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Accounting Policies of Somany Ceramics Ltd. Company
Mar 31, 2025
1M MATERIAL ACCOUNTING POLICIES
Accounting Policies have been consistently applied except where a
newly issued accounting standards is initially adopted or a revision to an
existing accounting standard required a change in the accounting policy
hitherto in use.
2.1 Statement of compliance
The standalone financial statements of Somany Ceramics Limited
("the Company") comply with Indian Accounting Standards ("Ind
AS") as prescribed under section 133 of the Companies Act, 2013
("the Act"), as notified under the Companies (Indian Accounting
Standards) Rules, 2015, as amended and other accounting principles
generally accepted in India.
2.2 Basis of preparation and measurement
The financial statements have been prepared under the historical
cost convention on accrual basis except for the followings :
- Non-current borrowings are initially measured at amortized
cost.
- Current investments are measured at fair value at each
reporting date.
- Defined benefit plans and other long-term employee benefits
are measured at fair value net off fair valuation of plan assets
at each reporting date.
- Share based payments are initially 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, regardless of whether that
price is directly observable or estimated using another valuation
technique. In estimating 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.
In addition, for financial reporting purposes, fair value measurements
are categorized into Level 1, 2 or 3 based on the degree to which
the inputs to the fair value measurements are observable and
the significance of the inputs to the fair value measurement in its
entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets
for identical assets or liabilities that the Company can access
at the measurement date;
- Level 2 inputs other than quoted prices included within Level
1, that are observable for the asset or liability, either directly or
indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2.3 Functional and presentation currency
These financial statements are presented in Indian National Rupee
(''?''), which is the Companyâs functional currency. All amounts have
been rounded to the nearest Lakhs, unless otherwise indicated.
2.4 Use of judgements and estimates
In preparing these financial statements, management has made
judgements, estimates and assumptions that affect the application
of the Companyâs accounting policies and the reported amounts of
assets, liabilities, income and expenses. Management believes that
the estimates used in the preparation of the financial statements
are prudent and reasonable. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognized prospectively.
Judgements
Information about the judgements made in applying accounting
policies that have the most material effects on the amounts
recognized in the financial statements have been given below:
- assessing the lease term (including anticipated renewals) and
the applicable discount rate.
- Classification of financial assets: assessment of business
model within which the assets are held and assessment of
whether the contractual terms of the financial assets are solely
payments of principal and interest on the principal amount
outstanding.
Assumptions and estimation uncertainties
I nformation about assumptions and estimation uncertainties that
have a significant risk of resulting in a material adjustment in the
financial statements for the every period ended is included below:
- Measurement of defined benefit obligations: key actuarial
assumptions;
- Recognition of deferred tax assets: availability of future taxable
profit against which carry-forward tax losses can be used;
- Impairment test: key assumptions underlying recoverable
amounts;
- Useful life and residual value of Property, Plant and Equipment,
Intangible assets and Right of Use assets;
- Recognition and measurement of provisions and contingencies:
key assumptions about the likelihood and magnitude of an
outflow of resources;
- Assessment of recoverability of receivables and advances
which requires significant management judgement based on
financial position of the counter-parties, market information
and other relevant factors.
- Assessment of reliability of inputs considered for fair valuation
of financial assets and liabilities falls under hierarchy Level 3.
- Assessment of appropriate inputs to the Black Scholes Model
for valuation of share based payments including the expected
life of the share option, volatility and dividend yield and making
assumptions about them.
2.5 Classification of Assets and Liabilities as Current and Non-Current
The Company presents assets and liabilities in the balance sheet
based on current/ non-current classification.
An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in
normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realized within twelve months after the reporting
period, or
- Cash and Cash equivalents unless restricted from being
exchanged or used to settle a liability for at least twelve months
after the reporting period.
An liability is treated as current when it is:
- Expected to be settled in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected 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.
All other assets/liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current.
The Company has ascertained the operating cycle as 12 months for
the purpose of current and non-current classification of assets and
liabilities.
2.6 Property, Plant and Equipment
Recognition and Measurement
Items of property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment loss, if any.
Cost includes deemed cost which represents the carrying value of
property, plant and equipment as at 01 April, 2016 measured as per
the previous Generally Accepted Accounting Principles (GAAP).The
cost of assets comprises of purchase price and directly attributable
cost of bringing the assets to working condition for its intended
use including borrowing cost and incidental expenditure during
construction incurred upto the date when the assets are ready for
intended use. Capital work in progress includes cost of assets at
sites, construction expenditure and interest on the funds deployed
on qualifying assets less any impairment loss, if any.
If significant parts of an item of property, plant and equipment have
different useful lives, then they are accounted for as a separate items
(major components) of property, plant and equipment.
Subsequent Measurement
Subsequent expenditure is capitalized only if it is probable that there
is a future economic benefits associated with the expenditure will
flow to the Company.
Depreciation
Depreciation is calculated on Straight Line Method using the rates
arrived at on the basis of estimated useful lives given in Schedule II
of the Companies Act, 2013 except for the following which has been
determined on the basis of technical evaluation.
Depreciation on additions to or on disposal of assets is calculated
on pro-rata basis. Individual assets costing below '' 5,000 are fully
depreciated in the year of purchase.
Leasehold improvements are depreciated over the lease period
or estimated useful life of assets in line with schedule II of the
Companies Act, 2013, which ever is lower.
Depreciation methods, useful lives and residual values are reviewed
in each financial year end and changes, if any, are accounted for
prospectively. The management believes that these estimated
useful lives are realistic and reflect fair approximation of the period
over which the assets are likely to be used.
Capital work-in-progress
Capital work-in-progress comprises of assets in the course of
construction for production or/and supply of goods or services or
administrative purposes, are carried at cost, less any recognized
impairment loss. At the point when an asset is operating at
management''s intended use, the cost of construction is transferred
to the appropriate category of property, plant and equipment. Costs
associated with the commissioning of an asset are capitalized
where the asset is available for use and commissioning has been
completed.
De-recognition
An item of property, plant and equipment is de-recognized upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on the
disposal or retirement of an item of property, plant and equipment is
determined as the difference between net disposal proceeds and the
carrying amount of the asset and is recognized in the Statement of
Profit & Loss.
2.7 Intangible assets
Intangible Assets (Other than Goodwill) acquired separately are
stated at cost less accumulated amortization and impairment loss, if
any. Cost includes deemed cost which represents the carrying value
of property, plant and equipment as at 01 April, 2016 measured as
per the previous Generally Accepted Accounting Principles (GAAP).
Intangible assets are amortized on straight line method basis over
the estimated useful life. Estimated useful life of the Software and
designs is considered as 5 years.
Amortization methods, useful lives and residual values are reviewed
at each financial year end and changes, if any, are accounted for
prospectively.
An intangible asset is de-recognized on disposal, or when no future
economic benefits are expected from use or disposal. Gains or
losses arising from derecognition of an intangible asset, measured
as the difference between the net disposal proceeds and the carrying
amount of the asset are recognized in the Statement of Profit & Loss
when the asset is derecognized.
2.8 Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amounts
of its non-financial assets (other than inventories and deferred tax
assets) to determine whether there is any indication on impairment.
If any such indication exists, then the recoverable amount of assets
is estimated.
For impairment testing, assets are grouped together into the smallest
group of assets that generates cash inflows from continuing use
that are largely independent of the cash inflows of other assets or
Cash Generating Unit (CGUs).
The recoverable amount of an asset or CGU is the greater of its value
in use and its fair value less costs to sell. Value in use is based on the
estimated future cash flows, discounted to their present value using
a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset or CGU.
An impairment loss is recognized if the carrying amount of an asset
or CGU exceeds its recoverable amount.
Impairment loss in respect of assets other than goodwill is
reversed only to the extent that the assets carrying amount does
not exceed the carrying amount that would have been determined,
net of depreciation or amortization, if no impairment loss had been
recognized in prior years. A reversal of impairment loss is recognized
immediately in the Statement of Profit & Loss.
2.9 Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction
of qualifying assets are capitalized as part of the cost of such assets
upto the assets are substantially ready for their intended use.
The loan origination costs directly attributable to the acquisition of
borrowings (e.g. loan processing fee, upfront fee) are amortized on
the basis of the Effective Interest Rate (EIR) method over the term of
the loan.
All other borrowing costs are recognized in the Statement of Profit &
Loss in the period in which they are incurred.
2.10 Foreign currency transactions
Transactions in foreign currencies are recorded by the Company at
their respective functional currency at the exchange rates prevailing
at the date of the transaction first qualifies for recognition. Monetary
assets and liabilities denominated in foreign currency are translated
to the functional currency at the exchange rates prevailing at the
reporting date.
Exchange differences arising on settlement or translation of
monetary items are recognized in the Statement of Profit & Loss
with the exception of the following:
Non-monetary items that are measured at historical cost in a foreign
currency are translated using the exchange rates at the date of initial
transactions. Non-monetary items measure at fair value in a foreign
currency are translated using the exchange rates at the date when
the fair value is determined.
2.11 Employee benefits
Short term employee benefits
Short-term employee benefits are expensed in the year in which
the related services are provided. A liability is recognized for the
amount expected to be paid if the Company has a present legal or
constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated
reliably.
Defined contribution plans
Employee benefits in the form of Provident Fund are defined as
contribution plan and charged as expenses during the period in
which the employees perform the services.
Defined benefit plans
For defined benefit plans, the cost of providing benefits is determined
using the projected unit credit method, with actuarial valuations
being carried out at the end of each annual reporting period. The
present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using market yields
available on government bonds.
The effect of the remeasurement changes (comprising actuarial
gains and losses) to the asset ceiling (if applicable) and the return
on plan assets (excluding interest), is reflected in the balance sheet
with a charge or credit recognized in other comprehensive income in
the period in which they occur.
Remeasurement gains and losses arising from experience
adjustments and changes in actuarial assumptions are recognized
in the period in which they occur, directly in OCI and such re¬
measurement gain / loss are not reclassified to the Statement
of Profit and Loss in the subsequent periods. They are included
in retained earnings in the statement of changes in equity.
Net interest is calculated by applying the discount rate at the
beginning of the period to the net defined benefit liability or asset.
Defined benefit costs are categorized as follows:
service cost (including current service cost, past service cost,
as well as gains and losses on curtailments and settlements);
net interest expense or income; and
⢠remeasurement
The Company presents the first two components of defined benefit
costs in the Statement of Profit & Loss in the line item employee
benefits expense.
The retirement benefit obligation recognized in the balance sheet
represents the actual deficit or surplus in the Companyâs defined
benefit plans. Any surplus resulting from this calculation is limited
to the present value of any economic benefits available in the form
of refunds from the plans or reductions in future contributions to the
plans.
Other long-term employee benefits
The Company has long term employment benefit plans i.e.
accumulated leave. Accumulated leave is encashed to eligible
employees at the time of retirement/termination of services. The
liability for accumulated leave, which is a defined benefit scheme,
is provided based on actuarial valuation as at the Balance Sheet
date, based on Projected Unit Credit Method, carried out by an
independent actuary.
Share Based Payments
The Company recognizes compensation expense relating to share-
based payment in statement of profit and loss using fair value in
accordance with Ind AS 102, "Share-based Payment".
The Company initially measures the cost of equity-settled
transactions with employees using Black Scholes model to
determine the fair value of the liability incurred which has been
considered most appropriate model. Estimating fair value for share-
based payment transactions requires determination of the most
appropriate valuation model, which is dependent on the terms and
conditions of the grant. This estimate also requires determination
of the most appropriate inputs to the valuation model including the
expected life of the share option, volatility and dividend yield and
making assumptions about them. The assumptions and models
used for estimating fair value for share-based payment transactions
are disclosed in note no. 48
2.12 Revenue Recognition
The Company recognizes revenue when it satisfies a performance
obligation in accordance with the provisions of contract with the
customer. Revenue towards satisfaction of a performance obligation
is measured at the amount of transaction price allocated to that
performance obligation. This is achieved when control of the product
has been transferred to the customer, which is generally determined
when title, ownership, risk of obsolescence and loss pass to the
customer and the Company has the present right to payment, all of
which occurs at a point in time upon shipment and delivery of the
product. The Company considers shipping and handling activities
as costs to fulfill the promise to transfer the related products and the
customer payments for shipping and handling costs are recorded as
a component of revenue.
Revenue (other than sale of goods) is recognized to the extent that it
is probable that the economic benefits will flow to the Company and
the revenue can be reliably measured. Claim on insurance companies
and others, where quantum of accrual cannot be ascertained with
reasonable certainty, are accounted for on acceptance basis.
Transaction price represents net value of goods and services provided
to customers after deducting for certain incentives including, but not
limited to discounts, volume rebates, incentive programs etc.
For incentives offered to customers, the Company makes estimates
related to customer performance and sales volume to determine
the total amounts earned and to be recorded as deductions. The
estimate is made in such a manner, which ensures that it is highly
probable that a significant reversal in the amount of cumulative
revenue recognized will not occur. The actual amounts may differ
from these estimates and are accounted for prospectively. No
element of significant financing is deemed present as the sales are
made with a credit term, which is consistent with market practice.
Interest income are recognized on an accrual basis using the
effective interest method.
2.13 Inventories
Inventories are valued at lower of cost and net realizable value. Cost
of manufactured finished goods and work in progress is determined
by taking cost of material consumed, labour and related overheads.
Finished goods, raw materials and packing materials, stock in trade
and stores & spares are valued at weighted average cost method.
Purchases cost of raw materials and packing materials, finished
goods, stock in trade and stores & spares are net of input tax
credits, rebates and discounts. Net realizable value is the estimated
selling price in the ordinary course of business, less estimated
costs of completion and to make the sale. However, materials and
other items held for use in the production of finished goods are not
written down below cost if the finished products in which they will
be incorporated are expected to be sold at or above cost. Provision
for cost of obsolescence and other anticipated losses, wherever
considered necessary, are recognized in the books of account.
Mar 31, 2024
1M MATERIAL ACCOUNTING POLICIES
Accounting Policies have been consistently applied except where a newly issued accounting standards is initially adopted or a revision to an existing accounting standard required a change in the accounting policy hitherto in use.
2.1 Statement of compliance
The standalone financial statements of Somany Ceramics Limited ("the Company") comply with Indian Accounting Standards ("Ind AS") as prescribed under section 133 of the Companies Act, 2013 ("the Act"), as notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended and other accounting principles generally accepted in India.
2.2 Basis of preparation and measurement
The financial statements have been prepared under the historical cost convention on accrual basis except for the followings :
- Non-current borrowings are initially measured at amortized cost.
- Current investments are measured at fair value at each reporting date.
- Defined benefit plans and other long-term employee benefits are measured at fair value net off fair valuation of plan assets at each reporting date.
- Share based payments are initially 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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating 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.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are guoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;
- Level 2 inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2.3 Functional and presentation currency
These financial statements are presented in Indian National Rupee (''INR''), which is the Company''s functional currency. All amounts have been rounded to the nearest Lakhs, unless otherwise indicated.
2.4 Use of judgements and estimates
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of the Companyâs accounting policies and the reported amounts of assets, liabilities, income and expenses. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively.
Judgements
Information about the judgements made in applying accounting policies that have the most material effects on the amounts recognized in the financial statements have been given below:
- assessing the lease term (including anticipated renewals) and the applicable discount rate.
- Classification of financial assets: assessment of business model within which the assets are held and assessment of whether the contractual terms of the financial assets are solely payments of principal and interest on the principal amount outstanding.
Assumptions and estimation uncertainties
I nformation about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the financial statements for the every period ended is included below:
- Measurement of defined benefit obligations: key actuarial assumptions;
- Recognition of deferred tax assets: availability of future taxable profit against which carry-forward tax losses can be used;
- Impairment test: key assumptions underlying recoverable amounts;
- Useful life and residual value of Property, Plant and Eguipment, Intangible assets and Right of Use assets;
- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources;
- Assessment of recoverability of receivables and advances which reguires significant management judgement based on financial position of the counter-parties, market information and other relevant factors.
- Assessment of reliability of inputs considered for fair valuation of financial assets and liabilities falls under hierarchy Level 3.
- Assessment of appropriate inputs to the Black Scholes Model for valuation of share based payments including the expected life of the share option, volatility and dividend yield and making assumptions about them.
2.5 Classification of Assets and Liabilities as Current and Non-Current
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle;
- Held primarily for the purposeoftrading;
- Expected to be realized within twelve months after the reporting period, or
- Cash and Cash eguivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
An liability is treated as current when it is:
- Expected to be settled in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected 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.
All other assets/liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current.
The Company has ascertained the operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
2.6 Property, Plant and Equipment
Recognition and Measurement
Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment loss , if any. cost includes deemed cost w.r.t assets acquired prior to 01 April, 2017 which represents the carrying value of property, plant and equipment as at 01 April, 2017 measured as perthe previous Generally Accepted Accounting Principles (GAAP).The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use including borrowing cost and incidental expenditure during construction incurred upto the date when the assets are ready for intended use. Capital work in progress includes cost of assets at sites, construction expenditure and interest on the funds deployed less any impairment loss, if any.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as a separate items (major components) of property, plant and equipment.
Subsequent Measurement
Subsequent expenditure is capitalized only if it is probable that there is a future economic benefits associated with the expenditure will flow to the Company.
Depreciation
Depreciation is calculated on Straight Line Method using the rates arrived at on the basis of estimated useful lives given in Schedule II of the Companies Act, 2013 except for the following which has been determined on the basis of technical evaluation.
Depreciation on additions to or on disposal of assets is calculated on pro-rata basis. Individual assets costing below '' 5,000 are fully depreciated in the year of purchase.
Leasehold improvements are depreciated over the lease period or estimated useful life of assets in line with schedule II of the Companies Act, 2013, which ever is lower.
Depreciation methods, useful lives and residual values are reviewed in each financial year end and changes, if any, are accounted for prospectively. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
Capital work-in-progress
Capital work-in-progress comprises of assets in the course of construction for production or/and supply of goods or services or administrative purposes, are carried at cost, less any recognized impairment loss. At the point when an asset is operating at management''s intended use, the cost of construction is transferred to the appropriate category of property, plant and equipment. Costs associated with the commissioning of an asset are capitalized where the asset is available for use and commissioning has been completed.
De-recognition
An item of property, plant and equipment is de-recognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognized in the Statement of Profit & Loss.
2.7 Intangible assets
Intangible Assets (Other than Goodwill) acquired separately are stated at cost less accumulated amortization and impairment loss, if any. Cost includes deemed cost w.r.t assets acquired prior to 01 April, 2017 which represents the carrying value of property, plant and equipment as at 01 April, 2017 measured as per the previous Generally Accepted Accounting Principles (GAAP). Intangible assets are amortized on straight line method basis over the estimated useful life. Estimated useful life of the Software is considered as 5 years.
Amortization methods, useful lives and residual values are reviewed at each financial year end and changes, if any, are accounted for prospectively.
An intangible asset is de-recognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognized in the Statement of Profit & Loss when the asset is derecognized.
2.8 Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication on impairment. If any such indication exists, then the recoverable amount of assets is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or Cash Generating Unit (CGUs).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the
estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment loss in respect of assets other than goodwill is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized in prior years. A reversal of impairment loss is recognized immediately in the Statement of Profit & Loss.
2.9 Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction of qualifying assets are capitalized as part of the cost of such assets upto the assets are substantially ready for their intended use.
The loan origination costs directly attributable to the acquisition of borrowings (e.g. loan processing fee, upfront fee) are amortized on the basis of the Effective Interest Rate (EIR) method over the term of the loan.
All other borrowing costs are recognized in the Statement of Profit & Loss in the period in which they are incurred.
2.10 Foreign currency transactions
Transactions in foreign currencies are recorded by the Company at their respective functional currency at the exchange rates prevailing at the date of the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currency are translated to the functional currency at the exchange rates prevailing at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in the Statement of Profit & Loss with the exception of the following:
Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates at the date of initial transactions. Non-monetary items measure at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.
2.11 Employee benefits
Short term employee benefits
Short-term employee benefits are expensed in the year in which the related services are provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Defined contribution plans
Employee benefits in the form of Provident Fund are defined as contribution plan and charged as expenses during the period in which the employees perform the services.
Defined benefit plans
For defined benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using market yields available on government bonds.
The effect of the remeasurement changes (comprising actuarial gains and losses) to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in OCI and such remeasurement gain / loss are not reclassified to the Statement of Profit and Loss in the subseguent periods. They are included in retained earnings in the statement of changes in equity.
Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
remeasurement
The Company presents the first two components of defined benefit costs in the Statement of Profit & Loss in the line item employee benefits expense.
The retirement benefit obligation recognized in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
Other long-term employee benefits
The Company has long term employment benefit plans i.e. accumulated leave. Accumulated leave is encashed to eligible employees at the time of retirement. The liability for accumulated leave, which is a defined benefit scheme, is provided based on actuarial valuation as at the Balance Sheet date, based on Projected Unit Credit Method, carried out by an independent actuary.
Share Based Payments
The Company recognizes compensation expense relating to share-based payment in statement of profit and loss using fair value in accordance with Ind AS 102, "Share-based Payment".
The Company initially measures the cost of equity-settled transactions with employees using Black Scholes model to determine the fair value of the liability incurred which has been considered most appropriate model. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also reguires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note no. 48
2.12 Revenue Recognition
The Company recognizes revenue when it satisfies a performance obligation in accordance with the provisions of contract with the customer. Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price allocated to that performance obligation. This is achieved when control of the product has been transferred to the customer, which is generally determined
when title, ownership, risk of obsolescence and loss pass to the customer and the Company has the present right to payment, all of which occurs at a point in time upon shipment or delivery of the product. The Company considers shipping and handling activities as costs to fulfill the promise to transfer the related products and the customer payments for shipping and handling costs are recorded as a component of revenue component of revenue.
Revenue (other than sale of goods) is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Claim on insurance companies, interest and others, where quantum of accrual cannot be ascertained with reasonable certainty, are accounted for on acceptance basis.
Transaction price represents net value of goods and services provided to customers after deducting for certain incentives including, but not limited to discounts, volume rebates, incentive programs etc. For incentives offered to customers, the Company makes estimates related to customer performance and sales volume to determine the total amounts earned and to be recorded as deductions. The estimate is made in such a manner, which ensures that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The actual amounts may differ from these estimates and are accounted for prospectively. No element of significant financing is deemed present as the sales are made with a credit term, which is consistent with market practice.
Interest income are recognized on an accrual basis using the effective interest method.
2.13 Inventories
I nventories are valued at lower of cost and net realizable value. Cost of manufactured finished goods and work in progress is determined by taking cost of material consumed, labour and related overheads. Cost of raw materials and packing materials, stock in trade and stores & spares are computed on weighted average basis. Purchases cost of raw materials and packing materials, stock in trade and stores & spares are net of input tax credits, rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and to make the sale. However, materials and other items held for use in the production of finished goods are not written down below cost if the finished products in which they will be incorporated are expected
to be sold at or above cost. Provision for cost of obsolescence and other anticipated losses, wherever considered necessary, are recognized in the books of account.
Mar 31, 2023
REPORTING ENTITY
Somany Ceramics Limited referred to as "the Companyâ is domiciled in India. The registered office of the Company is at 2, Red Cross Place, Kolkata - 700001 India. Equity shares of the Company are listed in India on the BSE Limited and the National Stock Exchange Limited.
The Company has own manufacturing plants in Kadi (Gujarat) and Kassar (Haryana), India. The Company is a manufacturer and trader of a complete decor solutions and its extensive range of products include Ceramic Wall and Floor Tiles, Polished Vitrified Tiles, Glazed Vitrified Tiles, Sanitaryware, Bath Fittings and allied products.
The financial statements of the Company for the year ended 31 March, 2023 were approved for issue by the board of directors on 23 May, 2023. However, the shareholders of the Company have the power to amend the Financial Statements after the issue.
SIGNIFICANT ACCOUNTING POLICIES
Accounting Policies have been consistently applied except where a newly issued accounting standards is initially adopted or a revision to an existing accounting standard required a change in the accounting policy hitherto in use.
The standalone financial statements of Somany Ceramics Limited ("the Companyâ) comply with Indian Accounting Standards ("Ind ASâ) as prescribed under section 133 of the Companies Act, 2013 ("the Actâ), as notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended and other accounting principles generally accepted in India.
2.2 Basis of preparation and measurement
The financial statements have been prepared under the historical cost convention on accrual basis except for the followings :
- Non-current borrowings are initially measured at amortized cost.
- Current investments are measured at fair value at each reporting date.
- Defined benefit plans and other long-term employee benefits are measured at fair value net off fair valuation of plan assets at each reporting date.
- Share based payments are initially 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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating 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.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;
- Level 2 inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2.3 Functional and presentation currency
These financial statements are presented in Indian National Rupee (T), which is the Company''s functional currency. All amounts have been rounded to the nearest Lakhs, unless otherwise indicated.
2.4 Use of judgements and estimates
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of the Company''s accounting policies and the reported amounts of assets, liabilities, income and expenses. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognized prospectively.
Judgements
Information about the judgements made in applying accounting policies that have the most significant effects on the amounts
recognized in the financial statements have been given below:
- assessing the lease term (including anticipated renewals) and the applicable discount rate.
- Classification of financial assets: assessment of business model within which the assets are held and assessment of whether the contractual terms of the financial assets are solely payments of principal and interest on the principal amount outstanding.
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the financial statements for the every period ended is included below:
- Measurement of defined benefit obligations: key actuarial assumptions;
- Recognition of deferred tax assets: availability of future taxable profit against which carry-forward tax losses can be used;
- Impairment test: key assumptions underlying recoverable amounts;
- Useful life and residual value of Property, Plant and Equipment, Intangible assets and Right of Use assets;
- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources;
- Assessment of recoverability of receivables and advances which requires significant management judgement based on financial position of the counter-parties, market information and other relevant factors.
- Assessment of reliability of inputs considered for fair valuation of financial assets and liabilities falls under hierarchy Level 3.
- Assessment of appropriate inputs to the Black Scholes Model for valuation of share based payments including the expected life of the share option, volatility and dividend yield and making assumptions about them.
2.5 Business Combination under Common Control
Common control business combination means a business combination involving entities or businesses in which all the
combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory. Business combinations involving entities or businesses under common control shall be accounted for using the pooling of interests method. The assets and liabilities of the combining entities are reflected at their carrying amounts.
2.6 Classification of Assets and Liabilities as Current and Non-Current
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realized within twelve months after the reporting period, or
- Cash and Cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
An liability is treated as current when it is:
- Expected to be settled in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected 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.
All other assets/liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current.
The Company has ascertained the operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.
2.7 Property, Plant and Equipment Recognition and Measurement
Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment loss , if any. cost includes deemed cost w.r.t assets acquired prior to 1 April, 2017 which represents the carrying value of property, plant and equipment as at 1 April, 2017 measured as per the previous Generally Accepted Accounting Principles (GAAP).The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use including borrowing cost and incidental expenditure during construction incurred upto the date when the assets are ready for intended use. Capital work in progress includes cost of assets at sites, construction expenditure and interest on the funds deployed less any impairment loss, if any.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as a separate items (major components) of property, plant and equipment.
Subsequent expenditure is capitalized only if it is probable that there is a future economic benefits associated with the expenditure will flow to the Company.
Depreciation is calculated on Straight Line Method using the rates arrived at on the basis of estimated useful lives given in Schedule II of the Companies Act, 2013 except for the following which has been determined on the basis of technical evaluation.
|
Particulars |
Useful Life |
|
Plant and Machinery |
5 - 25 Years |
|
Vehicles |
5 Years |
|
Dies & Punches |
8 Years |
Depreciation on additions to or on disposal of assets is calculated on pro-rata basis. Individual assets costing below '' 5,000 are fully depreciated in the year of purchase.
Leasehold improvements are depreciated over the lease period or estimated useful life of assets in line with schedule II of the Companies Act, 2013, which ever is lower.
Depreciation methods, useful lives and residual values are reviewed in each financial year end and changes, if any, are accounted for prospectively. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
Capital work-in-progress comprizes of assets in the course of construction for production or/and supply of goods or services or administrative purposes, are carried at cost, less any recognized impairment loss. At the point when an asset is operating at management''s intended use, the cost of construction is transferred to the appropriate category of property, plant and equipment. Costs associated with the commissioning of an asset are capitalized where the asset is available for use and commissioning has been completed.
An item of property, plant and equipment is de-recognized upon disposal or when no future economic benefits are expected to arize from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognized in the Statement of Profit & Loss.
Intangible Assets (Other than Goodwill) acquired separately are stated at cost less accumulated amortization and impairment loss, if any. Cost includes deemed cost w.r.t assets acquired prior to 1 April, 2017 which represents the carrying value of property, plant and equipment as at 1 April, 2017 measured as per the previous Generally Accepted Accounting Principles (GAAP).Intangible assets are amortized on straight line method basis over the estimated useful life. Estimated useful life of the Software is considered as 5 years.
Amortization methods, useful lives and residual values are reviewed at each financial year end and changes, if any, are accounted for prospectively.
An intangible asset is de-recognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognized in the Statement of Profit & Loss when the asset is derecognized.
2.9 Non-current assets held for sale
Non-current assets are classified as held-for sale if it is highly probable that they will be recovered primarily through sale in its present condition rather than through continuing use and it is expected that the sale will be completed with in one year from the date of classification.
Such assets are generally measured at the lower of their carrying amount and fair value less costs to sell. An impairment loss is recognized for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the noncurrent asset is recognized at the date of de-recognition.
Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortized or depreciated.
2.10 Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication on impairment. If any such indication exists, then the recoverable amount of assets is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or Cash Generating Unit (CGUs).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment loss in respect of assets other than goodwill is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized in prior years. A reversal of impairment loss is recognized immediately in the Statement of Profit & Loss.
Borrowing costs directly attributable to the acquisition, construction of qualifying assets are capitalized as part of the cost of such assets upto the assets are substantially ready for their intended use.
The loan origination costs directly attributable to the acquisition of borrowings (e.g. loan processing fee, upfront fee) are amortized on the basis of the Effective Interest Rate (EIR) method over the term of the loan.
All other borrowing costs are recognized in the Statement of Profit & Loss in the period in which they are incurred.
2.12 Foreign currency transactions
Transactions in foreign currencies are recorded by the Company at their respective functional currency at the exchange rates prevailing at the date of the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currency are translated to the functional currency at the exchange rates prevailing at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in the Statement of Profit & Loss with the exception of the following:
- exchange differences on foreign currency borrowings included in the borrowing cost when they are regarded as an adjustment to interest costs on those foreign currency borrowings.
Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates at the date of initial transactions. Non-monetary items measure at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.
2.13 Employee benefitsShort term employee benefits
Short-term employee benefits are expensed in the year in which the related services are provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Employee benefits in the form of Provident Fund are defined as contribution plan and charged as expenses during the period in which the employees perform the services.
For defined benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using market yields available on government bonds.
The effect of the remeasurement changes (comprising actuarial gains and losses) to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in OCI and such remeasurement gain / loss are not reclassified to the Statement of Profit and Loss in the subsequent periods. They are included in retained earnings in the statement of changes in equity.
Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorized as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
net interest expense or income; and
⢠remeasurement
The Company presents the first two components of defined benefit costs in the Statement of Profit & Loss in the line item employee benefits expense.
The retirement benefit obligation recognized in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
Other long-term employee benefits
The Company has long term employment benefit plans i.e. accumulated leave. Accumulated leave is encashed to eligible employees at the time of retirement. The liability for accumulated leave, which is a defined benefit scheme, is provided based on actuarial valuation as at the Balance Sheet date, based on Projected Unit Credit Method, carried out by an independent actuary.
The Company recognizes compensation expense relating to share-based payment in statement of profit and loss using fair value in accordance with Ind AS 102, "Share-based Paymentâ.
The Company initially measures the cost of equity-settled transactions with employees using Black Scholes model to determine the fair value of the liability incurred. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note no. 50
The Company recognizes revenue when it satisfies a performance obligation in accordance with the provisions of contract with the customer. Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price allocated to that performance obligation. This is achieved when control of the product has been transferred to the customer, which is generally determined when title, ownership, risk of obsolescence and loss pass to the customer and the Company has the present right to payment, all of which occurs at a point in time upon shipment or delivery of the product. The Company considers shipping and handling activities as costs to fulfill the promize to transfer the related products and the customer payments for shipping and handling costs are recorded as a component of revenue component of revenue.
Revenue (other than sale of goods) is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Claim on insurance
companies, interest and others, where quantum of accrual cannot be ascertained with reasonable certainty, are accounted for on acceptance basis.
Transaction price represents net value of goods and services provided to customers after deducting for certain incentives including, but not limited to discounts, volume rebates, incentive programs etc.
For incentives offered to customers, the Company makes estimates related to customer performance and sales volume to determine the total amounts earned and to be recorded as deductions. The estimate is made in such a manner, which ensures that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. The actual amounts may differ from these estimates and are accounted for prospectively. No element of significant financing is deemed present as the sales are made with a credit term, which is consistent with market practice.
Interest income are recognized on an accrual basis using the effective interest method.
Dividends are recognized at the time the right to receive payment is established.
Inventories are valued at lower of cost and net realizable value. Cost of manufactured finished goods and work in progress is determined by taking cost of material consumed, labour and related overheads. Cost of raw materials and packing materials, stock in trade and stores & spares are computed on weighted average basis. Purchases cost of raw materials and packing materials, stock in trade and stores & spares are net of input tax credits, rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and to make the sale. However, materials and other items held for use in the production of finished goods are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Provision for cost of obsolescence and other anticipated losses, wherever considered necessary, are recognized in the books of account.
2.16 Provisions, Contingent Liabilities and Contingent Assets
Based on the best estimate provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event and it is probable ("more likely than notâ) that it is required to settle the obligation, and a reliable estimate can be made of the amount of the obligation at reporting date.
A contingent liability is a possible obligation that arises from a past event, with the resolution of the contingency dependent on uncertain future events, or a present obligation where no outflow is probable. Major contingent liabilities are disclosed in the financial statements unless the possibility of an outflow of economic resources is remote.
Contingent assets are not recognized in the financial statements but disclosed, where an inflow of economic benefit is probable.
2.17 Measurement of fair valuea) Financial instruments
The estimated fair value of the Company''s financial instruments is based on market prices and valuation techniques. Valuations are made with the objective to include relevant factors that market participants would consider in setting a price, and to apply accepted economic and financial methodologies for the pricing of financial instruments. References for less active markets are carefully reviewed to establish relevant and comparable data.
b) Marketable and non-marketable equity securities
Fair value for quoted securities is based on quoted market prices as of the reporting date. Fair value for unquoted securities is calculated based on commonly accepted valuation techniques utilizing significant unobservable data. If fair value cannot be measured reliably unlisted shares are recognized at cost.
2.18 Financial instrumentsA FINANCIAL ASSETS
i) Initial recognition and measurement
Financial assets (except trade receivables) are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. However, trade receivables that do not contain a significant financing component are measured at transaction price.
ii) Classifications and Subsequent measurement
The Company classifies its financial assets as subsequently measured at either amortized cost or fair value depending on the Company''s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets.
a) Financial assets at amortized cost
A financial asset is measured at amortized cost only if both of the following conditions are met:
- it is held within a business model whose objective is to hold assets in order to collect contractual cash flows.
- the contractual terms of the financial assets represent contractual cash flows that are solely payments of principal and interest.
After initial measurement, such financial assets are subsequently measured at amortized cost using the Effective Interest Rate (''EIR'') method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance income in the Statement of Profit & Loss. The losses arising from impairment are recognized in the Statement of Profit & Loss.
b) Financial assets at fair value through Other Comprehensive Income (FVOCI)
Financial assets with contractual cash flow characteristics that are solely payments of principal and interest and held in a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets are classified to be measured at FVOCI.
c) Financial assets at fair value through Profit & Loss (FVTPL)
Financial assets, which does not meet the criteria for categorization as at amortized cost or as FVOCI, are classified as at FVTPL.
In addition, the Company may elect to classify a Financial assets, which otherwise meets amortized cost or FVOCI 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'').
Financial assets included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit & Loss.
All equity instruments in scope of Ind AS 109 are measured at fair value. On initial recognition an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in FVOCI. This election is made on an investment-by-investment basis.
All other Financial Instruments are classified as measured at FVTPL except investment in equity instruments of subsidiaries which are carried at cost less provision for impairment, if any.
iv) Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e. removed from the Company''s balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''passthrough'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all
of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognized) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognized in OCI is recognized in the Statement of Profit & Loss.
v) Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
With regard to trade receivable, the Company applies the simplified approach as permitted by Ind AS 109, Financial Instruments, which requires expected lifetime losses to be recognized from the initial recognition of the trade receivables.
i) Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, amortized cost, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of amortized cost, net of directly attributable transaction costs.
ii) Classifications and subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
a) Financial Liabilities measured at amortized cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process.
Amortized 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 amortization is included as finance costs in the Statement of Profit & Loss.
b) Financial liabilities at fair value through profit or loss (FVTPL)
Financial liabilities at fair value through Profit & Loss include financial liabilities designated upon initial recognition as at fair value through Profit & Loss.
Gains or losses on liabilities held for trading are recognized in the Statement of Profit & Loss.
Financial liabilities designated upon initial recognition at fair value through Profit & Loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to the Statement of Profit & Loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognized in the Statement of Profit & Loss.
iii) Derecognition of financial liabilities
The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expired.
Income tax expense comprizes current and deferred tax. It is recognized in the Statement of Profit & Loss except to the extent that it relates to items recognized directly in Equity or in Other Comprehensive Income.
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax assets and liabilities are offset only if, the Company:
a) Has a legally enforceable right to set off the recognized amounts; and
b) Intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences to the extent it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arizes from initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.
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 if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership are transferred from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Company as a lessee
The Company assesses whether a contract is or contains a lease, at inception of the contract. The Company recognizes a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets, wherein, the Company recognizes the lease payments as an operating expense on a straight-line basis over the lease term, unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. Contingent and variable rentals are recognized as expense in the periods in which they are incurred.
The lease payments that are not paid at the commencement date, are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee''s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value as that of right-of-use asset in a similar economic environment with similar terms, security and conditions.
Lease payments included in the measurement of the lease liability comprise:
⢠Fixed lease payments (including in-substance fixed payments) payable during the lease term and under reasonably certain extension options, less any lease incentives;
⢠Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
⢠The amount expected to be payable by the lessee under residual value guarantees;
⢠The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
⢠Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the Balance Sheet.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
The lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
⢠A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
The ROU assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Whenever the Company incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under Ind AS 37- Provisions, Contingent Liabilities and Contingent Assets. The costs are included in the related right-of-use asset.
ROU assets are depreciated over the shorter period of the lease term or useful life of the underlying asset. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset''s useful life. The depreciation starts at the commencement date of the lease.
The ROU assets are presented as a separate line in the Balance Sheet and details of assets are given ROU note under "Notes forming part of the Financial Statementâ.
The Company applies Ind AS 36- Impairment of Assets to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as per its accounting policy on ''property, plant and equipment''.
As a practical expedient, Ind AS 116 permits lessee not to separate non-lease components when bifurcation of the payments is not available between the two components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has used this practical expedient.
Extension and termination options are included in many of the leases. In determining the lease term the management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option.
2.21 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.
For the purposes of the Statement of Cash Flows, cash and cash equivalents is as defined above, net of outstanding bank overdrafts. In the balance sheet, bank overdrafts are shown within borrowings in current liabilities.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The board of directors of the Company has been identified as being the chief operating decision maker by the Management of the Company.
Government grants are recognized at its fair value, where there is a reasonable assurance that such grants will be received and compliance with the conditions attached therewith have been met.
Government grants related to expenditure on property, plant and equipment are credited to the statement of profit and loss over the useful lives of qualifying assets or other systematic basis representative of the pattern of fulfilment of obligations associated with the grant received. Grants received less amounts credited to the statement of profit and loss at the reporting date are included in the balance sheet as deferred income.
2.24 Standard issued but not yet effective
Ministry of Corporate Affairs ("MCAâ) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 31 March, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from 1 April, 2023, as below:
Ind AS 1 - Material accounting policies - The amendments mainly related to shifting of disclosure of erstwhile "significant accounting policiesâ in the notes to the financial statements to material accounting policy information requiring companies to reframe their accounting policies to make them more "entity specific. This amendment aligns with the "materialâ concept already required under International Financial Reporting Standards (IFRS). The Company does not expect this amendment to have any significant impact in its financial statement.
Ind AS 8 - Definition of accounting estimates - The amendments specify definition of ''change in accounting estimate'' replaced with the definition of ''accounting estimates''. The Company does not expect this amendment to have any significant impact in its financial statement.
Ind AS 12 - Income taxes - Annual Improvements to Ind AS (2021) - The amendment clarifies that in cases of transactions where equal amounts of assets and liabilities are recognized on initial recognition, the initial recognition exemption does not apply. Also, If a company has not yet recognized deferred tax asset and deferred tax liability on right-of-use assets and lease liabilities or has recognized deferred tax asset or deferred tax liability on net basis, that company shall have to recognize deferred tax assets and deferred tax liabilities on gross basis based on the carrying amount of right-of-use assets and lease liabilities existing at the beginning of 1 April 2022. The Company does not expect this amendment to have any significant impact in its financial statement.
Mar 31, 2018
1 Reporting Entity
Somany Ceramics Limited referred to as "the Company" is domiciled in India. The registered office of the Company is at 2, Red Cross Place, Kolkata - 700001 India. Equity shares of the Company are listed in India on the Bombay stock exchange and the National stock exchange.
The Company has own manufacturing plants in Kadi (Gujarat) and Kassar (Haryana), India The Company is a manufacturer and trader of a complete decor solutions and its extensive range of products include Ceramic Wall and Floor Tiles, Polished Vitrified Tiles, Glazed Vitrified Tiles, Sanitary ware, Bath Fittings and allied products.
The financial statements of the company for the year ended March 31, 2018 were authorized for issue in accordance with a resolution of the directors on May 24, 2018.
2 Significant Accounting Policies
The Company has consistently applied the following accounting policies to all periods presented in the financial statements.
2.1 Basis of preparation
The standalone financial statements of Somany Ceramics Limited ("the Company") comply in all material aspects with Indian Accounting Standards ("Ind AS") as prescribed under section 133 of the Companies Act, 2013 ("the Act"), as notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) (Amendment) Rules, 2016 and other accounting principles generally accepted in India.
The financial statement up to year ended March 31, 2017 were prepared in accordance with Generally Accepted Accounting Principles (GAAP) in India and complied with the applicable accounting standards prescribed in the Companies (Accounting Standards) Rules, 2014 issued by the Central Government and as per relevant provisions of the Companies Act, 2013 read together with Paragraph 7 of The Companies (Accounts) Rules, 2014.
The Company followed the provisions of Ind-AS 101 in preparing its opening Ind AS Balance Sheet as of the date of transition i.e April 1, 2016 and transional adjustment were recognized directly through retained earnings (Refer Note No. 53).
2.2 Basis of measurement
The financial statements have been prepared under the historical cost convention on accrual basis and the following items, which are measured on following basis on each reporting date:
- Certain financial assets and liabilities that is measured at fair value.
- Defined benefit liability/(assets): present value of defined benefit obligation less fair value of plan assets.
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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company take 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.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the company can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2.3 Functional and presentation currency
These financial statements are presented in Indian National Rupee (''INR''), which is the Company''s functional currency. All amounts have been rounded to the nearest lakhs, unless otherwise indicated.
2.4 Use of judgements and estimates
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of the company''s accounting policies and the reported amounts of assets, liabilities, income and expenses. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
Judgements
Information about the judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements have been given below:
- Classification of leases into finance and operating lease
- Classification of financial assets: assessment of business model within which the assets are held and assessment of whether the contractual terms of the financial asset are solely payments of principal and interest on the principal amount outstanding.
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the financial statements for the every period ended is included below:
- Measurement of defined benefit obligations: key actuarial assumptions;
- Recognition of deferred tax assets: availability of future taxable profit against which carry-forward tax losses can be used;
- Impairment test: key assumptions underlying recoverable amounts;
- Useful life and residual value of Property, Plant and Equipment;
- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources.
2.5 Classification of Assets and Liabilities as Current and Non-Current
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset/liabilities is treated as current when it is:
- Expected to be realised/settled (liabilities) or intended to be sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised/settled within twelve months after the reporting period, or
- Cash and Cash equivalents unless restricted from being exchanged or used to settle a liability for at least 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.
All other assets/liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets/liabilities.
The operating cycle is the time between the acquisition of the assets for processing and their realisation in cash and cash equivalents.
2.6 Property, Plant and Equipment (Fixed Assets)
Recognition and Measurement
Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment loss , if any. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use including borrowing cost and incidental expenditure during construction incurred upto the date when the assets are ready to use. Capital work in progress includes cost of assets at sites, construction expenditure and interest on the funds deployed less any impairment loss, if any.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as a separate items (major components) of property, plant and equipment.
Foreign exchange loss/gain arising on long-term foreign currency monetary items existing as on April 1, 2016 used for depreciable assets, which are capitalised as per transitional provision of Ind AS 101 "First time adoption".
Subsequent Measurement
Subsequent expenditure is capitalised only if it is probable that there is an increase in the future economic benefits associated with the expenditure will flow to the Company.
Depreciation
Depreciation is calculated on Straight Line Method using the rates arrived at on the basis of estimated useful lives given in Schedule II of the Companies Act, 2013 except for the following which has been determined on the basis of technical evaluation.
Depreciation on additions to or on disposal of assets is calculated on pro-rata basis. Leasehold land is being amortised over the period of lease tenure.
Leasehold improvements are being amortised over the period of 5 to 10 years.
Depreciation methods, useful lives and residual values are reviewed in each financial year end and changes, if any, are accounted for prospectively.
Individual assets costing below Rs. 5000 are fully depreciated in the year of purchase.
Capital work-in-progress
Expenditure incurred during the construction period, including all expenditure direct and indirect expenses, incidental and related to construction, is carried forward and on completion, the costs are allocated to the respective property, plant and equipment.
De-recognition
An item of property, plant and equipment is de-recognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
2.7 Intangible assets
Intangible Assets (Other than Goodwill) acquired separately are stated at cost less accumulated amortization and impairment loss, if any. Intangible assets are amortized on straight line method basis over the estimated useful life. Estimated useful life of the Software is considered as 5 years.
Amortisation methods, useful lives and residual values are reviewed in each financial year end and changes, if any, are accounted for prospectively.
An intangible asset is de-recognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in the Statement of Profit and Loss when the asset is derecognised.
2.8 Non-current assets held for sale
Non-current assets are classified as held-for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use.
Such assets are generally measured at the lower of their carrying amount and fair value less costs to sell. An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised at the date of de-recognition.
Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortised or depreciated.
2.9 Impairment of non-financial assets
At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication on impairment. If any such indication exists, then the recoverable amount of assets is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or Cash Generating Unit (CGUs).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment loss in respect of assets other than goodwill is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised in prior years. A reversal of impairment loss is recognised immediately in the Statement of Profit & Loss.
2.10 Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction of qualifying assets are capitalised as part of the cost of such assets upto the assets are substantially ready for their intended use.
The loan origination costs directly attributable to the acquisition of borrowings (e.g. loan processing fee, upfront fee) are amortised on the basis of the Effective Interest Rate (EIR) method over the term of the loan.
All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.
2.11 Foreign currency transactions
Transactions in foreign currencies are recorded by the Company at their respective functional currency at the exchange rates prevailing at the date of the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currency are translated to the functional currency at the exchange rates prevailing at the reporting date
Exchange differences arising on settlement or translation of monetary items are recognised in the Statement of Profit and Loss with the exception of the following:
- exchange differences on foreign currency borrowings included in the borrowing cost when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
- In respect of long term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind as financial reporting period, the Company has elected to recognise exchange differences on translation of such long term foreign currency monetary items in line with its Previous GAAP accounting policy.
Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates at the date of initial transactions. Non-monetary items measure at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.
2.12 Employee benefits
Short term employee benefits
Short-term employee benefits are expensed in the year in which the related services are provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Defined contribution plans
Employee benefits in the form of Provident Fund are defined as contribution plan and charged as expenses during the period in which the employees perform the services.
Defined benefit plans
For defined benefit retirement, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds.
The effect of the remeasurement changes (comprising actuarial gains and losses) to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in other equity and will not be reclassified to the Statement of Profit and Loss. Past service cost is recognised in the Statement of Profit and Loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- net interest expense or income; and
- remeasurement
The Company presents the first two components of defined benefit costs in the Statement of Profit and Loss in the line item employee benefits expense.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
Other long-term employee benefits
The Company has long term employment benefit plans i.e. accumulated leave. Accumulated leave is encashed to eligible employees at the time of retirement. The liability for accumulated leave, which is a defined benefit scheme, is provided based on actuarial valuation as at the Balance Sheet date, based on Projected Unit Credit Method, carried out by an independent actuary.
2.13 Revenue Recognition
The Company recognises revenue from sale of goods when;
i) the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
ii) the amount of revenue can be measured reliably;
iii) it is probable that the economic benefits associated with the transaction will flow to the Company; and
iv) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue (other than sale of goods) is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Claim on insurance companies, interest and others, where quantum of accrual cannot be ascertained with reasonable certainty, are accounted for on acceptance basis.
Revenue represents net value of goods and services provided to customers after deducting for certain incentives including, but not limited to discounts, volume rebates, incentive programs etc.
Interest income are recognised on an accrual basis using the effective interest method.
Dividends are recognised at the time the right to receive payment is established.
2.14 Inventories
Inventories are valued at lower of cost and net realisable value except waste/scrap which is valued at net realisable value. Cost of finished goods and stock in process is determined by taking cost of purchases, material consumed, labour and related overheads. Cost of raw materials and stores & spare parts is computed on weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and to make the sale.
2.15 Provisions, Contingent Liabilities and Contingent Assets
Based on the best estimate provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event and it is probable ("more likely than not") that it is required to settle the obligation, and a reliable estimate can be made of the amount of the obligation at reporting date.
A contingent liability is a possible obligation that arises from a past event, with the resolution of the contingency dependent on uncertain future events, or a present obligation where no outflow is probable. Major contingent liabilities are disclosed in the financial statements unless the possibility of an outflow of economic resources is remote.
Contingent assets are not recognized in the financial statements but disclosed, where an inflow of economic benefit is probable.
2.16 Measurement of fair value
a) Financial instruments
The estimated fair value of the Company''s financial instruments is based on market prices and valuation techniques. Valuations are made with the objective to include relevant factors that market participants would consider in setting a price, and to apply accepted economic and financial methodologies for the pricing of financial instruments. References for less active markets are carefully reviewed to establish relevant and comparable data.
b) Marketable and non-marketable equity securities
Fair value for quoted securities is based on quoted market prices as of the reporting date. Fair value for unquoted securities is calculated based on commonly accepted valuation techniques utilizing significant unobservable data, primarily cash flow based models. If fair value cannot be measured reliably unlisted shares are recognized at cost.
2.17 Financial instruments Financial Assets
Initial recognition and measurement
All financial assets are recognised initially at fair value, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Classifications
The Company classifies its financial assets as subsequently measured at either amortised cost or fair value depending on the company''s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets.
Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met:
- it is held within a business model whose objective is to hold assets in order to collect contractual cash flows.
- the contractual terms of the financial asset represent contractual cash flows that are solely payments of principal and interest.
After initial measurement, such 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 as finance income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss.
Financial assets at fair value through Other Comprehensive Income (FVOCI)
Financial assets with contractual cash flow characteristics that are solely payments of principal and interest and held in a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets are classified to be measured at FVOCI.
Financial assets at fair value through profit and loss (FVTPL)
Any Financial assets, which does not meet the criteria for categorization as at amortized cost or as FVOCI, is classified as at FVTPL.
In addition, the company may elect to classify a Financial assets, which otherwise meets amortized cost or FVOCI 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'').
Financial assets included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss. Equity Instruments
All equity instruments in scope of Ind AS 109 are measured at fair value. On initial recognition an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis.
All other Financial Instruments are classified as measured at FVTPL.
Derecognition of financial assets
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:
- The rights to receive cash flows from the asset have expired, or
- 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 (a) the company has transferred substantially all the risks and rewards of the asset, or (b) the company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the company continues to recognize the transferred asset to the extent of the company''s continuing involvement. In that case, the company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the company could be required to repay.
On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and
(ii) any cumulative gain or loss that had been recognised in OCI is recognised in the Statement of Profit and Loss.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
With regard to trade receivable, the Company applies the simplified approach as permitted by Ind AS 109, Financial Instruments, which requires expected lifetime losses to be recognised from the initial recognition of the trade receivables.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, amortised cost, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of amortised cost, net of directly attributable transaction costs. Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial Liabilities measured at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
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 as finance costs in the Statement of Profit and Loss.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit and loss include financial liabilities designated upon initial recognition as at fair value through profit and loss.
Gains or losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
Financial liabilities designated upon initial recognition at fair value through profit and loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to the Statement of Profit and Loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the Statement of Profit and Loss.
Derecognition of financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
2.18 Income tax
Income tax expense comprises current and deferred tax. It is recognised in the Statement of Profit and Loss except to the extent that it relates to items recognised directly in Equity or in Other Comprehensive Income.
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax assets and liabilities are offset only if, the Company:
a) Has a legally enforceable right to set off the recognised amounts; and
b) Intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Deferred tax
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.
Minimum Alternative Tax (MAT) is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of credit to the Statement of Profit and Loss and included in deferred tax assets. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.
2.19 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 lease''s inception at the fair value of the leased property or, if lower, the percentage 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 Statement of Profit and 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.
Lease in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to Statement of Profit and Loss on a straight line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
2.20 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 of the Company has been identified as being the chief operating decision maker by the Management of the Company.
2.21 Standard issued but not yet effective
The amendments to standards that are issued, but not yet effective, up to the date of issuance of the Company''s financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.
Standards issued but not yet effective
On March 28, 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying amendments to Ind AS 21, ''The Effects of Changes in Foreign Exchange Rates'' and Ind AS 115, ''Revenue from Contracts with Customers.'' The amendments are applicable to the Company from April 1, 2018.
(a) Amendment to Ind AS 21
Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs ("MCA") 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 evaluating the requirements of the amendment and the effect on the financial statements will be given in due course.
(b) Amendment to Ind AS 115
Ind AS 115- Revenue from Contract with Customers: On March 28, 2018, Ministry of Corporate Affairs (""MCA"") has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers. The standard permits two possible methods of transition:
- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch -up approach).
The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018. The Company is evaluating the requirements of the amendment and the effect on the financial statements will be given in due course.
Mar 31, 2017
1.1 ACCOUNTING CONCEPTS
The financial statements have been prepared under the historical cost convention on accrual basis in compliance with applicable accounting standards as prescribed under Section 133 of the Companies Act, 2013 (âActâ) read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Act. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis except where otherwise stated.
1.2 REVENUE RECOGNITION
Revenue is recognised when significant risks and reward of ownership have been passed to buyer and there is no uncertainty exists to its realization or collection.
1.3 FIXED ASSETS
a) Fixed assets are shown at cost of acquisition and/or construction less accumulated depreciation and impairment losses.
b) Intangible assets are stated at cost less amortisation.
c) Pre-operative expenditure during the construction/erection period is included under capital work-in-progress and is allocated to the respective fixed assets on completion of construction/erection.
1.4 DEPRECIATION, AMORTISATION AND IMPAIRMENT LOSS
a) Fixed assets are depreciated using written down value method except fixed assets of the floor tile unit (including MTP & GVT plant) and addition made after 1st April, 1995 to plant and machinery of wall tile units, where depreciation is provided on a straight line method, considering the estimated useful lives as specified in Schedule II of the Companies Act, 2013 except in case of vehicles, press punches / die boxes / components of certain plant & machinery and hand pallet truck where useful lives are taken as 5, 8 and 3 years respectively. Continuous process plants as defined in Schedule II have been considered on technical evaluation. Impaired assets are amortised over the estimated balance useful life.
b) In case of indication of impairment of the carrying amount of the Companyâs assets, an asset recoverable amount is estimated. Impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Reversal of impairment loss recognised in prior periods is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreased. Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.
c) Leasehold land is amortised over the period of lease.
d) (i) Intangible assets are being recognised if the future economic benefits attributable to the assets are expected to flow to the Company and cost of the assets can be measured reliably. The same are being amortised over the expected duration of benefits.
(ii) Intangible assets being computer software is amortised over a period of five years.
1.5 TRANSACTION OF FOREIGN CURRENCY ITEMS
Transactions denominated in foreign currencies are recorded at exchange rate prevailing at the time of transactions. Monetary items denominated in foreign currencies at the year-end translated at exchange rates prevailing on the balance sheet date. Premium in respect of forward contract is accounted over the period of the contract. Exchange differences arising on settlement/translation of monetary items including forward contracts are dealt in the statement of Profit and Loss except foreign exchange loss/gain arising after 1st April, 2012 on long-term foreign currency monetary items used for depreciable assets, which are capitalised.
1.6 INVESTMENTS
Long-term investments are stated at cost less provision for diminution in the value other than temporary. Current investments are stated at cost or market value whichever is lower.
1.7 INVENTORIES
Inventories are valued at lower of cost and net realisable value except waste/scrap which is valued at net realisable value. Cost of raw materials and stores and spare parts is computed on weighted average basis. Cost of finished goods and stock in process is determined by taking material, labour and related overheads. Cost of finished goods includes excise duty.
1.8 RESEARCH & DEVELOPMENT EXPENSES
Revenue expenditure on research and development is charged to Statement of Profit & Loss and Capital expenditure is added to fixed assets.
1.9 INTEREST ON BORROWINGS
Interest on borrowings is charged to the Statement of Profit & Loss for the year in which it is incurred except interest on borrowings for qualifying fixed assets which is capitalised till the date of commercial use of the asset.
1.10 EMPLOYEE BENEFITS:
a) Defined Contribution Plan:
Employee benefits in the form of Provident Fund (with Government Authorities) and Employeesâ pension Scheme are defined as contribution plan and charged as expenses during the period in which the employees perform the services.
b) Defined Benefit Plan:
Retirement benefits in the form of gratuity, long-term compensated leaves; other long-term employee benefit and provident fund (multiemployer plan) are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, according to the date of the Balance Sheet. Actuarial gain/losses, if any, are immediately recognised in the Statement of Profit & Loss.
c) Short-term employee benefit:
Short-term benefits are charged off at the undiscounted amount in the year in which the related services rendered.
1.11 GOVERNMENT GRANTS
Grants from government relating to fixed assets are shown as a deduction from the gross value of fixed assets and those of the nature of project capital subsidy are credited to capital reserve. Other government grants including incentive, duty drawback among others are credited to Statement of Profit & Loss or deducted from the related expenses.
1.12 LEASES
Operating lease payments are recognized as expenditure in the Statement of Profit and Loss on straight line basis, over the lease period.
1.13 SHARE ISSUE EXPENSES
Share issue expenses are written off against the Security Premium Account.
1.14 PROVISION FOR CURRENT AND DEFERRED TAX
Provision for current tax liability of the Company is estimated considering the provisions of the Income Tax Act, 1961.
Deferred tax is recognised subject to the consideration of 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.
1.15 USE OF ACCOUNTING ESTIMATES
The preparation of financial statements is in conformity with generally accepted accounting principles requires the management to make estimates and assumptions in certain circumstances, affecting amounts reported in these financial statements and related notes. Actual results could differ from these estimates.
1.16 CONTINGENT LIABILITY, CONTINGENT ASSETS AND PROVISION
Contingent liabilities if material, are disclosed by way of notes, contingent assets are not recognised or disclosed in the financial statement, a provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle obligation(s), in respect to which an estimate can be made for the amount of obligation.
Mar 31, 2016
1.1 ACCOUNTING CONCEPTS
The financial statements have been prepared under the historical cost
convention on accrual basis in compliance with applicable accounting
standards as prescribed under Section 133 of the Companies Act, 2013
(''Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014 and
the relevant provisions of the Act. The Company follows the mercantile
system of accounting and recognizes income and expenditure on accrual
basis except where otherwise stated.
1.2 REVENUE RECOGNITION
Revenue is recognised when significant risks and reward of ownership
have been passed to buyer and there is no uncertainty exists to its
realization or collection.
1.3 FIXED ASSETS
a) Fixed assets are shown at cost of acquisition and/or construction
less accumulated depreciation and impairment losses.
b) Intangible assets are stated at cost less amortisation.
c) Pre-operative expenditure during the construction/erection period is
included under capital work-in-progress and is allocated to the
respective fixed assets on completion of construction/erection.
1.4 DEPRECIATION, AMORTISATION AND IMPAIRMENT LOSS
a) Fixed assets are depreciated using written down value method except
fixed assets of the floor tile unit (including MTP & GVT plant) and
addition made after 1st April, 1995 to plant and machinery of wall tile
units, where depreciation is provided on a straight line method,
considering the estimated useful lives as specified in Schedule II of
the Companies Act, 2013 except in case of vehicles, press punches / die
boxes / components of certain plant & machinery and hand pallet truck
where useful lives are taken as 5, 8 and 3 years respectively.
Continuous process plants as defined in Schedule II have been
considered on technical evaluation. Impaired assets are amortised over
the estimated balance useful life.
b) In case of indication of impairment of the carrying amount of the
Company''s assets, an asset recoverable amount is estimated. Impairment
loss is recognised whenever the carrying amount of an asset exceeds its
recoverable amount. Reversal of impairment loss recognised in prior
periods is recorded when there is an indication that the impairment
losses recognised for the assets no longer exist or have decreased.
Post impairment, depreciation is provided on the revised carrying value
of the asset over its remaining useful life.
c) Leasehold land is amortised over the period of lease.
d) (i) Intangible assets are being recognised if the future economic
benefits attributable to the assets are expected to flow to the Company
and cost of the assets can be measured reliably. The same are being
amortised over the expected duration of benefits.
(ii) Intangible assets being computer software is amortised over a
period of five years.
1.5 TRANSACTION OF FOREIGN CURRENCY ITEMS
Transactions denominated in foreign currencies are recorded at exchange
rate prevailing at the time of transactions. Monetary items denominated
in foreign currencies at the year end translated at exchange rates
prevailing on the balance sheet date. Premium in respect of forward
contract is accounted over the period of the contract. Exchange
differences arising on settlement/ translation of monetary items
including forward contracts are dealt in the statement of Profit and
Loss except foreign exchange loss/gain arising after 1st April, 2012 on
long-term foreign currency monetary items used for depreciable assets,
which are capitalised.
1.6 INVESTMENTS
Long-term investments are stated at cost less provision for diminution
in the value other than temporary. Current investments are stated at
cost or market value whichever is lower.
1.7 INVENTORIES
Inventories are valued at lower of cost and net realisable value except
waste/ scrap which is valued at net realisable value. Cost of raw
materials and stores and spare parts is computed on weighted average
basis. Cost of finished goods and stock in process is determined by
taking material, labour and related overheads. Cost of finished goods
includes excise duty.
1.8 RESEARCH & DEVELOPMENT EXPENSES
Revenue expenditure on research and development is charged to Statement
of Profit & Loss and Capital expenditure is added to fixed assets.
1.9 INTEREST ON BORROWINGS
Interest on borrowings is charged to the Statement of Profit & Loss for
the year in which it is incurred except interest on borrowings for
qualifying fixed assets which is capitalised till the date of
commercial use of the asset.
1.10 EMPLOYEE BENEFITS:
a) Defined Contribution Plan:
Employee benefits in the form of Provident Fund (with Government
Authorities) and Employees'' pension Scheme are defined as contribution
plan and charged as expenses during the period in which the employees
perform the services.
b) Defined Benefit Plan:
Retirement benefits in the form of gratuity, long-term compensated
leaves;other long-term employee benefit and provident fund (multi-
employer plan) are considered as defined benefit obligations and are
provided for on the basis of an actuarial valuation, using the
projected unit credit method, according to the date of the Balance
Sheet. Actuarial gain/losses, if any, are immediately recognised in the
Statement of Profit & Loss.
c) Short-term employee benefit:
Short-term benefits are charged off at the undiscounted amount in the
year in which the related services rendered.
1.11 GOVERNMENT GRANTS
Grants from government relating to fixed assets are shown as a
deduction from the gross value of fixed assets and those of the nature
of project capital subsidy are credited to capital reserve. Other
government grants including incentive, duty drawback among others are
credited to Statement of Profit & Loss or deducted from the related
expenses.
1.12 LEASES
Operating lease payments are recognized as expenditure in the Statement
of Profit and Loss on straight line basis, over the lease period.
1.13 SHARE ISSUE EXPENSES
Share issue expenses are written off against the Security Premium
Account.
1.14 PROVISION FOR CURRENT AND DEFERRED TAX
Provision for current tax liability of the Company is estimated
considering the provisions of the Income Tax Act, 1961.
Deferred tax is recognised subject to the consideration of 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.
1.15 USE OF ACCOUNTING ESTIMATES
The preparation of financial statements is in conformity with generally
accepted accounting principles requires the management to make
estimates and assumptions in certain circumstances, affecting amounts
reported in these financial statements and related notes. Actual
results could differ from these estimates.
1.16 CONTINGENT LIABILITY, CONTINGENT ASSETS AND PROVISION
Contingent liabilities if material, are disclosed by way of notes,
contingent assets are not recognised or disclosed in the financial
statement, a provision is recognised when the Company has a present
obligation as a result of past event and it is probable that an outflow
of resources will be required to settle obligation(s), in respect to
which an estimate can be made for the amount of obligation.
Mar 31, 2015
1.1 ACCOUNTING CONCEPTS
The financial statements have been prepared under the historical cost
convention on accrual basis in compliance with applicable accounting
standards as prescribed under Section 133 of the Companies Act,
2013 (''Act'') read with Rule 7 of the Companies (Accounts) Rules,
2014 and the relevant provisions of the Act. The Company follows the
mercantile system of accounting and recognizes income and expenditure
on accrual basis except where otherwise stated.
1.2 REVENUE RECOGNITION
Revenue is recognised when significant risks and reward of ownership
have been passed to buyer and there is no uncertainty exists to its
realization or collection.
1.3 FIXED ASSETS
a) Fixed assets are shown at cost of acquisition and/or construction
less accumulated depreciation and impairment losses.
b) Intangible assets are stated at cost less amortisation.
c) Pre-operative expenditure during the construction/erection period is
included under capital work-in-progress and is allocated to the
respective fixed assets on completion of construction/ erection.
1.4 DEPRECIATION, AMORTISATION AND IMPAIRMENT LOSS
a) Fixed assets are depreciated using written down value method except
fixed assets of the floor tile unit (including MTP & GVT plant) and
addition made after 1st April, 1995 to plant and machinery of wall tile
units, where depreciation is provided on a straight line method,
considering the estimated useful lives as specified in Schedule II of
the Companies Act, 2013 except in case of vehicles, press punches / die
boxes and hand pallet truck where useful lives are taken as 5, 8 and 3
years respectively. Continuous process plants as defined in Schedule II
have been considered on technical evaluation. impaired assets are
amortised over the estimated balance useful life.
b) In case of indication of impairment of the carrying amount of the
Company''s assets, an asset recoverable amount is estimated. impairment
loss is recognised whenever the carrying amount of an asset exceeds its
recoverable amount. Reversal of impairment loss recognised in prior
periods is recorded when there is an indication that the impairment
losses recognised for the assets no longer exist or have decreased.
Post impairment, depreciation is provided on the revised carrying value
of the asset over its remaining useful life.
c) Leasehold land is amortised over the period of lease.
d) (i) intangible assets are being recognised if the future
economic benefits attributable to the assets are expected to flow to
the Company and cost of the assets can be measured reliably. The same
are being amortised over the expected duration of benefits.
(ii) intangible assets being computer software is amortised over a
period of five years.
1.5 TRANSACTION OF FOREIGN CURRENCY ITEMS
Transactions denominated in foreign currencies are recorded at exchange
rate prevailing at the time of transactions. Monetary items denominated
in foreign currencies at the year end translated at exchange rates
prevailing on the balance sheet date. Premium in respect of forward
contract is accounted over the period of the contract. Exchange
differences arising on settlement/translation of monetary items
including forward contracts are dealt in the statement of Profit and
Loss except foreign exchange loss/gain arising after 1st april, 2012 on
long-term foreign currency monetary items used for depreciable assets,
which are capitalised.
1.6 INVESTMENTS
Long-term investments are stated at cost less provision for diminution
in the value other than temporary. Current investments are stated at
cost or market value whichever is lower.
1.7 INVENTORIES
inventories are valued at lower of cost and net realisable value
except waste/scrap which is valued at net realisable value. Cost of raw
materials and stores and spare parts is computed on weighted average
basis. Cost of finished goods and stock in process is determined by
taking material, labour and related overheads. Cost of finished goods
includes excise duty.
1.8 RESEARCH & DEVELOPMENT EXPENSES
Revenue expenditure on research and development is charged to Statement
of Profit & Loss and Capital expenditure is added to fixed assets.
1.9 INTEREST ON BORROWINGS
Interest on borrowings is charged to the Statement of Profit & Loss for
the year in which it is incurred except interest on borrowings for
qualifying fixed assets which is capitalised till the date of
commercial use of the asset.
1.10 EMPLOYEE BENEFITS:
a) Defined Contribution Plan:
Employee benefits in the form of Provident Fund (with Government
Authorities) and Employees'' pension Scheme are defined as contribution
plan and charged as expenses during the period in which the employees
perform the services.
b) Defined Benefit Plan:
Retirement benefits in the form of gratuity, long-term compensated
leaves;other long-term employee benefit and provident fund
(multi-employer plan) are considered as defined benefit obligations and
are provided for on the basis of an actuarial valuation, using the
projected unit credit method, according to the date of the Balance
Sheet. Actuarial gain/losses, if any, are immediately recognised in the
Statement of Profit & Loss.
c) Short-term employee benefit:
Short-term benefits are charged off at the undiscounted amount in the
year in which the related services rendered.
1.11 GOVERNMENT GRANTS
Grants from government relating to fixed assets are shown as a
deduction from the gross value of fixed assets and those of the nature
of project capital subsidy are credited to capital reserve. other
government grants including incentive, duty drawback among others are
credited to Statement of Profit & Loss or deducted from the related
expenses.
1.12 LEASES
Operating lease payments are recognized as expenditure in the Statement
of Profit and Loss on straight line basis, over the lease period.
1.13 SHARE ISSUE EXPENSES
Share issue expenses are written off against the Security Premium
Account.
1.14 PROVISION FOR CURRENT AND DEFERRED TAX
Provision for current tax liability of the Company is estimated
considering the provisions of the Income Tax Act, 1961.
Deferred tax is recognised subject to the consideration of 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.
1.15 USE OF ACCOUNTING ESTIMATES
The preparation of financial statements is in conformity with generally
accepted accounting principles requires the management to make
estimates and assumptions in certain circumstances, affecting amounts
reported in these financial statements and related notes. Actual
results could differ from these estimates.
1.16 CONTINGENT LIABILITY, CONTINGENT ASSETS AND PROVISION
Contingent liabilities if material, are disclosed by way of notes,
contingent assets are not recognised or disclosed in the financial
statement, a provision is recognised when the Company has a present
obligation as a result of past event and it is probable that an outflow
of resources will be required to settle obligation(s), in respect to
which an estimate can be made for the amount of obligation.
Mar 31, 2013
1.1 Accounting Concepts
The financial statements have been prepared under the historical cost
convention on accrual basis in compliance with applicable accounting
standards notified by the companies (Accounting standards) Rules, 2006
(as amended) and relevant provisions of the Companies Act, 1956. The
Company follows the mercantile system of accounting and recognizes
income and expenditure on accrual basis except where otherwise stated.
1.2 Fixed Assets
(i) Fixed assets are shown at cost of acquisition and/or construction
less accumulated depreciation and impairment losses.
(ii) Intangible assets are stated at cost less amortisation.
(iii) Pre-operative expenditure during the construction/erection period
is included under capital work-in-progress and is allocated to the
respective fixed assets on completion of construction/erection.
1.3 Depreciation, Amortisation and Impairment Loss
(a) Fixed assets are depreciated using written down value method except
fixed assets of the floor tile unit (including MTP & GVT plant) and
addition made after 1st April, 1995 to plant and machinery of wall tile
units, where depreciation is provided on a straight line method, at the
rates and in the manner specified in Schedule XIV of the Companies Act,
1956. Continuous process plant as defined in Schedule XIV have been
considered on technical evaluation. Impaired assets are amortised over
the estimated balance useful life.
(b) In case of indication of impairment of the carrying amount of the
Company''s assets, an asset recoverable amount is estimated. Impairment
loss is recognised whenever the carrying amount of an asset exceeds its
recoverable amount. Reversal of impairment loss recognised in prior
periods is recorded when there is an indication that the impairment
losses recognised for the assets no longer exist or have decreased.
Post impairment, depreciation is provided on the revised carrying value
of the asset over its remaining useful life.
(c) Intangible assets being computer software is amortised over a
period of five years.
1.4 Transaction of Foreign Currency Items
Transactions denominated in foreign currencies are recorded at exchange
rate prevailing at the time of transactions. Monetary items denominated
in foreign currencies at the year end translated at exchange rates
prevailing on the balance sheet date. Premium in respect of forward
contract is accounted over the period of the contract. Exchange
differences arising on settlement/translation of monetary items
including forward contracts are dealt in the statement of Profit and
Loss except foreign exchange loss/gain arising after 1st April, 2012 on
long-term foreign currency monetary items used for depreciable assets,
which are capitalised.
1.5 Investments
Long-term investments are stated at cost less provision for diminution
in the value other than temporary. Current investments are stated at
cost or market value whichever is lower
1.6 Inventories
Inventories are valued at lower of cost and net realisable value except
waste/scrap which is valued at net realisable value. Cost of raw
materials and stores and spare parts is computed on weighted average
basis. Cost of finished goods and stock in process is determined by
taking material, labour and related overheads. Cost of finished goods
includes excise duty.
1.7 Revenue expenditure on research and development is charged to
Statement of Profit & Loss and capital expenditure is added to fixed
assets.
1.8 Interest on Borrowings
Interest on borrowings is charged to the Statement of Profit & Loss for
the year in which it is incurred except interest on borrowings for
qualifying fixed assets which is capitalised till the date of
commercial use of the asset.
1.9 Employee Benefits
(a) Defined Contribution Plan:
Employee benefits in the form of Provident Fund (with Government
Authorities) and Employees'' pension Scheme are defined as contribution
plan and charged as expenses during the period in which the employees
perform the services.
(b) Defined Benefit Plan:
Retirement benefits in the form of gratuity, long-term compensated
leaves,other long-term employee benefit and provident fund
(multi-employer plan) are considered as defined benefit obligations and
are provided for on the basis of an actuarial valuation, using the
projected unit credit method, according to the date of the Balance
Sheet. Actuarial gain/losses, if any, are immediately recognised in the
Statement of Profit & Loss.
(c) Short-term employee benefit:
Short-term benefits are charged off at the undiscounted amount in the
year in which the related services rendered.
1.10 Government Grants
Grants from government relating to fixed assets are shown as a
deduction from the gross value of fixed assets and those of the nature
of project capital subsidy are credited to capital reserve. Other
government grants including incentive, duty drawback among others are
credited to Statement of Profit & Loss or deducted from the related
expenses.
1.11 Provision for Current and Deferred Tax
Provision for current tax liability of the Company is estimated
considering the provisions of the Income Tax Act, 1961.
Deferred tax is recognised subject to the consideration of 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.
1.12 Intangible assets are being recognised if the future economic
benefits attributable to the assets are expected to flow to the Company
and cost of the assets can be measured reliably. The same are being
amortised over the expected duration of benefits.
1.13 Use of Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the management to make
estimates and assumptions in certain circumstances, affecting amounts
reported in these financial statements and related notes. Actual
results could differ from these estimates.
1.14 Contingent Liability, Contingent Assets and Provision
Contingent liabilities if material, are disclosed by way of notes,
contingent assets are not recognised or disclosed in the financial
statement, a provision is recognised when the Company has a present
obligation as a result of past event and it is probable that an outflow
of resources will be required to settle obligation(s), in respect to
which an estimate can be made for the amount of obligation.
Mar 31, 2012
1.1 Accounting Concepts
The financial statements have been prepared under the historical cost
convention on accrual basis in compliance with applicable accounting
standards notified by the companies (Accounting standards) Rules, 2006
and relevant provisions of the Companies Act, 1956.
1.2 Fixed Assets
i) Fixed assets are shown at cost of acquisition and/or construction
less accumulated depreciation and impairment losses.
ii) Intangible assets are stated at cost less amortisation.
iii) Pre-operative expenditure during the construction/erection period
is included under capital work-in-progress and is allocated to the
respective fixed assets on completion of construction/erection.
1.3 Depreciation, Amortisation and Impairment Loss
a) Fixed assets are depreciated using written down value method except
fixed assets of the floor tile unit (including vitrified tile plant)
and addition made after 1st April, 1995 to plant and machinery of wall
tile units, where depreciation is provided on a straight line method,
at the rates and in the manner specified in Schedule XIV of the
Companies Act, 1956. Continuous process plants as defined in Schedule
XIV have been considered on technical evaluation. Impaired assets are
amortised over the estimated balance useful life.
b) In case of indication of impairment of the carrying amount of the
Company's assets, an asset recoverable amount is estimated. Impairment
loss is recognised whenever the carrying amount of an asset exceeds its
recoverable amount. Reversal of impairment loss recognised in prior
periods is recorded when there is an indication that the impairment
losses recognised for the assets no longer exist or have decreased.
Post impairment, depreciation is provided on the revised carrying value
of the asset over its remaining useful life.
c) Intangible assets being computer software is amortised over a period
of five years.
1.4 Transaction of Foreign Currency Items
Transactions denominated in foreign currencies are recorded at exchange
rate prevailing at the time of transactions. Monetary items denominated
in foreign currencies at the year end translated at exchange rates
prevailing on the balance sheet date. Premium in respect of forward
contract is accounted over the period of the contract. Exchange
differences arising on settlement/translation of monetary items
including forward contracts are dealt in the statement of Profit and
Loss Account except foreign exchange loss/gain arising after 1st April,
2011 on long-term foreign currency monetary items used for depreciable
assets, which are capitalised.
1.2 Investments
Long-term investments are stated at cost less provision for diminution
in the value other than temporary. Current investments are stated at
cost or market value whichever is lower.
1.6 Inventories
Inventories are valued at lower of cost and net realisable value except
waste/scrap which is valued at net realisable value. Cost of raw
materials and stores and spare parts is computed on weighted average
basis. Cost of finished goods and stock in process is determined by
taking material, labour and related overheads. Cost of finished goods
includes excise duty.
1.7 Revenue expenditure on research and development is charged to
Profit and Loss Accounts and capital expenditure is added to fixed
assets.
1.8 Interest on Borrowings
Interest on borrowings is charged to the Profit and Loss Account for
the year in which it is incurred except interest on borrowings for
qualifying fixed assets which is capitalised till the date of
commercial use of the asset.
1.9 Employee Benefits:
a Defined Contribution Plan:
Employee benefits in the form of Provident Fund (with Government
Authorities), Employees' pension Scheme and Employees' State Insurance
are defined as contribution plan and charged as expenses during the
period in which the employees perform the services.
b) Defined Benefit Plan:
Retirement benefits in the form of gratuity, long-term compensated
leaves; other long-term employee benefit and provident fund
(multi-employer plan) are considered as defined benefit obligations and
are provided for on the basis of an actuarial valuation, using the
projected unit credit method, according to the date of the Balance
Sheet. Actuarial gain/losses, if any, are immediately recognised in the
Profit and Loss Account.
c) Short-term employee benefit:
Short-term benefits are charged off at the undiscounted amount in the
year in which the related services rendered.
1.10 Government Grants
Grants from government relating to fixed assets are shown as a
deduction from the gross value of fixed assets and those of the nature
of project capital subsidy are credited to capital reserve. Other
government grants including incentive, duty drawback among others are
credited to Profit and Loss account or deducted from the related
expenses.
1.11 Provision for Current and Deferred Tax
Provision for current tax liability of the Company is estimated
considering the provisions of the Income Tax Act, 1961.
Deferred tax is recognised subject to the consideration of 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.
1.12 Intangible assets are being recognised if the future economic
benefits attributable to the assets are expected to flow to the Company
and cost of the assets can be measured reliably. The same are being
amortised over the expected duration of benefits.
1.13 Use of accounting estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires the management to make
estimates and assumptions in certain circumstances, affecting amounts
reported in these financial statements and related notes. Actual
results could differ from these estimates.
1.14 Contingent liability, contingent assets and provision
Contingent liabilities if material, are disclosed by way of notes,
contingent assets are not recognised or disclosed in the financial
statement, a provision is recognised when the Company has a present
obligation as a result of past event and it is probable that an outflow
of resources will be required to settle obligation(s), in respect to
which an estimate can be made for the amount of obligation.
Mar 31, 2011
A) Accounting Concepts
The financial statements have been prepared under the historical cost
convention in accordance with the generally accepted accounting
principles and the provisions of the Companies Act, 1956. The Company
follows the mercantile system of accounting and recognises income and
expenditure on accrual basis except where otherwise stated.
b) Fixed Assets
(i) Fixed Assets are shown at cost of acquisition and/or construction
less accumulated depreciation and impairment losses.
(ii) Intangible assets are stated at cost less amortisation.
c) Transaction of Foreign Currency Items
Transactions denominated in foreign currencies are recorded at exchange
rate prevailing at the time of transactions. Monetary items denominated
in foreign currencies at the year end translated at exchange rates
prevailing on the balance sheet date. Exchange differences arising on
settlement of monetary items at rates different from those at which
they were initially recorded are recognised as income or as expenses in
the year in which they arise. Premium in respect of forward contract is
accounted over the period of the contract.
d) Treatment of Expenditure During Construction Period
Interest and other pre-operative expenditure are included under Capital
Work in Progress and are allocated to the respective fixed assets on
the installation/completion of the same.
e) Investments
Long Term investments are stated at cost less provision for dimunition
in the value other than temporary. Current investments are stated at
cost or market value whichever is lower.
f) Inventories
Inventories are valued at lower of cost and net realisable value except
waste/scrap which is valued at net realisable value. Cost of Raw
Materials and Stores and Spare Parts is computed on weighted average
basis. Cost of finished goods and stock in process is determined by
taking material, labour and related overheads. Cost of finished goods
includes excise duty.
g) Interest on Borrowings
Interest on borrowings is charged to the Profit and Loss Account for
the year in which it is incurred except interest on borrowings for
qualifying fixed assets which is capitalised till the date of
commercial use of the asset.
h) Depreciation, Amortisation and Impairment Loss
a) Fixed assets are depreciated using written down value method except
fixed assets of the Floor Tile Unit (including Vitrified Tile Plant)
and addition made after 1st April, 1995 to plant and machinery of Wall
Tile Units, where depreciation is provided on straight line method, at
the rates and in the manner specified in schedule XIV of the Companies
Act, 1956. Continuous process plant as defined in schedule XIV have
been considered on technical evaluation. Impaired assets are amortised
over the estimated balance useful life.
b) In case of indication of impairment of the carrying amount of the
Company's assets, an asset's recoverable amount is estimated.
Impairment loss is recognised whenever the carrying amount of an asset
exceeds its recoverable amount. Reversal of impairment loss recognised
in prior periods is recorded when there is an indication that the
impairment losses recognised for the assets no longer exist or have
decreased. Post impairment, depreciation is provided on the revised
carrying value of the asset over its remaining useful life.
c) Intangible assets being computer software is amortised over a period
of five years.
i) Employee Benefits:
a) Defined Contribution Plan:
Employee benefits in the form of Provident Fund (with Government
Authorities) are considered as defined contribution plan and the
contributions are charged to the Profit and Loss Account of the year
when the contributions to the respective funds are due.
b) Defined Benefit Plan:
Retirement benefits in the form of Gratuity, Long Term compensated
leaves, Other Long Term Employee Benefit and Provident Fund (multi-
employer plan) are considered as defined benefit obligations and are
provided for on the basis of an actuarial valuation, using the
projected unit credit method, as at the date of the Balance Sheet.
c) Actuarial gain/losses, if any, are immediately recognised in the
Profit and Loss Account.
j) Government Grants
Grants from Government relating to fixed assets are shown as a
deduction from the gross value of fixed assets and those of the nature
of project capita subsidy are credited to capital reserve. Other
Government grants including incentives, duty drawback etc. are credited
to profit and loss account or deducted from the related expenses.
k) Provision for Current and Deferred Tax
Provision for current tax liability of the Company is estimated
considering the provisions of the Income Tax Act, 1961.
Deferred Tax is recognised subject to the consideration of prudence 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.
l) Contingent Liability, Contingent Assets & Provisions
Contingent liabilities if material, are disclosed by way of notes,
contingent assets are not recognised or disclosed in the financial
statement, a provision is recognised when the Company has a present
obligation as a result of past event and it is probable that an outflow
of resources will be required to settle obligation(s), in respect of
which estimate can be made for the amount of obligation.
Mar 31, 2010
A) Accounting Concepts
The financial statements have been prepared under the historical cost
convention in accordance with the generally accepted accounting
principles and the provisions of the Companies Act, 1956 The Company
follows the mercantile system of accounting and recognizes income and
expenditure on accrual basis except where otherwise stated.
b) Fixed Assets
(i) Fixed Assets are shown at cost of acquisition and/or construction
less accumulated depreciation and impairment losses. (ii) Intangible
assets are stated at cost less amortization.
c) Transaction of Foreign Currency Items
Transactions denominated in foreign currencies are recorded at exchange
rate prevailing at the time of transactions. Monetary items denominated
in foreign currencies at the year end translated at exchange rates
prevailing on the balance sheet date. Exchange differences arising on
settlement of monetary items at rates different from those at which
they were initially recorded are recognized as income or as expenses in
the year in which they arise. Premium in respect of forward contract is
accounted over the period of the contract.
d) Treatment of Expenditure during Construction Period
nterest and other pre-operative expenditure are included under Capital
Work in Progress and are allocated to the respective fixed assets on
the installation/completion of the same.
e) Investments
Long Term investments are stated at cost less provision for diminution
in the value other than temporary. Current investments are stated at
cost or market value whichever is lower
f) Inventories
nventories are valued at lower of cost and net realizable value except
waste/scrap which is valued at net realizable value. Cost of Raw
Materials and Stores and Spare Parts is computed on weighted average
basis. Cost of finished goods and stock in process is determined by
taking material, labour and related overheads. Cost of finished goods
includes excise duty.
g) Interest on Borrowings
nterest on borrowings is charged to the Profit and Loss Account for the
year in which it is incurred except interest on borrowings for
qualifying fixed assets which is capitalized till the date of
commercial use of the asset.
h) Depreciation, Amortization and Impairment Loss
a) Fixed assets are depreciated using written down value method except
fixed assets of the Floor Tile Unit (including Vitrified Tile Plant)
and addition made after 1st April, 1995 to plant and machinery of Wall
Tile Units, where depreciation is provided on straight line method, at
the rates and in the manner specified in Schedule XIV of the Companies
Act, 1956. Continuous process plant as defined in Schedule XIV have
been considered on technical evaluation. Impaired assets are amortized
over the estimated balance useful life.
(b) In case of indication of impairment of the carrying amount of the
Companys assets, an assets recoverable amount is estimated.
Impairment loss is recognized whenever the carrying amount of an asset
exceeds its recoverable amount. Reversal of impairment loss recognised
in prior periods is recorded when there is an indication that the
impairment losses recognised for the assets no longer exist or have
decreased. Post impairment, depreciation is provided on the revised
carrying value of the asset over its remaining useful life.
(c) Intangible assets being computer software is amortized over a
period of five years.
i) Employee Benefits:
(a) Defined Contribution Plan:
Employee benefits in the form of Provident Fund (with Government
Authorities) are considered as defined contribution plan and the
contributions are charged to the Profit and Loss Account of the year
when the contributions to the respective funds are due.
(b) Defined Benefit Plan:
Retirement benefits in the form of Gratuity, Long Term compensated
leaves, Other Long Term Employee Benefit and Provident Fund
(multi-employer plan) are considered as defined benefit obligations and
are provided for on the basis of an actuarial valuation, using the
projected unit credit method, as at the date of the Balance Sheet.
(d) Actuarial gain/losses, if any, are immediately recognised in the
Profit and Loss Account.
j) Government Grants
Grants from Government relating to fixed assets are shown as a
deduction from the gross value of fixed assets and those of the nature
of project capital subsidy are credited to capital reserve. Other
Government grants including incentives, duty drawback etc. are credited
to profit and loss account or deducted from the related expenses.
k) Provision for Current and Deferred Tax
Provision for current tax liability of the Company is estimated
considering the provisions of the Income Ta x Act, 1961.
Deferred Tax is recognized subject to the consideration of prudence 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.
l) Contingent Liability, Contingent Assets & Provisions
Contingent liabilities if material, are disclosed by way of notes,
contingent assets are not recognized or disclosed in the financial
statement, a provision is recognized when the Company has a present
obligation as a result of past event and it is probable that an outflow
of resources will be required to settle obligation(s), in respect of
which estimate can be made for the amount of obligation.
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