Click it and Unblock the Notifications
Accounting Policies of Ram Ratna Wires Ltd. Company
Mar 31, 2025
(c) MATERIAL ACCOUNTING POLICIES
i) Property, Plant and Equipment
Freehold land is carried at historical cost. All
other items of property, plant and equipment are
stated at acquisition cost net of accumulated
depreciation and accumulated impairment
losses, if any. The cost of an item of property,
plant and equipment comprises of its purchase
price including import duties and other non¬
refundable purchase taxes or levies, directly
attributable cost of bringing the asset to its
working condition for its intended use and the
initial estimate of decommissioning, restoration
and similar liabilities, if any. Any trade discount
or rebate is deducted in arriving at the purchase
price. Cost includes cost of replacing a part of
a plant and equipment if the recognition criteria
are met.
Items such as spare parts, stand-by equipment
and servicing equipment that meet the definition
of property, plant and equipment are capitalised
at cost and depreciated over their useful life.
Costs in nature of repairs and maintenance are
recognised in the statement of profit and loss as
and when incurred.
Capital work-in-progress includes cost of
property, plant and equipment not ready for the
intended use as at the balance sheet date.
The cost and related accumulated depreciation
are eliminated from the Financial Statements
upon sale or retirement of the property, plant and
equipment and the resultant gains or losses are
recognised in the statement of profit and loss.
Property, plant and equipment to be disposed of
are reported at the lower of the carrying value or
the fair value less cost of disposal.
Where an item of property, plant and equipment
comprises major components having different
useful lives, these components are accounted
for as separate items.
The Company had elected to continue with the
carrying value of all of its property, plant and
equipment appearing in the financial statements
prepared in accordance with accounting
standards notified under section 133 of the
Act, 2013 read with Rule 7 of the Companies
(Accounts) Rules, 2014 (Generally Accepted
Accounting Standards "Previous GAAP") and
used as the deemed cost of the property, plant
and equipment in the opening balance sheet
under Ind AS effective 1st April, 2016.
Exchange differences arising on translation
of long-term foreign currency monetary items
recognised in the Previous GAAP financial
statements in respect of which the Company has
elected to recognise such exchange differences
as a part of cost of assets is allowed under Ind
AS 101. Such differences are added/ deducted
to/ from the cost of assets and are recognised in
the statement of profit and loss on a systematic
basis as depreciation over the balance life of the
assets.
ii) Intangible Assets
Intangible assets acquired are initially measured
at cost. Intangible assets arising on acquisition
of business are measured at fair value as at
date of acquisition. Following initial recognition,
intangible assets with defined useful lives are
carried at cost less accumulated amortisation
and accumulated impairment loss, if any.
Intangible Assets consist of Computer Software
license or rights under the license agreement are
measured on initial recognition at cost. Costs
comprise of license fees and cost of system
integration services and development.
The carrying amount of an intangible asset is
derecognised when no future economic benefits
are expected from its use.
The Company had elected to continue with the
carrying value of all of its intangible Assets
appearing in the financial statements prepared
in accordance with Indian accounting standards
notified under section 133 of the Act, 2013 read
with Rule 7 of the Companies (Accounts) Rules,
2014 (Generally Accepted Accounting Standards
"Previous GAAP") and used as the deemed cost
of the Intangible Assets in the opening balance
sheet under Ind AS effective 1st April, 2016.
iii) Depreciation on Property, Plant and Equipment
and Amortisation of intangible Assets
Depreciation on property, plant and equipment
is provided on pro rata basis using the straight¬
line method based on useful life of the assets
as prescribed in Schedule II to the Act, 2013 in
consideration with useful life of the assets as
estimated by the management. Depreciation is
not recorded on capital work-in-progress until
construction and installation are completed
and the asset is ready for its intended use by
management Intangible Assets with finite lives
are amortised on a straight-line basis over the
estimated useful economic life. The amortisation
expense on intangible assets with finite lives is
recognised in the statement of profit and loss.
The estimated useful lives, residual values and
methods of depreciation of property, plant &
equipment are reviewed at the end of each
financial year. If any of these expectations
differ from previous estimates, such change
is accounted for as a change in an accounting
estimate and adjusted prospectively, if any.
The estimated useful life of items of property,
plant and equipment and intangible assets are:
Freehold land is not depreciated.
The management believes that these estimated
useful lives are realistic and reflect fair
approximation of the period over which the
assets are likely to be used.
iv) Impairment of Assets
At each balance sheet date, the Company
reviews the carrying value of its property, plant
and equipment and intangible assets which
are subject to depreciation and amortisation
respectively, to determine whether there is any
indication that the carrying value of those assets
may not be recoverable through continuing use.
If any such indication exists, the recoverable
amount of the asset is reviewed in order to
determine the extent of impairment loss (if any).
An impairment loss on such assessment will
be recognised wherever the carrying value of
an asset exceeds its recoverable amount. The
recoverable amount of the assets is net selling
price or value in use, whichever is higher. While
assessing value in use, the estimated future
cash flows are discounted to the present value
by using weighted average cost of capital. A
previously recognised impairment loss is further
provided or reversed depending on changes in
the circumstances and to the extent that carrying
value of the assets does not exceed the carrying
value that would have been determined if no
impairment loss had previously been recognised.
Assets that have an indefinite useful life, for
example goodwill, are not subject to amortisation
and are tested for impairment annually and
whenever there is an indication that the asset
may be impaired.
v) Leases
A contract is, or contains, a lease, if the contract
conveys the right to control the use of an
assets for a period of time in exchange for
consideration.
The Company as a Lessee
The Company assesses whether a contract
is qualifies to be a lease at the inception of
contract.
At the date of the commencement of the lease,
the Company recognises a right-of-use asset
("ROU") and a corresponding lease liability for all
lease contracts in which it is a lessee, except for
leases contract for a period of twelve months or
less (short term leases), variable leases and low
value leases, in those cases the lease payments
are recognised in the statement of profit and
loss on a straight-line basis over the term of the
lease.
ROU is initially recognised at cost, which
comprises of the initial amount of the lease
liability adjusted for any lease payments made
at or prior to the commencement date of the
lease plus any initial direct costs less any
incentive received and estimated of costs to
be incurred by the lessee in dismantling and
removing the underlying asset or restoring the
underlying asset or site on which it is located.
They are subsequently measured at cost less
accumulated depreciation and impairment
losses.
ROU is depreciated from the commencement
date on a straight-line basis over the lease term
or useful life of the underlining asset, whichever
is shorter. ROU is tested for impairment and
account for as per impairment of assets policy
of the Company.
The lease liability is initially measure at the
present value of the future lease payments,
which comprises of the fixed payments and
with agreed time based incremental, variable
lease payments, guaranteed residual value
or exercise price of purchase option, if the
Company is reasonably certain to exercise the
option. The lease payments are discounted
using interest rate implicit in the lease or, if
not readily determinable, using incremental
borrowing rates. Lease liabilities are remeasured
with a corresponding adjustment to the related
right of use asset if the Company changes
its assessment if whether it will exercise an
extension or a termination option.
Lease liability and ROU asset have been
separately presented in the Balance Sheet.
Interest expense on lease liability is reported
as finance cost in the statement of profit and
loss account and lease payments have been
classified as financing cash flows.
The Company as a Lessor
Leases for which the Company is a lessor
is classified as a finance or operating lease.
Whenever the terms of the lease transfer
substantially all the risks and rewards of
ownership to the lessee, the contract is classified
as a finance lease. All other leases are classified
as operating leases. For operating leases mainly
of workers quarters and part of the factory
premises given to a subsidiary are recognised in
the statement of profit and loss on straight line
basis.
vi) Investment in Subsidiaries and Joint Venture
Investment in subsidiaries and joint venture are
carried at cost less accumulated impairment
losses, if any. Where an indication of impairment
exits, the carrying amount of the investments is
assessed and written down immediately to its
recoverable amount. On disposal of investments
in subsidiaries and joint venture, the difference
between net disposal proceeds and the carrying
amounts are recognised in the statement of
profit and loss.
vii) Inventories
⢠Raw Materials, Work-in-Progress and
Finished goods are valued at the lower
of cost or net realisable value. The cost is
determined using FIFO method.
⢠The cost of Inventories of work-in-progress
and finished goods comprises the cost of
purchases and the cost of conversion and in
case of finished goods it also includes the
cost of packing materials.
The cost of purchase comprises of the
purchase price including duties and taxes
(other than those subsequently recoverable
by the Company from the taxing authorities),
freight inward and other expenditure directly
attributable to the acquisition but net of
trade discount, rebates, duties for import
under advance licenses and other similar
items.
The cost of conversion comprises of
depreciation and repairs and maintenance of
factory buildings and plant and machineries,
power and fuel, factory management and
administration expenses and consumable
stores and spares.
⢠Packing Materials, Consumable Stores and
Spares and Fuel are valued at lower of cost
or net realisable value.
The cost is determined using FIFO method.
⢠Scrap is valued at net realisable value.
Net realisable value is the estimated selling
price in the ordinary course of business,
less estimated costs of completion and
estimated cost to make sale.
viii) Financial Assets and Financial Liabilities
The Company recognises financial assets and
financial liabilities when it becomes a party to
the contractual provisions of the instrument. All
financial assets and liabilities are recognised at
fair value on initial recognition and adjusted for
transaction costs that are directly attributable to
the acquisition or issues of financial assets and
financial liabilities in case of financial assets or
financial liabilities not at fair value through profit
or loss account.
Where the fair value of financial assets and
financial liabilities at initial recognition is
different from its transaction price, the difference
between the fair value and transaction price is
recognised in the statement of profit and loss.
However, trade receivables that do not contain
a significant financing component are initially
measured at transaction price.
a) Financial Assets
Cash and bank balances
Cash and bank balances consist of:
⢠Cash and cash equivalents - Cash and cash
equivalents include cash on hand, deposits
held at call with banks and other short-term
deposits which are readily convertible into
known amounts of cash, are subject to an
insignificant risk of change in value and
have maturities of less than one year from
the date of such deposits. These balances
with banks are unrestricted for withdrawal
and usage.
⢠Other bank balances - Other bank balances
include balances and deposits with banks
that are restricted for withdrawal and usage.
Financial assets measured at amortised cost
A financial asset is subsequently measured at
amortised cost if both of the following conditions
are met:
⢠If is held within a business model whose
objective is to hold the asset in order to
collect contractual cash flows, and
⢠The contractual terms of the financial asset
give rise on specified dates to cash flows that
are solely payments of principal and interest
on the principal amount outstanding using
the Effective Interest Rate (EIR) method less
impairment, if any, and the amortisation of
EIR and loss arising from impairment, if any
is recognised in the statement of profit and
loss.
Financial assets measured at fair value
A financial asset is measured at fair value
through other comprehensive income if both of
the following conditions are met:
⢠If it is held within a business model whose
objective is to hold these assets in order to
collect contractual cash flows and to sell
these financial assets, and
⢠The contractual terms of the financial assets
give rise on specified dates to cash flows that
are solely payments of principal and interest
on the principal amount outstanding.
Fair value movements are recognised in the
other comprehensive income.
The Company in respect of equity instruments
(other than equity instruments of subsidiaries
and joint venture) which are not held for trading
has made an irrevocable election to present the
subsequent changes in fair value of such equity
instruments in other comprehensive income.
Such an election is made by the Company on
an instrument-by-instrument basis at the time
of initial recognition of such equity investments.
On de-recognition, cumulative gain or loss
previously recognised in other comprehensive
income is reclassified from the equity to retained
earnings in the statement of changes in equity.
A financial asset not classified as either
amortised cost or at fair value through other
comprehensive income is carried at fair value
through the statement of profit and loss.
Impairment of Financial Assets
The Company applies loss allowance using the
Expected Credit Loss (ECL) model for the financial
assets which are measured at amortised cost or
fair value through other comprehensive income.
Loss allowance for trade receivables with no
significant financing component is measured
following simplified approach wherein an
amount equal to lifetime ECL is measured and
recognised as a loss allowance.
The application of simplified approach does
not require the Company to track changes in
credit risk. Rather, it recognises impairment
loss allowance based on life time ECLs at each
reporting date, right from its initial recognition.
For all other financial assets (apart from trade
receivables that do not constitute of financing
transaction), ECLs are measured at an amount
equal to 12-month ECL, unless there has been
a significant increase in credit risk for initial
recognition in which case those are measured at
lifetime ECL.
De-recognition of Financial Assets
A financial asset is de-recognised only when
⢠The contractual rights to cash flows from
the financial asset expire;
⢠The Company has transferred the
contractual rights to receive cash flows
from the financial asset or;
⢠Retains the contractual rights to receive
the cash flows of the financial asset, but
assumes a contractual obligation to pay the
cash flows to one or more recipients.
Where the Company has transferred an asset, the
Company evaluates whether it has transferred
substantially all risks and rewards of ownership
of the financial asset. In such cases, the financial
asset is de-recognised. Where the Company
has not transferred substantially all risks and
rewards of ownership of the financial asset, the
financial asset is not de-recognised.
Where the Company has neither transferred
a financial asset nor retained substantially all
risks and rewards of ownership of the financial
asset, the financial asset is de-recognised if the
Company has not retained control of the financial
asset. Where the Company retains control
of the financial asset, the asset is continued
to be recognised to the extent of continuing
involvement in the financial asset.
b) Financial Liabilities
Classification as debt or equity
Financial liabilities and equity instruments issued
by the Company are classified according to the
substance of the contractual arrangements
entered into and the definitions of a financial
liability and an equity instrument.
Equity Instrument
An equity instrument is any contract that
evidences a residual interest in the assets of
the Company after deducting all its liabilities.
Equity instruments are recorded at the proceeds
received, net of direct issue costs.
Financial Liability
Trade and other payables are initially measured
at fair value, net of transaction costs and are
subsequently measured at amortised cost using
the effective interest rate method. Financial
liabilities carried at fair value through profit or
loss are measured at fair value with all changes
in fair value recognised in the statement of profit
and loss.
Interest bearing loans and overdrafts are initially
measured at fair value, and are subsequently
measured at amortised cost using effective
interest rate method. Any difference between
proceeds (net of transaction cost) and the
settlement amount of borrowing is recognised
over the terms of the borrowings in the statement
of profit and loss.
De-recognition
A financial liability is de-recognised when the
obligation specified in the contract is discharged,
cancelled or has expired.
c) Financial Guarantee Contracts
Financial guarantee contracts are those
contracts that require specific payment to
be made to reimburse the holder for a loss
it incurs because the specified debtor fails
to make payment when due in accordance
with the terms of a debt instrument. Financial
guarantee contracts are recognised initially as
a liability at fair value adjusted for transaction
cost that are directly attributable to the issuance
of the guarantee. Subsequently, the liability
is measured at the higher of the amount of
loss allowance determined as per impairment
requirements of Ind AS 109 and the amount
recognised less cumulative amount of income
recognised in accordance with the principles of
Ind AS 115 amortisation.
d) Derivative Financial Instruments
The Company enters into derivative financial
contracts in the nature of forward currency
contracts with banks to reduce business risks
which arise from its exposures to foreign
exchange. The instruments are employed as
hedges of transactions included in the financial
statements or for highly probable forecast
transactions/ firm contractual commitments.
Derivatives are initially accounted for and
measured at fair value from the date the derivative
contract is entered into and are subsequently re¬
measured to their fair value at the end of each
reporting period. Any change therein is generally
recognised in the statement of profit and loss.
Derivatives are carried as financial assets when
fair value is positive and as financial liabilities
when fair value is negative.
e) Offsetting Financial Instruments
Financial assets and liabilities are offset and
the net amount is reported in the Balance Sheet
where there is a legally enforceable right to
offset the recognised amounts and there is an
intention to settle on a net basis or realise the
asset and settle the liability simultaneously. The
legally enforceable right must not be contingent
on future events and must be enforceable in
the normal course of business and in the event
of default, insolvency or bankruptcy of the
Company or the counterparty.
ix) Fair Value Measurement
The Company measures financial instruments at
fair value in accordance with the accounting policies
mentioned above. Fair value is the price that would
be received to sell an asset or paid to transfer a
liability in an orderly transaction between market
participants at the measurement date. The fair value
measurement is based on the presumption that the
transaction to sell the asset or transfer the liability
takes place either in the principal market for asset or
liability or in the absence of a principal market, in the
most advantageous market for the asset or liability.
All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorised within the fair value hierarchy that
categorises into three levels, described as follows:-
⢠Level 1â quoted (unadjusted) market prices in
active markets for identical assets or liabilities
⢠Level 2â inputs other than quoted prices
included within Level 1 that are observable for
the asset or liability, either directly or indirectly
⢠Level 3â inputs that are unobservable for the
asset or liability
For assets and liabilities that are recognised 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 categorisation at the end of each reporting
period and discloses the same.
x) Non-Current Assets held for sale
The Company classifies non-current assets as held
for sale if their carrying amounts will be recovered
principally through a sale rather than through
continuing use of the assets and actions required
to complete such sale indicate that it is unlikely that
significant changes to the plan to sell will be made
or that the decision to sell will be withdrawn. Also,
such assets are classified as held for sale only if the
management expects to complete the sale within
one year from the date of classification.
Non-Current assets classified as held for sale are
measured at the lower of their carrying amount and
the fair value less cost to sell and are presented
separately from other assets in the balance sheet.
The liabilities related to the assets held for sale are
presented separately from other liabilities in the
balance sheet. Non-Current assets held for sale are
not depreciated or amortised.
Mar 31, 2024
CORPORATE INFORMATION
Ram Ratna Wires Limited (âthe Companyâ) is a public company limited by shares incorporated and domiciled in India with its registered office in Mumbai, Maharashtra. Equity Shares of the Company is listed on the BSE Limited and National Stock Exchange of India Limited.
The Company is a leading manufacturer of winding wires, mainly enamelled copper wires. The Company offers unique product range of all gauges of winding wires including super fine wires. The product portfolio of the Company includes enamelled copper wire and strips, enamelled aluminium wires and strips, submersible winding wires, fiber glass covered copper and aluminium strips and paper cover round wires. The Company has manufacturing facilities located at Silvassa and Dadra and Nagar Haveli (Union Territory). The Standalone Financial Statements (âthe Financial Statementsâ) as at 31st March, 2024 present the financial position of the Company. The Financial Statements were approved by the Board of Directors and authorised for issue on 14th May, 2024.
1. BASIS OF PREPARATION, KEY ACCOUNTING ESTIMATES & JUDGEMENTS AND MATERIAL ACCOUNTING POLICIES(a) BASIS OF PREPARATION OF STANDALONEFINANCIAL STATEMENTS(i) Statement of Compliance:
The Standalone Financial Statements (âthe Financial Statementsâ) have been prepared in accordance with Indian Accounting Standards (âInd ASâ) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 (âthe Actâ) read together with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time and other relevant provisions of the Act.
The Financial Statements includes Balance Sheet as at 31st March, 2024, the Statement of Profit & Loss including Other Comprehensive Income, Cash Flows Statement, Statement of Change in Equity for the year ended 31st March, 2024 and notes to the Financial Statements, including a summary of material accounting policies and other explanatory information.
(ii) Basis of Preparation and Measurement:
The Financial Statements have been prepared and presented under the historical cost convention except for certain financial assets and financial liabilities that are required to be measured at fair values at the end of each reporting period by Ind AS.
Historical cost is generally based on fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Financial Statements have been prepared on accrual and going concern basis.
Any asset or liability is classified as current or non-current based on companyâs normal-operating cycle and other criteria as set out in the Division II of schedule III to the Act, 2013.
Asset/ Liability is classified as current, if it satisfies any of the following conditions :
⢠the asset/liability is expected to be realized/ settled in the Companyâs normal operating cycle;
⢠the asset is intended for sale or consumption;
⢠the asset/liability is held primarily for the purpose of trading;
⢠the asset/liability is expected to be realized/ settled within twelve months after the reporting period;
⢠the asset is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date;
⢠in the case of a liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
All other assets and liabilities are classified as non-current.
For the purpose of current/non-current classification of assets and liabilities, the Company has ascertained its normal operating cycle as twelve months. This is based on the nature of product and the time between the acquisition of assets or inventories for processing and their realization in cash and cash equivalents.
Cash flow statement is reported using the indirect method, whereby profit for the year is adjusted for the effects of transactions of a noncash 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 cashflows. The cash flows from operating, investing and financing activities of the Company are segregated.
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short- term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
For the purposes of cash flow statement cash and cash equivalents consist of cash and shortterm deposits, as defined above.
The functional and presentation currency of the Company is Indian Rupees (?) which is the currency of the primary economic environment in which the Company operates.
(iii) Recent Pronouncements:
Ministry of Corporate Affairs (âMCAâ) notifies new standards 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.
(b) KEY ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of Companyâs financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the accompanying disclosures in notes including disclosures of contingent liabilities. Uncertainty about these assumptions and estimates could result in the outcomes requiring adjustment to the carrying amounts of assets or liabilities in future periods. The estimates and the associated assumptions are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances as available at the time of preparation of the Financial
Statement. 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. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the standalone financial statements. The estimates and the associated assumptions are reviewed on an ongoing basis. Changes in accounting estimates are recognised prospectively.
Significant judgements and estimates have been made by the Company relating to
⢠Amount and Timing of recognising of revenue from contact at a point in time with customers, identifying performance obligations in a sales transactions and volume rebate that gives rise to variable consideration in a sales contract.
⢠Useful lives of property, plant and equipment and intangible assets at the end of each reporting period.
The Company reviews the useful life of property, plant and equipment and intangible assets at the end of each reporting period. This reassessment may result in change in depreciation and amortisation expense in future periods. Impairment of property, plant and equipment and intangible assets.
⢠Impairment of Investments in subsidiaries & Joint Venture
Determining whether the investment in subsidiaries and joint venture is impaired requires an estimate in the value in use of investments. The Company reviews its carrying value of investment carried at cost (net of impairment, if any) annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for in the statement of profit and loss. In considering the value in use, the Board of Directors have anticipated the future market conditions and other parameters that affect the operations of these entities.
⢠Provision for employee benefits and other provisions
The costs of providing employment benefit plans are charged to the statement of profit and loss in accordance with Ind AS 19 âEmployee benefitsâ over the period during which benefit is derived from the employeesâ services. The costs are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate, discount rate, expected rate of return on assets and mortality rates. The assumptions have been disclosed under employee benefits note.
⢠Share-based payment transactions
The fair value of employee stock options is measured using the Black-Scholes model. Measurement inputs include share price on grant date, exercise price of the instrument, expected volatility (based on weighted average historical volatility), expected life of the instrument (based on expected exercise behaviour), expected dividends, and the risk free interest rate (based on government bonds). Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 51.
⢠Provision for Income Tax including payment of advance Tax and deferred tax assets
The Company uses estimates and judgements based on the relevant rulings in the areas of allocation of revenue, costs, allowances and disallowances which is exercised while determining the provision for income tax. A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised. Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. Accordingly, the Company exercises its judgement to reassess the carrying amount of deferred tax assets at the end of each reporting period.
⢠Fair Value Measurements of Financial Instruments
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
⢠Lease
The Company assesses whether a contract is qualifies to be a lease as per the requirements of Ind As 116. Identification of lease requires significant judgment including judgement to assess the lease terms (including anticipated renewals) and the applicable discount rate. The Company determines the lease terms as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease, if the Company is reasonably certain to excise that option; and period covered by an option to terminate the lease, if the Company is reasonably certain not to exercise that option. In assessing, whether the Company is reasonably certain to exercise the option to extend a lease, or not to exercise an option to terminate a lease, the Company consider all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revise the lease term if there is a change in the noncancellable period of lease terms.
⢠Commitments and contingencies
A provision is recognised when the Company has a present obligation as result of a past event and it is probable that the outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements.
(c) MATERIAL ACCOUNTING POLICIES
i) Property, Plant and Equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. The cost of an item of property, plant and equipment comprises of its purchase price including import duties and other nonrefundable purchase taxes or levies, directly attributable cost of bringing the asset to its working condition for its intended use and the initial estimate of decommissioning, restoration and similar liabilities, if any. Any trade discount or rebate is deducted in arriving at the purchase price. Cost includes cost of replacing a part of a plant and equipment if the recognition criteria are met.
Items such as spare parts, stand-by equipment and servicing equipment that meet the definition of property, plant and equipment are capitalized at cost and depreciated over their useful life. Costs in nature of repairs and maintenance are recognized in the statement of profit and loss as and when incurred.
Capital work-in-progress includes cost of property, plant and equipment not ready for the intended use as at the balance sheet date.
The cost and related accumulated depreciation are eliminated from the Financial Statements upon sale or retirement of the property, plant and equipment and the resultant gains or losses are recognised in the statement of profit and loss. Property, plant and equipment to be disposed of are reported at the lower of the carrying value or the fair value less cost of disposal.
Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
The Company had elected to continue with the carrying value of all of its property, plant and equipment appearing in the financial statements prepared in accordance with accounting standards notified under section 133 of the
Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 (Generally Accepted Accounting Standards âPrevious GAAPâ) and used as the deemed cost of the property, plant and equipment in the opening balance sheet under Ind AS effective 1st April, 2016.
Exchange differences arising on translation of long-term foreign currency monetary items recognised in the Previous GAAP financial statements in respect of which the Company has elected to recognise such exchange differences as a part of cost of assets is allowed under Ind AS 101. Such differences are added/deducted to/ from the cost of assets and are recognised in the statement of profit and loss on a systematic basis as depreciation over the balance life of the assets.
ii) Intangible Assets
Intangible assets acquired are initially measured at cost. Intangible assets arising on acquisition of business are measured at fair value as at date of acquisition. Following initial recognition, intangible assets with defined useful lives are carried at cost less accumulated amortization and accumulated impairment loss, if any.
Intangible Assets consist of Computer Software license or rights under the license agreement are measured on initial recognition at cost. Costs comprise of license fees and cost of system integration services and development.
The carrying amount of an intangible asset is derecognized when no future economic benefits are expected from its use
The Company had elected to continue with the carrying value of all of its intangible Assets appearing in the financial statements prepared in accordance with Indian accounting standards notified under section 133 of the Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 (Generally Accepted Accounting Standards âPrevious GAAPâ) and used as the deemed cost of the Intangible Assets in the opening balance sheet under Ind AS effective 1st April, 2016.
iii) Depreciation on Property, Plant and Equipment and Amortisation of intangible Assets
Depreciation on property, plant and equipment is provided on pro rata basis using the straightline method based on useful life of the assets as prescribed in Schedule II to the Act, 2013 in consideration with useful life of the assets as estimated by the management. Depreciation is not recorded on capital- work-in-progress until construction and installation are completed and the asset is ready for its intended use.
Intangible Assets with finite lives are amortized on a straight-line basis over the estimated useful economic life. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss.
The estimated useful lives, residual values and methods of depreciation of property, plant & equipment are reviewed at the end of each financial year. If any of these expectations differ from previous estimates, such change is accounted for as a change in an accounting estimate and adjusted prospectively, if any.
The estimated useful life of items of property, plant and equipment and intangible Assets are:
|
Particulars |
Years |
Particulars |
Years |
|
Factory Buildings (including Roads) |
10 to 30 |
Office and Other Equipment |
5 to 10 |
|
Residential Buildings |
60 |
Computers/ Laptops/ Computers Hardware |
3 |
|
Plant and Machineries |
3 to 40 |
Computer Servers |
6 |
|
Laboratory Equipment |
10 |
Computer Software |
5 |
|
Electrical Installations |
10 |
Vehicles |
8 to 10 |
|
Furniture and Fixtures |
10 |
||
|
Freehold land is not depreciated. |
|||
The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
At each balance sheet date, the Company reviews the carrying value of its property, plant and equipment and intangible assets which are subject to depreciation and amortisation respectively, to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss (if any).
An impairment loss on such assessment will be recognised wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount of the assets is net selling price or value in use, whichever is higher. While assessing value in use, the estimated future cash flows are discounted to the present value by using weighted average cost of capital. A previously recognised impairment loss is further provided or reversed depending on changes in the circumstances and to the extent that carrying value of the assets does not exceed the carrying value that would have been determined if no impairment loss had previously been recognised.
Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested for impairment annually and whenever there is an indication that the asset may be impaired.
v) Leases
A contract is, or contains, a lease, if the contract conveys the right to control the use of an assets for a period of time in exchange for consideration.
The Company as a Lessee
The Company assesses whether a contract is qualifies to be a lease at the inception of contract.
At the date of the commencement of the lease, the Company recognizes a right-of-use asset (âROUâ) and a corresponding lease liability for all lease contracts in which it is a lessee, except for leases contract for a period of twelve months or less (short term leases), variable leases and low value leases, in those cases the lease payments are recognised in the statement of profit and loss on a straight-line basis over the term of the lease.
ROU is initially recognized at cost, which comprises of the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any incentive received and estimated of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. They are subsequently measured at cost less accumulated depreciation and impairment losses.
ROU is depreciated from the commencement date on a straight-line basis over the lease term or useful life of the underlining asset, whichever is shorter. ROU is tested for impairment and account for as per impairment of assets policy of the Company.
The lease liability is initially measure at the present value of the future lease payments, which comprises of the fixed payments and with agreed time based incremental, variable lease payments, guaranteed residual value or exercise price of purchase option, if the Company is reasonably certain to exercise the option. The lease payments are discounted using interest rate implicit in the lease or, if not readily determinable, using incremental borrowing rates. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet. Interest expense on lease liability is reported as finance cost in the statement of profit and loss account and lease payments have been classified as financing cash flows.
The Company as a Lessor
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. For operating leases mainly
of workers quarters and part of the factory premises given to a subsidiary are recognised in the statement of profit and loss on straight line basis.
vi) Investment in Subsidiaries and Joint Venture:
Investment in subsidiaries and joint venture are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exits, the carrying amount of the investments is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiary and joint venture, the difference between net disposal proceeds and the carrying amounts are recognised in the statement of profit and loss.
vii) Inventories:
⢠Raw Materials, Work-in-progress and Finished goods are valued at the lower of cost or net realizable value. The cost is determined using FIFO method.
⢠The cost of Inventories of work-in-progress and finished goods comprises the cost of purchases and the cost of conversion and in case of finished goods it also includes the cost of packing materials.
The cost of purchase comprises of the purchase price including duties and taxes (other than those subsequently recoverable by the Company from the taxing authorities), freight inward and other expenditure directly attributable to the acquisition but net of trade discount, rebates, duties for import under advance licenses and other similar items.
The cost of conversion comprises of depreciation and repairs and maintenance of factory buildings and plant and machineries, power and fuel, factory management and administration expenses and consumable stores and spares.
⢠Packing Materials, Consumable Stores and Spares and Fuel are valued at lower of cost or net realizable value.
The cost is determined using FIFO method.
⢠Scrap is valued at net realizable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated cost to make sale.
viii) Financial Assets and Financial Liabilities
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition and adjusted for transaction costs that are directly attributable to the acquisition or issues of financial assets and financial liabilities in case of financial assets or financial liabilities not at fair value through profit or loss account.
Where the fair value of financial assets and financial liabilities at initial recognition is different from its transaction price, the difference between the fair value and transaction price is recognised in the statement of profit and loss.
However, trade receivables that do not contain a significant financing component are initially measured at transaction price.
a) Financial Assets
Cash and bank balances Cash and bank balances consist of:
⢠Cash and cash equivalents - Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term deposits which are readily convertible into known amounts of cash, are subject to an insignificant risk of change in value and have maturities of less than one year from the date of such deposits. These balances with banks are unrestricted for withdrawal and usage.
⢠Other bank balances - Other bank balances include balances and deposits with banks that are restricted for withdrawal and usage.
Financial assets measured at amortised cost
A financial asset is subsequently measured at amortised cost if both of the following conditions are met:
⢠If is held within a business model whose objective is to hold the asset in order to collect contractual cash flows, and
⢠The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding using the Effective Interest Rate (EIR) method less impairment, if any, and the amortisation of EIR and loss arising from impairment, if any is recognised in the statement of profit and loss.
Financial assets measured at fair value
A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
⢠If it is held within a business model whose objective is to hold these assets in order to collect contractual cash flows and to sell these financial assets, and
⢠The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Fair value movements are recognised in the other comprehensive income.
The Company in respect of equity instruments (other than equity instruments of subsidiaries and joint venture) which are not held for trading has made an irrevocable election to present the subsequent changes in fair value of such equity instruments in other comprehensive income. Such an election is made by the Company on an instrument-by-instrument basis at the time of initial recognition of such equity investments. On de-recognition, cumulative gain or loss previously recognised in other comprehensive income is reclassified from the equity to retained earnings in the statement of changes in equity.
A financial asset not classified as either amortised cost or at fair value through other comprehensive income is carried at fair value through the statement of profit and loss.
Impairment of Financial Assets
The Company applies loss allowance using the expected credit loss (ECL) model for the financial assets which are measured at amortised cost or fair value through other comprehensive income.
Loss allowance for trade receivables with no significant financing component is measured following simplified approach wherein an amount equal to lifetime ECL is measured and recognised as a loss allowance.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on life time ECLs at each reporting date, right from its initial recognition.
For all other financial assets (apart from trade receivables that do not constitute of financing transaction), ECLs are measured at an amount equal to 12-month ECL, unless there has been a significant increase in credit risk for initial recognition in which case those are measured at lifetime ECL.
De-recognition of Financial Assets
A financial asset is de-recognised only when
⢠The contractual rights to cash flows from the financial asset expire;
⢠The Company has transferred the contractual rights to receive cash flows from the financial asset or;
⢠Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is de-recognised. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not de-recognised.
Where the Company has neither transferred a financial asset nor retained substantially all risks and rewards of ownership of the financial asset, the financial asset is de-recognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
b) Financial Liabilities
Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial Liability
Trade and other payables are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the statement of profit and loss.
Interest bearing loans and overdrafts are initially measured at fair value, and are subsequently measured at amortised cost using effective interest rate method. Any difference between proceeds (net of transaction cost) and the settlement amount of borrowing is recognised over the terms of the borrowings in the statement of profit and loss.
De-recognition
A financial liability is de-recognised when the obligation specified in the contract is discharged, cancelled or has expired.
c) Financial Guarantee Contracts
Financial guarantee contracts are those contracts that require specific payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value adjusted for transaction cost that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amount of income recognised in accordance with the principles of Ind As 115 amortisation.
d) Derivative financial instruments
The Company enters into derivative financial contracts in the nature of forward currency contracts with banks to reduce business risks which arise from its exposures to foreign exchange. The instruments are employed as hedges of transactions included in the financial statements or for highly probable forecast transactions/firm contractual commitments.
Derivatives are initially accounted for and measured at fair value from the date the derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. Any change therein is generally recognised in the statement of profit and loss. Derivatives are carried as financial assets when fair value is positive and as financial liabilities when fair value is negative.
e) Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
ix) Fair Value Measurement
The Company measures financial instruments at fair value in accordance with the accounting policies mentioned above. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy that categorizes into three levels, described as follows:-
⢠Level 1 â quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 â inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
⢠Level 3 â inputs that are unobservable 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 and discloses the same.
x) Non-Current Assets held for sale
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use of the assets and actions required to complete such sale indicate that it is unlikely that significant changes to the plan to sell will be made or that the decision to sell will be withdrawn. Also, such assets are classified as held for sale only if the management expects to complete the sale within one year from the date of classification.
Non-current assets classified as held for sale are measured at the lower of their carrying amount and the fair value less cost to sell and are presented separately from other assets in the balance sheet. The liabilities related to the assets held for sale are presented separately from other liabilities in the balance sheet. Noncurrent assets held for sale are not depreciated or amortized.
xi) Provisions, Contingent Liabilities and Contingent Assets
The Company recognised the provisions when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. These are reviewed at each year end and reflect the best current estimate. Provisions are not recognised for future operating losses.
Where there are number of similar obligations, the likelihood that an outflow will be required
in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of Managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. If the effect of time value of money is material, the provisions are discounted using current pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
A disclosure for a contingent liability is made when there is a possible obligation or present obligation arising from past events the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company and where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
Contingent assets are neither recognised nor disclosed in the financial statements.
xii) Revenue
Revenue from contracts with customer is recognized when the Company satisfies a performance obligation by transferring the promised goods or services to a customer at a transaction price. The Company assesses promises in the contract that are separate performance obligations to which a portion of transaction price is to be allocated. The transaction price is the amount of consideration to which the company expects to be entitled in exchange for transferring promised goods or services to a customer as per contract, excluding amount of taxes collected on behalf of the government or other amount collected from customers in its capacity as an agent. The transaction price is adjusted of trade discount, cash discount, volume rebate and other variable considerations as per the terms of contract which is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of
cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. It is reassessed at end of each reporting period.
Consideration payable to customers is accounted as reduction of transaction price and therefore, of revenue unless the payment to the customer is in exchange for a distinct good or service that the customer transfers to the Company.
Revenue from sale of products is recognised at a point in time when the control on the goods have been transferred to a customer i.e. when material is delivered to the customer or as per shipping terms, as may be specified in the contract.
Revenue from Job work is recognised when intended job work is carried out and goods are ready for transfer to the owner of the goods. Export Incentives
Eligible export incentives are recognised in the year in which the conditions precedents are met and there is no significant uncertainty about the collectability.
xiii) Other Income Interest Income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
Rental income is recognised in the statement of profit and loss on straight line basis.
Dividend Income from investments is recognised when shareholderâs rights to receive payment have been established.
Guarantee commission income (notional) for the financial guarantee issued by the Company to the banks/ financial institutions in respect of credit facility granted by the banks/financial institutions to the dealers of the Company is recognised over the period of guarantee.
Guarantee commission income (notional) for the financial guarantee issued by the Company to the bank in respect of credit facility granted by the bank to a subsidiary is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amount of income recognised in accordance with the principles of Ind AS 115 amortisation.
xiv) Government Grant
Government grants are recognised when there is reasonable assurance that the grant will be received and the company will comply with all the attached conditions. When the grant relates to revenue expense, it is recognised as an income on a systematic basis over the period necessary to match it with the expenses that it is intended to compensate. Government grant related to expenditure on property, plant and equipment is included as cost of property, plant and equipment and is credited to the statement of profit and loss over the useful lives of qualifying assets or credited to the statement of profit and loss over the period in which the corresponding export obligation is fulfilled. Total grants availed less the amounts credited to the statement of profit and loss at the balance sheet date are included in the balance sheet as deferred income.
xv) Foreign Currency Transactions
Transactions denominated in foreign currencies entered into by the Company are recorded in the functional currency (i.e. Indian Rupees), by applying the exchange rate prevailing on the date of transaction. Foreign currency denominated monetary items is restated at the closing exchange rates. Non-monetary items are recorded at exchange rate prevailing on the date of transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is measured. Exchange differences arising out of these translations are recognized in the statement of profit and loss.
The forward exchange contracts are marked to market and gain/loss on such contracts are recognised in the statement of profit and loss at the end of each reporting period.
The Company as per previous GAAP elected to recognise as part of cost of assets, exchange differences arising on translation of long-term foreign currency monetary items and this method of recognition of such exchange difference is followed by the Company as allowed under Ind AS 101. Such differences are added/deducted to/ from the cost of assets and are recognised in the statement of profit and loss on a systematic basis as depreciation over the balance life of the assets.
xvi) Employee Benefits
a) Short Term Obligations
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
b) Post-Employment Benefits
i) Defined benefit plan
Gratuity liability is a defined benefit obligation and recognized based on actuarial valuation carried out using the Projected Unit Credit Method. The scheme is maintained and administered by Life Insurance Corporation of India to which the Company makes periodical contributions through its trustees.
ii) Defined contribution plan
A Defined Contribution Plan is plan under which the Company makes contribution to Employeeâs Provident Fund administrated by the Central Government. The Companyâs
contribution is charged to the statement of profit and loss.
c) Other Long Term Employee Benefits - Leave Salary
The liability towards leave salary which is not expected to be settled wholly within 12 months after the end of the period in which the employees render the related services is recognized based on actuarial valuation carried out using the Projected Unit Credit Method.
xvii) Borrowing Cost
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs that are directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized. All other borrowing costs are expensed in the period in which they occur.
xviii) Income Taxes
Tax expense is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.
Current tax is the amount of income tax payable in respect of taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit and loss because taxable profit is adjusted for items of income or expenses which are taxable or deductible in other years and also for items which are not taxable or deductible under the Income Tax Act, 1961(âthe IT Actâ).
The Companyâs liability for current tax is calculated using tax rates and tax laws in force.
Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax base used in the computation of taxable profit under the âIT Actâ.
Deferred tax liabilities are generally recognized for all taxable temporary differences. However, in case of temporary differences that arise from initial recognition of assets or liabilities in a transaction (other than business combination) that affects neither the taxable profit nor the accounting profit, deferred tax liabilities are not recognized.
Deferred tax assets are generally recognized for all deductible temporary differences to the extent it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. In case of temporary differences that arise from initial recognition of assets or liabilities in a transaction (other than business combination) that affect neither the taxable profit nor the accounting profit, deferred tax assets are not recognized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent it is no longer probable that sufficient taxable profit will be available to allow entire or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws in force. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to cover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in statement of profit and loss, except to the extent that it relates to items recognised in Other Comprehensive Income or directly in equity, in which case, the tax is recognised in other comprehensive income or directly in equity, respectively.
xix) Employee Share Based Payment
Equity-settled share-based payments to employees are measured at the fair value of the employee stock option at the grant date.
The fair value determined at the grant date of equity-settled share-based payment is recognised as deferred employee compensation and is amortised in statement of profit and loss over the vesting period, based on the Companyâs estimated of equity instruments that will eventually vest, with corresponding increase in the equity (Share based payment reserve outstanding) in respect of employee share-based payment to employees of the Company.
In respect of equity-settled share-based payments to employees of subsidiaries of the Company, the fair value determined at the grant date of equity-settled share-based payment is recognised as capital contribution by the Parent over the vesting period, based on the Companyâs estimated of equity instruments that will eventually vest to employees of the subsidiaries with corresponding increase in the equity.
At the end of each reporting period, the Company revisit its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in the statement of profit and loss or as capital contribution such that the cumulative expense/ capital contribution reflects the revised estimate, with a corresponding adjustment to the Share based payment reserve outstanding.
xx) Events after Reporting date
Where events occurring after the Balance Sheet date provide evidence of conditions which existed at the end of the reporting period, the
impact of such events is adjusted within the financial statements. Otherwise, events after the Balance Sheet date of material size or nature are only disclosed.
xxi) Earnings per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose calculating Diluted Earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
xxii) Research and Development
Expenditure incurred by the Company on development of products are recognised as an intangible asset if and only if, expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to and has sufficient resources to complete development and use or sell the assets otherwise such expenses are recognised in the Statement of Profit and Loss as incurred. Subsequent to initial recognition, the assets are measured at cost less accumulated amortisation and any accumulated impairment losses, if any. Expenditures incurred on research are charged to the Statement of Profit and Loss as incurred.
Fixed assets utilized for research and development are capitalized and depreciated in accordance with the policies stated for Property, Plant & Equipment and Intangible Assets.
Mar 31, 2023
CORPORATE INFORMATION
Ram Ratna Wires Limited (âthe Companyâ) is a public company limited by shares incorporated and domiciled in India with its registered office in Mumbai, Maharashtra. The Company is listed on the BSE Limited and National Stock Exchange of India Limited.
The Company is a leading manufacturer of winding wires, mainly enamelled copper wires. The Company offers unique product range of all gauges of winding wires including super fine wires. The product portfolio of the Company includes enamelled copper wire and strips, enamelled aluminium wires and strips, submersible winding wires, fiber glass covered copper and aluminium strips and paper cover round wires. The Company has manufacturing facilities located at Silvassa and Dadra and Nagar Haveli (Union Territory). The Standalone Financial Statements (âthe Financial Statementsâ) as at 31st March, 2023 present the financial position of the Company. The Financial Statements were approved by the Board of Directors and authorised for issue on 26th May, 2023.
The functional and presentation currency of the Company is Indian Rupees (?) which is the currency of the primary economic environment in which the Company operates.
1. SIGNIFICANT ACCOUNTING POLICIES & KEY ACCOUNTING ESTIMATES & JUDGEMENTS
(a) BASIS OF PREPARATION OF STANDALONE FINANCIAL STATEMENTS
(i) Statement of Compliance:
The Standalone Financial Statements (âthe Financial Statementsâ) have been prepared in accordance with Indian Accounting Standards (âInd ASâ) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 (âthe Actâ) read together with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time and other relevant provisions of the Act.
The Financial Statements includes Balance Sheet as at 31st March, 2023, the Statement of Profit & Loss including Other Comprehensive Income, Cash Flows Statement, Statement of Change in Equity for the year ended 31st March, 2023 and notes to the Financial Statements, including a summary of significant accounting policies and other explanatory information.
(ii) Basis of Preparation and Measurement:
The Financial Statements have been prepared and presented under the historical cost convention except for certain financial assets and financial liabilities that are required to be measured at fair values at the end of each reporting period by Ind AS.
Historical cost is generally based on fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The Financial Statements have been prepared on accrual and going concern basis.
(iii) Recent Pronouncements:
Ministry of Corporate Affairs (âMCAâ) notifies amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 31st March 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from 1st April 2023, as below:
Amendments to Ind AS 12 Income Taxesâ Deferred Tax related to Assets and Liabilities arising from a Single Transaction:
Under the amendments, an entity does not apply the initial recognition exemption for transactions that give rise to equal taxable and deductible temporary differences. Equal taxable and deductible temporary differences may arise on initial recognition of an asset and liability in a transaction that is not a business combination and affects neither accounting nor taxable profit. For example, this may arise upon recognition of a lease liability and the corresponding right-of-use asset applying Ind AS 116 Leases at the commencement date of a lease. The amendments should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period presented, a deferred tax asset (provided that sufficient taxable profit is available) and a deferred tax liability should also be recognized for all deductible and taxable temporary differences associated with leases and decommissioning obligations.
Amendments to Ind AS 1 Presentation of Financial Statements - Disclosure of Accounting Policies:
The amendments substituted all instances of the term âSignificant Accounting Policiesâ with âMaterial Accounting Policy Informationâ. Accounting policy information is material if, when considered together with other information included in an entityâs financial statements, it can reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements. The supporting paragraphs in Ind AS 1 are also amended to clarify that accounting policy information that
relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed, if an entity discloses immaterial accounting policy information, such information shall not obscure material accounting policy information. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material. An entity shall disclose, along with material accounting policy information or other notes, the judgements, apart from those involving estimations that management has made in the process of applying the entityâs accounting policies and that have the most significant effect on the amounts recognised in the financial statements.
Amendments to Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors-
Definition of Accounting Estimates:
The amendments replaced the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are âmonetary amounts in financial statements that are subject to measurement uncertaintyâ. The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates.
The company does not expect the above amendment to have any significant impact in its Financial Statements.
(iv) Current/ Non- Current Classification:
Any asset or liability is classified as current or non-current based on companyâs normal-operating cycle and other criteria as set out in the Division II of schedule III to the Companies Act, 2013.
Asset/ Liability is classified as current, if it satisfies any of the following conditions:
⢠the asset/liability is expected to be realized/ settled in the Companyâs normal operating cycle;
⢠the asset is intended for sale or consumption;
⢠the asset/liability is held primarily for the purpose of trading;
⢠the asset/liability is expected to be realized/ settled within twelve months after the reporting period;
⢠the asset is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date;
⢠in the case of a liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
All other assets and liabilities are classified as non-current.
For the purpose of current/non-current classification of assets and liabilities, the Company has ascertained its normal operating cycle as twelve months. This is based on the nature of product and the time between the acquisition of assets or inventories for processing and their realization in cash and cash equivalents.
(b) KEY ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of Companyâs financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the accompanying disclosures in notes including disclosures of contingent liabilities. Uncertainty about these assumptions and estimates could result in the outcomes requiring adjustment to the carrying amounts of assets or liabilities in future periods. The estimates and the associated assumptions are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances as available at the time of preparation of the Financial Statement. 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. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the standalone financial statements. The estimates and the associated assumptions are reviewed on an ongoing basis. Changes in accounting estimates are recognised prospectively.
Significant judgements and estimates have been
made by the Company relating to
⢠Amount and Timing of recognising of revenue from contact at a point in time with customers, identifying performance obligations in a sales transactions and volume rebate that gives rise to variable consideration in a sales contract.
⢠Useful lives of property, plant and equipment and intangible assets at the end of each reporting period.
The Company reviews the useful life of property, plant and equipment and intangible assets at the end of each reporting period. This reassessment may result in change in depreciation and amortisation expense in future periods. Impairment of property, plant and equipment and intangible assets.
⢠Impairment of Investments in subsidiaries & Joint Venture
Determining whether the investment in subsidiaries and joint venture is impaired requires an estimate in the value in use of investments. The Company reviews its carrying value of investment carried at cost (net of impairment, if any) annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for in the statement of profit and loss. In considering the value in use, the Board of Directors have anticipated the future market conditions and other parameters that affect the operations of these entities.
⢠Provision for employee benefits and other provisions
The costs of providing employment benefit plans are charged to the statement of profit and loss in accordance with Ind AS 19 âEmployee benefitsâ over the period during which benefit is derived from the employeesâ services. The costs are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate, discount rate, expected rate of return on assets and mortality rates. The assumptions have been disclosed under employee benefits note.
⢠Provision for Income Tax including payment of advance Tax and deferred tax assets
The Company uses estimates and judgements based on the relevant rulings in the areas of allocation of revenue, costs, allowances and disallowances which is exercised while determining the provision for income tax. A
deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised. Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies. Accordingly, the Company exercises its judgement to reassess the carrying amount of deferred tax assets at the end of each reporting period.
⢠Fair Value Measurements of Financial Instruments
When the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
⢠Commitments and contingencies
A provision is recognised when the Company has a present obligation as result of a past event and it is probable that the outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are not recognised in the financial statements.
(c) SIGNIFICANT ACCOUNTING POLICIES
i) Property, Plant and Equipment
An item of property, plant and equipment is recognised as an asset if it is probable that the future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to the costs incurred initially to acquire an item of property, plant and equipment and also to the costs incurred subsequently to add to, replace part of, or service it. All other repair and maintenance costs, including regular
servicing, are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. The cost of an item of property, plant and equipment comprises of its purchase price including import duties and other nonrefundable purchase taxes or levies, directly attributable cost of bringing the asset to its working condition for its intended use and the initial estimate of decommissioning, restoration and similar liabilities, if any. Any trade discount or rebate is deducted in arriving at the purchase price. Cost includes cost of replacing a part of a plant and equipment if the recognition criteria are met.
Items such as spare parts, stand-by equipment and servicing equipment that meet the definition of property, plant and equipment are capitalized at cost and depreciated over their useful life. Costs in nature of repairs and maintenance are recognized in the statement of profit and loss as and when incurred.
Capital work-in-progress includes cost of property, plant and equipment not ready for the intended use as at the balance sheet date. Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date is classified as âcapital advancesâ under other non-current assets.
The cost and related accumulated depreciation are eliminated from the Financial Statements upon sale or retirement of the property, plant and equipment and the resultant gains or losses are recognised in the statement of profit and loss. Property, plant and equipment to be disposed of are reported at the lower of the carrying value or the fair value less cost of disposal.
The Company had elected to continue with the carrying value of all of its property, plant and equipment appearing in the financial statements prepared as per accounting standards notified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 (Generally Accepted Accounting Standards âPrevious GAAPâ) as the deemed
cost of the property, plant and equipment in the opening balance sheet under Ind AS effective 1st April, 2016.
Exchange differences arising on translation of long-term foreign currency monetary items recognised in the Previous GAAP financial statements in respect of which the Company has elected to recognise such exchange differences as a part of cost of assets is allowed under Ind AS 101. Such differences are added/deducted to/ from the cost of assets and are recognised in the statement of profit and loss on a systematic basis as depreciation over the balance life of the assets.
ii) Intangible Assets
Intangible assets acquired are initially measured at cost. Intangible assets arising on acquisition of business are measured at fair value as at date of acquisition. Following initial recognition, intangible assets with defined useful lives are carried at cost less accumulated amortization and accumulated impairment loss, if any. Internally generated intangibles are not capitalized and the related expenditure is reflected in statement of profit and loss in the period in which the expenditure is incurred.
Computer Software an intangible asset is measured on initial recognition at cost. Costs comprise of license fees and cost of system integration services and development.
The carrying amount of an intangible asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. On de-recognition the intangible asset is measured as the difference between the net disposal proceeds and the carrying amount of the intangible asset and is recognized in the statement of profit and loss.
The Company had elected to continue with the carrying value of all of its intangible Assets appearing in the financial statements prepared as per Indian accounting standards notified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 (Generally Accepted Accounting Standards âPrevious GAAPâ) as the deemed cost of the Intangible Assets in the opening balance sheet under Ind AS effective 1st April, 2016.
Expenditure incurred by the Company on development of products are recognised as an intangible asset if and only if, expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to and has sufficient resources to complete development and use or sell the assets otherwise such expenses are recognised in the Statement of Profit and Loss as incurred. Subsequent to initial recognition, the assets are measured at cost less accumulated amortisation and any accumulated impairment losses, if any. Expenditures incurred on research are charged to the Statement of Profit and Loss as incurred.
Fixed assets utilized for research and development are capitalized and depreciated in accordance with the policies stated for Property, Plant & Equipment and Intangible Assets.
iii) Depreciation on Property, Plant and Equipment and Amortisation of intangible Assets
Depreciation on property, plant and equipment is provided on pro rata basis using the straightline method based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013 in consideration with useful life of the assets as estimated by the management.
Intangible Assets with finite lives are amortized on a straight-line basis over the estimated useful economic life. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss.
The estimated useful lives, residual values and methods of depreciation of property, plant & equipment are reviewed at the end of each financial year. If any of these expectations differ from previous estimates, such change is accounted for as a change in an accounting estimate and adjusted prospectively, if any.
The estimated useful life of items of property, plant and equipment and intangible Assets are:
|
Particulars |
Years |
Particulars |
Years |
|
Factory Buildings (including Roads) |
10 to 30 |
Office and Other Equipment |
5 to 10 |
|
Residential Buildings |
60 |
Computers/ Laptops/ Computers Hardware |
3 |
|
Plant and Machineries |
3 to 40 |
Computer Servers |
6 |
|
Laboratory Equipment |
10 |
Computer Software |
5 |
|
Electrical Installations |
10 |
Vehicles |
8 to 10 |
|
Furniture and Fixtures |
10 |
Freehold land is not depreciated.
The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
At each balance sheet date, the Company reviews the carrying value of its property, plant and equipment and intangible assets which are subject to depreciation and amortisation respectively, to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss (if any).
An impairment loss on such assessment will be recognised wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount of the assets is net selling price or value in use, whichever is higher. While assessing value in use, the estimated future cash flows are discounted to the present value by using weighted average cost of capital. A previously recognised impairment loss is further provided or reversed depending on changes in the circumstances and to the extent that carrying value of the assets does not exceed the carrying value that would have been determined if no impairment loss had previously been recognised.
Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested for impairment annually and whenever there is an indication that the asset may be impaired.
v) Leases
The Company as a Lessee
The Companyâs lease assets classes primary consists of leases for premises. The Company assesses whether a contract is qualifies to be a lease at the inception of contract. A contract is, or contains, a lease, if the contract conveys the right to control the use of an assets for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of identified asset, the Company assess whether, throughout the period of use, the Company has both of the following: -
⢠right to obtain substantially all of the economic benefits from use of the identified assets
⢠right to direct the use of the identified assets Identification of lease requires significant judgment including judgement to assess the lease terms (including anticipated renewals) and the applicable discount rate. The Company determines the lease terms as the noncancellable period of a lease, together with both periods covered by an option to extend the lease, if the Company is reasonably certain to excise that option; and period covered by an
option to terminate the lease, if the Company is reasonably certain not to exercise that option. In assessing, whether the Company is reasonably certain to exercise the option to extend a lease, or not to exercise an option to terminate a lease, the Company consider all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revise the lease term if there is a change in the noncancellable period of lease terms.
At the date of the commencement of the lease, the Company recognizes a right-of-use asset (âROUâ) and a corresponding lease liability for all lease contracts in which it is a lessee, except for leases contract for a period of twelve months or less (short term leases), variable leases and low value leases, in those cases the lease payments are recognised in the statement of profit and loss on a straight-line basis over the term of the lease.
ROU is initially recognized at cost, which comprises of the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
ROU is depreciated from the commencement date on a straight-line basis over the lease term or useful life of the underlining asset, whichever is shorter. ROU is tested for impairment and account for as per impairment of assets policy of the Company.
The lease liability is initially measure at the present value of the future lease payments, which comprises of the fixed payments, variable lease payments, guaranteed residual value or exercise price of purchase option, if the Company is reasonably certain to exercise the option. The lease payments are discounted using interest rate implicit in the lease or, if not readily determinable, using incremental borrowing rates. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet. Interest expense on lease liability is reported as finance cost in the statement of profit and loss account and lease payments have been classified as financing cash flows.
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. For operating leases mainly of workers quarters are recognised in the statement of profit and loss on straight line basis.
vi) Investment in Subsidiaries and Joint Venture:
Investment in subsidiaries and joint venture are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exits, the carrying amount of the investments is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiary and joint venture, the difference between net disposal proceeds and the carrying amounts are recognised in the statement of profit and loss.
Investments in mutual funds are primarily held for the Companyâs temporary cash requirements and can be readily convertible in cash. These investments are initially recorded at fair value and classified as fair value through profit or loss.
vii) Inventories:
⢠Raw Materials, Work-in-progress and Finished goods are valued at the lower of cost or net realizable value. The cost is determined using FIFO method.
⢠The cost of Inventories of work-in-progress and finished goods comprises the cost of purchases and the cost of conversion and in case of finished goods it also includes the cost of packing materials.
The cost of purchase comprises of the purchase price including duties and taxes (other than those subsequently recoverable by the Company from the taxing authorities), freight inward and other expenditure directly attributable to the acquisition but net of trade discount, rebates, duties for import under advance licenses and other similar items.
The cost of conversion comprises of depreciation and repairs and maintenance of factory buildings and plant and machineries, power and fuel, factory management and administration expenses and consumable stores and spares.
⢠Packing Materials, Consumable Stores and Spares and Fuel are valued at lower of cost or net realizable value.
The cost is determined using FIFO method.
⢠Scrap is valued at net realizable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated cost to make sale.
viii) 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.
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition and adjusted for transaction costs that are directly attributable to the acquisition or issues of financial assets and financial liabilities in case of financial assets or financial liabilities not at fair value through profit or loss account.
Where the fair value of financial assets and financial liabilities at initial recognition is different from its transaction price, the difference between the fair value and transaction price is recognised in the statement of profit and loss.
However, trade receivables that do not contain a significant financing component are initially measured at transaction price.
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
a) Financial Assets
Cash and bank balances
Cash and bank balances consist of:
⢠Cash and cash equivalents - Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term deposits which are readily convertible into known amounts of cash, are subject to an insignificant risk of change in value and have maturities of less than one year from the date of such deposits. These balances with banks are unrestricted for withdrawal and usage.
⢠Other bank balances - Other bank balances include balances and deposits with banks that are restricted for withdrawal and usage.
Financial assets measured at amortised cost
A financial asset is subsequently measured at amortised cost if both of the following conditions are met:
⢠If is held within a business model whose objective is to hold the asset in order to collect contractual cash flows, and
⢠The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding using the Effective Interest Rate (EIR) method less impairment, if any, and the amortisation of EIR and loss arising from impairment, if any is recognised in the statement of profit and loss.
Financial assets measured at fair value
A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
⢠If it is held within a business model whose objective is to hold these assets in order to collect contractual cash flows and to sell these financial assets, and
⢠The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Fair value movements are recognised in the other comprehensive income.
The Company in respect of equity instruments (other than equity instruments of subsidiaries and joint venture) which are not held for trading has made an irrevocable election to present the subsequent changes in fair value of such equity instruments in other comprehensive income. Such an election is made by the Company on an instrument-byinstrument basis at the time of initial recognition of such equity investments. On de-recognition, cumulative gain or loss previously recognised in other comprehensive income is reclassified from the equity to retained earnings in the statement of changes in equity.
A financial asset not classified as either amortised cost or at fair value through other comprehensive income is carried at fair value through the statement of profit and loss.
Impairment of Financial Assets
The Company applies loss allowance using the expected credit loss (ECL) model for the financial assets which are measured at amortised cost or fair value through other comprehensive income.
Loss allowance for trade receivables with no significant financing component is measured following simplified approach wherein an amount equal to lifetime ECL is measured and recognised as a loss allowance.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on life time ECLs at each reporting date, right from its initial recognition.
For all other financial assets (apart from trade receivables that do not constitute of financing transaction), ECLs are measured at an amount equal to 12-month ECL, unless there has been a significant increase in credit risk for initial recognition in which case those are measured at lifetime ECL.
De-recognition of Financial Assets
A financial asset is de-recognised only when
⢠The contractual rights to cash flows from the financial asset expire;
⢠The Company has transferred the contractual rights to receive cash flows from the financial asset or;
⢠Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not de-recognised.
Where the Company has neither transferred a financial asset nor retained substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
b) Financial Liabilities
Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Equity Instrument
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial Liability
Trade and other payables are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities carried at fair value through profit or loss are measured at fair
value with all changes in fair value recognised in the statement of profit and loss.
Interest bearing loans and overdrafts are initially measured at fair value, and are subsequently measured at amortised cost using effective interest rate method. Any difference between proceeds (net of transaction cost) and the settlement amount of borrowing is recognised over the terms of the borrowings in the statement of profit and loss.
De-recognition
A financial liability is de-recognised when the obligation specified in the contract is discharged, cancelled or has expired.
c) Financial Guarantee Contracts
Financial guarantee contracts are those contracts that require specific payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value adjusted for transaction cost that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 or the amount recognised less cumulative amortisation.
d) Derivative financial instruments
The Company enters into derivative financial contracts in the nature of forward currency contracts with banks to reduce business risks which arise from its exposures to foreign exchange. The instruments are employed as hedges of transactions included in the financial statements or for highly probable forecast transactions/firm contractual commitments.
Derivatives are initially accounted for and measured at fair value from the date the derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. Any change therein is generally recognised in the statement of profit and loss. Derivatives are carried as financial assets when fair value is positive and as financial liabilities when fair value is negative.
e) Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
The Company measures financial instruments at fair value in accordance with the accounting policies mentioned above. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy that categorizes into three levels, described as follows:-
⢠Level 1 â quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 â inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
⢠Level 3 â inputs that are unobservable 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 and discloses the same.
x) Non-Current Assets held for sale
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use of the assets and actions required to complete such sale indicate that it is unlikely that significant changes to the plan to sell will be made or that the decision to sell will be withdrawn. Also, such assets are classified as held for sale only if the management expects to complete the sale within one year from the date of classification.
Non-current assets classified as held for sale are measured at the lower of their carrying amount and the fair value less cost to sell and are presented separately from other assets in the balance sheet. The liabilities related to the assets held for sale are presented separately from other liabilities in the balance sheet. Non-current assets held for sale are not depreciated or amortized.
xi) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. These are reviewed at each year end and reflect the best current estimate. Provisions are not recognised for future operating losses.
Where there are number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of Managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
A disclosure for a contingent liability is made when there is a possible obligation or present obligation arising from past events the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company and where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. Contingent assets are neither recognised nor disclosed in the financial statements.
xii) Revenue
Revenue from contracts with customer is recognized when the Company satisfies a performance obligation by transferring the promised goods or services to a customer at a transaction price. The Company assesses promises in the contract that are separate performance obligations to which a portion of transaction price is to be allocated. The transaction price is the amount of consideration to which the company expects to be entitled in exchange for transferring promised goods or services to a customer as per contract, excluding amount of taxes collected on behalf of the government or other amount collected from customers in its capacity as an agent. The transaction price is adjusted of trade discount, cash discount, volume rebate and other variable considerations as per the terms of contract which is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. It is reassessed at end of each reporting period.
Consideration payable to customers is accounted as reduction of transaction price and therefore, of revenue unless the payment to the customer is in exchange for a distinct good or service that the customer transfers to the Company.
Sale of Goods: -
Revenue from sale of products is recognised at a point in time when the control on the goods have been transferred to a customer i.e. when material is delivered to the customer or as per shipping terms, as may be specified in the contract.
Job Work
Revenue from Job work is recognised when intended job work is carried out and goods are ready for transfer to the owner of the goods.
Export Incentives
Eligible export incentives are recognised in the year in which the conditions precedents are met and there is no significant uncertainty about the collectability.
xiii) Other Income Interest Income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
Rental Income
Rental income is recognised in the statement of profit and loss on straight line basis.
Dividend Income
Dividend Income from investments is recognised when shareholderâs rights to receive payment have been established.
Commission Income
Guarantee commission income (notional) for the financial guarantee issued by the Company to the bank in respect of credit facility granted by the bank to the dealers of the Company is recognised over the period of guarantee.
xiv) Government Grant
Government grants are recognised when there is reasonable assurance that the grant will be received and the company will comply with all the attached conditions. When the grant relates to revenue expense, it is recognised as an income on a systematic basis over the period necessary to match it with the expenses that it is intended to compensate. Government grant related to expenditure on property, plant and equipment is included as cost of property, plant and equipment and is credited to the statement of profit and loss over the useful lives of qualifying assets or credited to the statement of profit and loss over the period in which the corresponding export obligation is fulfilled. Total grants availed less the amounts credited to the statement of profit and loss at the balance sheet date are included in the balance sheet as deferred income.
xv) Foreign Currency Transactions
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ). The functional and presentation currency of the Company is Indian Rupees ('').
Transactions denominated in foreign currencies entered into by the Company are recorded in the functional currency (i.e. Indian Rupees), by applying the exchange rate prevailing on the date of transaction. Foreign currency denominated monetary items is restated at the closing exchange rates. Non-monetary items are recorded at exchange rate prevailing on the date of transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is measured. Exchange differences arising out of these translations are recognized in the statement of profit and loss.
The forward exchange contracts are marked to market and gain/loss on such contracts are recognised in the statement of profit and loss at the end of each reporting period.
The Company as per previous GAAP elected to recognise as part of cost of assets, exchange differences arising on translation of long-term foreign currency monetary items and this method of recognition of such exchange difference is followed by the Company as allowed under Ind AS 101. Such differences are added/deducted to/ from the cost of assets and are recognised in the statement of profit and loss on a systematic basis as depreciation over the balance life of the assets.
xvi) Employee Benefits
a) Short Term Obligations
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
b) Post-Employment Benefits
i) Defined benefit plan
Gratuity liability is a defined benefit obligation and recognized based on actuarial valuation carried out using the Projected Unit Credit Method. The scheme is maintained and
administered by Life Insurance Corporation of India to which the Company makes periodical contributions through its trustees.
ii) Defined contribution plan
A Defined Contribution Plan is plan under which the Company makes contribution to Employeeâs Provident Fund administrated by the Central Government. The Companyâs contribution is charged to the statement of profit and loss.
c) Other Long Term Employee Benefits - Leave Salary
The liability towards leave salary which is not expected to be settled wholly within 12 months after the end of the period in which the employees render the related services is recognized based on actuarial valuation carried out using the Projected Unit Credit Method.
xvii) Borrowing Cost
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs that are directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized. All other borrowing costs are expensed in the period in which they occur.
xviii) Income Taxes
Tax expense is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.
Current tax is the amount of income tax payable in respect of taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit and loss because taxable profit is adjusted for items of income or expenses which are taxable or deductible in other years and also for items which are not taxable or deductible under the Income Tax Act, 1961(âthe I.T. Actâ).
The Companyâs liability for current tax is calculated using tax rates and tax laws in force.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax
base used in the computation of taxable profit under the I.T. Act.
Deferred tax liabilities are generally recognized for all taxable temporary differences. However, in case of temporary differences that arise from initial recognition of assets or liabilities in a transaction (other than business combination) that affects neither the taxable profit nor the accounting profit, deferred tax liabilities are not recognized.
Deferred tax assets are generally recognized for all deductible temporary differences to the extent it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. In case of temporary differences that arise from initial recognition of assets or liabilities in a transaction (other than business combination) that affect neither the taxable profit nor the accounting profit, deferred tax assets are not recognized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent it is no longer probable that sufficient taxable profit will be available to allow entire or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws in force. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to cover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in statement of profit and loss, except to the extent that it relates to items recognised in Other Comprehensive Income or directly in equity, in which case, the tax is recognised in other comprehensive income or directly in equity, respectively.
xix) Segment Reporting
Operating segment is a component of an entity whose operating results are regularly reviewed by the Chief Operating Decision Maker (CODM) to make decision about resource to be allocated to the segment and
assess its performance. The Company has no separate reportable segment.
xx) Statement of Cash Flow
Cash flow statement is reported using the indirect method, whereby profit for the year 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 cashflows. The cash flows from operating, investing and financing activities of the Company are segregated.
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short- term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
For the purposes of cash flow statement cash and cash equivalents consist of cash and short-term deposits, as defined above.
xxi) Events after Reporting date
Where events occurring after the Balance Sheet date provide evidence of conditions which existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the Balance Sheet date of material size or nature are only disclosed.
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose calculating Diluted Earnings per share, the net profit or loss for the period attributable to equity shareholders and the we
Mar 31, 2018
1. SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
(i) Basis of preparation
These financial statements have been prepared in accordance with Indian Accounting Standards (âInd ASâ) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 (âthe Actâ) read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act.
The financial statements for the year ended 31st March, 2018 are the first Ind AS financial statements of the Company. The financial statements for all the periods upto and including the year ended 31st March, 2017 were prepared in accordance with Accounting Standards notified under section 133 of the Act read together with Rule 7 of the Companies (Accounts) Rules, 2014 (âPrevious GAAPâ).
The total Equity as at 1st April, 2016 and 31st March, 2017 and total Comprehensive Income and Cash Flow for the year ended 31st March, 2017 have now been restated to give effect of Ind AS and to arrive at comparable figures for the year ended 31st March, 2018, by availing voluntary exemptions and subject to mandatory exceptions as per Ind AS 101 âFirst-time adoption of Indian Accounting Standards (âInd AS 101â). Reconciliation and descriptions of the effect of the transition has been summarized in note 43.
The financial statements have been prepared on accrual and going concern basis. The 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.
(ii) Basis of Measurement
These financial statements have been prepared and presented under the historical cost convention except for certain financial assets and financial liabilities that are required to be measured at fair values at the end of each reporting period by Ind AS.
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.
(iii) Recent accounting pronouncements
In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying Ind AS 115 - âRevenue from Contracts with Customersâ, and appendix B to Ind AS 21 âThe Effects of Changes in Foreign Exchange Ratesâ and amendments to Ind AS 12 - âIncome Taxesâ, Ind AS 28 - âInvestments in Associates and Joint Venturesâ and Ind AS 40 - âInvestment Propertyâ; which will be effective from the accounting year beginning on or after 1st April, 2018.
The Company is in the process of evaluating the impact of these pronouncements on the financial statements of the Company.
(iv) Current/ Non- Current Classification
Any asset or liability is classified as current if it satisfies any of the following conditions:
- the asset/liability is expected to be realized/settled in the Companyâs normal operating cycle;
- the asset is intended for sale or consumption;
- the asset/liability is held primarily for the purpose of trading;
- the asset/liability is expected to be realized/settled within twelve months after the reporting period;
- the asset is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date;
- in the case of a liability, the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date;
- All other assets and liabilities are classified as non-current.
For the purpose of current/non-current classification of assets and liabilities, the Company has ascertained its normal operating cycle as twelve months. This is based on the nature of product and the time between the acquisition of assets or inventories for processing and their realization in cash and cash equivalents.
(b) KEY ACCOUNTING ESTIMATES, JUDGEMENTS AND ASSUMPTIONS
The preparation of Companyâs financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the accompanying disclosures and disclosures of contingent liabilities. Uncertainty about these assumptions and estimates could result in the outcomes requiring adjustment to the carrying amounts of assets or liabilities in future periods. The estimates and the associated assumptions are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements. Changes in accounting estimates are recognised prospectively.
Significant judgements and estimates relating to the carrying values of assets and liabilities include useful lives of property, plant and equipment and intangible assets, impairment of property, plant and equipment, intangible assets and investments, provision for employee benefits and other provisions, recoverability of deferred tax assets, commitments and contingencies.
(c) SIGNIFICANT ACCOUNTING POLICIES
i) Property, Plant and Equipment
An item of property, plant and equipment is recognised as an asset if it is probable that the future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to the costs incurred initially to acquire an item of property, plant and equipment and also to the costs incurred subsequently to add to, replace part of, or service it. All other repair and maintenance costs, including regular servicing, are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. The cost of an item of property, plant and equipment comprises of its purchase price including import duties and other non-refundable purchase taxes or levies, directly attributable cost of bringing the asset to its working condition for its intended use and the initial estimate of decommissioning, restoration and similar liabilities, if any. Any trade discount or rebate is deducted in arriving at the purchase price. Cost includes cost of replacing a part of a plant and equipment if the recognition criteria are met.
Items such as spare parts, stand-by equipment and servicing equipment that meet the definition of property, plant and equipment are capitalized at cost and depreciated over their useful life. Costs in nature of repairs and maintenance are recognized in the statement of profit and loss as and when incurred.
Capital work-in-progress includes cost of property, plant and equipment not ready for the intended use as at the balance sheet date. Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date is classified as âcapital advancesâ under other non-current assets.
The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the property, plant & equipment and the resultant gains or losses are recognised in the statement of profit and loss. Property, Plant & Equipment to be disposed of is reported at the lower of the carrying value or the fair value less cost of sale.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1st April, 2016 measured as per Previous GAAP as the deemed cost of the property, plant and equipment.
Exchange differences arising on translation of long term foreign currency monetary items recognised in the Previous GAAP financial statements in respect of which the Company has elected to recognise such exchange differences as a part of cost of assets as allowed under Ind AS 101. Such differences are added/deducted to/ from the cost of assets and are recognised in the statement of profit and loss on a systematic basis as depreciation over the balance life of the assets.
ii) Intangible Assets
Intangible assets acquired are initially measured at cost. Intangible assets arising on acquisition of business are measured at fair value as at date of acquisition. Following initial recognition, intangible assets with defined useful lives are carried at cost less accumulated amortization and accumulated impairment loss, if any. Internally generated intangibles are not capitalized and the related expenditure is reflected in statement of profit and loss in the period in which the expenditure is incurred.
Computer Software an intangible asset is measured on initial recognition at cost. Costs comprise of license fees and cost of system integration services and development.
The carrying amount of an intangible asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. On de-recognition the intangible asset is measured as the difference between the net disposal proceeds and the carrying amount of the intangible asset and is recognized in the statement of profit and loss.
iii) Depreciation on Property, Plant & Equipment and Amortisation of intangible Assets
Depreciation on property, plant and equipment is provided using the straight line method based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013 in consideration with useful life of the assets as estimated by the management.
Intangible Assets with finite lives are amortized on a straight line basis over the estimated useful economic life. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss.
The estimated useful lives and residual values are reviewed at the end of each financial year. If any of these expectations differ from previous estimates, such change is accounted for as a change in an accounting estimate and adjusted prospectively, if any.
The estimated useful life of items of property, plant and equipment and intangible Assets are:
iv) Impairment of Assets
At each balance sheet date, the Company reviews the carrying values of its property, plant and equipment and intangible assets to determine whether there is any indication that the carrying value of those assets may not be recoverable through continuing use. If any such indication exists, the recoverable amount of the asset is reviewed in order to determine the extent of impairment loss (if any).
An impairment loss on such assessment will be recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of the assets is net selling price or value in use, whichever is higher. While assessing value in use, the estimated future cash flows are discounted to the present value by using weighted average cost of capital. A previously recognised impairment loss is further provided or reversed depending on changes in the circumstances and to the extent that carrying amount of the assets does not exceed the carrying amount that would have been determined if no impairment loss had previously been recognised.
v) Leases
The Company as Lessee
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
In respect of assets taken on operating lease, lease rentals are recognized as an expense in the statement of profit and loss on straight line basis over the lease term unless
- another systematic basis is more representative of the time pattern in which the benefit is derived from the leased asset; or
- the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
The Company as Lessor
Lease rentals from the workers quarters are recognised in the statement of profit & loss on straight line basis.
vi) Investment in Subsidiary and Joint Venture
Investment in subsidiary and joint venture are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exits, the carrying amount of the investments is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiary & joint venture, the difference between net disposal proceeds and the carrying amounts are recognised in the statement of profit & loss.
vii) Inventories
- Raw Materials, Work-in-progress and Finished goods are valued at the lower of cost or net realizable value. The cost is determined using FIFO method.
- The cost of purchase comprises of the purchase price including duties and taxes (other than those subsequently recoverable by the Company from the taxing authorities), freight inward and other expenditure directly attributable to the acquisition but net of trade discount, rebates, duties for import under advance licenses and other similar items.
- Packing Materials, Consumable Stores & Spares and Fuel are valued at lower of cost or net realizable value. The cost is determined using FIFO method.
- Scrap is valued at net realizable value.
- The cost of Inventories comprises the cost of purchases, the cost of conversion and the cost of packing materials in case of Finished Goods.
- The cost of conversion comprises of depreciation on factory buildings and plant & machineries, power & fuel, factory management and administration expenses, repairs & maintenance and consumable stores & spares.
viii) 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.
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities that are not at fair value through profit or loss are added to / deducted from the fair value on initial recognition.
a) Financial Assets Cash and bank balances
Cash and bank balances consist of:
- Cash and cash equivalents - which includes cash on hand, deposits held at call with banks and other short term deposits which are readily convertible into known amounts of cash, are subject to an insignificant risk of change in value and have maturities of less than one year from the date of such deposits. These balances with banks are unrestricted for withdrawal and usage.
- Other bank balances - which includes balances and deposits with banks that are restricted for withdrawal and usage.
Financial assets carried at amortised cost
A financial asset is are subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, using the Effective Interest Rate (EIR) method less impairment, if any, the amortisation of EIR and loss arising from impairment, if any is recognised in the statement of profit and loss.
Financial assets measured at fair value
A financial asset is measured at fair value through other comprehensive income if it is held within a business model whose objective is to hold these assets in order to collect contractual cash flows or to sell these financial assets and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Fair value movements are recognised in the other comprehensive income.
The Company in respect of equity instruments (other than equity instruments of subsidiary and joint venture) which are not held for trading has made an irrevocable election to present the subsequent changes in fair value of such equity instruments in other comprehensive income. Such an election is made by the Company on an instrument by instrument basis at the time of initial recognition of such equity investments. On de-recognition, cumulative gain or loss previously recognised in other comprehensive income is reclassified from the equity to retained earnings in the statement of changes in equity.
A financial asset not classified as either amortised cost or at fair value through other comprehensive income is carried at fair value through the statement of profit & loss.
Impairment of Financial Assets
The Company applies loss allowance using the expected credit loss (ECL) model for the financial assets which are measured at amortised cost and fair value through other comprehensive income. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, ECLs are measured at an amount equal to 12-month ECL, unless there has been a significant increase in credit risk for initial recognition in which case those are measured at lifetime ECL.
De-recognition of Financial Assets
A financial asset is de-recognised only when
- The contractual rights to cash flows from the financial asset expires
- The Company has transferred the contractual rights to receive cash flows from the financial asset or
- Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not de-recognised.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is de-recognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
b) Financial Liabilities
Classification as debt or equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into 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 the Company after deducting all its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.
Financial Liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the statement of profit and loss.
Interest bearing loans and overdrafts are initially measured at fair value, and are subsequently measured at amortised cost using effective interest rate method. Any difference between proceeds (net of transaction cost) and the settlement amount of borrowing is recognised over the terms of the borrowings in the statement of profit and loss.
De-recognition
A financial liability is de-recognised when the obligation specified in the contract is discharged, cancelled or has expired.
c) Financial Guarantee Contracts
Financial guarantee contracts are those contracts that require specific payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value adjusted for transaction cost that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
d) Derivative financial instruments
The Company enters into derivative financial contracts in the nature of forward currency contracts with banks to reduce business risks which arise from its exposures to foreign exchange. The instruments are employed as hedges of transactions included in the financial statements or for highly probable forecast transactions/firm contractual commitments.
Derivatives are initially accounted for and measured at fair value from the date the derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. Any change therein is generally recognised in the statement of profit and loss. Derivatives are carried as financial assets when fair value is positive & as financial liabilities when fair value is negative.
e) Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
ix) Fair Value Measurement
The Company measures financial instruments at fair value in accordance with the accounting policies mentioned above. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy that categorizes into three levels, described as follows:
- Level 1 â quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 â inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
- Level 3 â inputs that are unobservable 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 and discloses the same.
x) Non-Current Assets held for sale
The Company classifies non-current assets as held for sale if their carrying amounts will be recovered principally through a sale rather than through continuing use of the assets and actions required to complete such sale indicate that it is unlikely that significant changes to the plan to sell will be made or that the decision to sell will be withdrawn. Also, such assets are classified as held for sale only if the management expects to complete the sale within one year from the date of classification.
Non-current assets classified as held for sale are measured at the lower of their carrying amount and the fair value less cost to sell. Non-current assets are not depreciated or amortized.
xi) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. These are reviewed at each year end and reflect the best current estimate. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of Managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
Contingent assets are neither recognised nor disclosed in the financial statements.
xii) Revenue
Revenue is recognized when it is probable that economic benefits associated with a transaction flows to the Company in the ordinary course of its activities and the amount of revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts, volume rebates and other considerations given to customers that have impacted value of transactions and excluding taxes or duties collected on behalf of the government.
Sale of Goods
Revenue from sale of products is recognised when the Company transfers all significant risks and rewards of ownership to the buyer, while the Company retains neither continuing managerial involvement nor effective control over the products sold.
Job Work
Revenue from Job work is recognised when intended job work is carried out and goods are ready for transfer to the owner of the goods.
Interest Income
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the applicable interest rates.
Rental Income
Rental income is recognised in the statement of profit & loss on straight line basis.
Dividend Income
Dividend Income from investments is recognised when shareholderâs rights to receive payment have been established.
Commission Income
Guarantee commission income for the financial guarantee issued by the Company to the bank in respect of credit facility granted by the bank to the dealers of the Company is recognised over the period of guarantee.
Export Incentives
Eligible export incentives are recognised in the year in which the conditions precedents are met and there is no significant uncertainty about the collectability.
xiii) Government Grant
Government grants are recognised when there is reasonable assurance that the grant will be received and the company will comply with all the attached conditions. When the grant relates to revenue expense, it is recognised as an income on a systematic basis over the period necessary to match it with the expenses that it is intended to compensate. Government grant related to expenditure on property, plant & equipment is included as cost of property, plant & equipment and is credited to the statement of profit & loss over the useful lives of qualifying assets or credited to the statement of profit & loss over the period in which the corresponding export obligation is fulfilled. Total grants availed less the amounts credited to the statement of profit and loss at the balance sheet date are included in the balance sheet as deferred income.
xiv) Foreign Currency Transactions
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ). The functional and presentation currency of the Company is Indian Rupees (Rs. ).
Transactions denominated in foreign currencies entered into by the Company are recorded in the functional currency (i.e. Indian Rupees), by applying the exchange rate prevailing on the date of transaction. Foreign currency denominated monetary items is restated at the closing exchange rates. Non-monetary items are recorded at exchange rate prevailing on the date of transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is measured. Exchange differences arising out of these translations are recognized in the Statement of Profit and Loss.
Exchange differences arising on translation of long term foreign currency monetary items recognised in the Previous GAAP financial statements in respect of which the Company has elected to recognise such exchange differences as a part of cost of assets as allowed under Ind AS 101. Such differences are added/deducted to/ from the cost of assets and are recognised in the statement of profit and loss on a systematic basis as depreciation over the balance life of the assets.
xv) Employee Benefits
a) Short Term Obligations
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
b) Post-Employment Benefits
i) Defined benefit plan
Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation on Project Unit Credit Method made at the end of each financial year. The scheme is maintained and administered by Life Insurance Corporation (LIC) to which the Company makes periodical contributions through its trustees.
ii) Defined contribution plan
A Defined Contribution Plan is plan under which the Company makes contribution to Employeeâs Provident Fund administrated by the Central Government. The Companyâs contribution is charged to the Statement of Profit & Loss.
c) Other Long Term Employee Benefits - Leave Salary
The liability towards leave salary which is not expected to be settled wholly within 12 months after the end of the period in which the employees render the related services is recognized based on actuarial valuation carried out using the Projected Unit Credit Method.
xvi) Borrowing Cost
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing costs that are directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized, if any. All other borrowing costs are expensed in the period in which they occur.
xvii) Income Taxes
Tax expenses for the year comprises current tax and deferred tax.
Current Tax
Current tax is the amount of income tax payable in respect of taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit & loss because taxable profit is adjusted for items of income or expenses which are taxable or deductible in other years and also for items which are never taxable or deductible under the Income Tax Act, 1961(âthe IT Actâ).
The Companyâs liability for current tax is calculated using tax rates and tax laws that have been enacted by the end of reporting period.
Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit under the IT Act.
Deferred tax liabilities are generally recognized for all taxable temporary differences. However, in case of temporary differences that arise from initial recognition of assets or liabilities in a transaction (other than business combination) that affects neither the taxable profit nor the accounting profit, deferred tax liabilities are not recognized.
Deferred tax assets are generally recognized for all deductible temporary differences to the extent it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. In case of temporary differences that arise from initial recognition of assets or liabilities in a transaction (other than business combination) that affect neither the taxable profit nor the accounting profit, deferred tax assets are not recognized.
The carrying value of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to cover or settle the carrying value of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in Other Comprehensive Income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
MAT
Minimum Alternate Tax (âMATâ) under the provisions of the IT Act is recognised as deferred tax in the statement of profit and loss. The credit available under the Act in respect of MAT paid will be recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set off against the normal tax liability. Such asset is reviewed at each Balance Sheet date.
xviii) Segment Reporting
Operating segment is a component of an entity whose operating results are regularly reviewed by the Chief Operating Decision Maker (CODM) to make decision about resource to be allocated to the segment and assess it performance. The Company has no separate reportable segment.
xix) Statement of Cash Flow
The Cash Flow Statement is prepared under âIndirect Methodâ.
xx) Events after Reporting date
Where events occurring after the Balance Sheet date provide evidence of conditions which existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the Balance Sheet date of material size or nature are only disclosed.
xxi) Earnings per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity share outstanding during the period.
For the purpose calculating Diluted Earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2016
1 COMPANY OVERVIEW
The Company is engaged in the business of manufacturing engineering goods such as Enamelled Copper Wire & Strips, Enamelled Alluminium Wire, Submersible Winding Wire, Fibre Glass Covered Copper Wire & Strips, Paper Covered Copper Wire & Strips.
2 SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of Preparation:
The financial statements have been prepared on accrual basis under the historical cost convention and in accordance with Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standard specified under Section 133 of the Companies Act, 2013 (âthe Actâ) read with Rule 7 of the Companies (Accounts) Rules, 2014.
2.2 Use of Estimates:
The preparation of financial statements is in conformity with Indian GAAP requires the management to make estimates and assumptions that affect the reporting amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of financial statements and the reporting amounts of revenue and expenses during the reporting period.
2.3 Fixed Assets:
a) Fixed Assets are stated at cost of acquisition or construction, less accumulated depreciation and accumulated impairment loss, if any. Cost include purchase price, tax & duty net of credit availed, if any and other direct cost attributable for acquisition or construction of assets up to the date the asset is ready for its intended use.
b) The foreign currency differences on Long Term Borrowings for acquiring of fixed assets are adjusted to the cost of assets.
c) Intangible assets are stated at cost of acquisition, less accumulated amortization and accumulated impairment loss, if any.
2.4 Depreciation:
a) Tangible Assets:
Depreciation on tangible fixed assets has been provided on the Straight Line Method as per the useful lives of the assets prescribed under Schedule II of the Act read with notes thereon.
b) Intangible Assets:
Computer Softwareâs are amortized on Straight Line Method over the estimated useful life of 5 years.
2.5 Valuation of Inventories:
a) Raw Materials, Work-in-progress and Finished goods are valued at the lower of cost or realizable value. The cost is determined using FIFO method.
b) The cost of purchase comprises of the purchase price including duties and taxes (other than those subsequently recoverable by the Company from the taxing authorities), freight inward and other expenditure directly attributable to the acquisition but net of trade discount, rebates, duties for import under advance licenses and other similar items.
c) Packing Materials and Fuel are valued at lower of cost or net realizable value. The cost is determined using FIFO method.
d) Scrap is valued at net realizable value.
e) Consumable Stores and Spares being negligible percentage of Finished Goods are charged off to the Statement of Profit and Loss in the year of purchase.
f) The cost of Inventories comprises the cost of purchases, the cost of conversion and the cost of packing materials in case of Finished Goods.
g) The cost of conversion comprises of Depreciation on Factory Buildings and Plant & Machineries, Power & Fuel, Factory Management and Administration Expenses, Repairs & Maintenance and Consumable Stores & Spares.
2.6 Investments:
Long term investments are stated at cost, after providing for any diminution in value, if such diminution is âother than temporaryâ in nature.
2.7 Sales:
Sales include sales of finished goods, semi finished goods, scrap and excise duty but net off value added tax, rate difference and sales returns. Revenue from Sales is recognized when the substantial risk & rewards of ownership are transferred to the buyer.
2.8 Foreign Currency Transactions:
a) Foreign Currency Transactions are recorded at the exchange rate prevailing as at the date of transaction.
b) Foreign currency monetary items are restated at the closing exchange rates. Non-monetary items are recorded at exchange rate prevailing on the date of transaction.
c) The premium or discount that arises on entering into forward exchange contracts for hedging are measured by the difference between the exchange rate at the date of inception of the forward exchange contract and the forward rate.
d) Any revenue or expense on account of exchange difference either on settlement or on translation is recognized in the statement of profit and loss except related to fixed assets are adjusted to carrying cost of net assets. The premium or discount on forward contracts entered into to hedge the foreign currency risks of a firm commitment is recognized over the life of contract. The mark to market loss in respect of outstanding derivative contracts as on the Balance Sheet date for highly probable forecasted transactions are charged to Statement of Profit & Loss.
e) The Company uses foreign exchange forward contracts to hedge its exposure to fluctuations in foreign exchange rates. Net forward contracts liabilities are disclosed in the Balance Sheet.
f) Profit or loss arising on cancellation or renewal of such forward exchange contracts are recognized as income or expenses for the year.
2.9 Employee Benefits:
a) Short term benefits are recognized as an expense at the undiscounted amount in the Statement of Profit & Loss of the year in which related services are rendered.
b) Defined Contribution plan:
A Defined Contribution Plan is a post employment benefit plan under which the Company makes contribution to Employee''s Provident Fund administrated by the Central Government. The Company''s contribution is charged to the Statement of Profit & Loss.
c) Defined Benefit Plan:
Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation on Project Unit Credit Method made at the end of each financial year. The scheme is maintained and administered by LIC to which the Company make periodical contributions through its trustees.
d) Leave Salary:
The liability towards compensated absence is recognized based on actuarial valuation carried out using the Projected Unit Credit Method.
2.10 Provision for Current and Deferred Tax:
Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from âtiming difference'' between book and taxable profit is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the asset will be realized in future.
2.11 Earnings per share:
In determining earnings per share, the Company considers the net profit after tax and extraordinary items. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the year.
2.12 Impairment of Assets:
An asset is treated as impaired when the carrying cost of the assets exceeds its recoverable value. An impairment loss is charged for when an asset is identified as impaired.
2.13 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 substantial period of time to get ready for its intended use. All other borrowing costs are charged to statement of profit and loss.
2.14 Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognized but are disclosed in the Notes on Financial Statements. Contingent Assets are neither recognized nor disclosed in the financial statements.
2.15 Cash Flow Statements:
The Cash Flow Statement is prepared under ''Indirect Method"
2.16 Segment Reporting:
The Company is primarily engaged in the business of Enamelled Wire & Strips. As such there is no separate reportable segment as defined by the Accounting Standard (AS-17) Segment Reporting.
Mar 31, 2015
1.1 Basis of Preparation
The financial statements of the company have been prepared on accrual
basis under the historical cost convention and in accordance with
Generally Accepted Accounting Principles in India (Indian GAAP) to
comply with the Accounting Standard specified under Section 133 of the
Companies Act, 2013 ("the Act") read with Rule 7 of the Companies
(Accounts) Rules, 2014 and the relevant Provisions of the Act /
Companies Act, 1956 (the 1956 Act), as applicable.
2.2 Use of Estimates
The preparation of financial statements is in conformity with Generally
Accepted Accounting Principles (GAAP) in India, requires the management
to make estimates and assumptions that affect the reporting amounts of
assets and liabilities and the disclosures of contingent liabilities as
at the date of financial statements and the reporting amounts of
revenue and expenses during the reporting period.
2.3 Depreciation:
a) Tangible Assets:
Depreciation on tangible fixed assets has been provided on Straight
Line Method as per the useful life prescribed under Schedule II of the
Act.
b) Intangible Assets:
Computer Softwares are amortised on Straight Line Method over the
estimated useful life of 5 years.
2.4 Fixed Assets:
a) Fixed Assets are stated at cost, net of CENVAT/ Value Added Tax,
less accumulated depreciation and impairment loss, if any.
b) The foreign currency differences on Long Term Borrowings for
acquiring of fixed assets are adjusted to the cost of assets.
c) Intangible assets are stated at cost of acquisition, less
accumulated amortisation.
2.5 Valuation of Inventories:
a) Raw Materials, Work-in-progress and Finished goods are valued at the
lower of cost or realizable value. The cost is determined using FIFO
method.
b) The cost of purchase comprises of the purchase price including
duties and taxes (other than those subsequently recoverable by the
Company from the taxing authorities), freight inward and other
expenditure directly attributable to the acquisition but net of trade
discount, rebates, duties for import under advance licenses and other
similar items.
c) Packing Materials and Fuel are valued at lower of cost or net
realizable value. The cost is determined using FIFO method.
d) Scrap is valued at net realizable value.
e) Consumable Stores and Spares being negligible percentage of Finished
Goods are charged off to the Statement of Profit and Loss in the year
of purchase.
f) The cost of Inventories comprises the cost of purchases, the cost of
conversion and the cost of packing materials in case of Finished Goods.
g) The cost of conversion comprises of Depreciation on Factory
Buildings and Plant & Machineries, Power & Fuel, Factory Management and
Administration Expenses, Repairs & Maintenance and Consumable Stores &
Spares.
2.6 Investments:
Long term investments in unquoted equity shares are stated at cost.
2.7 Sales:
Sales include sales of Finished Goods, Semi Finished Goods and excise
duty but net of sales returns and rate difference.
2.8 Foreign Currency Transactions:
a) Foreign Currency Transactions are recorded at the exchange rate
prevailing as at the date of transaction.
b) Current assets and liabilities in foreign currency at the balance
sheet date are translated with reference to the year end exchange
rates.
c) The premium or discount that arises on entering into forward
exchange contracts for hedging are measured by the
difference between the exchange rate at the date of inception of the
forward exchange contract and the forward rate.
d) Any revenue or expense on account of exchange difference either on
settlement or on translation is recognized in the statement of profit
and loss except related to fixed assets are adjusted to carrying cost
of net assets. The premium or discount on forward contracts entered
into to hedge the foreign currency risks of a firm commitment is
recognized over the life of contract. The mark to market loss in
respect of outstanding derivative contracts as on the Balance Sheet
date for highly probable forecasted transactions are charged to
Statement of Profit & Loss.
e) The Company uses foreign exchange forward contracts to hedge its
exposure to fluctuations in foreign exchange rates. Net forward
contracts liabilities are disclosed in the Balance Sheet.
f) Profit or loss arising on cancellation or renewal of such forward
exchange contracts are recognised as income or expenses for the year.
2.9 Employee Benefits:
a) Short term benefits are recognized as an expense at the undiscounted
amount in the Statement of Profit & Loss of the year in which related
services are rendered.
b) Defined Contribution plan:
Provident Fund deducted from employees together with employer's
contribution is remitted to Employee's Provident Fund administered by
the Central Government and employer's contribution is charged to the
Statement of Profit & Loss.
c) Defined Benefit Plan:
Gratuity liability is a defined benefit obligation and is provided for
on the basis of actuarial valuation on Project Unit Credit Method made
at the end of each financial year. The scheme is maintained and
administered by LIC to which the Company make periodical contributions
through its trustees.
d) Leave Salary:
The liability towards compensated absence is recognized based on
actuarial valuation carried out using the Projected Unit Credit Method.
2.10 Provision for Current and Deferred Tax:
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income Tax Act, 1961.
Deferred tax resulting from 'timing difference' between book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or substantively enacted as on the Balance Sheet date. The
deferred tax asset is recognized and carried forward only to the extent
that there is a reasonable certainty that the asset will be realized in
future.
2.11 Earnings per share:
In determining earnings per share, the Company considers the net profit
after tax and extraordinary items. The number of shares used in
computing basic earnings per share is the weighted average number of
shares outstanding during the year.
2.12 Impairment of Assets:
An asset is treated as impaired when the carrying cost of the assets
exceeds its recoverable value. An impairment loss is charged for when
an asset is identified as impaired.
2.13 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
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to statement of profit and loss.
2.14 Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
Notes on Financial Statements. Contingent Assets are neither recognized
nor disclosed in the financial statements.
2.15 Cash Flow Statements:
The Cash Flow Statement is prepared under 'Indirect Method"
2.16 Segment Reporting:
The Company is primarily engaged in the business of Enamelled Wire &
Strips. As such there is no separate reportable segment as defined by
the Accounting Standard (AS-17) Segment Reporting.
Mar 31, 2014
1.1 Basis of Preparation
The financial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting with
Generally Accepted Accounting Principles (GAAP) and Accounting
Standards as prescribed by Accounting Standards (Rules) read with
General Circular No. 15/2013 dated 13th September, 2013 issued by the
Ministry of Corporate Affairs, as applicable and relevant provisions of
the Companies Act, 1956 read with General Circular No. 08/2014 dated
4th April, 2014 issued by the Ministry of Corporate Affairs.
2.2 Use of Estimates
The preparation of financial statements is in conformity with Generally
Accepted Accounting Principles (GAAP) in India, requires the management
to make estimates and assumptions that affect the reporting amounts of
assets and liabilities and the disclosures of contingent liabilities as
at the date of financial statements and the reporting amounts of
revenue and expenses during the reporting period.
2.3 Depreciation:
Depreciation on Fixed Assets is provided on straight-line method at the
rates prescribed under Schedule XIV to the Companies Act, 1956.
2.4 Fixed Assets:
a) Fixed Assets are stated at cost net of CENVAT/ Value Added Tax, less
accumulated depreciation and impairment loss, if any.
b) The foreign currency differences on Long Term Borrowings for
acquiring of fixed assets are adjusted to the cost of assets.
2.5 Valuation of Inventories:
a) Raw Materials, Work-in-progress and Finished goods are valued at the
lower of cost or realizable value. The cost is determined using FIFO
method.
b) The cost of purchase comprises of the purchase price including
duties and taxes (other than those subsequently recoverable by the
Company from the taxing authorities), freight inward and other
expenditure directly attributable to the acquisition but net of trade
discount, rebates, duties for import under advance licenses and other
similar items.
c) Packing Materials and Fuel are valued at lower of cost or net
realizable value. The cost is determined using FIFO method.
d) Scrap is valued at net realizable value.
e) Consumable Stores and Spares being negligible percentage of Finished
Goods are charged off to the Statement of Profit and Loss in the year
of purchase.
f) The cost of Inventories comprises the cost of purchases, the cost of
conversion and the cost of packing materials in case of Finished Goods.
g) The cost of conversion comprises of Depreciation on Factory
Buildings and Plant & Machineries, Power & Fuel, Factory Management and
Administration Expenses, Repairs & Maintenance and Consumable Stores &
Spares.
2.6 Investments:
Long term investments in unquoted equity shares are stated at cost.
2.7 Sales:
Sales include sales of Finished Goods, Semi Finished Goods and excise
duty but net of sales returns and rate difference.
2.8 Foreign Currency Transactions:
a) Foreign Currency Transactions are recorded at the exchange rate
prevailing as at the date of transaction.
b) Current assets and liabilities in foreign currency at the balance
sheet date are translated with reference to the year end exchange
rates.
c) The premium or discount that arises on entering into forward
exchange contracts for hedging are measured by the difference between
the exchange rate at the date of inception of the forward exchange
contract and the forward rate.
d) Any revenue or expense on account of exchange difference either on
settlement or on translation is recognized in the statement of profit
and loss except related to fixed assets are adjusted to carrying cost
of net assets. The premium or discount on forward contracts entered
into to hedge the foreign currency risks of a firm commitment is
recognized over the life of contract.
e) The Company uses foreign exchange forward contracts to hedge its
exposure to fluctuations in foreign exchange rates. Net forward
contracts liabilities are disclosed in the Balance Sheet.
2.9 Employee Benefits:
a) Short term benefits are recognized as an expense at the undiscounted
amount in the Statement of Profit & Loss of the year in which related
services are rendered.
b) Defined Contribution plan:
Provident Fund deducted from employees together with employer''s
contribution is remitted to Employee''s Provident Fund administered by
the Central Government and employer''s contribution is charged to the
Statement of Profit & Loss.
c) Defined Benefit Plan:
Gratuity liability is a defined benefit obligation and is provided for
on the basis of actuarial valuation on Project Unit Credit Method made
at the end of each financial year. The scheme is maintained and
administered by LIC to which the Company make periodical contributions
through its trustees.
d) Leave Salary:
The liability towards compensated absence is recognized based on
actuarial valuation carried out using the Projected Unit Credit Method.
2.10 Provision for Current and Deferred Tax:
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income Tax Act, 1961.
Deferred tax resulting from ''timing difference'' between book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or substantively enacted as on the Balance Sheet date. The
deferred tax asset is recognized and carried forward only to the extent
that there is a reasonable certainty that the asset will be realized in
future.
2.11 Earnings per share:
In determining earnings per share, the Company considers the net profit
after tax and extraordinary items. The number of shares used in
computing basic earnings per share is the weighted average number of
shares outstanding during the year.
2.12 Impairment of Assets:
An asset is treated as impaired when the carrying cost of the assets
exceeds its recoverable value. An impairment loss is charged for when
an asset is identified as impaired.
2.13 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
substantial period of time to get ready for its intended use. All
other borrowing costs are charged to statement of Profit and Loss.
2.14 Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
Notes on Accounts. Contingent Assets are neither recognized nor
disclosed in the financial statements.
2.15 Segment Reporting:
The Company is operating in one segment only i.e. Enamelled Wires and
Strips.
3.3 Terms/ rights attached to Equity Shares
The Company has only one class of shares referred to as equity shares
having face value of Rs. 5/- per share. Each holder of equity shares is
entitled to one vote per share. The dividend proposed by Board of
Directors is subject to approval of the Shareholders in the ensuring
Annual General Meeting, except in the case of interim dividend.
As per the Companies Act,1956 the holders of equity shares will be
entitled to receive remaining assets of the Company, after the
distribution of all preferential amounts in the event of the
liquidation of the Company. The distribution will be in proportion to
the number of equity shares held by the Shareholders.
5.3 Term Loan is secured by way of first pari passu charge with the
consortium lenders over the existing immovable properties (excluding
immovable property at Rakholi, Silvassa) and the present and future
movable fixed assets of the Company and pari passu second charge with
the consortium lenders over the present and future current assets of
the Company and further secured by personal guarantees of some
Directors and a relative of Directors.
5.4 Interest on External Commercial Borrowing ( ECB ) is hedged through
Interest rate swap @ 5.51%.
5.5 Vehicle Loans are secured by way of hypothecation of specific
vehicle.
5.7 Public Deposits taken by the Company are under the provisions of
Section 58A & 58 AA of the Companies Act, 1956 and rules made there
under. Fixed deposits carry interest rates from 9.50% to 11% depending
upon their tenure.
5.8 Other Unsecured Loans carry interest rates from 11% to 13% with
tenure more than two years.
8.1 Secured Working Capital Loans are secured by first pari passu
charge with the consortium lenders over the entire current assets,
present and future, such as stock, book debts, other receivables, etc.
and pari passu second charge with the consortium lenders over the
existing immovable properties (excluding immovable property at Rakholi,
Silvassa) and the present and future movable fixed assets of the
Company and further secured by personal guarantees of some Directors
and a relative of Directors.
8.2 For the Unsecured Loans, personal guarantees have been given by
some Directors and a relative of Directors.
12.1 For relevant Accounting Policies refer Notes 2.3, 2.4, 2.8 & 2.13
12.2 Net Exchange Difference of Rs. 4.02 lacs ( Previous Year Rs. 2.64
lacs) on Factory Buildings and Rs. 5.45 lacs (Previous Year Rs. 14.06 lacs)
on Plant & Machineries is capitalized.
12.3 Interest of Rs. NIL /- ( Previous Year Rs. 0.32 lacs) on Plant &
Machineries is capitalised.
14.1 Rental Deposits include Rs. 45.50 lacs (P.Y. Rs. 45.50 lacs) due from
related parties and Rs. 3.50 lacs (P.Y. Rs. 3.50 lacs) due from a Private
Company in which one of the Director is interested (Note 35)
15.1 For mode of valuation for each class of Inventories (Note 2.5)
16.1 *For relevant Accounting Policy (Note 2.8) and for forward
contracts (Note 36).
Mar 31, 2013
1.1 Basis of Preparation:
The financial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting with
Generally Accepted Accounting Principles (GAAP) and Accounting
Standards issued by the Institute of Chartered Accountants of India, as
applicable and relevant provisions of the Companies Act, 1956.
1.2 Use of Estimates:
The preparation of financial statements is in conformity with Generally
Accepted Accounting Principles (GAAP) in India, requires the management
to make estimates and assumptions that affect the reporting amounts of
assets and liabilities and the disclosures of contingent liabilities as
at the date of financial statements and the reporting amounts of
revenue and expenses during the reporting period.
1.3 Depreciation:
Depreciation on Fixed Assets is provided on straight-line method at the
rates prescribed under Schedule XIV to the Companies Act, 1956.
1.4 Fixed Assets:
a) Fixed Assets are stated at cost net of CENVAT/Value Added Tax, less
accumulated depreciation and impairment loss, if any.
b) The foreign currency differences on Long Term Borrowings are
adjusted to the cost of assets.
1.5 Valuation of Inventories:
a) Raw Materials, Work-in-progress and Finished goods are valued at the
lower of cost or realizable value. The cost is determined using FIFO
method.
b) The cost of purchase comprises of the purchase price including
duties and taxes (other than those subsequently recoverable by the
Company from the taxing authorities), freight inward and other
expenditure directly attributable to the acquisition but net of trade
discount, rebates, duties for import under advance licenses and other
similar items.
c) Packing Materials and Fuel are valued at lower of cost or net
realizable value. The cost is determined using FIFO method.
d) Scrap is valued at net realizable value.
e) Consumable Stores and Spares being negligible percentage of Finished
Goods are charged off to the Statement of Profit and Loss in the year
of purchase.
f) The cost of Inventories comprises the cost of purchases, the cost of
conversion and the cost of packing materials in case of Finished Goods.
g) The cost of conversion comprises of Depreciation on Factory
Buildings and Plant & Machineries, Power & Fuel, Factory Management and
Administration Expenses, Repairs & Maintenance and Consumable Stores &
Spares.
1.6 Investments:
Long term investments in unquoted equity shares are stated at cost.
1.7 Sales:
Sales include sales of Finished Goods, Semi Finished Goods and excise
duty but net of sales returns and rate difference.
1.8 Foreign Currency Transactions:
a) Foreign Currency Transactions are recorded at the exchange rate
prevailing as at the date of transaction.
b) Current assets and liabilities in foreign currency at the balance
sheet date are translated with reference to the year end exchange
rates.
c) The premium or discount that arises on entering into forward
exchange contracts for hedging are measured by the difference between
the exchange rate at the date of inception of the forward exchange
contract and the forward rate.
d) Any revenue or expense on account of exchange difference either on
settlement or on translation is recognized in the statement of profit
and loss except related to fixed assets are adjusted to carrying cost
of net assets. The premium or discount on forward contracts entered
into to hedge the foreign currency risks of a firm commitment is
recognized over the life of contract.
e) The Company uses foreign exchange forward contracts to hedge its
exposure to fluctuations in foreign exchange rates. Net forward
contracts liabilities are disclosed in the Balance Sheet.
1.9 Employee Benefits:
a) Short term benefits are recognized as an expense at the undiscounted
amount in the statement of profit & loss of the year in which related
services are rendered.
b) Defined Contribution plan:
Provident Fund deducted from employees together with employer''s
contribution is remitted to Employee''s Provident Fund administered by
the Central Government and employer''s contribution is charged to the
statement of Profit & Loss.
c) Defined Benefit Plan:
Gratuity liability is a defined benefit obligation and is provided for
on the basis of actuarial valuation on Project Unit Credit Method made
at the end of each financial year. The scheme is maintained and
administered by LIC to which the trustees make periodical
contributions.
d) Leave Salary:
The liability towards compensated absence is recognized based on
actuarial valuation carried out using the Projected Unit Credit Method.
1.10 Provision for Current and Deferred Tax:
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income Tax Act, 1961.
Deferred tax resulting from''timing difference''between book and taxable
profit is accounted for using the tax rates and laws that have been
enacted or substantively enacted as on the Balance Sheet date. The
deferred tax asset is recognized and carried forward only to the extent
that there is a reasonable certainty that the asset will be realized in
future.
1.11 Earnings per share:
In determining earnings per share, the Company considers the net profit
after tax and extraordinary items. The number of shares used in
computing basic earnings per share is the weighted average number of
shares outstanding during the year.
1.12 Impairment of Assets:
An asset is treated as impaired when the carrying cost of the assets
exceeds its recoverable value. An impairment loss is charged for when
an asset is identified as impaired.
1.13 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
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to statement of profit and loss.
1.14 Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
Notes on Financial Statements. Contingent Assets are neither recognized
nor disclosed in the financial statements.
1.15 Segment Reporting:
The Company is operating in one segment only i.e. Enamelled Wires and
Strips.
Mar 31, 2012
1.1 Basis of Preparation:
The financial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting with
Generally Accepted Accounting Principles (GAAP) and Accounting
Standards issued by the Institute of Chartered Accountants of India, as
applicable and relevant provisions of the Companies Act, 1956.
1.2 Use of Estimates:
The preparation of financial statements is in conformity with Generally
Accepted Accounting Principles (GAAP) in India, requires the management
to make estimates and assumptions that affect the reporting amounts of
assets and liabilities and the disclosures of contingent liabilities as
at the date of financial statements and the reporting amounts of
revenue and expenses during the reporting period.
1.3 Depreciation:
Depreciation on Fixed Assets is provided on straight-line method at the
rates prescribed under Schedule XIV to the Companies Act, 1956.
1.4 Fixed Assets:
a) Fixed Assets are stated at cost net of CENVAT/Value Added Tax, less
accumulated depreciation and impairment loss, if any.
b) The foreign currency differences on Long Term Borrowings are
adjusted to the cost of assets.
1.5 Valuation of Inventories:
a) Raw Materials, Work-in-progress and Finished goods are valued at the
lower of cost or realizable value. The cost is determined using FIFO
method.
b) The cost of purchase comprises of the purchase price including
duties and taxes (other than those subsequently recoverable by the
Company from the taxing authorities), freight inward and other
expenditure directly attributable to the acquisition but net of trade
discount, rebates and other similar items.
c) Packing Materials and Fuel are valued at lower of cost or net
realizable value. The cost is determined using FIFO method.
d) Scrap is valued at net realizable value.
e) Consumable Stores and Spares being negligible percentage of Finished
Goods are charged off to the Statement of Profit and Loss in the year
of purchase.
f) The cost of Inventories comprises the cost of purchases, the cost of
conversion and the cost of packing materials in case of Finished Goods.
g) The cost of conversion comprises of Depreciation on Factory
Buildings and Plant & Machineries, Power & Fuel, Factory Management and
Administration Expenses, Repairs & Maintenance and Consumable Stores &
Spares.
1.6 Investments:
Long term investments in unquoted equity shares are stated at cost.
1.7 Sales:
Sales include sales of Finished Goods, Semi Finished Goods and excise
duty but net of sales returns and rate difference.
1.8 Foreign Currency Transactions:
a) Foreign Currency Transactions are recorded at the exchange rate
prevailing as at the date of transaction.
b) Current assets and liabilities in foreign currency at the balance
sheet date are translated with reference to the year end exchange
rates.
c) The premium or discount that arises on entering into forward
exchange contracts for hedging are measured by the difference between
the exchange rate at the date of inception of the forward exchange
contract and the forward rate.
d) Any revenue or expense on account of exchange difference either on
settlement or on translation is recognized in the statement of profit
and loss except related to fixed assets are adjusted to carrying cost
of net assets. The premium or discount on forward contracts entered
into to hedge the foreign currency risks of a firm commitment is
recognized over the life of contract.
e) The Company uses foreign exchange forward contracts to hedge its
exposure to fluctuations in foreign exchange rates. Net forward
contracts liabilities are disclosed in the Balance Sheet.
1.9 Employee Benefits:
a) Short term benefits are recognized as an expense at the undiscounted
amount in the statement of profit & loss of the year in which related
services are rendered.
b) Defined Contribution plan:
Provident Fund deducted from employees together with employer's
contribution is remitted to Employee's Provident Fund administered by
the Central Government and employer's contribution is charged to the
Statement of Profit & Loss.
c) Defined Benefit Plan:
Gratuity liability is a defined benefit obligation and is provided for
on the basis of actuarial valuation on Project Unit Credit Method made
at the end of each financial year. The scheme is maintained and
administered by LIC to which the trustees make periodical
contributions.
d) Leave Salary:
The liability towards compensated absence is recognized based on
actuarial valuation carried out using the Projected Unit Credit Method.
1.10 Provision for Current and Deferred Tax:
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income Tax Act, 1961.
Deferred tax resulting from 'timing difference' between book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or substantively enacted as on the Balance Sheet date. The
deferred tax asset is recognized and carried forward only to the extent
that there is a reasonable certainty that the asset will be realized in
future.
1.11 Earnings per share:
In determining earnings per share, the Company considers the net profit
after tax and extraordinary items. The number of shares used in
computing basic earnings per share is the weighted average number of
shares outstanding during the year.
1.12 Impairment of Assets:
An asset is treated as impaired when the carrying cost of the assets
exceeds its recoverable value. An impairment loss is charged for when
an asset is identified as impaired.
1.13 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
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to statement of profit and loss.
1.14 Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
Notes to Financial Statements. Contingent Assets are neither recognized
nor disclosed in the financial statements.
1.15 Segment Reporting:
The Company is operating in one segment only i.e. Enamelled Wires and
Strips.
Mar 31, 2011
I) Basis of Preparation:
The financial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting with
Generally Accepted Accounting Principles (GAAP) and Accounting
Standards issued by Institute of Chartered Accountants of India, as
applicable and relevant provisions of Companies Act, 1956.
ii) Use of Estimation:
The preparation of financial statements is in conformity with Generally
Accepted Accounting Principles (GAAP) in India, requires the management
to make estimation and assumptions that affect the reporting amounts of
assets and liabilities and the disclosure of contingent liabilities on
the date of financial statements.
(iii) Depreciation:
Depreciation on Fixed Assets is provided on straight-line method at the
rates prescribed under Schedule XIV to the Companies Act, 1956.
(iv) Fixed Assets:
Fixed Assets are stated at cost net of CENVAT/Value Added Tax, less
accumulated depreciation and impairment loss, if any.
(v) Valuation of Inventories:
a) Raw materials, Work-in-progress and Finished goods are valued at the
lower of cost or realisable value. The cost is determined using FIFO
method.
b) The cost of purchase comprises of the purchase price including
duties and taxes (other than those subsequently recoverable by the
Company from the taxing authorities), freight inward and other
expenditure directly attributable to the acquisition but net of trade
discount, rebates and other similar items.
c) Packing Materials and Fuel are valued at lower of cost or net
realisable value. The cost is determined using FIFO method.
d) Scrap is valued at net realizable value.
e) Consumable Stores and Spares being negligible percentage of Finished
Goods are charged off to Profit and Loss account in the year of
purchase.
f) The cost of inventories comprises the cost of purchases, the cost of
conversion and the cost of packing materials in case of Finished Goods.
g) The cost of conversion comprises of Depreciation on Factory Building
and Plant & Machinery, Power & Fuel, Factory Management and
Administration Expenses, Repairs & Maintenance and Consumable Stores &
Spares.
(vi) Investments:
Long term investment in unquoted equity shares are stated at cost.
(vii) Sales:
Sales include sales of finished goods, semi finished goods, scrap and
excise duty but net of sales returns and rate difference.
(viii) Foreign Currency Transactions:
a) Foreign Currency Transactions are recorded at the exchange rate
prevailing on the date of transaction.
b) Current assets and liabilities in foreign currency at the balance
sheet date are translated with reference to the year end exchange
rates.
c) The premium or discount that arises on entering into forward
exchange contracts for hedging are measured by the difference between
the exchange rate at the date of inception of the forward exchange
contract and the forward rate.
d) Any income or expense on account of exchange difference either on
settlement or on translation is recognized in the profit and loss
account except related to fixed assets are adjusted to carrying cost of
net assets. The premium or discount on forward contract entered into to
hedge the foreign currency risks of a firm commitment is recognized
over the life of contract.
e) The Company uses foreign exchange forward contracts to hedge its
exposure to fluctuations in foreign exchange rates. Net forward
contracts liabilities are disclosed in Balance Sheet.
(ix) Employee Benefits:
a) Short term benefits are recognized as an expense at the undiscounted
amount in profit & loss account of the year in which related services
are rendered.
b) Defined Contribution plan:
Provident Fund deducted from employees together with employer's
contribution is remitted to Employee's Provident Fund administered by
the Central Government and employer's contribution is charged to Profit
& Loss account.
c) Defined Benefit Plan:
Gratuity liability is a defined benefit obligation and is provided for
on the basis of actuarial valuation on Project Unit Credit Method made
at the end of each financial year. The scheme is maintained and
administered by LIC to which the trustees make periodica]
contributions.
d) Leave Salary:
The liability towards compensated absence is recognized based on
actuarial valuation carried out using the Projected Unit Credit Method.
(x) Provision for Current and Deferred Tax:
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income Tax Act, 1961.
Deferred tax resulting from 'timing difference' between book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or substantively enacted as on the Balance Sheet date.The
deferred tax asset is recognized and carried forward only to the extent
that there is a reasonable certainty that the asset will be realized in
future.
(xi) Earnings per share:
In determining earnings per share, the Company considers the net profit
after tax, extraordinary items and prior period items. The number of
shares used in computing basic earning per share is the weighted
average number of shares outstanding during the year.
(xii) Impairment of Assets:
An asset is treated as impaired when the carrying cost of the assets
exceeds its recoverable value. An impairment loss is charged for when
an asset is identified as impaired.
(xiii) 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
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to revenue.
(xiv) Provision, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
Mar 31, 2010
I) Basis of Preparation
The financial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting with
Generally Accepted Accounting Principles (GAAP) and Accounting
Standards issued by Institute of 1
Chartered Accountants of India, as applicable and relevant provision of
Companies Act, 1956.
ii) Use of Estimation
The preparation of financial statements is in conformity with Generally
Accepted Accounting Principles (GAAP) in India, requires the management
to make estimation and assumptions that affect the reporting amounts of
assets and liabilities and the disclosure of contingent liabilities on
the date of financial statements.
(iii) Depreciation
Depreciation on Fixed Assets is provided on straight-line method at the
rates prescribed under Schedule XIV to the Companies Act, 1956.
(iv) Fixed Assets
Fixed Assets are stated at cost net of CENVAT/Value Added Tax, less
accumulated depreciation and impairment loss, if any.
(v) Valuation of Inventories
a) Raw materials, Work-in-progress and Finished goods are valued at the
lower of cost or realisable value. The cost is determined using FIFO
method.
b) The cost of purchase comprises of the purchase price including
duties and taxes (other than those subsequently recoverable by the
Company from the taxing authorities), freight inward and other
expenditure directly attributable to the acquisition but net of trade
discount, rebates and other similar items.
c) Packing Materials and Fuel are valued at lower of cost or net
realisable value. The cost is determined using FIFO method.
d) Scrap is valued at net realizable value.
e) Consumable Stores and Spares being negligible percentage of Finished
Goods are charged off to Profit and Loss account in the year of
purchase.
f) The cost of inventories comprises the cost of purchases, the cost of
conversion and the cost of packing materials in case of Finished Goods.
g) The cost of conversion comprises of Depreciation on Factory Building
and Plant & Machinery, Power & Fuel, Factory Management and
Administration expenses, Repairs & Maintenance and Consumable Stores &
Spares
(vi) Investments
Long term investment in unquoted equity shares are stated at cost.
(vii) Sales
Sales include sales of finished goods, semi finished goods, scrap and
excise duty but net of sales returns and rate difference.
(viii) Foreign Currency Transactions
a) Foreign Currency Transactions are recorded at the exchange rate
prevailing on the date of transaction
b) Current assets and liabilities in foreign currency at the balance
sheet date are translated with reference to the year end exchange
rates.
c) The premium or discount that arise on entering into a forward
exchange contracts for hedging are measured by the difference between
the exchange rate at the date of inception of the forward exchange
contract and the forward rate.
d) Any income or expense on account of exchange difference either on
settlement or on translation is recognized in the profit and loss
account. The premium or discount on forward contract entered into to
hedge the foreign currency risks of a firm commitment is recognized
over the life of contract.
e) The Company uses foreign exchange forward contracts to hedge its
exposure to fluctuations in foreign exchange rates. Net forward
contracts liabilities are disclosed in Balance Sheet.
(ix) Employee Benefits
a) Short term benefits are recognized as an expense at the undiscounted
amount in profit & loss account of the year in which related services
are rendered.
b) Defined Contribution plan
Provident Fund deducted from employees together with employers
contribution is remitted to Employees Provident Fund administered by
the Central Government, and employers contribution is charged to
Profit & Loss account.
c) Defined Benefit Plan
Gratuity liability is a defined benefit obligation and is provided for
on the basis of actuarial valuation on Project Unit Credit Method made
at the end of each financial year. The scheme is maintained and
administered by LIC to which the trustees make periodical
contributions.
d) Leave Salary:
The liability towards compensated absence is recognized based on
actuarial valuation carried out using the Projected Unit Credit Method.
(x) Provision for Current and Deferred Tax
Provision for current tax is made after taking into consideration
benefits admissible under the provisions of the Income Tax Act, 1961.
Deferred tax resulting from timing difference between book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or substantively enacted as on the Balance Sheet date. The
deferred tax asset is recognized and carried forward only to the extent
that there is a reasonable certainty that the asset will be realized in
future.
(xi) Earnings per share
In determining earnings per share, the Company considers the net profit
after tax, extraordinary items and prior period items. The number of
shares used in computing basic earning per share is the weighted
average number of shares outstanding during the year.
(xii) Impairment of Assets:
An asset is treated as impaired when the carrying cost of the assets
exceeds its recoverable value. An impairment bss is charged for when an
asset is identified as impaired.
(xiii) 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
substantial period of time to get ready for its ntended use. All other
borrowing costs are charged to revenue.
(xiv) Provision, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article
More Information on Ram Ratna Wires Ltd.
-
Ram Ratna Wires Ltd. Tools
- Bulk Deals
-
Ram Ratna Wires Ltd. Company Details
- Company Profile
- Company History
- Management Team
- Capital Structure
- Product Mix
- Banker/Auditor/Registrar
-
Company History
- Bonus
- BSE Price History
- NSE Price History
-
Ram Ratna Wires Ltd. Key Financial Ratios
- Ratios
-
Ram Ratna Wires Ltd. Results
- Quarterly Results
- Half Yearly Results
- Nine Months Results
- Annual Results
-
Ram Ratna Wires Ltd. Financial Data
- Audited Results
- Cash Flow
- Balance Sheet
-
Ram Ratna Wires Ltd. Reports
- Accounting Policies
- Auditors Report
- Directors Report
- Notes To Account
-
Ram Ratna Wires Ltd. Corporate Announcements
- Book Closure
- Dividend
- Board Meetings
-
Stocks To Buy Today, Dec 19: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Friday -
Stocks To Buy Today, Dec 18: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Thursday -
Stocks To Buy Today, Dec 17: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Wednesday -
Stocks To Buy Today, Dec 16: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Tuesday -
India Stock Market Weekly Review: Nifty and Sensex Fall as Caution Spreads -
Stocks To Buy Today, Dec 15: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Monday
-
Stocks To Buy Today, Dec 12: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Friday -
Market Outlook 2026: Kotak Securities Sees Nifty 50 at 30,000; THESE 4 Sectors Lead Rally, Gold To Stay Strong -
Stocks To Buy Today, Dec 10: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Wednesday -
D-Street Bleeds For 2nd Day! Sensex Slumps 678 Pts; Nifty Cracks 25,800; Why Stock Market Is Falling Today? -
Stocks To Buy Today, Dec 9: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Tuesday -
Stocks To Buy Today, Dec 8: Top 4 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Monday -
Stock Market Alert! Major Pre-Open Session Change From Dec 8: Full Timings, Rules & All You Need To Know -
Bank Nifty Surges: RBI’s 25 bps Rate Cut Triggers Strong Upside in Major Banking Stocks -
Closing Bell: Sensex Ends 158 pts Higher, Nifty Climbs Above 26,000; Hero MotoCorp, HAL Up 2% Each -
Stocks To Buy Today, Dec 4: Top 2 Picks By Riyank Arora of Mehta Equities For Profitable Trading On Thursday
-
Block for 8 hours
-
Block for 12 hours
-
Block for 24 hours
-
Don't block
Sign in with Google- Male
- Female
- Others
- Under 18
- 18 to 25
- 26 to 35
- 36 to 45
- 45 to 55
- 55+