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Accounting Policies of Shaily Engineering Plastics Ltd. Company
Mar 31, 2025
Note 2 - I: Material accounting policies
a) Basis of preparation and measurement
i) Compliance with Ind AS
These standalone financial statements of the company have been prepared in accordance with the Indian Accounting
Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) and other relevant provision of the act,
read with Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time.
ii) Basis of measurement
These financial statements have been prepared on the historical cost basis except for defined benefit plans - net defined
benefit (asset) / liabilities which have been measured at fair value based on principles of Ind AS 19 -"Employee benefits"
and certain financial assets and liabilities are measured at fair value (refer note 29 (b) for list of financial assets and liabilities
measured at fair value).
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 under current market conditions, regardless of whether that price is directly
observable or estimated using another valuation technique. In determining the fair value of an asset or a liability, the
Company takes into account the characteristics of the asset or liability if market participants would take those characteristics
into account when pricing the asset or liability at the measurement date.
The Company adopted Disclosures of Accounting policies (Amendments to Ind As 1) from 1 April 2023, although the
amendments did not result in any changes in the accounting policies themselves, they impacted the accounting policy
information disclosed in the financial statements.
The amendments require the disclosure of ''material'' rather than ''significant'' accounting policies. The amendments also
provide guidance on the application of materiality to disclosure of accounting policies, assisting the entities to provide useful,
entity-specific accounting policy information that users need to understand other information in the financial statement.
Current / Non-current classification:
Based on the time involved between the acquisition of assets for processing and their realization in cash and cash equivalents,
the Company has identified twelve months as its operating cycle for determining current and non-current classification of
assets and liabilities in the balance sheet.
b) Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The board of directors assesses the financial performance and position of the Company, and makes strategic decisions. The
managing director has been identified as being the chief operating decision maker. Refer Note 32 for segment information.
c) Foreign currency transactions and translations
(i) Functional and presentation currency
Items included in Standalone financial statements are measured using the currency of the primary economic environment
in which the entity operates ("functional currency"). The Standalone financial statements are presented in Indian rupee (),
which is the company''s functional and presentation currency.
(ii) Transactions and balances
Monetary items denominated in foreign currencies at the year-end are translated into the functional currency at the exchange
rate prevailing on the balance sheet date.
Non-monetary items are carried at historical cost using the exchange rates on the date of transaction, other than those measured
at fair value. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates
at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported
as part of the fair value gain or loss. Foreign exchange gains and losses are presented in the statement of profit and loss on a
net basis within other incomes/expenses.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss,
within finance costs.
d) Revenue and income recognition
Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods are transferred to the customer, depending
on individual terms, i.e. at the time of dispatch, delivery or formal customer acceptance depending on agreed terms and at an
amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. Similarly for
services, revenue is recognised upon completion of performance obligations as agreed with customer at an amount that reflects
the consideration to which the Company expects to be entitled in exchange for those services.
The Company assesses promises in the contract that are separate performance obligations to which a portion of transaction
price is allocated.
Revenue is measured based on the transaction price as specified in the contract with the customer. It excludes discounts,
incentives, volume rebates, goods & services tax and amounts collected on behalf of third parties. In determining the transaction
price, the Company considers below, if any:
Variable consideration:
This includes discounts, incentives, volume rebates, etc. It is estimated at contract inception and constrained until it is highly
probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated
uncertainty with the variable consideration is subsequently resolved. It is reassessed at end of each reporting period.
Contract balances
Trade receivables: A receivable represents the Company''s right to an amount of consideration that is unconditional i.e. only the
passage of time is required before payment of consideration is due.
Contract liabilities: A contract liability is the obligation to transfer goods or services to a customer for which the Company has
received consideration (or an amount of consideration is due) from the customer. Contract liabilities are recognised as revenue
when the Company delivers performance obligation under the contract.
Interest Income:
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and
the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the amortised cost
and at the effective interest rate applicable.
Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be
received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them
with the costs that they are intended to compensate and presented within other income.
Export incentives
Export incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the term of
scheme is established in respect of exports made and accounted to the extent there is no significant uncertainty about the
measurability and ultimate utilization of such duty credit.
Dividend
Dividend income is recognised in the standalone statement of profit and loss only when the right to receive payment is established,
provided it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the
dividend can be measured reliable.
e) Income tax
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable
income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in India.
Deferred tax is provided, on all temporary differences at the reporting date between the tax base of assets and liabilities and
their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured at the tax rates that
are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or
substantively enacted at the reporting date. Tax relating to items recognised directly in equity or OCI is recognised in equity or
OCI and not in the Statement of Profit and Loss.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset deferred tax assets and liabilities
and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where
the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the
liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in
equity, respectively.
f) Leases
Ind AS 116 - Leases:
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the site on which it is located, less any lease incentives received. Certain lease arrangements
include the option to extend or terminate the lease before the end of the lease term.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right of-use assets
are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by
lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the
portfolio as a whole.
Lease payments included in the measurement of the lease liability comprises of fixed payments, including in-substance fixed
payments, amounts expected to be payable under a residual value guarantee and the exercise price under a purchase option
that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably
certain to exercise an extension option.
The lease liability is subsequently remeasured at amortised cost using the effective interest method. It is remeasured when there
is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate
of the amount expected to be payable under a residual value guarantee, or if Company changes its assessment of whether it will
exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right of use
asset or is recorded in the Statement of Profit and Loss if the carrying amount of the right-of-use asset has been reduced to zero.
Lease liability and the right of use asset have been separately presented in the balance sheet and lease payments have been
classified as financing activities.
The Company has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of
less than or equal to 12 months with no purchase option and assets with low value leases. The Company recognises the lease
payments associated with these leases as an expense in Statement of Profit and Loss over the lease term. The related cash flows
are classified as operating activities.
g) Impairment of assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount, which is the higher of the value in use or fair value less cost to sell, of the asset or cash-generating unit, as the case
may be, is estimated and impairment loss (if any) is recognised and the carrying amount is reduced to its recoverable amount.
In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of
future cash flows have not been adjusted. When it is not possible to estimate the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
When an impairment loss subsequently reverses, the carrying amount of the asset or a cash-generating unit is increased to the
revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) earlier.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least
annually, and whenever there is an indication that the asset may be impaired.
h) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
The Company considers various factors like shelf life, ageing of inventory, product discontinuation, price changes and any
other factor which impact the Company''s business in determining the allowance for obsolete, non-saleable and slow moving
inventories. The Company considers the above factors and adjusts the inventory provision to reflect its actual experience on a
periodic basis.
j) Financial assets and liabilities
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity.
Financial assets
Initial recognition and measurement
A financial asset is recognised in the balance sheet when the Company becomes party to the contractual provisions of the
instrument. All financial assets are recognised initially at fair value, plus in the case of financial assets not recorded at fair value
through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial assets. However, trade
receivables that do not contain a significant financing component are measured at transaction price.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified into:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other comprehensive income (FVTOCI);
c) Financial assets measured at fair value through statement of profit and loss (FVTPL).
The Company classifies its financial assets in the above mentioned categories based on:
a) The Company''s business model for managing the financial assets;
b) The contractual cash flows characteristics of the financial asset.
Financial assets measured at amortised cost
A financial asset is measured at amortised cost if both of the following conditions are met:
a) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual
cash flows; and
b) The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal
and interest (SPPI) on the principal amount outstanding.
Financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is
calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are
recognised in the statement of profit and loss. This category generally applies to trade and other receivables.
Financial assets measured at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
a) The financial asset is held within a business model whose objective is achieved by both collecting the contractual cash flows
and selling financial assets; and
b) The asset''s contractual cash flows represent SPPI.
Financial assets measured at fair value through the statement of profit and loss (FVTPL)
FVTPL is a residual category. Any financial asset, which does not meet the criteria for categorization as at amortized cost or as
FVTOCI, is classified as at FVTPL. In addition, the Company may elect to designate a financial asset, which otherwise meets
amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a
measurement or recognition inconsistency (referred to as ''accounting mismatch'').
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily
derecognised (i.e. removed from the Company''s balance sheet) when:
a) The contractual rights to the cash flows from the financial asset have expired, or
b) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under a ''pass-through ''arrangement; and either:
i) The Company has transferred substantially all the risks and rewards of the asset, or
ii) The Company has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred
control of the asset.
Impairment of financial assets
The Company assesses impairment based on expected credit loss (ECL) model to the following:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other comprehensive income
Expected credit losses are measured through a loss allowance at an amount equal to:
a) The 12 month''s expected credit losses (expected credit losses that result from those default events on the financial
instrument that are possible within 12 months after the reporting date); or
b) Full time expected credit losses (expected credit losses that result from all possible default events over the life of the financial
instrument).
The Company follows a ''simplified approach'' for recognition of impairment loss allowance on trade receivables. Under
the simplified approach, the Company uses a provision matrix to determine impairment loss allowance on the portfolio of
trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade
receivable which is adjusted for management''s estimates. At every reporting date, the historical observed default rates are
updated and changes in the forward-looking estimates are analysed.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through statement of profit and loss,
loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All
financial liabilities are recognised initially at fair value.
The Company''s financial liabilities include trade and other payables.
Subsequent measurement
a) Financial liabilities measured at amortised cost;
b) Financial liabilities subsequently measured at fair value through statement of profit and loss (FVTPL)
Trade and other payables
These amounts represent liability for goods and services provided to the Company prior to the end of financial year which are
unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the
reporting period. They are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised
in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn
down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some
or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period
of the facility to which it relates.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting period.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the
recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when, and only when,
there is a legally enforceable right to offset the recognised amount and there is intention either to settle on net basis or to realise
the assets and to settle the liabilities simultaneously.
k) Property, plant and equipment
Recognition and measurement
Items of PPE are measured at cost less accumulated depreciation and accumulated impairment losses, if any. Cost of an item of
PPE comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts
and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs
of dismantling and removing the item and restoring the site on which it is located.
The cost of property, plant and equipment as at 1 April 2016, the company''s date of transition to Ind AS, was determined with
reference to its carrying value recognised as per the previous GAAP (deemed cost), as at the date of transition to Ind AS.
Capital work-in-progress is stated at cost. All the direct expenditure related to implementation including incidental expenditure
incurred during the period of implementation of a project, till it is commissioned, is accounted as Capital work-in-progress and
after commissioning the same is transferred / allocated to the respective item of PPE. Pre-operative costs, being indirect in
nature, are expensed to the Statement of Profit and Loss as and when incurred.
If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components)
of PPE.
Any gain or loss on disposal of an item of PPE is recognised in the Statement of Profit and Loss.
Subsequent expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will
flow to the Company.
Depreciation methods, estimated useful lives and residual value.
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated
useful lives which are in accordance with Schedule II to the Companies Act, 2013. The property, plant and equipment acquired
under finance leases is depreciated over the asset''s useful life or over the shorter of the asset''s useful life and the lease term if
there is no reasonable certainty that the Company will obtain ownership at the end of the lease term.
An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss
within other incomes/expenses.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Based
on technical evaluation and consequent advice, the management believes that its estimates of useful lives as given above best
represent the period over which management expects to use these assets. Depreciation on additions/(disposals) is provided on
a pro-rata basis i.e. from/ (upto) the date on which asset is ready for use/(disposed off).
l) Intangible assets
Recognition and measurement
Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the assets will
flow to the Company and the cost of the asset can be measured reliably. Intangible assets are initially measured at cost. Such
intangible assets are subsequently measured at cost less accumulated recognised i and any accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is recognised only when it increases the future economic benefits embodied in the specific asset to
which it relates. All other expenditure is recognised in the Statement of Profit and Loss as incurred.
m) Intangible assets under development
The Company expenses costs incurred during research phase to profit or loss in the year in which they are incurred. Development
phase expenses are initially recognised as intangible assets under development until the development phase is complete, upon
which the amount is recognised as intangible asset.
n) Borrowings costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset are recognised. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended
use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for recognised ion.
Other borrowing costs are expensed in the period in which they are incurred.
Mar 31, 2024
Note 2 - I: Material accounting policies
a) Basis of preparation and measurement
i) Compliance with Ind AS
These standalone financial statements of the company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) and other relevant provision of the act, read with Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time.
ii) Basis of measurement
These financial statements have been prepared on the historical cost basis except for defined benefit plans - net defined benefit (asset) / liabilities which have been measured at fair value based on principles of Ind AS 19 -"Employee benefits" and certain financial assets and liabilities are measured at fair value (refer note 29 (b) for list of financial assets and liabilities measured at fair value).
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 under current market conditions, regardless of whether that price is directly observable or estimated using another valuation technique. In determining the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
The Company adopted Disclosures of Accounting policies (Amendments to Ind As 1) from 1st April, 2023, although the amendments did not result in any changes in the accounting policies themselves, they impacted the accounting policy information disclosed in the financial statements.
The amendments require the disclosure of ''material'' rather than ''significant'' accounting policies. The amendments also provide guidance on the application of materiality to disclosure of accounting policies, assisting the entities to provide useful, entity-specific accounting policy information that users need to understand other information in the financial statement.
Current / Non-current classification:
Based on the time involved between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has identified twelve months as its operating cycle for determining current and non-current classification of assets and liabilities in the balance sheet.
b) Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The board of directors assesses the financial performance and position of the Company, and makes strategic decisions. The managing director has been identified as being the chief operating decision maker. Refer Note 32 for segment information.
c) Foreign currency transactions and translations
(i) Functional and presentation currency
Items included in standalone financial statements are measured using the currency of the primary economic environment in which the entity operates ("functional currency"). The standalone financial statements are presented in Indian rupee (H), which is the company''s functional and presentation currency.
(ii) Transactions and balances
Monetary items denominated in foreign currencies at the year-end are translated into the functional currency at the exchange rate prevailing on the balance sheet date.
Non-monetary items are carried at historical cost using the exchange rates on the date of transaction, other than those measured at fair value. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other incomes/expenses.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs.
d) Revenue and income recognition Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
The Company assesses promises in the contract that are separate performance obligations to which a portion of transaction price is allocated.
Revenue is measured based on the transaction price as specified in the contract with the customer. It excludes discounts, incentives, volume rebates, goods & services tax and amounts collected on behalf of third parties. In determining the transaction price, the Company considers below, if any:
Variable consideration:
This includes discounts, incentives, volume rebates, etc. It is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. It is reassessed at end of each reporting period.
Contract balances
Trade receivables: A receivable represents the Company''s right to an amount of consideration that is unconditional i.e. only the passage of time is required before payment of consideration is due.
Contract liabilities: A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. Contract liabilities are recognised as revenue when the Company delivers performance obligation under the contract.
Interest Income:
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the amortised cost and at the effective interest rate applicable.
Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.
Export incentives
Export incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the term of scheme is established in respect of exports made and accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization of such duty credit.
e) Income tax
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in India.
Deferred tax is provided, on all temporary differences at the reporting date between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted at the reporting date. Tax relating to items recognised directly in equity or OCI is recognised in equity or OCI and not in the Statement of Profit and Loss.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset deferred tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
f) Leases
Ind AS 116 Leases replaces existing lease accounting guidance i.e. Ind AS 17 Leases. It sets out principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases, except short-term leases and leases for low-value items, under a single on-balance sheet lease accounting model. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments.
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the site on which it is located, less any lease incentives received. Certain lease arrangements include the option to extend or terminate the lease before the end of the lease term.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole.
Lease payments included in the measurement of the lease liability comprises of fixed payments, including in-substance fixed payments, amounts expected to be payable under a residual value guarantee and the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option.
The lease liability is subsequently remeasured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company''s estimate of the amount expected to be payable under a residual value guarantee, or if Company changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right of use asset or is recorded in the Statement of Profit and Loss if the carrying amount of the right-of-use asset has been reduced to zero.
Lease liability and the right of use asset have been separately presented in the balance sheet and lease payments have been classified as financing activities.
The Company has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of less than or equal to 12 months with no purchase option and assets with low value leases. The Company recognises the lease payments associated with these leases as an expense in Statement of Profit and Loss over the lease term. The related cash flows are classified as operating activities.
g) Impairment of assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount, which is the higher of the value in use or fair value less cost to sell, of the asset or cash-generating unit, as the case may be, is estimated and impairment loss (if any) is recognised and the carrying amount is reduced to its recoverable amount. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
When an impairment loss subsequently reverses, the carrying amount of the asset or a cash-generating unit is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) earlier.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
h) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
i) Inventories
Inventories are valued at cost or net realizable value, whichever is lower. The basis of determining cost for various categories of inventories is as follows:
The Company considers various factors like shelf life, ageing of inventory, product discontinuation, price changes and any other factor which impact the Company''s business in determining the allowance for obsolete, non-saleable and slow moving inventories. The Company considers the above factors and adjusts the inventory provision to reflect its actual experience on a periodic basis.
j) Financial assets and liabilities
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
A financial asset is recognised in the balance sheet when the Company becomes party to the contractual provisions of the instrument. All financial assets are recognised initially at fair value, plus in the case of financial assets not recorded at fair value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial assets. However, trade receivables that do not contain a significant financing component are measured at transaction price.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified into:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other comprehensive income (FVTOCI);
c) Financial assets measured at fair value through statement of profit and loss (FVTPL).
The Company classifies its financial assets in the above mentioned categories based on:
a) The Company''s business model for managing the financial assets;
b) The contractual cash flows characteristics of the financial asset.
Financial assets measured at amortised cost
A financial asset is measured at amortised cost if both of the following conditions are met:
a) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
b) The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade and other receivables.
Financial assets measured at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
a) The financial asset is held within a business model whose objective is achieved by both collecting the contractual cash flows and selling financial assets; and
b) The asset''s contractual cash flows represent SPPI.
Financial assets measured at fair value through the statement of profit and loss (FVTPL)
FVTPL is a residual category. Any financial asset, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to designate a financial asset, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch'').
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company''s balance sheet) when:
a) The contractual rights to the cash flows from the financial asset have expired, or
b) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either:
i) The Company has transferred substantially all the risks and rewards of the asset, or
ii) The Company has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of the asset.
Impairment of financial assets
The Company assesses impairment based on expected credit loss (ECL) model to the following:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other comprehensive income Expected credit losses are measured through a loss allowance at an amount equal to:
a) The 12 month''s expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
b) Full time expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
The Company follows a ''simplified approach'' for recognition of impairment loss allowance on trade receivables. Under the simplified approach, the Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade
receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables which is adjusted for management''s estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through statement of profit and loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value.
The Company''s financial liabilities include trade and other payables.
Subsequent measurement
a) Financial liabilities measured at amortised cost;
b) Financial liabilities subsequently measured at fair value through statement of profit and loss (FVTPL)
Trade and other payables
These amounts represent liability for goods and services provided to the Company prior to the end of the financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet when, and only when, there is a legally enforceable right to offset the recognised amount and there is intention either to settle on net basis or to realise the assets and to settle the liabilities simultaneously.
k) Property, plant and equipment Recognition and measurement
Items of PPE are measured at cost less accumulated depreciation and accumulated impairment losses, if any. Cost of an item of PPE comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
Capital work-in-progress is stated at cost. All the direct expenditure related to implementation including incidental expenditure incurred during the period of implementation of a project, till it is commissioned, is accounted as Capital work-in-progress and after commissioning the same is transferred / allocated to the respective item of PPE. Pre-operative costs, being indirect in nature, are expensed to the Statement of Profit and Loss as and when incurred.
If significant parts of an item of PPE have different useful lives, then they are accounted for as separate items (major components) of PPE.
Any gain or loss on disposal of an item of PPE is recognised in the Statement of Profit and Loss.
Subsequent expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
Depreciation methods, estimated useful lives and residual value.
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives which are in accordance with Schedule II to the Companies Act, 2013. The property, plant and equipment acquired under finance leases is depreciated over the asset''s useful life or over the shorter of the asset''s useful life and the lease term if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term.
An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other incomes/expenses.
l) Intangible assets Recognition and measurement
Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of the asset can be measured reliably. Intangible assets are initially measured at cost. Such intangible assets are subsequently measured at cost less accumulated recognised i and any accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is recognised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in the Statement of Profit and Loss as incurred.
Amortisation
Intangible assets are amortised over the estimated period of benefit i.e. 3 to 10 years.
m) Intangible assets under development
The Company expenses costs incurred during research phase to profit or loss in the year in which they are incurred. Development phase expenses are initially recognised as intangible assets under development until the development phase is complete, upon which the amount is recognised as intangible asset.
n) Borrowings costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are recognised. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for recognised ion.
Other borrowing costs are expensed in the period in which they are incurred.
Mar 31, 2023
Significant accounting policies
a) Basis of preparation and measurement
i) Compliance with Ind AS
These standalone financial statements of the company
have been prepared in accordance with the Indian
Accounting Standards (Ind AS) notified under Section
133 of the Companies Act, 2013 (the Act) read with
Companies (Indian Accounting Standards) Rules,
2015 as amended from time to time.
ii) Historical cost convention
These financial statements have been prepared on the
historical cost basis except for defined benefit plans -
net defined benefit (asset) / liabilities which have been
measured at fair value based on principles of Ind AS 19
-"Employee benefitsâ.
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 under current market conditions,
regardless of whether that price is directly observable
or estimated using another valuation technique. In
determining the fair value of an asset or a liability, the
Group takes into account the characteristics of the
asset or liability if market participants would take those
characteristics into account when pricing the asset or
liability at the measurement date.
All assets and liabilities have been classified as current
or non-current as per the Company''s normal operating
cycle and other criteria set out in the Schedule III to
the Act.
b) Segment reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker.
The board of directors assesses the financial performance
and position of the Company, and makes strategic decisions.
The managing director has been identified as being the
chief operating decision maker. Refer Note 32 for segment
information.
c) Foreign currency transactions and translations
(i) Functional and presentation currency
Items included in standalone financial statements are
measured using the currency of the primary economic
environment in which the entity operates ("functional
currencyâ). The standalone financial statements are
presented in Indian rupee (H), which is the company''s
functional and presentation currency.
(ii) Transactions and balances
Monetary items denominated in foreign currencies at
the year-end are translated into the functional currency
at the exchange rate prevailing on the balance sheet
date.
Non-monetary items are carried at historical cost using
the exchange rates on the date of transaction, other
than those measured at fair value. Non-monetary items
that are measured at fair value in a foreign currency are
translated using the exchange rates at the date when
the fair value was determined. Translation differences
on assets and liabilities carried at fair value are reported
as part of the fair value gain or loss. Foreign exchange
gains and losses are presented in the statement of
profit and loss on a net basis within other incomes/
expenses.
Foreign exchange differences regarded as an
adjustment to borrowing costs are presented in the
statement of profit and loss, within finance costs.
d) Revenue and income recognition
Revenue from contracts with customers
Revenue from contracts with customers is recognised
when control of the goods or services are transferred to the
customer at an amount that reflects the consideration to
which the Company expects to be entitled in exchange for
those goods or services.
The Company assesses promises in the contract that are
separate performance obligations to which a portion of
transaction price is allocated.
Revenue is measured based on the transaction price as
specified in the contract with the customer. It excludes
discounts, incentives, volume rebates, goods & services
tax and amounts collected on behalf of third parties. In
determining the transaction price, the Company considers
below, if any:
Variable consideration:
This includes discounts, incentives, volume rebates, etc.
It is estimated at contract inception and constrained until
it is highly probable that a significant revenue reversal
in the amount of cumulative revenue recognised will not
occur when the associated uncertainty with the variable
consideration is subsequently resolved. It is reassessed at
end of each reporting period.
Contract balances
Trade receivables: A receivable represents the Company''s
right to an amount of consideration that is unconditional
i.e. only the passage of time is required before payment of
consideration is due.
Contract liabilities: A contract liability is the obligation
to transfer goods or services to a customer for which the
Company has received consideration (or an amount of
consideration is due) from the customer. Contract liabilities
are recognised as revenue when the Company delivers
performance obligation under the contract.
Interest Income:
Interest income from a financial asset is recognised when
it is probable that the economic benefits will flow to the
Company and the amount of income can be measured
reliably. Interest income is accrued on a time basis, by
reference to the amortised cost and at the effective interest
rate applicable.
Government grants
Grants from the government are recognised at their fair
value where there is a reasonable assurance that the grant
will be received and the Company will comply with all
attached conditions.
Government grants relating to income are deferred and
recognised in the profit or loss over the period necessary
to match them with the costs that they are intended to
compensate and presented within other income.
Export incentives
Export incentive available under prevalent scheme is
accrued in the year when the right to receive credit as per
the term of scheme is established in respect of exports
made and accounted to the extent there is no significant
uncertainty about the measurability and ultimate utilization
of such duty credit. The same forms part of other non
operating income of the Group.
e) Income tax
The income tax expense or credit for the period is the tax
payable on the current period''s taxable income based on
the applicable income tax rate adjusted by changes in
deferred tax assets and liabilities attributable to temporary
differences.
The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end of
the reporting period in India.
Deferred tax is provided, on all temporary differences at the
reporting date between the tax base of assets and liabilities
and their carrying amounts for financial reporting purposes.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to be applied to the temporary
differences when they reverse, based on the laws that have
been enacted or substantively enacted at the reporting
date. Tax relating to items recognised directly in equity or
OCI is recognised in equity or OCI and not in the Statement
of Profit and Loss.
Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset deferred tax assets and
liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and tax liabilities
are offset where the entity has a legally enforceable right to
offset and intends either to settle on a net basis, or to realize
the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss,
except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
f) Leases
Ind AS 116 - Leases:
Ind AS 116 Leases replaces existing lease accounting
guidance i.e. Ind AS 17 Leases. It sets out principles for the
recognition, measurement, presentation and disclosure of
leases and requires lessees to account for all leases, except
short-term leases and leases for low-value items, under a
single on-balance sheet lease accounting model. A lessee
recognises a right-of-use asset representing its right to use
the underlying asset and a lease liability representing its
obligation to make lease payments.
The Company recognises a right-of-use asset and a lease
liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the
initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus
any initial direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to restore the
site on which it is located, less any lease incentives received.
Certain lease arrangements include the option to extend or
terminate the lease before the end of the lease term.
The right-of-use asset is subsequently depreciated using
the straight-line method from the commencement date to
the earlier of the end of the useful life of the right-of-use
asset or the end of the lease term. The estimated useful
lives of right of-use assets are determined on the same basis
as those of property, plant and equipment. In addition, the
right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain re-measurements of
the lease liability.
The lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement
date, discounted using incremental borrowing rate. For
leases with reasonably similar characteristics, the Company,
on a lease by lease basis, may adopt either the incremental
borrowing rate specific to the lease or the incremental
borrowing rate for the portfolio as a whole.
Lease payments included in the measurement of the lease
liability comprises of fixed payments, including in-substance
fixed payments, amounts expected to be payable under a
residual value guarantee and the exercise price under a
purchase option that the Company is reasonably certain to
exercise, lease payments in an optional renewal period if
the Company is reasonably certain to exercise an extension
option.
The lease liability is subsequently remeasured at amortised
cost using the effective interest method. It is remeasured
when there is a change in future lease payments arising
from a change in an index or rate, if there is a change in the
Company''s estimate of the amount expected to be payable
under a residual value guarantee, or if Company changes
its assessment of whether it will exercise a purchase,
extension or termination option.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount
of the right of use asset or is recorded in the Statement of
Profit and Loss if the carrying amount of the right-of-use
asset has been reduced to zero.
Lease liability and the right of use asset have been separately
presented in the balance sheet and lease payments have
been classified as financing activities.
The Company has elected not to recognise right-of-use
assets and lease liabilities for short term leases that have
a lease term of less than or equal to 12 months with no
purchase option and assets with low value leases. The
Company recognises the lease payments associated with
these leases as an expense in Statement of Profit and Loss
over the lease term. The related cash flows are classified as
operating activities.
g) Impairment of assets
At the end of each reporting period, the Company reviews
the carrying amounts of its tangible and intangible assets
to determine whether there is any indication that those
assets have suffered an impairment loss. If any such
indication exists, the recoverable amount, which is the
higher of the value in use or fair value less cost to sell, of
the asset or cash-generating unit, as the case may be, is
estimated and impairment loss (if any) is recognised and
the carrying amount is reduced to its recoverable amount.
In assessing the value in use, the estimated future cash
flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset
for which the estimates of future cash flows have not been
adjusted. When it is not possible to estimate the recoverable
amount of an individual asset, the Company estimates the
recoverable amount of the cash-generating unit to which
the asset belongs.
When an impairment loss subsequently reverses, the
carrying amount of the asset or a cash-generating unit is
increased to the revised estimate of its recoverable amount,
so that the increased carrying amount does not exceed the
carrying amount that would have been determined had no
impairment loss been recognised for the asset (or cash¬
generating unit) earlier.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment at
least annually, and whenever there is an indication that the
asset may be impaired.
h) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits
held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three
months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant
risk of changes in value.
i) Inventories
Inventories are valued at cost or net realizable value,
whichever is lower. The basis of determining cost for various
categories of inventories is as follows:
j) Financial assets and liabilities
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.
Financial assets
Initial recognition and measurement
A financial asset is recognised in the balance sheet when
the Company becomes party to the contractual provisions of
the instrument. All financial assets are recognised initially at
fair value, plus in the case of financial assets not recorded
at fair value through profit or loss (FVTPL), transaction costs
that are attributable to the acquisition of the financial assets.
However, trade receivables that do not contain a significant
financing component are measured at transaction price.
Subsequent measurement
For purpose of subsequent measurement, financial assets
are classified into:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other
comprehensive income (FVTOCI);
c) Financial assets measured at fair value through
statement of profit and loss (FVTPL).
The Company classifies its financial assets in the above
mentioned categories based on:
a) The Company''s business model for managing the
financial assets;
b) The contractual cash flows characteristics of the
financial asset.
Financial assets measured at amortised cost
A financial asset is measured at amortised cost if both of the
following conditions are met:
a) The financial asset is held within a business model
whose objective is to hold financial assets in order to
collect contractual cash flows; and
b) The contractual terms of the financial assets give rise on
specified dates to cash flows that are solely payments
of principal and interest (SPPI) on the principal amount
outstanding.
Financial assets are subsequently measured at amortised
cost using the effective interest rate (EIR) method.
Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortisation is
included in finance income in the statement of profit and
loss. The losses arising from impairment are recognised
in the statement of profit and loss. This category generally
applies to trade and other receivables.
Financial assets measured at fair value through other
comprehensive income (FVTOCI)
A financial asset is measured at fair value through other
comprehensive income if both of the following conditions
are met:
a) The financial asset is held within a business model
whose objective is achieved by both collecting the
contractual cash flows and selling financial assets; and
b) The asset''s contractual cash flows represent SPPI.
Financial assets measured at fair value through the
statement of profit and loss (FVTPL)
FVTPL is a residual category. Any financial asset, which
does not meet the criteria for categorization as at amortized
cost or as FVTOCI, is classified as at FVTPL. In addition,
the Company may elect to designate a financial asset,
which otherwise meets amortized cost or FVTOCI criteria,
as at FVTPL. However, such election is allowed only if doing
so reduces or eliminates a measurement or recognition
inconsistency (referred to as âaccounting mismatch'').
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
primarily derecognised (i.e. removed from the Company''s
balance sheet) when:
a) The contractual rights to the cash flows from the
financial asset have expired, or
b) The Company has transferred its rights to receive cash
flows from the asset or has assumed an obligation to pay
the received cash flows in full without material delay to
a third party under a âpass-through âarrangement; and
either:
i) The Company has transferred substantially all the
risks and rewards of the asset, or
ii) The Company has neither transferred nor retained
substantially all the risks and rewards of the asset
but has transferred control of the asset.
Impairment of financial assets
The Company assesses impairment based on expected
credit loss (ECL) model to the following:
a) Financial assets measured at amortised cost;
b) Financial assets measured at fair value through other
comprehensive income
Expected credit losses are measured through a loss
allowance at an amount equal to:
a) The 12 month''s expected credit losses (expected credit
losses that result from those default events on the
financial instrument that are possible within 12 months
after the reporting date); or
b) Full time expected credit losses (expected credit losses
that result from all possible default events over the life
of the financial instrument).
The Company follows a âsimplified approach'' for recognition
of impairment loss allowance on trade receivables. Under
the simplified approach, the Company uses a provision
matrix to determine impairment loss allowance on the
portfolio of trade receivables. The provision matrix is
based on its historically observed default rates over the
expected life of the trade receivable which is adjusted
for management''s estimates. At every reporting date, the
historical observed default rates are updated and changes
in the forward-looking estimates are analysed.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through statement of profit
and loss, loans and borrowings, payables, or as derivatives
designated as hedging instruments in an effective hedge,
as appropriate. All financial liabilities are recognised initially
at fair value.
The Company''s financial liabilities include trade and other
payables.
Subsequent measurement
a) Financial liabilities measured at amortised cost;
b) Financial liabilities subsequently measured at fair value
through statement of profit and loss (FVTPL)
Trade and other payables
These amounts represent liability for goods and services
provided to the Company prior to the end of financial year
which are unpaid. Trade and other payables are presented
as current liabilities unless payment is not due within 12
months after the reporting period. They are recognised
initially at fair value and subsequently measured at
amortised cost using the effective interest method.
Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the
borrowings using the effective interest method. Fees paid
on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this
case, the fee is deferred until the draw down occurs. To the
extent there is no evidence that it is probable that some or
all of the facility will be drawn down, the fee is capitalised as
a prepayment for liquidity services and amortised over the
period of the facility to which it relates.
Borrowings are classified as current liabilities unless the
Company has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
Derecognition
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms, or the
terms of an existing liability are substantially modified, such
an exchange or modification is treated as the derecognition
of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is
recognised in the Statement of Profit and Loss.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the
net amount is reported in the balance sheet when, and
only when, there is a legally enforceable right to offset the
recognised amount and there is intention either to settle on
net basis or to realise the assets and to settle the liabilities
simultaneously.
k) Property, plant and equipment
Recognition and measurement
Items of PPE are measured at cost less accumulated
depreciation and accumulated impairment losses, if any.
Cost of an item of PPE comprises its purchase price,
including import duties and non-refundable purchase
taxes, after deducting trade discounts and rebates, any
directly attributable cost of bringing the item to its working
condition for its intended use and estimated costs of
dismantling and removing the item and restoring the site on
which it is located.
Capital work-in-progress is stated at cost. All the direct
expenditure related to implementation including incidental
expenditure incurred during the period of implementation
of a project, till it is commissioned, is accounted as Capital
work-in-progress and after commissioning the same is
transferred / allocated to the respective item of PPE. Pre¬
operative costs, being indirect in nature, are expensed to
the Statement of Profit and Loss as and when incurred.
If significant parts of an item of PPE have different useful
lives, then they are accounted for as separate items (major
components) of PPE.
Any gain or loss on disposal of an item of PPE is recognised
in the Statement of Profit and Loss.
Subsequent expenditure
Subsequent expenditure is capitalized only if it is probable
that the future economic benefits associated with the
expenditure will flow to the Company.
Depreciation methods, estimated useful lives and residual
value.
Depreciation is calculated using the straight-line method
to allocate their cost, net of their residual values, over
their estimated useful lives which are in accordance with
Schedule II to the Companies Act, 2013. The property,
plant and equipment acquired under finance leases is
depreciated over the asset''s useful life or over the shorter
of the asset''s useful life and the lease term if there is no
reasonable certainty that the Company will obtain ownership
at the end of the lease term.
An asset''s carrying amount is written down immediately
to its recoverable amount if the asset''s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in profit
or loss within other incomes/expenses.
Investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for
capitalisation.
Other borrowing costs are expensed in the period in which
they are incurred.
l) Intangible assets
Recognition and measurement
Intangible assets are recognised when it is probable that the
future economic benefits that are attributable to the assets
will flow to the Company and the cost of the asset can be
measured reliably. Intangible assets are initially measured
at cost. Such intangible assets are subsequently measured
at cost less accumulated amortisation and any accumulated
impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalised only when it
increases the future economic benefits embodied in the
specific asset to which it relates. All other expenditure is
recognised in the Statement of Profit and Loss as incurred.
Amortisation
Intangible assets are amortised over the estimated period of
benefit i.e. 3 to 10 years.
m) Intangible assets under development
The Company expenses costs incurred during research
phase to profit or loss in the year in which they are incurred.
Development phase expenses are initially recognised as
intangible assets under development until the development
phase is complete, upon which the amount is capitalised as
intangible asset.
n) Borrowings costs
General and specific borrowing costs that are directly
attributable to the acquisition, construction or production
of a qualifying asset are capitalised. Qualifying assets are
assets that necessarily take a substantial period of time to
get ready for their intended use or sale.
Mar 31, 2018
1 Significant accounting policies
a. Basis of preparation
i. Compliance with Ind AS
These financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
The financial statements up to year ended 31st March, 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.
These financial statements are the first financial statements of the Company under Ind AS.
Refer note 39 for an explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows.
ii. Historical cost convention
The financial statements have been prepared on a historical cost basis, except for the following:
- defined benefit plans - plan assets measured at fair value.
- certain financial assets and liabilities that are measured at fair value.
iii. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
iv. New standards or interpretations adopted by the Company
The Company has applied the following amendment for the first time for its annual reporting period commencing 1st April, 2017:
Amendment to Ind AS 7 âStatement of Cash Flowsâ:
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of Standalone Financial Statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.
The adoption of this amendment did not have any impact on the amounts recognised in prior periods. When the Company first applies these amendments, it is not required to provide comparative information for preceding periods.
v. New standards or interpretations issued by but not yet effective
The Company will apply the following standard for the first time for its annual reporting period commencing 1st April, 2018:
Ind AS 115 - Revenue from Contracts from Customers
On March 28, 2018, the Ministry of Corporate Affairs issued Companies (Indian Accounting Standards) Amendment Rules, 2018, notifying Ind AS 115 - Revenue from Contracts with Customers. The accounting standard is applicable to the Company from April 1, 2018.
This will replace Ind AS 18 which covers contracts for goods and services. Entities will have a choice of full retrospective application, or modified retrospective application with additional disclosures.
The new standard is based on the principle that revenue is recognized when control of a good or service transfers to a customer and essentially replaces the existing notion of risks and rewards. The management is evaluating the requirements of the new standard and the effect on the financial statements.
Ind AS 21 - The Effects of Changes in Foreign Exchange Rate: Appendix B to Ind AS 21, Foreign currency transactions and advance consideration.
On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The company is in the process of evaluating the impact.
b. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The board of directors assesses the financial performance and position of the Company, and makes strategic decisions. The managing director has been identified as being the chief operating decision maker. Refer Note 31 for segment information.
c. Foreign currency transactions and translations
i. Functional and presentation currency
Items included in financial statements are measured using the currency of the primary economic environment in which the entity operates (âfunctional currencyâ). The financial statements are presented in Indian rupee (f), which is the companyâs functional and presentation currency.
ii. Transactions and balances
Foreign currency transactions are translated into the functional currency using exchange rates at the date of the transaction. Foreign exchange gains and losses from settlement of these transactions, and from translation of monetary assets and liabilities at the reporting date exchange rates are recognised in the Statement of Profit and Loss. Foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other incomes/expenses.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs.
d. Revenue and income recognition
Sale of products
Timing of recognition: The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity, the significant risk and reward of ownership has passed onto the customer, the recovery of the cost can be estimated reliably and there is no continuing managerial involvement with the product.
Measurement of revenue: Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty and net of returns, trade allowances, rebates, and excluding amounts collected on behalf of third parties (viz goods and services tax)
Revenue with respect to Other Operating Income and Other Income is recognised when a reasonable certainty as to its realization exists. Interest income from financial assets such as time deposits is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset.
e. Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.
Export incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the term of scheme is established in respect of exports made and accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization of such duty credit.
f. Income tax
The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in India.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset deferred tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
g. Leases
Leases of property, plant and equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the leaseâs inception at the fair value of the leased asset or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is (or contains) a lease of fulfillment of the arrangement is dependent on the use of a specified asset or assets in a contract.
These leases are analyzed based on the situations and indicators set out in Ind AS 17 in order to determine whether they are finance leases or operating leases.
A finance lease is defined as a lease which transfers substantially all the risks and rewards incidental to the ownership of the related asset to the lessee. All leases which do not comply with the definition of finance lease are classified as operating leases.
Appendix C of Ind AS 17 deals with the identification of services and take-or-pay contracts that do not take the legal form of lease but convey rights to customers/suppliers to use an asset or assets in return for a payment or a series of fixed payments. Contracts meeting these criteria are identified as either operating leases or finance leases. In the later case, a finance lease receivable is recognized to reflect the financing deemed to be granted by the company where it is considered as acting as a lessor and its customer as lessees.
The Company has assessed certain take-or-pay contract manufacturing agreements where it manufactures on behalf of the customer using identified plant and machinery. The customer has an exclusive right-of-first-refusal over which the output from such identified plant and machinery.
In case of finance leases, where assets are leased out under a finance lease, the amount recognized under finance lease receivables is an amount equal to the net investment in the lease.
h. Impairment of assets
Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the assetâs carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less cost of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor.
When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the statement of profit and loss, to the extent the amount was previously charged to the statement of profit and loss.
i. Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
j. Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment if any.
k. Inventories
Raw materials and stores, work in progress, traded and finished goods are stated at the lower of cost and net realisable value. Cost of raw materials and traded goods comprises cost of purchases, cost of conversion and all other costs incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on the basis of first-in first-out basis.
Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
I. Financial assets and liabilities
i. Financial assets
1. Classification
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
- those measured at amortised cost.
Financial assets other than equity instruments
For financial assets other than equity, the classification will depend on contractual terms of the cash flows and on the business model in which the financial asset is held. The Company reclassifies the financial assets other than equity when and only when its business model for managing those assets changes.
Financial assets that are equity instruments
For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.
Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in statement of profit or loss.
Financial assets other than equity instruments
Measured at amortised cost: Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortised cost using the effective interest rate (âElRâ) method less impairment, if any. The amortisation of EIR and loss arising from impairment, if any is recognised in the Statement of Profit and Loss.
Measured at fair value through other comprehensive income: Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through other comprehensive income. Fair value movements are recognised in the other comprehensive income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to âother incomeâ in the Statement of Profit and Loss.
Measured at fair value through profit or loss: A financial asset not classified as either amortised cost or FVOCI, is classified as FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised as âother incomeâ in the Statement of Profit and Loss.
Currently, the Company holds no âother than equity instrumentâ financial assets that are classified as fair value through other comprehensive income.
Financial assets that are equity instruments
The Company subsequently measures all equity investments at fair value. Where the Companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Companyâs right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in other income/ expenses in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
Impairment of financial assets
The Company is required to assess on a forward looking basis the expected credit losses associated with its assets carried at amortised cost which includes trade receivables, security deposits etc. For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables. The impairment methodology applied on other financial assets depends on whether there has been a significant increase in credit risk.
Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.
ii. Financial liabilities:
1. Initial recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at its fair value plus or minus transaction costs that are directly attributable to the issue of the financial liability in case its classification is amortised cost viz. trade and other payables, borrowings etc.
The Company has no financial liabilities that are measured at fair value through profit or loss.
2. Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using the EIR method.
Trade and other payables
Trade payables represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current financial liabilities unless payment is not due within 12 months after the reporting period.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.
3. Derecognition
A financial liability is derecognised when the obligation specified in the contract is discharged, cancelled or expires.
m. Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
n. Property, plant and equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
i. Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2015 measured as per the previous GAAP and use that carrying value as the deemed cost of the property, plant and equipment.
ii. Depreciation methods, estimated useful lives and residual value
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives. The property, plant and equipment acquired under finance leases is depreciated over the assetâs useful life or over the shorter of the assetâs useful life and the lease term if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term.
An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other incomes/expenses.
0. Intangible assets
Intangible Assets are stated at cost of acquisition less accumulated amortisation/ impairment losses, if any. Intangible assets are amortised on a straight-line basis over their estimated useful lives. Company has estimated useful life for computer software at 6 years and for patents and copyrights at 10 years.
Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Statement of Profit and Loss.
1. Transition to Ind /4S
On transition to Ind AS, the Company has elected to continue with the carrying value of all its intangible assets recognised as at April 1, 2016 measured as per the previous GAAP and use that carrying value as the deemed cost of the intangible assets.
2. Amortization methods, estimated useful lives and residual values
The Company amortizes intangible assets with a finite useful life using the straight-line method over the estimated useful lives. Computer Software is amortised over a period of six years based on terms of the software licenses. The estimated useful life and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in the estimates being accounted for on a prospective basis.
p. Borrowings costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
Other borrowing costs are expensed in the period in which they are incurred.
q. Provisions and contingencies
A provision is recognised when the Company has a present obligation, legal or constructive, as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding employee benefit obligations) are discounted to their present value using a pre-tax rate that reflects current market assessments of time value of money, where the timing of settlement is more than one year and is reliably predictable. The increase in provision due to passage of time is recorded as interest expense in the statement of profit and loss. In case, the timing of ultimate settlement is not reliably predictable, the amount of provision is determined based on the best estimate required to settle the obligation at the balance sheet date. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best assessments.
Contingencies are disclosed in the notes.
r. Employees Benefits
i. Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
ii. Long-term obligations
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
iii. Post-employment obligations
The Company operates the following post-employment schemes:
- defined benefit plans such as gratuity, and
- defined contribution plans such as provident fund.
1. Defined benefit plans
The employeesâ gratuity fund scheme managed by HDFC Standard Life Insurance is a defined benefit plan.
The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.
2. Defined contribution plans
Companyâs contribution to Provident fund and other funds are determined under the relevant schemes and/or statute and charged to revenue.
s. Contributed equity
Equity shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
t. Dividends
Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period
u. Earnings per share
i. Basic earnings per share
Basic earnings per share is calculated by dividing:
- the profit attributable to owners of the Company
- by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares.
ii. Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
- the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
v. Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
Mar 31, 2017
1. Corporate Information
Shaily Engineering Plastics Limited (the Company) is a Public Limited Company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in the manufacture and sale of injection moulded precision plastic components and sub-assemblies. The Company''s manufacturing facilities are at Savli and Halol, Baroda, Gujarat, India.
2. Significant Accounting Policies
2.1. Framework of Preparation of Financial Statements :
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act") as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
2.2. System of Accounting :
The Company has adopted accrual system of accounting.
2.3. Use of Estimates :
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions.
2.4. Revenue :
i. Sales and services are accounted inclusive of excise duty but excluding Sales Tax, and are net of returns / discounts / debit notes / reversals.
ii. Revenue from sales of product is recognized on the transfer of substantial risk and rewards of ownership, which generally coincides with the delivery of goods to customers.
iii. Revenue from services is recognized when services are rendered and related costs are incurred.
iv. Export Incentive available under prevalent scheme is accrued in the year when the right to receive credit as per the term of scheme is established is established in respect of exports made and accounted to the extent there is no significant uncertainty about the measurability and ultimate utilization of such duty credit.
v. Revenue with respect to Other Operating Income and Other Income is recognized when a reasonable certainty as to its realization exists. Interest income is accounted on accrual basis. Dividend income is accounted for when the same is received.
2.5. Fixed Assets :
Fixed Assets acquired on amalgamation with erstwhile Anmol Trading Company Ltd on 1st April 2001 are stated at fair value determined at the time of amalgamation. Assets acquired thereafter are shown at cost. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. Subsequent expenditure on fixed assets after its purchase / completion is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.
Capital Work-in-progress
Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest.
Intangible assets under development:
Expenditure on Research and development (Refer Note 2.19) eligible for capitalization are carried as Intangible assets under development where such assets are not yet ready for their intended use.
2.6. Depreciation, Amortization and Impairment
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
2.7. Investments
Investments are either classified as current or long term based on management''s intention at the time of purchase. ''Long-term investments, are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.
2.8. Inventories
Inventories are valued at lower of cost and net realizable value. Cost of inventories comprises cost of purchase, cost of conversion and other cost incurred in bringing them to their present location and conditions. The cost of Raw Material, Packing Material and Stores & Spares inventories is determined based on the First in First out method and that of Work-in-Process and Finished Goods inventories is based on Retail Valuation Method. Excise duty liability is provided for on finished goods lying with the Company.
2.9. Employee Benefits Defined Contribution Plan
Company''s contribution to Provident fund and other funds are determined under the relevant schemes and/or statute and charged to revenue.
Defined Benefit Plan
The employees'' gratuity fund scheme managed by HDFC Standard Life Insurance is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in the same manner as gratuity.
Short term Employee Benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service. These benefits include compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.
2.10. Foreign Currency Transactions
Transactions denominated in foreign currencies are recorded at the exchange rates prevailing at the date of transaction. Monetary items denominated in foreign currency at the yearend are translated at year end rates. The exchange difference arising on settlement /translation are recognized in the revenue accounts.
2.11. Borrowing Costs
Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalization of such asset are added to the cost of the assets. Capitalization of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
2.12. Taxation
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.
Deferred tax expense or benefit is recognized on timing differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax asset on account of unabsorbed loss/depreciation is recognized only if virtual certainty, supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability.
Current and deferred tax relating to items directly recognized in reserves are recognized in reserves and not in the Statement of Profit and Loss.
2.13. Cash and Cash Equivalents and Cash Flow
Statement
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
2.14. Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the financial statements.
2.15. Share Issue Expenses
Share issue expenses are adjusted against the Securities Premium Account as permissible under Section 52 of the Companies Act, 2013, to the extent any balance is available for utilization in the Securities Premium Account. Share issue expenses in excess of the balance in the Securities Premium Account is expensed in the Statement of Profit and Loss.
2.16. Leases
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis over the lease term.
2.17. Service Tax Input Credit
Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is reasonable certainty in availing / utilizing the credits.
2.18. Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
2.19. Research & Development
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product''s technical feasibility has been established, in which case such expenditure is capitalized. The amount capitalized comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilized for research and development are capitalized and depreciated in accordance with the policies stated for Fixed Assets.
The Board of Directors has recommended dividend of ''5/- per Equity share of 10/- each (i.e.50%) subject to the shareholders approval in the ensuing 37th Annual General Meeting.
27.4 Details on derivatives instruments and unheeded foreign currency exposures
I. The Company has taken Interest Rate Swaps to hedge against fluctuation in interest rate changes. No. of contracts 2. ( As at 31st March, 2016 - 2).
(b) Currency swaps (other than forward exchange contracts stated above) to hedge against fluctuations in changes in exchange rate. No. of contracts: Nil (As at 31 March, 2016: Nil)
Mar 31, 2014
1.1 Framework of Preparation of Financial Statements:
The financial statements have been prepared under the historical cost
convention in accordance with the Accounting Standards as given in
Companies Accounting Standards Rules, 2006 and the relevant provisions
of Companies Act, 1956 except as regards certain fixed assets as
indicated below shown at fair value.
2.2 System of Accounting:
The Company has adopted accrual system of accounting.
2.3 Use of Estimates:
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent amounts as at the date of
financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates. Such difference is recognized in the periods in which the
results are known / materialized.
2.4 Revenue:
Sales and services are accounted inclusive of excise duty but excluding
Sales Tax, and are net of returns / discounts / debit notes /
reversals.
Revenue from sales of product is recognised on the transfer of
substantial risk and rewards of ownership.
2.5 Fixed Assets:
Fixed Assets acquired on amalgamation on 1st April 2001 are stated at
fair value determined at the time of amalgamation. Assets acquired
thereafter are shown at cost. Cost includes all incidental expenditure,
net of cenvat, wherever applicable. Expenditure on software is
capitalised in accordance with the applicable Accounting Standard.
2.6 Depreciation and Amortisation:
Depreciation on fixed assets is calculated on straight-line method in
the manner and at the rates as prescribed in schedule XIV of the
Companies Act, 1956. Depreciation on additions / deletions to fixed
assets during the year is provided on a pro- rata basis.
2.7 Investments:
Investments are either classified as current or long term based on
management''s intention at the time of purchase. Current investments are
carried at lower of cost and fair value. Long term investments are
stated at cost. Provision is made for any diminution in value, if other
than temporary.
2.8 Inventories:
Inventories are valued at lower of cost and net realisable value. Cost
of inventories comprises cost of purchase, cost of conversion and other
cost incurred in bringing them to their present location and
conditions. The cost of inventories is determined based on the First in
First out method.
2.9 Employee Benefits:
Defined Contribution Plan
Company''s contribution to Provident fund and other funds are determined
under the relevant schemes and/or statute and charged to revenue.
Defined Benefit Plan
The employees'' gratuity fund scheme managed by HDFC Standard Life
Insurance is a defined benefit plan. The present value of obligation is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognises each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation. The obligation for leave
encashment is recognised in the same manner as gratuity.
2.10 Foreign Currency Transactions:
Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing at the date of transaction. Monetary items
denominated in foreign currency at the year end are translated at year
end rates. In respect of monetary items which are covered by forward
exchange contracts, the premium on such forward contracts is recognised
over the life of the forward contract. The exchange difference arising
on settlement /translation are recognised in the revenue accounts,.
2.11 Borrowing costs:
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset are added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
2.12 Taxation:
Current tax is determined as the amount of tax payable in respect of
taxable income for the period based on applicable tax rate and laws.
Deferred tax expense or benefit is recognised on timing differences
being the difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets and liabilities are measured
using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date. Deferred tax asset on
account of unabsorbed loss/depreciation is recognised only if virtual
certainty as regards absorption thereof exists.
2.13 Miscellaneous Expenditure:
Preliminary expenses are deferred over the period of 10 years.
Expenditure for raising equity/preference shares are deferred over the
period of 10 years.
2.14 Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurements
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
a. Terms & Rights attached to equity shares :
The Company has only one class of equity shares having face value of Rs
10/- each. Each holder of Equity share is entitled to one vote per
share.
In the event of Liquidation of the company, the holders of the equity
shares will be entitled to receive remaining assets of the company. The
distribution will be in proportion to the Number of equity shares held
by the Shareholders.
Mar 31, 2013
1.1 Framework of Preparation of Financial Statements:
The financial statements have been prepared under the historical cost
convention in accordance with the Accounting Standards as given in
Companies Accounting Standards Rules, 2006 and the relevant provisions
of Companies Act, 1956 except as regards certain fixed assets as
indicated below shown at fair value.
1.2 System of Accounting:
The Company has adopted accrual system of accounting.
1.3 Use of Estimates:
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent amounts as at the date of
financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.Such difference is recognized in the periods in which the
results are known / materialized.
1.4 Revenue:
Sales and services are accounted inclusive of excise duty but excluding
Sales Tax, and are net of returns / discounts / debit notes /
reversals.
Revenue from sales of product is recognised on the transfer of
substantial risk and rewards of ownership.
1.5 Fixed Assets:
Fixed Assets acquired on amalgamation on 1st April 2001 are stated at
fair value determined at the time of amalgamation. Assets acquired
thereafter are shown at cost. Cost includes all incidental expenditure,
net of cenvat, wherever applicable. Expenditure on software is
capitalised in accordance with the applicable Accounting Standard.
1.6 Depreciation and Amortisation:
Depreciation on fixed assets is calculated on straight-line method in
the manner and at the rates as prescribed in schedule XIV of the
Companies Act, 1956. Depreciation on additions / deletions to fixed
assets during the year is provided on a pro- rata basis.
1.7 Investments:
Investments are either classified as current or long term based on
management''s intention at the time of purchase. Current investments are
carried at lower of cost and fair value. Long term investments are
stated at cost. Provision is made for any diminution in value, if other
than temporary.
1.8 Inventories:
Inventories are valued at lower of cost and net realisable value. Cost
of inventories comprises cost of purchase, cost of conversion and other
cost incurred in bringing them to their present location and
conditions. The cost of inventories is determined based on the First in
First out method.
1.9 Employee Benefits:
Defined Contribution Plan
Company''s contribution to Provident fund and other funds are determined
under the relevant schemes and/or statute and charged to revenue.
Defined Benefit Plan
The employees'' gratuity fund scheme managed by HDFC Standard Life
Insurance is a defined benefit plan. The present value of obligation is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognises each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation. The obligation for leave
encashment is recognised in the same manner as gratuity.
1.10 Foreign Currency Transactions:
Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing at the date of transaction. Monetary items
denominated in foreign currency at the year end are translated at year
end rates. In respect of monetary items which are covered by forward
exchange contracts, the premium on such forward contracts is recognised
over the life of the forward contract. The exchange difference arising
on settlement /translation are recognised in the revenue accounts.
1.11 Taxation:
Current tax is determined as the amount of tax payable in respect of
taxable income for the period based on applicable tax rate and laws.
Deferred tax expense or benefit is recognised on timing differences
being the difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets and liabilities are measured
using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date. Deferred tax asset on
account of unabsorbed loss/depreciation is recognised only if virtual
certainty as regards absorption thereof exists.
1.12 Miscellaneous Expenditure:
Preliminary expenses deferred over the period of 10 years.
Expenditure for raising equity/preference shares are deferred over the
period of 10 years.
1.13 Provisions, Contingent Liabilities and Contigent Assets:
Provisions involving substantial degree of estimation in measurements
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
Mar 31, 2012
1.1 Framework of Preparation of Financial Statements:
The financial statements have been prepared under the historical cost
convention in accordance with the Accounting Standards as given in
Companies Accounting Standards Rules, 2006 and the relevant provisions
of Companies Act, 1956 except as regards certain fixed assets as
indicated below shown at fair value.
1.2 System of Accounting:
The Company has adopted accrual system of accounting.
1.3 Use of Estimates:
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent amounts as at the date of
financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates. Such difference is recognized in the periods in which the
results are known / materialized.
1.4 Revenue:
Sales and services are accounted inclusive of excise duty but excluding
Sales Tax, and are net of returns / discounts / debit notes /
reversals.
Revenue from sales of product is recognized on the transfer of
substantial risk and rewards of ownership.
1.5 Fixed Assets:
Fixed Assets acquired on amalgamation on 1st April 2001 are stated at
fair value determined at the time of amalgamation. Assets acquired
thereafter are shown at cost. Cost includes all incidental expenditure,
net of convert, wherever applicable. Expenditure on software is
capitalized in accordance with the applicable Accounting Standard.
1.6 Depreciation and Amortization:
Depreciation on fixed assets is calculated on straight-line method in
the manner and at the rates as prescribed in schedule XIV of the
Companies Act, 1956. Depreciation on additions / deletions to fixed
assets during the year is provided on a pro-rata basis.
1.7 Investments:
Investments are either classified as current or long term based on
management's intention at the time of purchase. Current investments
are carried at lower of cost and fair value. Long term investments are
stated at cost. Provision is made for any diminution in value, if other
than temporary.
1.8 Inventories:
Inventories are valued at lower of cost and net realizable value. Cost
of inventories comprises cost of purchase, cost of conversion and other
cost incurred in bringing them to their present location and
conditions. The cost of inventories is determined based on the First in
First out method.
1.9 Employee Benefits:
Defined Contribution Plan
Company's contribution to Provident fund and other funds are
determined under the relevant schemes and/or statute and charged to
revenue.
Defined Benefit Plan
The employees' gratuity fund scheme managed by HDFC Standard Life
Insurance is a defined benefit plan. The present value of obligation is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognizes each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation. The obligation for leave
encashment is recognized in the same manner as gratuity.
1.10 Foreign Currency Transactions:
Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing at the date of transaction. Monetary items
denominated in foreign currency at the yearend are translated at year
end rates. In respect of monetary items which are covered by forward
exchange contracts, the premium on such forward contracts is recognized
over the life of the forward contract. The exchange difference arising
on settlement /translation are recognized in the revenue accounts,.
1.11 Taxation:
Current tax is determined as the amount of tax payable in respect of
taxable income for the period based on applicable tax rate and laws.
Deferred tax expense or benefit is recognized on timing differences
being the difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets and liabilities are measured
using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date. Deferred tax asset on
account of unabsorbed loss/depreciation is recognized only if virtual
certainty as regards absorption thereof exists.
1.12 Miscellaneous Expenditure:
Preliminary expenses deferred over the period of 10 years.
Expenditure for raising equity/preference shares are deferred over the
period of 10 years.
1.13 Provisions, Contingent Liabilities and Contingent Assets:
Provisions involving substantial degree of estimation in measurements
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
Mar 31, 2011
A) Framework of Preparation of Financial Statements:
The financial statements have been prepared under the historical cost
convention in accordance with the Accounting Standards as given in
Companies Accounting Standards Rules, 2006 and the relevant provisions
of Companies Act, 1956 except as regards certain fixed assets as
indicated bellow shown at fair value.
b) System of Accounting:
The Company has adopted accrual system of accounting.
c) Use of Estimates:
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent amounts as at the date of
financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.Such difference is recognized in the periods in which the
results are known / materialized.
d) Revenue:
Sales and services are accounted inclusive of excise duty but excluding
Sales Tax, and are net of returns / discounts / debit notes /
reversals.
Revenue from sales of product is recognised on the transfer of
substantial risk and rewards of ownership.
e) Fixed Assets:
Fixed Assets acquired on amalgamation on 1st April 2001 are stated at
fair value determined at the time of amalgamation. Assets acquired
thereafter are shown at cost. Cost includes all incidental expenditure,
net of Cenvat, wherever applicable. Expenditure on software is
capitalised in accordance with the applicable Accounting Standard.
f) Depreciation and Amortisation:
Depreciation on fixed assets is calculated on straight-line method in
the manner and at the rates as prescribed in schedule XIV of the
Companies Act, 1956. Depreciation on additions / deletions to fixed
assets during the year is provided on a pro-rata basis.
g) Investments:
Investments are either classified as Current or Long term based on
managements intention at the time of purchase. Current Investments are
carried at lower of Cost and Fair Value. Long term Investments are
stated at cost. Provision is made for any diminution in value, if other
than temporary.
h) Inventories:
Inventories are valued at lower of cost and net realisable value. Cost
of inventories comprises cost of purchase, cost of conversion and other
cost incurred in bringing them to their present location and
conditions. The cost of inventories is determined based on the First in
First out method.
i) Employee Benefits:
Defined Contribution Plan
Companys contribution to Provident fund and other funds are determined
under the relevant schemes and/or statute and charged to revenue.
Defined Benefit Plan
The employees gratuity fund scheme managed by HDFC Standard Life
Insurance is a defined benefit plan. The present value of obligation is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognises each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation. The obligation for leave
encashment is recognised in the same manner as gratuity.
j) Foreign Currency Transactions:
Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing at the date of transaction. Monetary items
denominated in foreign currency at the year end are translated at year
end rates. In respect of monetary items which are covered by forward
exchange contracts, the premium on such forward contracts is recognised
over the life of the forward contract. The exchange difference arising
on settlement /translation are recognised in the revenue accounts,.
k) Taxation:
Current tax is determined as the amount of tax payable in respect of
taxable income for the period based on applicable tax rate and laws.
Deferred tax expense or benefit is recognised on timing differences
being the difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets and liabilities are measured
using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date. Deferred tax asset on
account of unabsorbed loss/depreciation is recognised only if virtual
certainty as regards absorption thereof exists.
l) Miscellaneous Expenditure:
Preliminary expenses deferred over the period of 10 years.
Expenditure for raising equity/preference shares are deferred over the
period of 10 years.
m) Provisions, Contingent Liabilities and Contigent Assets:
Provisions involving substantial degree of estimation in measurements
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
Mar 31, 2010
A) Framework of Preparation of Financial Statements:
The financial statements have been prepared under the historical cost
convention in accordance with the Accounting Standards issued by the
Institute of Chartered Accountants of India and the relevant provisions
of Companies Act, 1956 except as regards certain fixed assets as
indicated bellow shown at fair value.
b) System of Accounting:
The Company has adopted accrual system of accounting.
c) Revenue:
Sales and services are accounted inclusive of excise duty but excluding
Sales Tax, and are net of returns / discounts / debit notes /
reversals.
Revenue from sales of product is recognised on the transfer of
substantial risk and rewards of ownership.
d) Fixed Assets:
Fixed Assets acquired on amalgamation on 1st April 2001 are stated at
fair value determined at the time of amalgamation. Assets acquired
thereafter are shown at cost. Cost includes all incidental expenditure,
net of Cenvat, wherever applicable. Expenditure on software is
capitalised in accordance with the applicable Accounting Standard.
e) Depreciation:
Depreciation on fixed assets is calculated on straight-line method in
the manner and at the rates as prescribed in schedule XIV of the
Companies Act, 1956. Depreciation on additions / deletions to fixed
assets during the year is provided on a pro-rata basis.
f) Investments:
Investments are either classified as Current or Long term based on
managements intention at the time of purchase. Current Investments are
carried at lower of Cost and Fair Value. Long term Investments are
stated at cost. Provision is made for any diminution in value, if
other than temporary.
g) Inventories:
Inventories are valued at lower of cost and net realisable value. Cost
of inventories comprises cost of purchase, cost of conversion and other
cost incurred in bringing them to their present location and
conditions. The cost of inventories is determined based on the First in
First out method.
h) Employee Benefits:
Defined Contribution Plan
The disclosure required under Accounting Standard 15ÃEmployee BenefitsÃ
notified in the Companies (Accounting Standards) Rules 2006, are given
below:
Defined Benefit Plan
The employees gratuity fund scheme managed by HDFC Standard Life
Insurance is a defined benefit plan. The present value of obligation is
determined based on actuarial valuation using the Projected Unit Credit
Method, which recognises each period of service as giving rise to
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation. The obligation for leave
encashment is recognised in the same manner as gratuity.
i) Foreign Currency Transactions:
Transactions denominated in foreign currencies are recorded at the
exchange rates prevailing at the date of transaction. Monetary items
denominated in foreign currency at the year end are translated at year
end rates. In respect of monetary items which are covered by forward
exchange contracts, the premium on such forward contracts is recognised
over the life of the forward contract. The exchange difference arising
on settlement /translation are recognised in the revenue accounts,.
j) Taxation:
Current tax is determined as the amount of tax payable in respect of
taxable income for the period based on applicable tax rate and laws.
Deferred tax expense or benefit is recognised on timing differences
being the difference between taxable income and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets and liabilities are measured
using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date. Deferred tax asset on
account of unabsorbed loss/depreciation is recognised only if virtual
certainty as regards absorption thereof exists.
k) Miscellaneous Expenditure:
Preliminary expenses deferred over the period of 10 years.
Expenditure for raising equity/preference shares are deferred over the
period of 10 years.
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