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Accounting Policies of Roto Pumps Ltd. Company
Mar 31, 2025
i) SECURITIES PREMIUM
Securities Premium represents premium received on equity shares issued, which can be utilised only in accordance with the provisions of
the companies Act,2013 (''''the Act'''') for specified purposes.
ii) GENERAL RESERVE
The general reserve is used from time to time to transfer profits from retained earnings for appropriations purposes. As the general reserve
is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the
general reserve will not be reclassified subsequently to profit or loss.
iii) OTHER COMREHENSIVE INCOME
These are actuarial gains/ losses on employee benefit obligations.
17.1 Terms of Repayment:
a) Term Loans from others consists of vehicle loans repayable in 36 monthly equal installments.
b) Unsecured Loan facility is avalied in United Kingdom which consists of providing economic benefit to our business including , but
not limited to working capital or investing in our business, first repayable will be made on the date 13 months from the draw down
loan dated 16.07.2020 after that in 59 months equal installments.
20.1 Securities
DBS Bank & BANK OF BARODA
a) Hypothecation on the stocks and book debts of the company on Pari Passu basis with Bank of India and DBS bank
b) Equitable Mortgage of Immovable Factory Building, located at Roto House , 13 NSEZ, Noida on Pari Passu basis with Bank of India.
c) Equitable Mortgage of Immovable Factory land and building located at B-14, Phase-II, Extension, Noida on Pari Passu basis with Bank
of India.
d) Equitable Mortgage of Immovable Factory land and building located at B-15, Phase-II, Extension, Noida on Pari Passu basis with Bank
of India.
Secured Current Maturities of long term borrowings consists of vehicle loans which are securedby hypothecation of Motor Vehicles purchased
under the loan.
As per terms of banks, the company has submitted monthly stock statements and Quarterly Information Statement(QIS) which tallies with books
of accounts.
Mar 31, 2024
COMPANY OVERVIEW
Roto Pumps Limited referred to as "RPL" or "the Company" was incorporated on 31st July 1975. RPL is an enterprise listed on the BSE Ltd. and National Stock Exchange of India Ltd. The principal source of Company''s revenue is from the sale of pumps, spares and retrofit parts. The Company has a rich heritage of designing and manufacturing superior products and technologies. Company offers comprehensive range of Progressive Cavity Pumps (PCP), Twin Screws Pumps and added other PD pumps in the product basket such as AODD and Gear pumps. The products cater to a large spectrum of industries covering various industrial and municipal applications. Aligned with its vision, the Company is transforming into a fluid equipment solution provider.
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation: The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 ("Act") read with Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and the other relevant provisions of the Acts and Rules thereunder.
The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements. All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle, paragraph 66 and 69 of Ind AS 1 and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or noncurrent classification of assets and liabilities.
The Financial Statements have been prepared under historical cost convention basis, except for certain assets and liabilities measured at fair value.
The Company''s presentation and functional currency is Indian Rupees (INR). All figures appearing in the financial statements are rounded off to the INR Lakhs.
Authorization of Standalone Financial Statements:
The Standalone financial statements were authorized for issue in accordance with a resolution of the Board of Directors in its meeting held on 30th May, 2024.
1.1. Key Accounting Estimates and Judgements
The preparation of Company''s financial statements requires management to make judgement, estimates and assumptions that affect the reported amounts of revenue, expenses, assets, liabilities and the accompanying disclosures along with Contingent Liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information.
I n particular, information about significant areas of estimates and judgements in applying accounting policies that have the most significant areas of estimates and judgements in applying accounting policies that have the most significant effect on the financial statements are as below:
⢠Financial Instruments;
⢠Estimates of useful lives and residual value of Property, Plant and Equipment and Intangible Assets;
⢠Valuation of Inventories;
⢠Measurement of Defined Benefit Obligations and actuarial assumptions;
⢠Measurement and likelihood of occurrence of provisions and Contingencies
⢠Evaluation of recoverability of Deferred tax
assets; and
⢠Measurement of Lease Liabilities and Right to
Use Asset.
Revisions to accounting estimates are recognized prospectively in the Statement of Profit and Loss in the period in which the estimates are revised and in any future periods in which the estimates are revised and in any future periods affected.
1.2. Property, Plant and Equipment
1.2.1. Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses, if any.
1.2.2. The initial cost of an asset comprises its purchase price (including non-refundable import duties and taxes), any costs directly attributable to bringing the asset at the location and condition necessary for it to be capable of operating in the manner intended by the management, the initial estimate of any decommissioning obligation, if any, and borrowing cost for qualifying assets (i.e. assets that necessarily take a substantial period of time to get ready for their intended use).
1.2.3. Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company over the period.
1.2.4. Spare parts which meet the definition of Property, plant and equipment are capitalized as Property, plant and equipment in case the unit value of spare part is above the threshold limit. In other cases, the spare parts are inventoried on procurement and charged to Statement of Profit and Loss on consumption.
1.2.5. An item of Property, plant and equipment and any significant part initially recognized separately as part of Property, plant and equipment is de-recognized upon disposal; or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the assets is included in the Statement of Profit and Loss.
1.2.6. The residual value and useful lives of Property, plant and equipment are reviewed at each financial year end and changes, if any, are accounted in line with the revisions to accounting estimates.
1.2.7. The Company has elected to use exemption available under Ind AS 101 to continue with the carrying value for all its Property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per previous GAAP and use that as its deemed cost as at the date of transition (1st April, 2016).
Depreciation on Property, plant and equipment are provided on the Written down value, over the estimated useful lives of the assets (after retaining the estimated residual value of up-to 5%). These useful lives are determined are in line with the useful lives as prescribed in the Schedule III of the Act.
1.3.1. Components of the main assets that are significant in value and have different useful lives as compared to the main asset are depreciated over their estimated useful life. Useful life of such components has been assessed based on historical experience and internal technical assessment.
1.3.2. Depreciation on Spare parts specific to an item of Property, plant and equipment is based on life of the related Property, plant and equipment. In other cases, the spare parts are depreciated over their estimated useful life based on the technical assessment.
1.3.3. Items of Property, plant and equipment costing not more than the threshold limit are depreciated at 100% in the year of acquisition.
1.3.4. Depreciation is charged on additions/ deletions on prorata basis from the date of addition/deletion.
1.3.5. Trade Mark, Technical Design and Drawings and Patents has been amortized over the period of 10 years.
1.4.1. Intangible Assets are carried at cost net of accumulated amortization and accumulated impairment losses, if any. Expenditure on internally generated intangibles, excluding development costs, are not capitalized and is reflected in the Statement of Profit and Loss in the period in which the expenditure is incurred. Development costs are capitalized if, and only if, technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Company has an intention and ability to complete and use or sell the asset and the costs can be measured reliably.
1.4.2. Intangible assets with indefinite useful lives, such as right of way which is perpetual and absolute in nature, are not amortized, but are tested for impairment annually. The useful lives are reviewed at each period to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. If not, the change in useful life from indefinite to finite is made on a prospective basis. The impairment losses on intangible assets with indefinite useful life are recognized in the Statement of Profit and Loss.
1.4.3. Expenditure incurred for creating/ acquiring other intangible assets above the threshold limit from which future economic benefits will flow over a period of time, is amortized over the estimated useful life of the asset or ten years, whichever is lower, on a straight line basis, from the time the intangible asset starts providing the economic benefit. In other cases, the expenditure is reflected in the Statement of Profit and Loss in the year in which the expenditure is incurred. The amortization period and the amortization method for an intangible asset with finite life are reviewed at each year end. The amortization expense on intangible assets with finite useful lives and impairment losses in case there is an
indication that the intangible asset may be impaired, are recognized in the Statement of Profit and Loss.
1.5.1. I nvestment Property is property (land or a building - or part of a building - or both) held either to earn rental income or for capital appreciation or both, held for currently undetermined future use, but not for sale in the ordinary course of business, use in production or supply of goods or services or for administrative purposes. Investment Properties are stated at cost net of accumulated depreciation and accumulated impairment losses, if any.
1.5.2. Any gain or loss on disposal of investment property calculated as the difference between the net proceeds from disposal and carrying amount of the Investment Property is recognized in Statement of Profit and Loss.
1.5.3. The residual value and the useful life of an asset is reviewed at least at each financial year -end and, if expectations differ from previous estimates, the change (s) is accounted with Ind AS 8-Accomting Policies, Changes in Accounting Estimates and Errors. & Ind AS 16- Property, Plant & Equipment.
1.6.1. Borrowing cost consists of interest and other costs incurred in connection with the borrowing of funds.
1.6.2. Borrowing costs that are attributable to the acquisition or construction of qualifying assets (i.e. an asset that necessarily takes a substantial period of time to get ready for its intended use) are capitalized as a part of the cost of such assets. All other borrowings costs are charged to the Statement of Profit and Loss.
1.6.3. Investment income earned on the temporary
investment of funds of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
1.7. Non-current assets held for sale
1.7.1. Non-current assets classified as held for sale if their
carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such assets.
1.7.2. Non-current assets classified as held for sale are measured at lower of carrying amount and fair value less costs to sell.
1.7.3. Property, plant and equipment and intangible assets classified as held for sale are not depreciated or amortized.
The Company has adopted Ind AS 116 effective from 1 April 2019 using modified retrospective approach. For the purpose of preparation of Standalone Financial Information, management has evaluated the impact of change in accounting policies required due to adoption of lnd AS 116 for year ended 31 March 2020.
1.8.1. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified assets, the Company assesses whether: (i) the contact involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
1.8.2. As a lessee, the Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
1.8.3. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of use asset is periodically reduced by impairment losses, if any, and adjusted for certain re measurements of the lease liability.
1.8.4. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.
1.8.5. Lease payments included in the measurement of the lease liability comprise the fixed payments, including in substance fixed payments.
1.8.6. The lease liability is measured at amortized cost using the effective interest method. The Company has used number of practical expedients when applying Ind AS 116: - Short-term leases, leases of low-value assets and single discount rate.
1.8.7. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight line basis over the lease term. The Company applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date.
1.8.8. The Company has Land Lease agreements with government authorities, company has recognized lease liability and Right to Use assets.
1.9. Impairment of Non-financial assets
1.9.1. Non-financial assets other than inventories, deferred tax assets and non-current assets classified as held for sale are reviewed at each Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. The recoverable amount is higher of the assets or Cash-Generating Units (CGUs) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.
1.9.2. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
1.10. Inventories
1.10.1. Inventories are stated at cost or net realizable value, whichever is lower. Cost of inventories comprises of expenditure incurred in the normal course of business in bringing inventories to their present location including appropriate overheads apportioned on a reasonable and consistent basis and are determined on the following basis:
⢠Raw materials, work in progress, stores, tools and other materials are determined on First in First out basis.
⢠Finished goods are determined by considering the standard conversion cost.
1.10.2. Customs duties on raw materials/ finished goods lying in bonded warehouse are provided for at the applicable rates except where liability to pay duty is transferred to the consignee.
1.10.3. Raw materials held for use in the production of finished goods are not written down below cost except in cases where raw material prices have declined and it is estimated that the cost of the finished goods will exceed their net realizable value.
1.10.4. Obsolete, slow moving, surplus and defective stocks are identified at the time of physical verification of stocks and valued at the net estimated realization cost.
1.11. Revenue Recognition
1.11.1. Sale of Goods
Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of goods have been passed to the buyer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, revenue and the associated costs can be estimated reliably and it is probable that economic benefits associated with the transaction will flow to the Company.
Revenue from sale of goods is measured at fair value of the consideration received or receivable (after including fair value allocations related to multiple deliverable and/or linked arrangements), net of returns, taxes or duties collected on behalf of the government and applicable trade discounts or rebates.
Where the Company acts as an agent on behalf of a third party, the associated income is recognized on net basis.
1.11.2. Sale of Services
I ncome from services rendered is recognized based on agreements/ arrangements with the customers as the service is performed in proportion to the stage of completion of the transaction at the reporting date and the amount of revenue can be measured reliably.
1.11.3. Multiple Element Contracts
For revenue arrangements having more than one deliverable, at the inception of the arrangement, the Company evaluates all deliverables in the arrangement to determine whether they represent separately identifiable components of the following two conditions are met:
⢠The deliverable has value to the customer on a standalone basis and
⢠There is evidence of the fair value of the item.
The total arrangement consideration is allocated to each separate component based on its relative fair value.
1.11.4. Interest and Dividend Income
Interest income is recognized using Effective Interest Rate (EIR) method.
Dividend is recognized when right to receive the payment is established, it is probable that the economic benefits associated with the dividend will flow to the entity and the amount of dividend can be measured reliably.
1.11.5. Income from sale of scrap is accounted on billing basis and customer takes title.
1.11.6. The benefit under the Remission of Duties or Taxes on Export Products (RoDTEP) as per the Export and Import Policy in respect of exports made under the said Schemes is accounted on an accrual basis and is included under the head "Other Income" as ''Export Incentives''.
1.12. Classification of Income/ Expense
1.12.1. Income/ Expenditure (net) in aggregate pertaining to prior year (s) above the threshold limit are corrected retrospectively in the first set of financial statements approved for issue after their discovery by restating the comparative amount and/ or restating the opening Balance sheet for the earliest prior period presented.
1.12.2. Prepaid expenses are charged to revenue over the period.
1.12.3. Deposits places with Government agencies/ local authorities which are perpetual in nature are charged to revenue in the year of payment.
1.13. Employee Benefits
1.13.1. Short-term employee benefits
Short-term employee benefits are recognized as an expense at an undiscounted premium in the Statement of Profit and Loss of the year ended in which related services are rendered.
1.13.2. Post-Employment Benefits Defined Contribution Plans:
Obligations for contributions to defined contribution plans such as pension are recognized as an expense in the Statement of Profit and Loss as the related service is provided. Prepaid contributions are recognized as an asset to the extent that cash fund in future payments is available.
Defined Benefit Plans:
The Company''s net obligation in respect of defined benefit plans such as gratuity, other post-employment benefits etc., is calculated separately for each plan by estimating the amount of future benefit that the employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligation is performed at each reporting period end by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of the economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan.
The current service cost of the defined benefit plan, recognized in the Statement of Profit and Loss as part of employee benefit expense, reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes, curtailments and settlements. Past service costs are recognized immediately in the Statement of Profit and Loss. The net interest is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This net interest is included in employee benefit expense in the Statement of Profit and Loss.
Re-measurements which comprise of actuarial gains and losses, the return on plan assets (excluding amounts included in the net interest on net defined benefit liability (asset)) and the effect of the asset ceiling (if any, excluding amounts included in the net
interest on the net defined benefit liability (asset)), are recognized in other comprehensive income.
1.13.3. Other long-term employee benefits
Liability towards other long term employee benefits - leave encashment are determined on actuarial valuation by qualified actuary by using Projected Unit Credit Method.
The current service cost of other long terms employee benefits, recognized in the Statement of Profit and Loss as part of employee benefit expense, reflects the increase in the obligation resulting from employee service in the current year, benefit changes, curtailments and settlements. Past service costs are recognized immediately in the Statement of Profit and Loss. The interest cost is calculated by applying the discount rate to the balance of the obligation. This cost is included in employee benefit expense in the Statement of Profit and Loss. Re-measurements are recognized in the Statement of Profit and Loss.
1.13.4. Termination benefits
Expenditures on account of Voluntary Retirement Scheme are charged to Statement of Profit and Loss.
1.14. Foreign Currency Transactions
1.14.1. Monetary Items
Transactions in foreign currencies are initially recorded at their respective exchange rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at exchange rates prevailing on the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in the Statement of Profit and Loss either as profit or loss foreign currency transaction and translation.
1.14.2. Non-monetary items
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
1.14.3. Foreign Branch Operation''s Translations
The activities of foreign branches are an integral part of operations of the Company and hence the foreign branch financial statements are translated in accordance with accounting standard.
Income and Expenditure items by applying to the foreign currency amount, the exchange rate used is an average rate for calendar month and used for all transaction occurring during that calendar month.
Property, plant and equipment are recorded at the exchange rate prevailing on the date of the transaction.
Depreciation on property, plant and equipment in Indian rupees, which are reported using the exchange rate at the date of transaction.
Inventories related to stocks transfer from reporting enterprise are shown at the cost of reporting enterprises plus expenses incurred to bring the material at the shelf of foreign branch''s warehouse and local bought out inventories are translated at the exchange rate prevailing at year end.
Other current assets and liabilities are converted at the exchange rate prevailing at the year end.
The exchange difference on translation of Foreign Branch financial statements are recognized in the Statement of Profit and Loss.
1.15. Investment in Subsidiaries, Joint Ventures and Associates
I nvestments in equity shares of Subsidiaries, Joint Ventures and Associates are recorded at cost and reviewed for impairment at each reporting date.
1.16. Government Grants
1.16.1. Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
1.16.2. When the grant relates to an expense item, it is recognized in Statement of Profit and Loss on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
1.16.3. Government grants relating for Property, plant and equipment are presented as deferred income and are credited to the Statement of Profit and Loss on a systematic and rational basis over the useful life of the asset.
1.17. Provisions, Contingent Liabilities and Commitments
1.17.1. Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation.
1.17.2. The expenses relating to a provision is presented in the Statement of Profit and Loss net of reimbursements, if any.
1.17.3. I f the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in provision due to the passage of time is recognized as a finance cost.
1.17.4. Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Company, or present obligations where it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured with sufficient reliability.
1.17.5. Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote.
1.18. Fair Value Measurement
1.18.1. The Company measures certain financial instruments at fair value at each reporting date.
1.18.2. Certain accounting policies and disclosures require the measurement of fair values, for both financial and nonfinancial assets and liabilities.
1.18.3. 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 in the principal or, in its absence, the most advantageous market to which the Company has access at that date. The fair value of the liability also reflects its non-performance risk.
1.18.4. The best estimate of the fair value of a financial instrument on initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received. If the Company determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently
that difference is recognized in Statement of Profit and Loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.
1.18.5. While measuring the fair value of an asset or liability, the Company uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:
⢠Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
⢠Level 2 - Inputs other than quoted prices included in Level 1 that are observable for assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
⢠Level 3 - inputs for the assets or liability that are not based on observable market data (unobservable inputs)
1.18.6. When quoted prices in active market for an instrument are available, the Company measures the fair value of the instrument using that price. A market is regarded as active if transactions for the asset and liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
1.18.7. If there is no quoted price in an active market for an instrument is available, the Company measures the fair value of the instrument using that price. A market is regarded as active if transactions for the asset and liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
1.18.8. The Company regularly reviews significant
unobservable inputs and valuation adjustments. If
the third party information, such as broker quotes or pricing services, is used to measure fair values, then the Company assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.
1.19. Financial Assets
1.19.1. Initial Recognition and measurement
Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets are initially recognized at fair value when the Company becomes a party to the contractually
provisions of the instrument. All financial assets other than those measured subsequently at fair value through profit and loss, are recognized initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset.
1.19.2. Subsequent measurement
Subsequent measurement is determined with reference to the classification of the respective financial assets. Based on the business model for managing the financial assets and the contractual cash flow characteristics of the financial assets, the Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit and loss.
Debt instruments at amortized cost
A ''debt instrument'' is measured at the amortized cost if both the following conditions are met:
The asset held within business model whose objective is:
- To hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium or fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the Statement of Profit and Loss. The losses arising from impairment are recognized in the Statement of Profit and Loss.
Debt instruments at Fair value through Other Comprehensive Income (FVOCI)
A ''debt instrument'' is measured at the fair value through other comprehensive income if both the following conditions are met:
The asset is held within business model whose objective is achieved by both
- Collecting contractual cash flows and selling financial assets and
- Contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
After initial measurement, these assets are subsequently measured at fair value. Interest income under effective interest method, foreign exchange gains and losses and impairment losses are recognized in the Statement of Profit and Loss. Other net gains and losses are recognized in other comprehensive income.
Debt instruments at Fair value through Profit and Loss (FVTPL)
Fair Value through Profit or Loss is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization at amortized cost or as FVOCI, is classified as FVTPL.
After initial measurement, any fair value changes including any interest income, foreign exchange gain and losses, impairment losses and other net gains and losses are recognized in the Statement of Profit and Loss.
Equity Investments
All equity investments within the scope of Ind AS 109 are measured at fair value. Such equity instruments which are held for trading are classified as FVTPL. For all other such equity instruments, the Company decides to classify the same either as FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
For equity instruments classified as FVOCI, all fair value changes on the instrument, excluding dividends, are recognized in Other Comprehensive Income (OCI). Dividends on such equity instruments are recognized in the Statement of Profit or Loss.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.
1.19.3. De-recognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily de-recognized (i.e. removed from the Company''s Balance Sheet) when
The rights to receive cash flows from the asset have expired, or
The Company has transferred its rights to receive cash flows from asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either:
- The Company has transferred substantially all the risks and rewards of the asset, or
- The Company has neither transferred not retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
On de-recognition, any gains or losses on all debt instruments (other than debt instruments measured at FVOCI) and equity instruments (measured at FVTPL) are recognized in the Statement of Profit and Loss. Gains and losses in respect of debt instruments are measured at FVOCI and that are accumulated in OCI are reclassified to profit or loss on de-recognition. Gains or losses on equity instruments measured at FVOCI that are recognized and accumulated in OCI are not reclassified to profit or loss on de-recognition.
1.19.4. Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss ("ECL") model for measurement and recognition of impairment loss on the financial assets measured at amortized cost and debt instruments measured at FVOCI.
Loss allowances on trade receivables are measured following the ''simplified approach'' at an amount equal to the lifetime ECL at each reporting date. In respect of other financial assets such as debt securities and bank balances, the loss allowance is measured at 12 month ECL only if there is no significant deterioration in the credit risk since initial recognition of the asset or asset is determined to have a low credit risk at the reporting date.
1.20. Financial Liabilities
1.20.1. Initial recognition and measurement
Financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument.
Financial liability is initially measured at fair value less, for an item not at fair value through profit and loss, transaction costs that are directly attributable to its acquisition or issue.
1.20.2. Subsequent measurement
Subsequent measurement is determined with reference to the classification of the respective financial liabilities.
Financial liabilities at Fair value through Profit and Loss (FVTPL)
A financial liability is classified as at Fair Value through Profit or Loss (FVTPL) if it is classified as held-for-trading or is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and changes therein, including any interest expense, are recognized in Statement of Profit and Loss.
Financial liabilities at Amortized Cost
After initial recognition, financial liabilities other than those which are classified as FVTPL are subsequently measured at amortized cost using the effective interest rate ("EIR") method.
Amortized cost is calculated by taking into account any discount or premium and fees or costs that are an integral part of the EIR. The amortization done using the EIR method is included as finance costs in the Statement of Profit and Loss.
1.20.3. De-recognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss.
1.21. Financial Guarantees
Financial guarantee contracts issued by the Company are those contracts that will require a 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 the debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the fair value initially recognized less cumulative amortization.
1.22. Derivative financial instruments
The Company uses derivative financial instruments to manage the exposure on account of fluctuation in interest rate and foreign exchange rates. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently measured at fair value with the changes being recognized in the Statement of Profit and Loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
1.23. Embedded Derivatives
If the hybrid contract contains a host that is a financial asset within the scope of Ind AS 109, the classification requirements contained in Ind AS 109 are applied to the entire hybrid contract. Derivatives embedded in all other host contracts, including financial liabilities are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value through profit and loss. These embedded derivatives are measured at fair value with changes in fair value recognized in Statement of Profit and Loss, unless designated as effective hedging instruments. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows.
1.24. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
1.25. Taxes on Income
1.25.1. Current Tax
Income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to complete the amount are those that are enacted or substantively enacted, by the end of the reporting period.
Current tax items are recognized in correlation to the underlying transaction either in the Statement of Profit and Loss, other comprehensive income or directly in equity.
1.25.2. Deferred Tax
Deferred tax is provided using the Balance Sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
Deferred Tax items are recognized in correlation to the underlying transaction either in the Statement of Profit and Loss, other comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
1.26. Earnings per Share
1.26.1. Basic earnings per share are calculated by dividing the profit or loss for the period attributable to equity shareholders (after deducting preference dividends, if any, and attributable taxes) by the weighted average number of equity shares outstanding during the period.
1.26.2. For the purpose of calculating diluted earnings per share, the profit or loss for the period attributable to equity shareholders and weighted average number of shares outstanding during the period is adjusted for the effect of all dilutive potential equity shares.
1.27. Classification of Assets and Liabilities as Current and Non-current
All assets and liabilities are classified as current or noncurrent as per the Company''s normal operating cycle (determined at 12 months) and other criteria set out in Schedule III of the Act.
1.28. Cash and cash equivalents
Cash and cash equivalents in the Balance Sheet include cash at bank, cash, cheque on hand, Remittance in Transit, Term Deposit, which are subject to an insignificant risk of changes in value.
For the purpose of Statement of Cash Flows, Cash and cash equivalents include cash at bank, cash, cheque on hand, Remittance in Transit and Bank balances other than cash and cash equivalents include Earmarked balances with bank and Term deposits.
1.29. Cash Flows
Cash flows are reported using the indirect method, where by net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.
Mar 31, 2023
COMPANY OVERVIEW
Roto Pumps Limited referred to as "RPL" or "the Company" was incorporated on 31st July 1975. RPL is an enterprise listed on the BSE Ltd. and NSE Ltd. The principal source of Company''s revenue is from the sale of pumps, spares and retrofit parts. The Company has a rich heritage of designing and manufacturing superior products and technologies. Company offers comprehensive range of Progressive Cavity Pumps (PCP), Twin Screws Pumps and added other PD pumps in the product basket such as AODD and Gear pumps. The products cater to a large spectrum of industries covering various industrial and municipal applications. Aligned with its vision, the Company is transforming into a fluid equipment solution provider.
1. Statement of Significant Accounting Policies
Basis of Preparation: The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 ("Act") read with Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and the other relevant provisions of the Acts and Rules thereunder.
The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements. All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle, paragraph 66 and 69 of Ind AS 1 and other criteria as set out in the Division II of Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.
The Financial Statements have been prepared under historical cost convention basis, except for certain assets and liabilities measured at fair value.
The Company''s presentation and functional currency is Indian Rupees (INR). All figures appearing in the financial statements are rounded off to the INR Lakhs.
Authorization of Standalone Financial Statements: The Standalone financial statements were authorized for issue in accordance with a resolution of the Board of Directors in its meeting held on 23rd May, 2023.
1.1. Key Accounting Estimates and Judgements
The preparation of Company''s financial statements requires management to make judgement, estimates and assumptions that affect the reported amounts of revenue, expenses, assets, liabilities and the
accompanying disclosures along with Contingent Liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information.
I n particular, information about significant areas of estimates and judgements in applying accounting policies that have the most significant areas of estimates and judgements in applying accounting policies that have the most significant effect on the financial statements are as below:
⢠Financial Instruments;
⢠Estimates of useful lives and residual value of Property, Plant and Equipment and Intangible Assets;
⢠Valuation of Inventories;
⢠Measurement of Defined Benefit Obligations and
actuarial assumptions;
⢠Measurement and likelihood of occurrence of provisions and Contingencies
⢠Evaluation of recoverability of Deferred tax assets; and
⢠Measurement of Lease Liabilities and Right to
Use Asset.
Revisions to accounting estimates are recognized prospectively in the Statement of Profit and Loss in the period in which the estimates are revised and in any future periods in which the estimates are revised and in any future periods affected.
1.2. Property, Plant and Equipment
1.2.1. Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses, if any.
1.2.2. The initial cost of an asset comprises its purchase price (including non-refundable import duties and taxes), any costs directly attributable to bringing the asset at the location and condition necessary for it to be capable of operating in the manner intended by the management, the initial estimate of any decommissioning obligation, if any, and borrowing cost for qualifying assets (i.e. assets that necessarily take a substantial period of time to get ready for their intended use).
1.2.3.Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company over the period.
1.2.4.Spare parts which meet the definition of Property, plant and equipment are capitalized as Property, plant and equipment in case the unit value of spare part is above the threshold limit. In other cases, the spare parts are inventoried on procurement and charged to Statement of Profit and Loss on consumption.
1.2.5. An item of Property, plant and equipment and any significant part initially recognized separately as part of Property, plant and equipment is derecognized upon disposal; or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the assets is included in the Statement of Profit and Loss.
1.2.6. The residual value and useful lives of Property, plant and equipment are reviewed at each financial year end and changes, if any, are accounted in line with the revisions to accounting estimates.
1.2.7. The Company has elected to use exemption available under Ind AS 101 to continue with the carrying value for all its Property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per previous GAAP and use that as its deemed cost as at the date of transition (1st April, 2016).
Depreciation on Property, plant and equipment are provided on the Written down value, over the estimated useful lives of the assets (after retaining the estimated residual value of up-to 5%). These useful lives are determined are in line with the useful lives as prescribed in the Schedule III of the Act.
1.3.1. Components of the main assets that are significant in value and have different useful lives as compared to the main asset are depreciated over their estimated useful life. Useful life of such components has been assessed based on historical experience and internal technical assessment.
1.3.2. Depreciation on Spare parts specific to an item of Property, plant and equipment is based on life of the related Property, plant and equipment.
In other cases, the spare parts are depreciated over their estimated useful life based on the technical assessment.
1.3.3.Items of Property, plant and equipment costing not more than the threshold limit are depreciated at 100% in the year of acquisition.
1.3.4. Depreciation is charged on additions/ deletions on pro-rata basis from the date of addition/ deletion.
1.3.5. Trade Mark, Technical Design and Drawings and Patents has been amortized over the period of 10 years.
1.4.1 .Intangible Assets are carried at cost net of accumulated amortization and accumulated impairment losses, if any. Expenditure on internally generated intangibles, excluding development costs, are not capitalized and is reflected in the Statement of Profit and Loss in the period in which the expenditure is incurred. Development costs are capitalized if, and only if, technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Company has an intention and ability to complete and use or sell the asset and the costs can be measured reliably.
1.4.2.Intangible assets with indefinite useful lives, such as right of way which is perpetual and absolute in nature, are not amortized, but are tested for impairment annually. The useful lives are reviewed at each period to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. If not, the change in useful life from indefinite to finite is made on a prospective basis. The impairment losses on intangible assets with indefinite useful life are recognized in the Statement of Profit and Loss.
1.4.3.Expenditure incurred for creating/ acquiring other intangible assets above the threshold limit from which future economic benefits will flow over a period of time, is amortized over the estimated useful life of the asset or ten years, whichever is lower, on a straight line basis, from the time the intangible asset starts providing the economic benefit. In other cases, the expenditure is reflected in the Statement of Profit and Loss in the year in which the expenditure is incurred. The
amortization period and the amortization method for an intangible asset with finite life are reviewed at each year end. The amortization expense on intangible assets with finite useful lives and impairment losses in case there is an indication that the intangible asset may be impaired, are recognized in the Statement of Profit and Loss.
1.5.1.Investment Property is property (land or a building - or part of a building - or both) held either to earn rental income or for capital appreciation or both, held for currently undetermined future use, but not for sale in the ordinary course of business, use in production or supply of goods or services or for administrative purposes. Investment Properties are stated at cost net of accumulated depreciation and accumulated impairment losses, if any.
1.5.2. Any gain or loss on disposal of investment property calculated as the difference between the net proceeds from disposal and carrying amount of the Investment Property is recognized in Statement of Profit and Loss.
1.5.3. The residual value and the useful life of an asset is reviewed at least at each financial year -end and, if expectations differ from previous estimates, the change (s) is accounted with Ind AS 8-Accomting Policies, Changes in Accounting Estimates and Errors. & Ind AS 16- Property, Plant & Equipment.
1.6.1. Borrowing cost consists of interest and other costs incurred in connection with the borrowing of funds.
1.6.2. Borrowing costs that are attributable to the acquisition or construction of qualifying assets (i.e. an asset that necessarily takes a substantial period of time to get ready for its intended use) are capitalized as a part of the cost of such assets. All other borrowings costs are charged to the Statement of Profit and Loss.
1.6.3. I nvestment income earned on the temporary investment of funds of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
1.7. Non-current assets held for sale
1.7.1.Non-current assets classified as held for sale if their carrying amounts will be recovered through a sale
transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such assets.
1.7.2. Non-current assets classified as held for sale are measured at lower of carrying amount and fair value less costs to sell.
1.7.3. Property, plant and equipment and intangible assets classified as held for sale are not depreciated or amortized.
The Company has adopted Ind AS 116 effective from 1 April 2019 using modified retrospective approach. For the purpose of preparation of Standalone Financial Information, management has evaluated the impact of change in accounting policies required due to adoption of lnd AS 116 for year ended 31 March 2020.
1.8.1. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified assets, the Company assesses whether: (i) the contact involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
1.8.2. As a lessee, the Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
1.8.3. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of use asset is periodically reduced by impairment losses, if any, and adjusted for certain re measurements of the lease liability.
1.8.4. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.
1.8.5. Lease payments included in the measurement of the lease liability comprise the fixed payments, including in substance fixed payments.
1.8.6. The lease liability is measured at amortized cost using the effective interest method. The Company has used number of practical expedients when applying Ind AS 116: - Short-term leases, leases of low-value assets and single discount rate.
1.8.7. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight line basis over the lease term. The Company applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date.
1.8.8. The Company has Land Lease agreements with government authorities, during the year company has recognized lease liability and Right to Use assets.
1.9. Impairment of Non-financial assets
1.9.1.Non-financial assets other than inventories, deferred tax assets and non-current assets classified as held for sale are reviewed at each Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. The recoverable amount is higher of the assets or Cash-Generating Units (CGUs) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset,
unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.
1.9.2.When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
1.10.1. Inventories are stated at cost or net realizable value, whichever is lower. Cost of inventories comprises of expenditure incurred in the normal course of business in bringing inventories to their present location including appropriate overheads apportioned on a reasonable and consistent basis and are determined on the following basis:
⢠Raw materials, work in progress, stores, tools and other materials are determined on First in First out basis.
⢠Finished goods are determined by considering the standard conversion cost.
1.10.2. Customs duties on raw materials/ finished goods lying in bonded warehouse are provided for at the applicable rates except where liability to pay duty is transferred to the consignee.
1.10.3. Raw materials held for use in the production of finished goods are not written down below cost except in cases where raw material prices have declined and it is estimated that the cost of the finished goods will exceed their net realizable value.
1.10.4. Obsolete, slow moving, surplus and defective stocks are identified at the time of physical verification of stocks and valued at the net estimated realization cost.
1.11. Revenue Recognition1.11.1. Sale of Goods
Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of goods have been passed to the buyer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, revenue and the associated costs can be estimated reliably and it is probable
that economic benefits associated with the transaction will flow to the Company.
Revenue from sale of goods is measured at fair value of the consideration received or receivable (after including fair value allocations related to multiple deliverable and/or linked arrangements), net of returns, taxes or duties collected on behalf of the government and applicable trade discounts or rebates.
Where the Company acts as an agent on behalf of a third party, the associated income is recognized on net basis.
I ncome from services rendered is recognized based on agreements/ arrangements with the customers as the service is performed in proportion to the stage of completion of the transaction at the reporting date and the amount of revenue can be measured reliably.
1.11.3. Multiple Element Contracts
For revenue arrangements having more than one deliverable, at the inception of the arrangement, the Company evaluates all deliverables in the arrangement to determine whether they represent separately identifiable components of the following two conditions are met:
⢠The deliverable has value to the customer on a standalone basis and
⢠There is evidence of the fair value of the item.
The total arrangement consideration is allocated to each separate component based on its relative fair value.
1.11.4. Interest and Dividend Income
I nterest income is recognized using Effective Interest Rate (EIR) method.
Dividend is recognized when right to receive the payment is established, it is probable that the economic benefits associated with the dividend will flow to the entity and the amount of dividend can be measured reliably.
1.11.5. Income from sale of scrap is accounted on billing basis and customer takes title.
1.11.6. The benefit under the remission of duties or taxes on Export Prodcuts (RoDTEP) as per the Export and Import Policy in respect of exports made under the said Schemes is accounted on a accrual basis and is included under the head "Other Income" as ''Export Incentives''.
1.12. Classification of Income/ Expense
1.12.1. Income/ Expenditure (net) in aggregate pertaining to prior year (s) above the threshold limit are corrected retrospectively in the first set of financial statements approved for issue after their discovery by restating the comparative amount and/ or restating the opening Balance sheet for the earliest prior period presented.
1.12.2. Prepaid expenses are charged to revenue over the period.
1.12.3. Deposits places with Government agencies/ local authorities which are perpetual in nature are charged to revenue in the year of payment.
1.13. Employee Benefits1.13.1. Short-term employee benefits
Short-term employee benefits are recognized as an expense at an undiscounted premium in the Statement of Profit and Loss of the year ended in which related services are rendered.
1.13.2. Post-Employment Benefits Defined Contribution Plans:
Obligations for contributions to defined contribution plans such as pension are recognized as an expense in the Statement of Profit and Loss as the related service is provided. Prepaid contributions are recognized as an asset to the extent that cash fund in future payments is available.
The Company''s net obligation in respect of defined benefit plans such as gratuity, other post-employment benefits etc., is calculated separately for each plan by estimating the amount of future benefit that the employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligation is performed at each reporting period end
by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of the economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan.
The current service cost of the defined benefit plan, recognized in the Statement of Profit and Loss as part of employee benefit expense, reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes, curtailments and settlements. Past service costs are recognized immediately in the Statement of Profit and Loss. The net interest is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This net interest is included in employee benefit expense in the Statement of Profit and Loss.
Re-measurements which comprise of actuarial gains and losses, the return on plan assets (excluding amounts included in the net interest on net defined benefit liability (asset)) and the effect of the asset ceiling (if any, excluding amounts included in the net interest on the net defined benefit liability (asset)), are recognized in other comprehensive income.
1.13.3. Other long-term employee benefits
Liability towards other long term employee benefits - leave encashment are determined on actuarial valuation by qualified actuary by using Projected Unit Credit Method.
The current service cost of other long terms employee benefits, recognized in the Statement of Profit and Loss as part of employee benefit expense, reflects the increase in the obligation resulting from employee service in the current year, benefit changes, curtailments and settlements. Past service costs are recognized immediately in the Statement of Profit and Loss. The interest cost is calculated by applying the discount rate to the balance of the obligation. This cost is included in employee benefit expense in the Statement of Profit and Loss.
Re-measurements are recognized in the Statement of Profit and Loss.
Expenditures on account of Voluntary Retirement Scheme are charged to Statement of Profit and Loss.
1.14. Foreign Currency Transactions1.14.1. Monetary Items
Transactions in foreign currencies are initially recorded at their respective exchange rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at exchange rates prevailing on the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in the Statement of Profit and Loss either as profit or loss foreign currency transaction and translation.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
1.14.3. Foreign Branch Operation''s Translations
The activities of foreign branches are an integral part of operations of the Company and hence the foreign branch financial statements are translated in accordance with accounting standard.
Income and Expenditure items by applying to the foreign currency amount, the exchange rate used is an average rate for calendar month and used for all transaction occurring during that calendar month.
Property, plant and equipment are recorded at the exchange
rate prevailing on the date of the transaction.
Depreciation on property, plant and equipment in Indian rupees, which are reported using the exchange rate at the date of transaction.
Inventories related to stocks transfer from reporting enterprise are shown at the cost of reporting enterprises plus expenses incurred to bring the material at the shelf of foreign branch''s warehouse and local bought out inventories are translated at the exchange rate prevailing at year end.
Other current assets and liabilities are converted at the exchange rate prevailing at the year end.
The exchange difference on translation of Foreign Branch financial statements are recognized in the Statement of Profit and Loss.
1.15. Investment in Subsidiaries, Joint Ventures and Associates
Investments in equity shares of Subsidiaries, Joint Ventures and Associates are recorded at cost and reviewed for impairment at each reporting date.
1.16.1. Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
1.16.2. When the grant relates to an expense item, it is recognized in Statement of Profit and Loss on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
1.16.3. Government grants relating for Property, plant and equipment are presented as deferred income and are credited to the Statement of Profit and Loss on a systematic and rational basis over the useful life of the asset.
1.17. Provisions, Contingent Liabilities andCommitments
1.17.1. Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
1.17.2. The expenses relating to a provision is presented in the Statement of Profit and Loss net of reimbursements, if any.
1.17.3. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in provision due to the passage of time is recognized as a finance cost.
1.17.4. Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Company, or present obligations where it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured with sufficient reliability.
1.17.5. Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote.
1.18.1. The Company measures certain financial instruments at fair value at each reporting date.
1.18.2. Certain accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
1.18.3. 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 in the principal or, in its absence, the most advantageous market to which the Company has access at that date. The fair value of the liability also reflects its non-performance risk.
1.18.4. The best estimate of the fair value of a financial instrument on initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received. If the Company determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently that difference is recognized in Statement of Profit and Loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.
1.18.5. While measuring the fair value of an asset or liability, the Company uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:
⢠Level 1 - Quoted prices
(unadjusted) in active markets for identical assets or liabilities.
⢠Level 2 - Inputs other than quoted prices included in Level 1 that are observable for assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
⢠Level 3 - inputs for the assets or liability that are not based
on observable market data (unobservable inputs)
1.18.6. When quoted prices in active market for an instrument are available, the Company measures the fair value of the instrument using that price. A market is regarded as active if transactions for the asset and liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
1.18.7. If there is no quoted price in an active market for an instrument is available, the Company measures the fair value of the instrument using that price. A market is regarded as active if transactions for the asset and liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
1.18.8. The Company regularly reviews significant unobservable inputs and valuation adjustments. If the third party information, such as broker quotes or pricing services, is used to measure fair values, then the Company assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.
1.19. Financial Assets1.19.1. Initial Recognition and measurement
Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets are initially recognized at fair value when the Company becomes a party to the contractually provisions of the instrument. All financial assets other than those measured subsequently at fair value through profit and loss, are recognized initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset.
1.19.2. Subsequent measurement
Subsequent measurement is determined with reference to the classification of the respective financial assets. Based on the business model for managing the financial assets and the contractual cash flow characteristics of the financial assets, the Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit and loss.
Debt instruments at amortized cost
A ''debt instrument'' is measured at the amortized cost if both the following conditions are met:
The asset held within business model whose objective is:
- To hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium or fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the Statement of Profit and Loss. The losses arising from impairment are recognized in the Statement of Profit and Loss.
Debt instruments at Fair value through Other Comprehensive Income (FVOCI)
A ''debt instrument'' is measured at the fair value through other comprehensive income if both the following conditions are met:
The asset is held within business model whose objective is achieved by both
- Collecting contractual cash flows and selling financial assets and
- Contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
After initial measurement, these assets are subsequently measured at fair value. Interest income under effective interest method, foreign exchange gains and losses and impairment losses are recognized in the Statement of Profit and Loss. Other net gains and losses are recognized in other comprehensive income.
Debt instruments at Fair value through Profit and Loss (FVTPL)
Fair Value through Profit or Loss is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization at amortized cost or as FVOCI, is classified as FVTPL.
After initial measurement, any fair value changes including any interest income, foreign exchange gain and losses, impairment losses and other net gains and losses are recognized in the Statement of Profit and Loss.
Equity Investments
All equity investments within the scope of Ind AS 109 are measured at fair value. Such equity instruments which are held for trading are classified as FVTPL. For all other such equity instruments, the Company decides to classify the same either as FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
For equity instruments classified as FVOCI, all fair value changes on the instrument, excluding dividends, are recognized in Other Comprehensive Income (OCI). Dividends on such equity instruments are recognized in the Statement of Profit or Loss.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily de-recognized (i.e. removed from the Company''s Balance Sheet) when
The rights to receive cash flows from the asset have expired, or
The Company has transferred its rights to receive cash flows from asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either:
- The Company has transferred substantially all the risks and rewards of the asset, or
- The Company has neither transferred not retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
On de-recognition, any gains or losses on all debt instruments (other than debt instruments measured at FVOCI) and equity instruments (measured at FVTPL) are recognized in the Statement of Profit and Loss. Gains and losses in respect of debt instruments are measured at FVOCI and that are accumulated in OCI are reclassified to profit or loss on de-recognition. Gains or losses on equity instruments measured at FVOCI that are recognized and accumulated in OCI are not reclassified to profit or loss on de-recognition.
1.19.4. Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss ("ECL") model for measurement and recognition of impairment loss on the financial assets measured at amortized cost and debt instruments measured at FVOCI.
Loss allowances on trade receivables are measured following the ''simplified approach'' at an amount equal to the lifetime ECL at each reporting date. In respect of other financial assets such as debt securities and bank balances, the loss allowance is measured at 12 month ECL only if there is no significant deterioration in the credit risk since initial recognition of the asset or asset is determined to have a low credit risk at the reporting date.
1.20. Financial Liabilities1.20.1. Initial recognition and measurement
Financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument.
Financial liability is initially measured at fair value less, for an item not at fair value through profit and loss, transaction costs that are directly attributable to its acquisition or issue.
1.20.2. Subsequent measurement
Subsequent measurement is determined with reference to the classification of the respective financial liabilities.
Financial liabilities at Fair value through Profit and Loss (FVTPL)
A financial liability is classified as at Fair Value through Profit or Loss (FVTPL) if it is classified as held-for-trading or is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and changes therein, including any interest expense, are recognized in Statement of Profit and Loss.
Financial liabilities at Amortized Cost
After initial recognition, financial liabilities other than those which are classified as FVTPL are subsequently measured at amortized cost using the effective interest rate ("EIR") method.
Amortized cost is calculated by taking into account any discount or premium and fees or costs that are an integral part of the EIR. The amortization done using the EIR method is included as finance costs in the Statement of Profit and Loss.
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss.
Financial guarantee contracts issued by the Company are those contracts that will require a 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 the debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the fair value initially recognized less cumulative amortization.
1.22. Derivative financial instruments
The Company uses derivative financial instruments to manage the exposure on account of fluctuation in interest rate and foreign exchange rates. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently measured at fair value with the changes being recognized in the Statement of Profit and Loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
I f the hybrid contract contains a host that is a financial asset within the scope of Ind AS 109, the classification requirements contained in Ind AS 109 are applied to the entire hybrid contract. Derivatives embedded in all other host contracts, including financial liabilities are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value through profit and loss. These embedded derivatives are measured at fair value with changes in fair value recognized in Statement of Profit and Loss, unless designated as effective hedging instruments. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows.
1.24. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
1.25. Taxes on Income1.25.1. Current Tax
I ncome tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to complete the amount are those that are enacted or substantively enacted, by the end of the reporting period.
Current tax items are recognized in correlation to the underlying transaction either in the Statement of Profit and Loss, other comprehensive income or directly in equity.
Deferred tax is provided using the Balance Sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
Deferred Tax items are recognized in correlation to the underlying transaction either in the Statement of Profit and Loss, other comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
1.26.1. Basic earnings per share are calculated by dividing the profit or loss for the period attributable to equity shareholders (after deducting preference dividends, if any, and attributable taxes) by the weighted average number of equity shares outstanding during the period.
1.26.2. For the purpose of calculating diluted earnings per share, the profit or loss for the period attributable to equity shareholders and weighted average number of shares outstanding during the period is adjusted for the effect of all dilutive potential equity shares.
1.27. Classification of Assets and Liabilities as Current and Non-current
All assets and liabilities are classified as current or non-current as per the Company''s normal operating cycle (determined at 12 months) and other criteria set out in Schedule III of the Act.
1.28. Cash and cash equivalents
Cash and cash equivalents in the Balance Sheet include cash at bank, cash, cheque on hand, Remittance in Transit, Term Deposit, which are subject to an insignificant risk of changes in value.
For the purpose of Statement of Cash Flows, Cash and cash equivalents include cash at bank, cash, cheque on hand, Remittance in Transit and Bank balances other than cash and cash equivalents include Earmarked balances with bank and Term deposits.
Cash flows are reported using the indirect method, where by net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.
Mar 31, 2018
1. Statement of Significant Accounting Policies
Basis of Preparation: The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (âActâ) read with Companies (Indian Accounting Standards) Rules, 2015; and the other relevant provisions of the Acts and Rules thereunder.
The Financial Statements have been prepared under historical cost convention basis, except for certain assets and liabilities measured at fair value.
The Company has adopted all the Ind AS and the adoption was carried out in accordance with Ind AS 101 âFirst Time Adoption of Indian Accounting Standardsâ. The transition was carried out from Generally Accepted Accounting Principles in India (Indian GAAP) as prescribed under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, which was the âPrevious GAAPâ.
The Companyâs presentation and functional currency is Indian Rupees (Rs). All figures appearing in the financial statements are shown in absolute figures.
Authorization of Financial Statements: The financial statements were authorized for issue in accordance with a resolution of the Board of Directors in its meeting held on 30th May 2018.
1.1. Use of Judgement and Estimates
The preparation of Companyâs financial statements requires management to make judgement, estimates and assumptions that affect the reported amounts of revenue, expenses, assets, liabilities and the accompanying disclosures along with Contingent Liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require material adjustments to the carrying amount of assets or liabilities affected in future periods. The Company continually evaluates these estimates and assumptions based on the most recently available information.
In particular, information about significant areas of estimates and judgements in applying accounting policies that have the most significant areas of estimates and judgements in applying accounting policies that have the most significant effect on the financial statements are as below:
- Financial Instruments;
- Estimates of useful lives and residual value of Property, Plant and Equipment and Intangible Assets;
- Valuation of Inventories;
- Measurement of Defined Benefit Obligations and actuarial assumptions;
- Provisions;
- Evaluation of recoverability of Deferred tax assets; and
- Contingencies
Revisions to accounting estimates are recognized prospectively in the Statement of Profit and Loss in the period in which the estimates are revised and in any future periods in which the estimates are revised and in any future periods affected.
1.2 Property, Plant and Equipment
1.2.1. Property, plant and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses, if any.
1.2.2. The initial cost of an asset comprises its purchase price (including non-refundable import duties and taxes), any costs directly attributable to bringing the asset at the location and condition necessary for it to be capable of operating in the manner intended by the management, the initial estimate of any decommissioning obligation, if any, and borrowing cost for qualifying assets (i.e. assets that necessarily take a substantial period of time to get ready for their intended use).
1.2.3. Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company over the period.
1.2.4. Spare parts which meet the definition of Property, plant and equipment are capitalized as Property, plant and equipment in case the unit value of spare part is above the threshold limit. In other cases, the spare parts are inventoried on procurement and charged to Statement of Profit and Loss on consumption.
1.2.5. An item of Property, plant and equipment and any significant part initially recognized separately as part of Property, plant and equipment is de-recognized upon disposal; or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the assets is included in the Statement of Profit and Loss.
1.2.6. The residual value and useful lives of Property, plant and equipment are reviewed at each financial year end and changes, if any, are accounted line with revisions to accounting estimates.
1.2.7. The Company has elected to use exemption available under Ind AS 101 to continue with the carrying value for all its Property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per previous GAAP and use that as its deemed cost as at the date of transition (1st April, 2016).
1.3. Depreciation
Depreciation on Property, plant and equipment are provided on the Written Down Value basis over the estimated useful lives of the assets (after retaining the estimated residual value of up-to 5%). These useful lives are determined are in line with the useful lives as prescribed in the Schedule III of the Act.
1.3.1. Components of the main assets that are significant in value and have different useful lives as compared to the main asset are depreciated over their estimated useful life. Useful life of such components has been assessed based on historical experience and internal technical assessment.
1.3.2. Depreciation on Spare parts specific to an item of Property, plant and equipment is based on life of the related Property, plant and equipment. In other cases, the spare parts are depreciated over their estimated useful life based on the technical assessment.
1.3.3. Items of Property, plant and equipment costing not more than the threshold limit are depreciated at 100% in the year of acquisition.
1.3.4. Depreciation is charged on additions / deletions on pro-rata basis from the date of additions / deletions.
1.4. Intangible Assets
1.4.1. Intangible Assets are carried at cost net of accumulated amortization and accumulated impairment losses, if any. Expenditure on internally generated intangibles, excluding development costs, are not capitalized and is reflected in the Statement of Profit and Loss in the period in which the expenditure is incurred. Development costs are capitalized if, and only if, technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Company has an intention and ability to complete and use or sell the asset and the costs can be measured reliably.
1.4.2. Intangible assets with indefinite useful lives, such as right of way which is perpetual and absolute in nature, are not amortized, but are tested for impairment annually. The useful lives are reviewed at each period to determine whether events and circumstances continue to support an indefinite useful life assessment for that asset. If not, the change in useful life from indefinite to finite is made on a prospective basis. The impairment losses on intangible assets with indefinite useful life are recognized in the Statement of Profit and Loss.
1.4.3. Expenditure incurred for creating/ acquiring other intangible assets above the threshold limit from which future economic benefits will flow over a period of time, is amortized over the estimated useful life of the asset or ten years, whichever is lower, on a straight line basis, from the time the intangible asset starts providing the economic benefit. In other cases, the expenditure is reflected in the Statement of Profit and Loss in the year in which the expenditure is incurred. The amortization period and the amortization method for an intangible asset with finite life are reviewed at each year end. The amortization expense on intangible assets with finite useful lives and impairment losses in case there is an indication that the intangible asset may be impaired, are recognized in the Statement of Profit and Loss.
1.4.4. The Company has elected to use the exemption available under Ind AS 101 to continue the carrying value for all its intangible assets as recognized in the financial statements as at the date of transition to Ind AS, measured as per previous GAAP and use that as its deemed cost as at the date of transition (1st April, 2016).
1.5. Investment Property
1.5.1. Investment Property is property (land or a building - or part of a building - or both) held either to earn rental income or for capital appreciation or both, held for current views and undetermined feature use but not for sale in the ordinary course of business, use in production or supply of goods or services or for administrative purposes. Investment Properties are stated at cost net of accumulated depreciation and accumulated impairment losses, if any.
1.5.2. Any gain or loss on disposal of investment property calculated as the difference between the net proceeds from disposal and carrying amount of the Investment Property is recognized in Statement of Profit and Loss.
1.5.3. On transition to Ind AS i.e. 1st April, 2016, the Company has re-classified certain items from Property, plant and equipment to investment property. For the same, Company has elected to use the exemption available under Ind AS 101 to continue carrying value for such assets as recognized in the financial statements as at the date of transition to Ind AS, measured as per previous GAAP and use that as its deemed cost as at date of transition (1st April, 2016).
1.6. Borrowing Costs
1.6.1. Borrowing cost consists of interest and other costs incurred in connection with the borrowing of funds. Borrowing costs also include exchange differences to the extent regarded as an adjustment to the borrowing costs.
1.6.2. Borrowing costs that are attributable to the acquisition or construction of qualifying assets (i.e. an asset that necessarily takes a substantial period of time to get ready for its intended use) are capitalized as a part of the cost of such assets. All other borrowings costs are charged to the Statement of Profit and Loss.
1.6.3. Investment income earned on the temporary investment of funds of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
1.7. Non-current assets held for sale
1.7.1. Non-current assets classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sale of such assets.
1.7.2. Non-current assets classified as held for sale are measured at lower of carrying amount and fair value less costs to sell.
1.7.3. Property, plant and equipment and intangible assets classified as held for sale are not depreciated or amortized.
1.8. Leases
1.8.1. Finance Lease
Lease Agreements are classified as finance lease, if substantially all the risks and rewards irrespective of whether title is transferred.
Land lease agreements classified as finance lease, are amortized over the period of the lease.
1.8.2. Operating Lease
Lease agreements not classified as finance lease are considered as operating lease.
Payments made under operating lease are recognized in Statement of Profit and Loss with reference to lease terms and other relevant considerations. Lease incentives received/ lease premium paid (if any) are recognized as an integral part of the total lease expense, over the term of the lease. Payments made under Operating Leases are generally recognized in Statement of Profit and Loss on a straight line basis over the term of the lease, unless such payments are structured to increase in line with expected general inflation.
1.8.3. Determining whether the arrangement contains a lease
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease. At inception or on reassessment of an arrangement that contains a lease, the Company separates payments and other consideration required by the arrangement into those for the lease and those other elements on the basis of their relative fair values. In case of a finance lease, if the company concludes that it is impracticable to separate the payments reliably, then an asset and a liability are recognized at an equal to the fair value of the underlying assets; subsequently, the liability is reduced as payments are made and an imputed finance cost on the liability is recognized using the Companyâs incremental borrowing rate.
1.9. Impairment of Non-financial assets
1.9.1. Non-financial assets other than inventories, deferred tax assets and non-current assets classified as held for sale are reviewed at each Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. The recoverable amount is higher of the assets or Cash-Generating Units (CGUs) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.
1.9.2. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
1.10. Inventories
1.10.1. Inventories are stated at cost or net realizable value, whichever is lower. Cost of inventories comprises of expenditure incurred in the normal course of business in bringing inventories to their present location including appropriate overheads apportioned on a reasonable and consistent basis and are determined on the following basis:
- Raw materials, work in progress, stores, tools and other materials are determined on First in First out basis.
- Finished goods are determined by considering the standard conversion cost.
1.10.2. Customs duties on raw materials/ finished goods lying in bonded warehouse are provided for at the applicable rates except where liability to pay duty is transferred to the consignee.
1.10.3. Excise duty till 30th June, 2017, on finished stocks lying at manufacturing locations is provided for at the assessable value applicable at each of the locations based on end use.
1.10.4. Raw materials held for use in the production of finished goods are not written down below cost except in cases where raw material prices have declined and it is estimated that the cost of the finished goods will exceed their net realizable value.
1.10.5. Obsolete, slow moving, surplus and defective stocks are identified at the time of physical verification of stocks and where necessary, provision is made for such stocks.
1.11. Revenue Recognition
1.11.1. Sale of Goods
Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of goods have been passed to the buyer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, revenue and the associated costs can be estimated reliably and it is probable that economic benefits associated with the transaction will flow to the Company.
Revenue from sale of goods includes excise duty till 30th June, 2017 and is measured at fair value of the consideration received or receivable (after including fair value allocations related to multiple deliverable and/or linked arrangements), net of returns, taxes or duties collected on behalf of the government and applicable trade discounts or rebates.
Where the Company acts as an agent on behalf of a third party, the associated income is recognized on net basis.
1.11.2. Sale of Services
Income from services rendered is recognized based on agreements/ arrangements with the customers as the service is performed in proportion to the stage of completion of the transaction at the reporting date and the amount of revenue can be measured reliably.
1.11.3. Multiple Element Contracts
For revenue arrangements having more than one deliverable, at the inception of the arrangement, the Company evaluates all deliverables in the arrangement to determine whether they represent separately identifiable components of the following two conditions are met:
- The deliverable has value to the customer on a standalone basis and
- There is evidence of the fair value of the item. The total arrangement consideration is allocated to each separate component based on its relative fair value.
1.11.4. Interest and Dividend Income
Interest income is recognized using Effective Interest Rate (EIR) method.
Dividend is recognized when right to receive the payment is established, it is probable that the economic benefits associated with the dividend will flow to the entity and the amount of dividend can be measured reliably.
1.11.5. Income from sale of scrap is accounted on dilling basis and customer takes title.
1.12. Classification of Income/ Expense
1.12.1. Income/ Expenditure (net) in aggregate pertaining to prior year (s) above the threshold limit are corrected retrospectively in the first set of financial statements approved for issue after their discovery by restating the comparative amount and / or restating the opening Balance sheet for the earliest prior period presented.
1.12.2. Prepaid expenses up-to threshold limit in each case, are charged to revenue over the period.
1.12.3. Deposits places with Government agencies / local authorities which are perpetual in nature are charged to revenue in the year of payment.
1.13. Employee Benefits
1.13.1. Short-term employee benefits
Short-term employee benefits are recognized as an expense at an undiscounted premium in the Statement of Profit and Loss of the year ended in which related services are rendered.
1.13.2. Post-Employment Benefits Defined Contribution Plans:
Obligations for contributions to defined contribution plans such as pension are recognized as an expense in the Statement of Profit and Loss as the related service is provided. Prepaid contributions are recognized as an asset to the extent that cash fund in future payments is available.
Defined Benefit Plans:
The Companyâs net obligation in respect of defined benefit plans such as gratuity, other post-employment benefits etc., is calculated separately for each plan by estimating the amount of future benefit that the employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligation is performed at each reporting period end by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of the economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan.
The current service cost of the defined benefit plan, recognized in the Statement of Profit and Loss as part of employee benefit expense, reflects the increase in the defined benefit obligation resulting from employee service in the current year, benefit changes, curtailments and settlements. Past service costs are recognized immediately in the Statement of Profit and Loss. The net interest is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This net interest is included in employee benefit expense in the Statement of Profit and Loss.
Re-measurements which comprise of actuarial gains and losses, the return on plan assets (excluding amounts included in the net interest on net defined benefit liability (asset) and the effect of the asset ceiling (if any, excluding amounts included in the net interest on the net defined benefit liability (asset), are recognized in other comprehensive income.
1.13.3. Other long-term employee benefits
Liability towards other long term employee benefits
- leave encashment and long service awards etc., are determined on actuarial valuation by qualified actuary by using Projected Unit Credit Method.
The current service cost of other long terms employee benefits, recognized in the Statement of Profit and Loss as part of employee benefit expense, reflects the increase in the obligation resulting from employee service in the current year, benefit changes, curtailments and settlements. Past service costs are recognized immediately in the Statement of Profit and Loss. The interest cost is calculated by applying the discount rate to the balance of the obligation. This cost is included in employee benefit expense in the Statement of Profit and Loss. Re-measurements are recognized in the Statement of Profit and Loss.
1.13.4. Termination benefits
Expenditures on account of Voluntary Retirement Scheme are charged to Statement of Profit and Loss.
1.14. Foreign Currency Transactions
1.14.1. Monetary Items
Transactions in foreign currencies are initially recorded at their respective exchange rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at exchange rates prevailing on the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in the Statement of Profit and Loss either as profit or loss foreign currency transaction and translation.
The Company has elected to continue the policy adopted under previous GAAP for accounting the foreign exchange differences arising on settlement or translation of long-term foreign currency monetaryitems outstanding as on 31st March, 2018
1.14.2. Non-monetary items
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
1.14.3. Foreign Branch Operationâs Translations
The activities of foreign branches are an integral part of operations of the Company and hence the foreign branch financial statements are translated in accordance with accounting standard.
Income and Expenditure items by applying to the foreign currency amount, the exchange rate at the date of transaction. The rate used is an average rate for calendar month and used for all transaction occurring during that calendar month.
Property, plant and equipment are recorded at the exchange rate prevailing on the date of the transaction.
Depreciation on property, plant and equipment in Indian rupees, which are reported using the exchange rate at the date of transaction.
Inventories related to stocks transfer from reporting enterprise are shown at the cost of reporting enterprises plus expenses incurred to bring the material at the shelf of foreign branchâs warehouse and local bought out inventories are translated at the exchange rate prevailing at year end.
Other current assets and liabilities are converted at the exchange rate prevailing at the year end.
The exchange difference on translation of Foreign Branch financial statements are recognized in the Statement of Profit and Loss.
1.15. Investment in Subsidiaries, Joint Ventures and Associates
Investments in equity shares of Subsidiaries, Joint Ventures and Associates are recorded at cost and reviewed for impairment at each reporting date.
1.16. Government Grants
1.16.1. Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
1.16.2. When the grant relates to an expense item, it is recognized in Statement of Profit and Loss on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
1.16.3. Government grants relating for Property, plant and equipment are presented as deferred income and are credited to the Statement of Profit and Loss on a systematic and rational basis over the useful life of the asset.
1.17. Provisions, Contingent Liabilities and Commitments
1.17.1 Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
1.17.2 The expenses relating to a provision is presented in theStatementofProfitandLossnetofreimbursements, if any.
1.17.3 If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in provision due to the passage of time is recognized as a finance cost.
1.17.4 Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Company, or present obligations where it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured with sufficient reliability.
1.17.5 Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of economic resources is considered remote.
1.18. Fair Value Measurement
1.18.1 The Company measures certain financial instruments at fair value at each reporting date.
1.18.2. Certain accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
1.18.3. 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 themeasurement date in the principal or, in its absence, the most advantageous market to which the Company has access at that date. The fair value of the liability also reflects its non-performance risk.
1.18.4. The best estimate of the fair value of a financial instrument on initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received. If the Company determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently that difference is recognized in Statement of Profit and Loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.
1.18.5. While measuring the fair value of an asset or liability, the Company uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:
- Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2 - Inputs other than quoted prices included in Level 1 that are observable for assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
- Level 3 - inputs for the assets or liability that are not based on observable market data (unobservable inputs)
1.18.6. When quoted prices in active market for an instrument are available, the Company measures the fair value of the instrument using that price. A market is regarded as active if transactions for the asset and liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
1.18.7. If there is no quoted price in an active market for an instrument is available, the Company measures the fair value of the instrument using that price. A market is regarded as active if transactions for the asset and liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
1.18.8. The Company regularly reviews significant unobservable inputs and valuation adjustments. If the third party information, such as broker quotes or pricing services, is used to measure fair values, then the Company assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.
1.19. Financial Assets
1.19.1. Initial Recognition and measurement
Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets are initially recognized at fair value when the Company becomes a party to the contractually provisions of the instrument. All financial assets other than those measured subsequently at fair value through profit and loss, are recognized initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset.
1.19.2. Subsequent measurement
Subsequent measurement is determined with reference to the classification of the respective financial assets. Based on the business model for managing the financial assets and the contractual cash flow characteristics of the financial assets, the Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit and loss.
Debt instruments at amortized cost
A âdebt instrumentâ is measured at the amortized cost if both the following conditions are met:
- The asset held within business model whose objective is:
- To hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium or fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the Statement of Profit and Loss. The losses arising from impairment are recognized in the Statement of Profit and Loss.
Debt instruments at Fair value through Other Comprehensive Income (FVOCI)
A âdebt instrumentâ is measured at the fair value through other comprehensive income if both the following conditions are met:
The asset is held within business model whose objective is achieved by both
- Collecting contractual cash flows and selling financial assets and
- Contractual terms of the asset give rise on specified dates to cash flows that are SPPI on the principal amount outstanding.
After initial measurement, these assets are subsequently measured at fair value. Interest income under effective interest method, foreign exchange gains and losses and impairment losses are recognized in the Statement of Profit and Loss. Other net gains and losses are recognized in other comprehensive income.
Debt instruments at Fair value through Profit and Loss (FVTPL)
Fair Value through Profit or Loss is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization at amortized cost or as FVOCI, is classified as FVTPL
After initial measurement, any fair value changes including any interest income, foreign exchange gain and losses, impairment losses and other net gains and losses are recognized in the Statement of Profit and Loss.
Equity Investments
All equity investments within the scope of Ind AS 109 are measured at fair value. Such equity instruments which are held for trading are classified as FVTPL. For all other such equity instruments, the Company decides to classify the same either as FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
For equity instruments classified as FVOCI, all fair value changes on the instrument, excluding dividends, are recognized in Other Comprehensive Income (OCI). Dividends on such equity instruments are recognized in the Statement of Profit or Loss.
Equity instruments included withintheFVTPLcategory are measured at fair value with all changes recognized in the Statement of Profit and Loss.
1.19.3. De-recognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily de-recognized (i.e. removed from the Companyâs Balance Sheet) when
The rights to receive cash flows from the asset have expired, or
The Company has transferred its rights to receive cash flows from asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either:
- The Company has transferred substantially all the risks and rewards of the asset, or
- The Company has neither transferred not retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
On de-recognition, any gains or losses on all debt instruments (other than debt instruments measured atFVOCI)andequityinstruments(measuredatFVTPL) are recognized in the Statement of Profit and Loss. Gains and losses in respect of debt instruments are measured at FVOCI and that are accumulated in OCI are reclassified to profit or loss on de-recognition. Gains or losses on equity instruments measured at FVOCI that are recognized and accumulated in OCI are not reclassified to profit or loss on de-recognition.
1.19.4. Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss (âECLâ) model for measurement and recognition of impairment loss on the financial assets measured at amortized cost and debt instruments measured at FVOCI.
Loss allowances on trade receivables are measured following the âsimplified approachâ at an amount equal to the lifetime ECL at each reporting date. In respect of other financial assets such as debt securities and bank balances, the loss allowance is measured at 12 month ECL only if there is no significant deterioration in the credit risk since initial recognition of the asset or asset is determined to have a low credit risk at the reporting date.
1.20. Financial Liabilities
1.20.1. Initial recognition and measurement
Financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument.
Financial liability is initially measured at fair value less, for an item not at fair value through profit and loss, transaction costs that are directly attributable to its acquisition or issue.
1.20.2. Subsequent measurement
Subsequent measurement is determined with reference to the classification of the respective financial liabilities.
Financial liabilities at Fair value through Profit and Loss (FVTPL)
A financial liability is classified as at Fair Value through Profit or Loss (FVTPL) if it is classified as held-for-trading or is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and changes therein, including any interest expense, are recognized in Statement of Profit and Loss.
Financial liabilities at Amortized Cost
After initial recognition, financial liabilities other than those which are classified as FVTPL are subsequently measured at amortized cost using the effective interest rate (âEIRâ) method.
Amortized cost is calculated by taking into account any discount or premium and fees or costs that are an integral part of the EIR. The amortization done using the EIR method is included as finance costs in the Statement of Profit and Loss.
1.20.3. De-recognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss.
1.21. Financial Guarantees
Financial guarantee contracts issued by the Company are those contracts that will require a 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 the debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the fair value initially recognized less cumulative amortization.
1.22. Derivative financial instruments
The Company uses derivative financial instruments to manage the exposure on account of fluctuation in interest rate and foreign exchange rates. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently measured at fair value with the changes being recognized in the Statement of Profit and Loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
1.23. Embedded Derivatives
If the hybrid contract contains a host that is a financial asset within the scope of Ind AS 109, the classification requirements contained in Ind AS 109 are applied to the entire hybrid contract. Derivatives embedded in all other host contracts, including financial liabilities are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value through profit and loss. These embedded derivatives are measured at fair value with changes in fair value recognized in Statement of Profit and Loss, unless designated as effective hedging instruments. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows.
1.24. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
1.25. Taxes on Income
1.25.1. Current Tax
Income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to complete the amount are those that are enacted or substantively enacted, by the end of the reporting period.
Current tax items are recognized in correlation to the underlying transaction either in the Statement of Profit and Loss, other comprehensive income or directly in equity.
1.25.2 Deferred Tax
Deferred tax is provided using the Balance Sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
Deferred Tax items are recognized in correlation to the underlying transaction either in the Statement of Profit and Loss, other comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
1.26. Earnings per Share
1.26.1. Basic earnings per share are calculated by dividing the profit or loss for the period attributable to equity shareholders (after deducting preference dividends, if any, and attributable taxes) by the weighted average number of equity shares outstanding during the period.
1.26.2. For the purpose of calculating diluted earnings per share, the profit or loss for the period attributable to equity shareholders and weighted average number of shares outstanding during the period is adjusted for the effect of all dilutive potential equity shares.
1.27. Classification of Assets and Liabilities as Current and Non-current
All assets and liabilities are classified as current or noncurrent as per the Companyâs normal operating cycle (determined at 12 months) and other criteria set out in Schedule III of the Act.
1.28. Cash and cash equivalents
Cash and cash equivalents in the Balance Sheet include cash at bank, cash, cheque, draft on hand, which are subject to an insignificant risk of changes in value.
For the purpose of Statement of Cash Flows, Cash and cash equivalents include cash at bank, cash, cheque and draft on hand, Bank Balances other then Cash and cash equivalents include earmarked Balances with bank and Turm deposites
1.29. Cash Flows
Cash flows are reported using the indirect method, where by net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.
1.30. The Company has adopted the following materiality threshold limits in the preparation and presentation of financial statements as given below:
Mar 31, 2016
System of Accounting
Unless otherwise stated hereunder the financial accounts of the Company have been drawn up on historical cost convention and on accrual basis.
Use of Estimates
The preparation of financial statement requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and notes thereto. Differences between actual results and estimates are recognized in the period in which they are materialize.
Sales
Sales are net of taxes and sales returns but inclusive of excise duty and exchange rates fluctuations.
Fixed Assets
Fixed Assets are capitalized at cost of acquisition and subsequent improvements thereto including taxes, duties etc other than Cenvat credit wherever applicable. Freight & other incidental expenses related to acquisition and installation are added to cost. In case of write-up due to revaluation are shown at such higher amount.
Depreciation
Depreciation on all assets has been charged by written down value method in accordance with the useful life of the assets as prescribed in Schedule II to the Companies Act ,2013.
In respect of revalued assets, the incremental depreciation attributable to the Revaluation is transferred to Revaluation Reserve.
Inventories
Inventories have been valued as follows -
Raw Materials : At cost *
Finished Goods : At lower of the cost and
net realizable value **
Work in Progress : At cost *
Stores, Tools & : At cost *
Other Materials
* The cost has been arrived at by using ''FIFO'' method.
** The cost of finished goods has been determined by considering standard conversion cost.
Impairment of Assets
The Company determines whether there is any indication of impairment of the carrying amount of the company''s assets. The recoverable amount of such assets are estimated , if any indication exists , and impairment losses recognized wherever the carrying amount of the assets exceeds its recoverable amount.
Employees'' Benefits
-Company''s contribution to Provident Fund and Family Pension Fund are charged to profit & loss account.
-Provision for Gratuity and Leave Encashment benefits, in respect of employees governed by Indian rules and regulations is made on the basis of actuarial valuation as at the end of the year in conformity with the Accounting standard-15 (Revised) issued by the Institute of Chartered Accountants of India and the provision for leave encashment ( including long term leave ) in respect of employees at foreign branches is made as per law prevalent in foreign country.
-Contribution to Employee Group Gratuity Trust for the current year are charged to Profit & Loss account and for the past years are adjusted in the Provision for Gratuity a/c.
Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange rates prevailing at the date of transaction. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currency are recognized in the profit and loss account. Exchange differences arising on account of monetary liabilities related to fixed assets are adjusted in the cost of assets. Bank Guarantee in foreign currency are translated at the exchange rate prevailing at the year end.
Foreign Branch Operation''s Translations
The activities of the Foreign Branches are an integral part of the operations of the company and hence the foreign branch financial statements are translated in accordance with accounting standard applicable to Integral Foreign Operation as given under:
Income & Expenditure items by applying to the foreign currency amount, the exchange rate at the date of transaction. The rate used is an average rate for calendar month and used for all transaction occurring during that calendar month.
Fixed Assets are recorded at the exchange rate prevailing on the date of transaction.
Depreciation on the fixed assets in Indian rupees, which are reported using the exchange rate at the date of transaction.
Inventories related to stocks transfer from reporting enterprise are shown at the cost of reporting enterprises plus expenses incurred to bring the material at the shelf of foreign branch''s warehouse and local bought out inventories are translated at the exchange rate prevailing at year end.
Other current assets and liabilities are converted at the exchange rates prevailing at the year end.
The exchange difference on translation of Foreign Branch financial statements are recognized in profit & loss account.
Research & Development
Revenue expenditure pertaining to research and development is charged to revenue in the year in which it is incurred. Capital Expenditure is treated as forming part of Fixed Assets.
Government Grants
i) Revenue grants are accounted for in Profit & Loss Account.
ii) Capital grants other than relating to specific fixed assets are credited to Capital Reserve.
Miscellaneous Expenditure
Public Issue Expense, Deferred Revenue Expenses & other expenses on intangible assets are recognized & amortized as per the Accounting Standard no. 26 on Intangible Assets issued by the Institute of Chartered Accountants of India.
Borrowing Cost
Interest and other costs in connection with borrowing of funds to the extent related / attributed to the acquisition / construction of qualifying fixed assets are capitalized up to the date when such assets are ready for its intended use and other borrowing cost are charged to Profit and Loss Account.
Provision for Deferred and Current 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 assets will be realized in future.
Mar 31, 2015
System of Accounting
Unless otherwise stated hereunder the financial accounts of the Company
have been drawn up on historical cost convention and on accrual basis.
Use of Estimates
The preparation of financial statement requires management to make
certain estimates and assumptions that affect the amounts reported in
the financial statements and notes thereto. Differences between actual
results and estimates are recognised in the period in which they are
materialise.
Sales
Sales are net of taxes and sales returns but inclusive of excise duty
and exchange rates fluctuations.
Fixed Assets
Fixed Assets are capitalised at cost of acquisition and subsequent
improvements thereto including taxes, duties etc other than Cenvat
credit wherever applicable. Freight & other incidental expenses related
to acquisition and installation are added to cost. In case of write-up
due to revaluation are shown at such higher amount.
Depreciation
Depreciation on all assets has been charged by written down value
method in accordance with the useful life of the assets as prescribed
in Schedule II to the Companies Act ,2013.
In respect of revalued assets, the incremental depreciation
attributable to the Revaluation is transferred to Revaluation Reserve.
Inventories
Inventories have been valued as follows -
Raw Materials : At cost *
Finished Goods : At lower of the cost and
net realisable value **
Work in Progress : At cost *
Stores, Tools & : At cost *
Other Materials
* The cost has been arrived at by using 'FIFO' method.
** The cost of finished goods has been determined by considering
standard conversion cost.
Impairment of Assets
The Company determines whether there is any indication of impairment of
the carrying amount of the company's assets. The recoverable amount of
such assets are estimated, if any indication exists , and impairment
losses recognised wherever the carrying amount of the assets exceeds
its recoverable amount.
Employees' Benefits
-Company's contribution to Provident Fund and Family Pension Fund are
charged to profit & loss account.
-Provision for Gratuity and Leave Encashment benefits, in respect of
employees governed by Indian rules and regualtions is made on the basis
of actuarial valuation as at the end of the year in conformity with the
Acccoutning standard-15 (Revised) issued by the Institute of Chartered
Accountants of India and the provision for leave encashment ( including
long term leave ) in respect of employees at foreign branches is made
as per law prevalent in foreign country.
-Contribution to Employee Group Gratuity Trust for the current year are
charged to Profit & Loss account and for the past years are adjusted in
the Provision for Gratuity a/c.
Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange
rates prevailing at the date of transaction. Gains and losses resulting
from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currency are
recognised in the profit and loss account. Exchange differences arising
on account of monetary liabilities related to fixed assets are adjusted
in the cost of assets. Bank Guarantee in foreign currency are
translated at the exchange rate prevailing at the year end.
Foreign Branch Operation's Translations
The activities of the Foreign Branches are an integral part of the
operations of the company and hence the foreign branch financial
statements are translated in accordance with accounting standard
applicable to Integral Foreign Operation as given under:
Income & Expenditure items by applying to the foreign currency amount,
the exchange rate at the date of transaction. The rate used is an
average rate for calendar month and used for all transaction occurring
during that calendar month.
Fixed Assets are recorded at the exchange rate prevailing on the date
of transaction.
Depreciation on the fixed assets in Indian rupees, which are reported
using the exchange rate at the date of transaction.
Inventories related to stocks transfer from reporting enterprise are
shown at the cost of reporting enterprises plus expenses incurred to
bring the material at the shelf of foreign branch's warehouse and local
bought out inventories are translated at the exchange rate prevailing
at year end.
Other current assets and liabilities are converted at the exchange
rates prevailing at the year end.
The exchange difference on translation of Foreign Branch financial
statements are recognised in profit & loss account.
Research & Development
Revenue expenditure pertaining to research and development is charged
to revenue in the year in which it is incurred. Capital Expenditure is
treated as forming part of Fixed Assets.
Government Grants
i) Revenue grants are accounted for in Profit & Loss Account.
ii) Capital grants other than relating to specific fixed assets are
credited to Capital Reserve.
Miscellaneous Expenditure
Public Issue Expense, Deferred Revenue Expenses & other expenses on
intangible assets are recognised & amortised as per the Accounting
Standard no. 26 on Intangible Assets issued by the Institute of
Chartered Accountants of India.
Borrowing Cost
Interest and other costs in connection with borrowing of funds to the
extent related / attributed to the acquisition / construction of
qualifying fixed assets are capitalised upto the date when such assets
are ready for its intended use and other borrowing cost are charged to
Profit and Loss Account.
Provision for Deferred and Current 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 recognised and carried forward only to the extent
that there is a reasonable certainty that the assets will be realised
in future.
Mar 31, 2014
System of Accounting
Unless otherwise stated hereunder the financial accounts of the Company
have been drawn up on historical cost convention and on accrual basis.
Use of Estimates
The preparation of financial statement requires management to make
certain estimates and assumptions that affect the amounts reported in
the financial statements and notes thereto. Differences between actual
results and estimates are recognised in the period in which they are
materialise.
Sales
Sales are net of taxes and sales returns but inclusive of excise duty
and exchange rates fluctuations.
Fixed Assets
Fixed Assets are capitalised at cost of acquisition and subsequent
improvements thereto including taxes, duties etc other than Cenvat
credit wherever applicable. Freight & other incidental expenses related
to acquisition and installation are added to cost. In case of write-up
due to revaluation are shown at such higher amount.
Depreciation
Depreciation on all assets has been charged by written down value
method in accordance with the rates and manner specified in Schedule
XIV to the Companies Act, 1956.
In respect of revalued assets, the incremental depreciation
attributable to the Revaluation is transferred to Revaluation Reserve.
Inventories
Inventories have been valued as follows -
Raw Materials : At cost *
Finished Goods : At lower of the cost and net
realisable value **
Work in Progress : At cost *
Stores, Tools & Other Materials : At cost *
* The cost has been arrived at by using ''FIFO'' method.
**The cost of finished goods has been determined by considering
standard conversion cost.
Impairment of Assets
The Company determines whether there is any indication of impairment of
the carrying amount of the company''s assets. The recoverable amount of
such assets are estimated, if any indication exists, and impairment
losses recognised wherever the carrying amount of the assets exceeds
its recoverable amount.
Employees'' Benefits
* Company''s contribution to Provident Fund and Family Pension Fund are
charged to profit & loss account.
* Provision for Gratuity and Leave Encashment benefits, in respect of
employees governed by Indian rules and regualtions is made on the basis
of actuarial valuation as at the end of the year in confirmity with the
Acccoutning standard-15 (Revised) issued by the Institute of Chartered
Accountants of India and the provision for leave encashment ( including
long term leave ) in respect of employees at foreign branches is made
as per law prevalent in foreign country.
* Contribution to Employee Group Gratuity Trust for the current year
are charged to Profit & Loss account and for the past years are
adjusted in the Provision for Gratuity a/c.
Foreign Currency Translations
Transactions in foreign currency are accounted for at the exchange
rates prevailing at the date of transaction. Gains and losses resulting
from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currency are
recognised in the profit and loss account. Exchange differences arising
on account of monetary liabilities related to fixed assets are adjusted
in the cost of assets. Bank Guarantee in foreign currency are
translated at the exchange rate prevailing at the year end.
Foreign Branch Operation''s Translations
The activities of the Foreign Branches are an integral part of the
operations of the company and hence the foreign branch financial
statements are translated in accordance with accounting standard
applicable to Integral Foreign Operation as given under:
Income & Expenditure items by applying to the foreign currency amount,
the exchange rate at the date of transaction. The rate used is an
average rate for calendar month and used for all transaction occurring
during that calendar month.
Fixed Assets are recorded at the exchange rate prevailing on the date
of transaction.
Depreciation on the fixed assets in Indian rupees, which are reported
using the exchange rate at the date of transaction.
Inventories related to stocks transfer from reporting enterprise are
shown at the cost of reporting enterprises plus expenses incurred to
bring the material at the shelf of foreign branch''s warehouse and local
bought out inventories are translated at the exchange rate prevailing
at year end.
Other current assets and liabilities are converted at the exchange
rates prevailing at the year end.
The exchange difference on translation of Foreign Branch financial
statements are recognised in profit & loss account.
Research & Development
Revenue expenditure pertaining to research and development is charged
to revenue in the year in which it is incurred. Capital Expenditure is
treated as forming part of Fixed Assets.
Government Grants
i) Revenue grants are accounted for in Profit & Loss Account.
ii) Capital grants other than relating to specific fixed assets are
credited to Capital Reserve.
Miscellaneous Expenditure
Public Issue Expense, Deferred Revenue Expenses & other expenses on
intangible assets are recognised & amortised as per the Accounting
Standard no. 26 on Intangible Assets issued by the Institute of
Chartered Accountants of India.
Borrowing Cost
Interest and other costs in connection with borrowing of funds to the
extent related / attributed to the acquisition / construction of
qualifying fixed assets are capitalised upto the date when such assets
are ready for its intended use and other borrowing cost are charged to
Profit and Loss Account.
Provision for Deferred and Current 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 recognised and carried forward only to the extent
that there is a reasonable certainty that the assets will be realised
in future.
Mar 31, 2012
1. System of Accounting
Unless otherwise stated heieunder the financial accounts of the Company
have been drawn up on historical cost convention and on accrual basis.
2. Use of Estimates
The preparation of financial statement requires management to make
certain estimates and assumptions that affect the amounts reported in
the financial statements and notes thereto. Differences between actual
results and estimates are recognised in the period in which they are
materialise.
3. Sales
Sales are net of taxes and sales returns but inclusive of excise duty
and exchange rates fluctuations.
4. Fixed Assets
Fixed Assets are capitalised at cost of acquisition and subsequent
improvements thereto including taxes, duties etc other than Cenvat
credit wherever applicable. Freight & other incidental expenses related
to acquisition and installation are added to cost. In case of write-up
due to revaluation are shown at such higher amount.
5. Depreciation
(i) Depreciation on all assets has been charged by written down value
method in accordance with the rates and manner specified in Schedule
XIV to the Companies Act, 1956.
(ii) In respect of revalued assets, the incremental depreciation
attributable to the Revaluation is transferred to Revaluation Reserve.
6. Inventories
Inventories have been valued as follows - Raw Materials : At cost*
Finished Goods : At lower of the cost and net realisable value **
Work in Progress : At cost*
Stores, Tools & Other Materials : At cost*
*The cost has been arrived at by using âÃÃFIFO' method.
**The cost of finished goods has been determined by considering
standard conversion cost.
7. Impairment of Assets
The Company determines whether there is any indication of impairment of
the carrying amount of the company's assets. The recoverable amount
of such assets are estimated, if any indication exists, and impairment
losses recognised wherever the carrying amount of the assets exceeds
its recoverable amount.
8. Employees' Benefits
- Company's contribution to Provident Fund and Family Pension Fund
are charged to profit & loss account.
- Provision for Gratuity and Leave Encashment benefits, in respect of
employees governed by Indian rules and regualtions is made on the basis
of actuarial valuation as at the end of the year in confirmity with the
Acccoutning standard-15 (Revised) issued by the Institute of Chartered
Accountants of India and the provision for leave encashment (including
long term leave) in respect of employees at foreign branches is made as
per law prevalent in foreign country.
- Contribution to Employee Group Gratuity Trust for the current year
are charged to Profit & Loss account and for the past years are
adjusted in the Provision for Gratuity a/c.
9. Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange
rates prevailing at the date of transaction. Gains and losses resulting
from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currency are
recognised in the profit and loss account. Exchange differences arising
on account of monetary liabilities related to fixed assets are adjusted
in the cost of assets. Bank Guarantee in foreign currency are
translated at the exchange rate prevailing at the year end.
10. Foreign Branch Operation's Translations
The activities of the Foreign Branches are an integral part of the
operations of the company and hence the foreign branch financial
statements are translated in accordance with accounting standard
applicable to Integral Foreign Operation as given under:
Income & Expenditure items by applying to the foreign currency amount,
the exchange rate at the date of transaction. The rate used is an
average rate for calendar month and used for all transaction occurring
during that calendar month.
Fixed Assets at the exchange rate prevailing on the date of
transaction.
Depreciation on the fixed assets in Indian rupees, which are reported
using the exchange rate at the date of transaction.
Inventories related to stocks transfer from reporting enterprise are
shown at the cost of reporting enterprises plus expenses incurred to
bring the material at the shelf of foreign branch's warehouse and
local bought out inventories are translated at the exchange rate
prevailing at year end.
Other current assets and liabilities are converted at the exchange
rates prevailing at the year end.
The exchange difference on translation of Foreign Branch financial
statements are recognised in profit & loss account.
11. Research & Development
Revenue expenditure pertaining to research and development is charged
to revenue in the year in which it is incurred. Capital Expenditure is
treated as forming part of Fixed Assets.
12. Government Grants
i) Revenue grants are accounted for in Profit & Loss Account.
ii) Capital grants other than relating to specific fixed assets are
credited to Capital Reserve.
13. Miscellaneous Expenditure
Public Issue Expense, Deferred Revenue Expenses & other expenses on
intangible assets are recognised & amortised as per the Accounting
Standard no. 26 on Intangible Assets issued by the Institute of
Chartered Accountants of India.
14. Borrowing Cost
Interest and other costs in connection with borrowing of funds to the
extent related / attributed to the acquisition / construction of
qualifying fixed assets are capitalised upto the date when such assets
are ready for its intended use and other borrowing cost are charged to
Profit and Loss Account.
15. Provision for Deferred and Current 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 recognised and carried forward only to the extent
that there is a reasonable certainty that the assets will be realised
in future.
Mar 31, 2011
1 System of Accounting
Unless otherwise stated hereunder the financial accounts of the Company
have been drawn up on historical cost convention and on accrual basis.
2 Use of Estimates
The preparation of financial statement requires management to make
certain estimates and assumptions that affect the amounts reported in
the financial statements and notes thereto. Differences between actual
results and estimates are recognised in the period in which they are
materialise.
3 Sales
Sales are net of taxes and sales returns but inclusive of excise duty
and exchange rates fluctuations.
4 Fixed Assets
Fixed Assets are capitalised at cost of acquisition and subsequent
improvements thereto including taxes, duties etc other than Cenvat
credit wherever applicable. Freight & other incidental expenses related
to acquisition and installation are added to cost. In case of write-up
due to revaluation are shown at such higher amount.
5 Depreciation
i) Depreciation on all assets has been charged by written down value
method in accordance with the rates and manner specified in Schedule
XIV to the Companies Act, 1956.
ii) In respect of revalued assets, the incremental depreciation
attributable to the Revaluation is transferred to Revaluation Reserve.
6 Inventories
Inventories have been valued as follows -
Raw Materials : At cost *
Finished Goods : At lower of the cost and net realisable value **
Work in Progress : At cost *
Stores, Tools & Other Materials : At cost *
* The cost has been arrived at by using 'FIFO' method.
** The cost of finished goods has been determined by considering
standard conversion cost.
7 Impairment of Assets
The Company determines whether there is any indication of impairment of
the carrying amount of the company's assets. The recoverable amount of
such assets are estimated, if any indication exists, and impairment
losses recognised wherever the carrying amount of the assets exceeds
its recoverable amount.
8 Employees' Benefits
Company's contribution to Provident Fund and Family Pension Fund are
charged to profit & loss account.
Provision for Gratuity and Leave Encashment benefits, in respect of
employees governed by Indian rules and regulations is made on the basis
of actuarial valuation as at the end of the year in confirmity with the
Acccoutning standard-15 (Revised) issued by the Institute of Chartered
Accountants of India and the provision for leave encashment (including
long term leave) in respect of employees at foreign branches is made as
per law prevalent in foreign country.
Contribution to Employee Group Gratuity Trust for the current year are
charged to Profit & Loss account and for the past years are adjusted in
the Provision for Gratuity a/c.
9 Foreign Currency Translations
a Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange
rates prevailing at the date of transaction. Gains and losses resulting
from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currency are
recognised in the profit and loss account. Exchange differences arising
on account of monetary liabilities related to fixed assets are adjusted
in the cost of assets. Bank Guarantee in foreign currency are
translated at the exchange rate prevailing at the year end.
b Foreign Branch Operation's Translations
The activities of the Foreign Branches are an integral part of the
operations of the company and hence the foreign branch financial
statements are translated in accordance with accounting standard
applicable to Integral Foreign Operation as given under:
i) Income & Expenditure items by applying to the foreign currency
amount, the exchange rate at the date of transaction.
The rate used is an average rate for calendar month and used for all
transaction occurring during that calendar month.
ii) Fixed Assets at the exchange rate prevailing on the date of
transaction.
iii) Depreciation on the fixed assets in Indian rupees, which are
reported using the exchange rate at the date of transaction.
iv) Inventories related to stocks transfer from reporting enterprise
are shown at the cost of reporting enterprises plus expenses incurred
to bring the material at the shelf of foreign branch's warehouse and
local bought out inventories are translated at the exchange rate
prevailing at year end.
v) Other current assets and liabilities are converted at the exchange
rates prevailing at the year end.
vi) The exchange difference on translation of Foreign Branch financial
statements are recognised in profit & loss account.
10 Research & Development
Revenue expenditure pertaining to research and development is charged
to revenue in the year in which it is incurred. Capital Expenditure is
treated as forming part of Fixed Assets.
11 Government Grants
i) Revenue grants are accounted for in Profit & Loss Account.
ii) Capital grants other than relating to specific fixed assets are
credited to Capital Reserve.
12 Miscellaneous Expenditure
Public Issue Expense, Deferred Revenue Expenses & other expenses on
intangible assets are recognised & amortised as per the Accounting
Standard no. 26 on Intangible Assets issued by the Institute of
Chartered Accountants of India.
13 Borrowing Cost
Interest and other costs in connection with borrowing of funds to the
extent related / attributed to the acquisition / construction of
qualifying fixed assets are capitalised upto the date when such assets
are ready for its intended use and other borrowing cost are charged to
Profit and Loss Account.
14 Provision for Deferred and Current 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 recognised and carried forward only to the extent
that there is a reasonable certainty that the assets will be realised
in future.
Mar 31, 2010
1 System of Accounting
Unless otherwise stated hereunder the financial accounts of the Company
have been drawn up on historical cost convention and on accrual basis.
2 Use of Estimates
The preparation of financial statement requires management to make
certain estimates and assumptions that affect the amounts reported in
the financial statements and notes thereto. Differences between actual
results and estimates are recognised in the period in which they
materialise.
3 Sales
Sales are net of taxes and sales returns but inclusive of excise duty
and exchange rates fluctuations.
4 Fixed Assets
Fixed Assets are capitalised at cost of acquisition and subsequent
improvements thereto including taxes, duties etc other than Cenvat
credit wherever applicable. Freight & other incidental expenses related
to acquisition and installation are added to cost. In case of write-up
due to revalution, Fixed Assets are shown at such higher amount.
5 Depreciation
i) Depreciation on all assets has been charged by written down value
method in accordance with the rates and manner specified in Schedule
XIV to the Companies Act, 1956.
ii) In respect of revalued assets, the incremental depreciation
attributable to the Revaluation is transferred to Revaluation Reserve.
6 Inventories
Inventories have been valued as follows -
Raw Materials : At cost *
Finished Goods : At lower of the cost and net
realisable value **
Work in Progress : At cost *
Stores, Tools & Other Materials : At cost *
* The cost has been arrived at by using FIFO method.
** The cost of finished goods has been determined by considering
standard conversion cost.
7 Impairment of Assets
Impairment loss is provided to the extent, the carrying amount of
assets exceeds their recoverable amount. Recoverable amount is higher
of an assetss net selling price and its value in use. Value in use is
the present value of estimated future cash flows expected to arise from
the continue use of an asset and from its disposal as the end of its
useful life.
8 Employees Benefits
Companys contribution to Provident Fund and Family Pension Fund are
charged to profit & loss account. Provision for Gratuity and Leave
Encashment benefits, in respect of employees governed by Indian rules
and regualtions is made on the basis of actuarial valuation as at the
end of the year in confirmity with the Acccoutning standard-15
(Revised) issued by the Institute of Chartered Account of India and the
provision for leave encashment
(including long term leave) in respect of employee at foreign branches
is made as per law previlent in foreign country. Contribution to
Employee Group Gratuity Trust for the current year are charged to
Profit & Loss accounl and for the past years are adjusted in the
Provision for Gratuity a/c.
9 Foreign Currency Translations
a Foreign Currency Transactions
Transactions in foreign currency are accounted for at the exchange
rates prevailing at the date of transaction Gains and losses resulting
from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currencies are
recognised in the Profit & Loss Account. Exchange differences arising
on account of monetary liabilities related to fixed assets are adjusted
in the cost ol assets. Bank Guarantee in foreign currency are
translated at the exchange rate prevailing at the year end.
b Foreign Branch Operations Translations
The activities of the Foreign Branches are an integral part of the
operations of the company and hence the foreign branch financial
statements are translated in accordance with accounting standard
applicable tc Integral Foreign Operation as given under:
I) Income & Expenditure items by applying to the foreign currency
amount, the exchange rate at the date ol transaction. The rate used is
an average rate for calendar month and used for all transaction
occurring during that calendar month.
ii) Fixed Assets at the exchange rate prevailing on the date of
transaction.
iii) Depreciation on the fixed assets in Indian rupees, which are
reported using the exchange rate at the date of transaction.
iv) Inventories related to stocks transfer from reporting enterprise
are shown at the cost of reporting enterprises plus expenses incurred
to bring the material at the shelf of foreign branchs warehouse and
local bought inventories are translated at the exchange rate prevaing
at the yearend.
v) Other current assets and liabilities are converted at the exchange
rates prevailing at the year end.
vi) The exchange difference on translation of Foreign Branch financial
statements are recognised in profit & loss account.
10 Research & Development
Revenue expenditure pertaining to research and development is charged
to revenue in the year in which it is incurred. Capital Expenditure is
treated as formirrg part of Fixed Assets.
11 Government Grants
i) Revenue grants are accounted for in Profit & Loss Account.
ii) Capital grants other than relating to specific fixed assets are
credited to Capital Reserve.
12 Miscellaneous Expenditure
Public Issue Expense, Deferred Revenue Expenses & other expenses on
intangible assets are recognised & amortised as per the Accounting
Standard no. 26 on Intangible Assets issued by the Institute of
Chartered Accountants of India.
13 Borrowing Cost
Interest and other costs in connection with borrowing of funds to the
extent related / attributed to the acquisition
construction of qualifying fixed assets are capitalised upto the date
when such assets are ready for its intended use and other borrowing
cost are charged to profit & loss A/c.
14 Provision for Deferred and Current tax
Provisipn 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 recognised and carried forward only to the
extent that there is a reasonable certainty that the assets will be
realised in future.
15 Others
I) Contingent liabilities not provided for, are disclosed by way of
notes.
II) Contingencies which can be reasonably ascertained are provided for.
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