) Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are charged to revenue.
(1.1.6) Inventories
a. Raw material is valued at cost. The cost is arrived at on
First-in-First-out basis.
b. Components, stores and spares are valued at cost.
c. Dies and tools are valued at cost, including the cost of design,
development and proportionate cost of factory overheads taken at 15% of
Raw Material cost of dies.
d. Work-in-process and semi-finished goods are valued at lower of cost
or estimated net realizable value.
(1.1.7) Investment
Investments are stated at Cost.
(1.1.8) Sales
Sales are inclusive of excise duty. Revenue from sale of goods is
recognised on transfer of significant risks and rewards of ownership to
the buyer.
(1.1.9) Foreign Currency transactions
Transactions in foreign currency are recorded at the rates of exchange
in force at the time the transactions are effected. Monetary items
denominated in foreign currency are restated using
the exchange rates prevailing at the date of the Balance Sheet. The
exchange difference between the rate prevailing on the date of
transaction and on the date of settlement is recognized as income or
expense, as the case may be.
(1.1.10) Provisions, Contingent Liabilities and Contingent Assets
Provisions, to the extent found necessary as per the Management, have
been made based on best estimates which includes a provision for a
present obligation as a result of past event. Contingent Assets have
not been recognized and hence, not reported.
(1.1.11) Employee Benefits
Contributions payable to the Government Provident Fund, ESIC and
premium paid to Life Insurance Corporation of India under Employees
Group Gratuity Scheme, are charged to revenue. The liabilities in
respect of leave encashment at the year end is charged to revenue based
on actuarial value.
(1.1.12) Impairment
At the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indications that an impairment loss may have occurred in accordance
with Accounting Standard (AS-28) which deals with "Impairment of
Assets", notified under the Company''s (Accounting Standards)Rules,
2006. During the period, no such loss was observed and hence, no
provision for impairment loss has been made.
(1.1.13) The Company manufactures "Forgings" of various types at one
location only.Hence, Accounting Standard 17 regarding Segment Reporting
notified under the Company''s (Accounting Standards) Rules, 2006, is not
applicable to the Company.
(1.1.14) Preliminary expenses are being amortized in the year in which
the same has been incurred.
Mar 31, 2012
(1.1.1) Basis for preparation of Accounts.
a. The accounts have been prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India and the Accounting Standards notified under the
Companies (Accounting Standards) Rules, 2006 and the relevant
provisions of the Companies Act, 1956.
b. Accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year.
(1.1.2) System of Accounting
The Company generally follows the mercantile system of accounting and
recognizes income and expenditure on accrual basis, except income from
investments, which is accounted for on receipt basis.
(1.1.3) Use of Estimates
The preparation of Financial Statements are in accordance with
generally accepted accounting principles. As per the Management, the
best estimates and assumptions are made, wherever necessary and
reported in the amount of assets and liabilities as on the date of
financial statement as well as in the amount of revenue and expenses
during the reporting period. The Management believes that the
estimates used in the preparation of the financial statements are
prudent and reasonable. Actual results could differ from these
estimates. Any variance is recognized prospectively in current or
future period in which the results are known/materialized.
(1.1.4) Fixed Assets and Depreciation
Fixed Assets are stated at cost less depreciation. Depreciation on
assets has been provided for on straight line method at the rates
specified in Schedule XIV of the Companies Act, 1956, on continuous
process plant basis. Depreciation on additions to assets is calculated
on pro-rata basis from the day of asset put to use.
(1.1.5) Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are charged to revenue.
(1.1.6) Inventories
a. Raw material is valued at cost. The cost is arrived at on
First-in-First-out basis.
b. Components, stores and spares are valued at cost.
c. Dies and tools are valued at cost, including the cost of design,
development and proportionate cost of factory overheads taken at 15% of
Raw Material cost of dies.
d. Work-in-process and semi-finished goods are valued at lower of cost
or estimated net realizable value.
(1.1.7) Investment
Investments are stated at Cost.
(1.1.8) Sales
Sales are inclusive of excise duty. The revenue from sale of goods are
recognised when title to goods is transferred on delivery of goods.
(1.1.9) Foreign Currency transactions
Transactions in foreign currency are recorded at the rates of exchange
in force at the time the transactions are effected. Monetary items
denominated in foreign currency are restated using the exchange rates
prevailing at the date of the Balance Sheet. The exchange difference
between the rate prevailing on the date of transaction and on the date
of settlement is recognized as income or expense, as the case may be.
(1.1.10) Provisions, Contingent Liabilities and Contingent Assets
Provisions, to the extent found necessary as per the Management, have
been made based on best estimates and are also recognized in respect of
present liability in respect of the prior activity. Contingent Assets
have not been recognized and hence, not reported.
(1.1.11) Employee Benefits
Contributions payable to the Government Provident Fund, ESIC and
premium paid to Life Insurance Corporation of India under Employees
Group Gratuity Scheme, are charged to revenue. The liabilities in
respect of leave encashment at the year end is charged to revenue based
on actuarial value.
(1.1.12)Impairment
At the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indications that an impairment loss may have occurred in accordance
with Accounting Standard (AS-28) which deals with "Impairment of
Assets", notified under the CompanyÃs (Accounting Standards)Rules,2006.
During the period, no such loss was observed and hence, no provision
for impairment loss has been made.
(1.1.13) The Company manufactures "Forgings" of various types at one
location only. Hence, Accounting Standard 17 regarding Segment Reporting
notified under the CompanyÃs (Accounting Standards) Rules, 2006, is not
applicable to the Company.
(1.1.14) Preliminary expenses are being amortized in the year in which
the same has been incurred.
Mar 31, 2011
(1) Basis for preparation of Accounts.
a. The accounts have been prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India and the Accounting Standards notified under the
Companies (Accounting Standards) Rules, 2006 and the relevant
provisions of the Companies Act, 1956.
b. Accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year.
(2) System of Accounting
The Company generally follows the mercantile system of accounting and
recognizes income and expenditure on accrual basis, except income from
investments, which is accounted for on receipt basis.
(3) Use of Estimates
The preparation of Financial Statements are in accordance with
generally accepted accounting principles. As per the Management, the
best estimates and assumptions are made, wherever necessary, and
reported in the amount of assets and liabilities as on the date of
financial statement as well as in the amount of revenue and expenses
during the reporting period. The Management believes that the estimates
used in the preparation of the financial statements are prudent and
reasonable. Actual results could differ from these estimates. Any
variance is recognized prospectively in current or future period in
which the results are known/materialized.
(4) Fixed Assets and Depreciation
Fixed Assets are stated at cost less depreciation. Depreciation on
assets has been provided for on straight line method at the rates
specified in Schedule XIV of the Companies Act, 1956, on continuous
process plant basis.
Depreciation on additions to assets is calculated on pro-rata basis
from the day of asset put to use.
(5) Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are charged to revenue.
(6) Inventories
a. Raw material is valued at cost. The cost is arrived at on
First-in-First-out basis.
b. Components, stores and spares are valued at cost.
c. Dies and tools are valued at cost, including the cost of design,
development and proportionate cost of factory overheads taken at 10% of
Raw Material cost of dies.
d. Work-in-process and semi-finished goods are valued at lower of cost
or estimated net realizable value.
(7) Investment
Investments are stated at Cost.
(8) Sales
Sales are inclusive of income from job work, excise duty, export
incentives, exchange fluctuations on export receivables and income from
Microwave Operations. The revenue from sale of goods are recognised
when title to goods is transferred on delivery of goods.
(9) Foreign Currency transactions
Transactions in foreign currency are recorded at the original rates of
exchange in force at the time the transactions are effected. Monetary
items denominated in foreign currency are restated using the exchange
rates prevailing at the date of the Balance Sheet. The exchange
difference between the rate prevailing on the date of transaction and
on the date of settlement is recognized as income or expense, as the
case may be.
(10) Provisions, Contingent Liabilities and Contingent Assets
Provisions, to the extent found necessary as per the Management, have
been made based on best estimates and are also recognized in respect of
present liability in respect of the prior activity. Contingent Assets
have not been recognized and hence, not reported.
(11) Employee Benefits
Contributions payable to the Government Provident Fund, ESIC and
premium paid to Life Insurance Corporation of India under Employees
Group Gratuity Scheme. are charged to revenue. The liabilities in
respect of leave encashment at the year end is charged to revenue based
on actuarial value.
(12) Impairment
At the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indications that an impairment loss may have occurred in accordance
with Accounting Standard (AS-28) which deals with "Impairment of
Assets", notified under the Companys (Accounting Standards) Rules,
2006. During the year, no such loss was observed and hence, no
provision for impairment loss has been made.
(13) The Company manufactures forgings of various types at one location
only. Hence, Accounting Standard 17 regarding Segment Reporting
notified under the Companys (Accounting Standards) Rules, 2006, is not
applicable to the Company.
(14) Preliminary expenses are being amortized over a period of 10
years.
Mar 31, 2010
(1) Basis for preparation of Accounts.
a The accounts have been prepared under the historical cost convention
in accordance with the generally accepted accounting principles in
India and the Accounting Standards notified under the Companies
(Accounting Standards) Rules, 2006 and the relevant provisions of the
Companies Act, 1956.
b Accounting policies have been consistently applied by the Company and
are consistent with those used in the previous year.
(2) System of Accounting
The Company generally follows the mercantile system of accounting and
recognizes income and expenditure on accrual basis, except income from
investments, which is accounted for on receipt basis.
(3) Use of Estimates
The preparation of Financial Statements are in accordance with
generally accepted accounting principles. As per the Management, the
best estimates and assumptions are made wherever necessary and reported
in the amount of assets and liabilities as on the date of financial
statement as well as in the amount of revenue and expenses during the
reporting period. The Management believes that the estimates used in
the preparation of the financial statements are prudent and reasonable.
Actual results could differ from these estimates. Any variance is
recognized prospectively in current or future period in which the
results are known/materialized.
(4) Fixed Assets and Depreciation
Fixed Assets are stated at cost less depreciation. Depreciation on
assets acquired on or after 1st January 1988 has been provided for on
straight line method at the rates specified in Schedule XIV of the
Companies Act, 1956.
Depreciation on the assets acquired prior to 1st January 1988 is
provided for at the rates prevailing at the time of their acauisition.
Depreciation on additions to assets is calculated on pro-rata basis
from the day of asset put to use.
(5) Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes a
substantial period of time to get ready for its intended use or sale.
All other borrowing costs are charged to revenue.
(6) Inventories
a. Raw material is valued at cost. The cost is arrived at on
First-in-First-out basis.
b. Components, stores and spares are valued at cost.
c. Dies and tools are valued at cost, including the cost of design,
development and proportionate cost of factory overheads taken at 10% of
raw material cost of dies.
d. Work-in-process and semi-finished goods are valued at lower of cost
or estimated net realizable value.
(7) Investment
Investments are stated at Cost.
(8) Sales
Sales are inclusive of income from job work, excise duty, export
incentives, exchange fluctuations on export receivables and income from
Microwave Operations. The revenue from sale of goods are recognised
when title to goods is transferred on delivery of goods.
(9) Foreign Currency transactions
Transactions in foreign currency are recorded at the original rates of
exchange in force at the time the transactions are effected. Monetary
items denominated in foreign currency are restated using the exchange
rates prevailing at the date of the Balance Sheet. The exchange
difference between the rate prevailing on the date of transaction and
on the date of settlement is recognized as income or expense, as the
case may be.
(10)Provisions, Contingent Liabilities and Contingent Assets
Provisions, to the extent found necessary as per the Management, have
been made based on best estimates and are also recognized in respect of
present liability in respect of prior activity. Contingent Assets have
not been recognized and hence, not reported.
(11)Employee Benefits
Contributions payable to the Government Provident Fund, ESIC and
premium paid to Life Insurance Corporation of India under Employees
Group Gratuity Scheme, are charged to revenue.
The liabilities in respect of leave encashment at the year end is
charged to revenue based on actuarial value.
(12)lmpairment
At the end of each year, the Company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indications that an impairment loss may have occurred in accordance
with Accounting Standard (AS-28) which deals with "Impairment of
Assets", notified under the Companys (Accounting Standards) Rules,
2006. During the year, no such loss was observed and hence, no
provision for impairment loss has been made.
(13)The Company manufactures forgings of various types at one location
only. Hence, Accounting Standard 17 regarding Segment Reporting
notified under the Companys (Accounting Standards) Rules, 2006, is not
applicable to the Company.
(14)Preliminary expenses are being amortized over a period of 10 years.
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