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Accounting Policies of Steel Strips Wheels Ltd. Company
Mar 31, 2025
2. SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these Indian Accounting Standards (Ind-AS)
financial statements. These policies have been consistently applied to all the years except where newly issued accounting standard is
initially adopted.
2.01) BASIS OF PREPARATION
The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind
AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation
requirements of Division II of schedule III to the Companies Act, 2013 (Ind AS compliant schedule III) as applicable to these
standalone financial statements.
The Company has prepared the standalone financial statements on the basis that it will continue to operate as going concern.
These policies have been consistently applied to all the years presented, unless otherwise stated.
The standalone financial statements have been prepared on a historical cost basis, except for the following assets and liabilities
(i) Certain financial assets and liabilities that is measured at fair value.
(ii) Assets held for sale-measured at fair value less cost to sell
(iii) Defined benefit plans-plan assets measured at fair value
(iv) Share based payments.
2.02) Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/non- current classification. An asset is
treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle - Held primarily for purpose of
trading
- Expected to be realised within twelve months after the reporting period, or
- cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after
the reporting period.
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
The term of the liability that could, at the option of counterparty, result in its settlement by the issue of equity instruments do not
affect its classification.
Deferred tax assets and deferred tax liabilities are classified as non- current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents.
The Company has identified twelve months as its operating cycle.
2.03) Revenue from contract with customers
Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at
an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
A receivable is recognized when the control of the product is transferred as the consideration is unconditional and payment
becomes due upon passage of time as per the terms of contract with customers. The Company collects GST on behalf of the
government and, therefore, it is not an economic benefit flowing to the Company. Hence, it is excluded from revenue
Revenue from sales of products.
Revenue from sale of products is recognized at the point in time when control of the goods is transferred to the customer,
generally on delivery of the goods and there are no unfulfilled obligations.
The Company considers, whether there are other promises in the contract in which there are separate performance obligations,
to which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of equipment,
the Company considers the effects of variable consideration, the existence of significant financing components, noncash
consideration, and consideration payable to the customer, if any.
Variable consideration
If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will
be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception
and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will
not occur when the associated uncertainty with the variable consideration is subsequently resolved. Some contracts for the sale
of product provide customers with a right of return the goods within a specified period. The Company also provides retrospective
volume rebates to certain customers once the quantity of product purchased during the period exceeds the threshold specified
in the contract. The rights of return and volume rebates give rise to variable consideration. The Company uses the expected
value method to estimate the goods that will not be returned because this method best predicts the amount of variable consideration
to which the Company will be entitled. The requirements in Ind AS 115 on constraining estimates of variable consideration are
also applied in order to determine the amount of variable consideration that can be included in the transaction price. For goods
that are expected to be returned, instead of revenue, the Company recognizes a refund liability. A right of return asset (and
corresponding adjustment to cost of sales) is also recognized for the right to recover products from a customer.
Warranty obligations
The Company generally provides for warranties for general repair of defects that existed at the time of sale. These warranties
are assurance-type warranties under Ind AS 115, which are accounted for under Ind AS 37 (Provisions, Contingent Liabilities
and Contingent Assets).
Significant Financing Components
In respect of short-term advances from its customers, using the practical expedient in Ind AS 115, the Company is not required
to adjust the promised amount of consideration for the effects of a significant financing component because it expects, at
contract inception, that the period between the transfer of the promised good or service to the customer and when the customer
pays for that good or service will be within normal operating cycle.
Sale of service
The Company recognizes revenue from sales of services over period of time, because the customer simultaneously receives
and consumes the benefits provided by the Company. Revenue from services related activities is recognized as and when
services are rendered and on the basis of contractual terms with the parties.
Contract assets
Contract assets is right to consideration in exchange for goods or services transferred to the customer and performance obligation
satisfied. If the Company performs by transferring goods or services to a customer before the customer pays consideration or
before payment is due, a contract asset is recognised for the earned consideration that is conditional. Upon completion of the
attached condition and acceptance by the customer, the amounts recognized as contract assets is reclassified to trade receivables
upon invoicing. A receivable represents the Companyâs right to an amount of consideration that is unconditional. Contract assets
are subject to impairment assessment. Refer to accounting policies on impairment of financial assets in section (Financial
instruments - initial recognition and subsequent measurement).
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration
(or an amount of consideration is due) from the customer or has raised the invoice in advance. If a customer pays consideration
before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or
the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the
contract (i.e., transfers control of the related goods or services to the customer).
Trade receivables
A trade receivable is recognised if an amount of consideration that is unconditional (i.e., only the passage of time is required
before payment of the consideration is due). Refer to accounting policies of financial assets in section (Financial instruments).
2.04) Other Operating Revenues
Export incentives
Revenue from export benefits arising from duty drawback scheme, rodtep scheme, remission of duties and taxes on exported
product scheme are recognised on export of goods in accordance with their respective underlying scheme at fair value of
consideration received or receivable.
2.05) LEASES
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right
to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of
low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the
right to use the underlying assets. For these short-term and low value leases, the Company recognises the lease payments as
an operating expense on a straight-line basis over the term of the lease.
1) Right-of-use assets
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset
is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of
lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date
less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the
lease term and the estimated useful lives of the underlying assets. If ownership of the leased asset transfers to the
Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated
using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Refer to the accounting
policies in section âImpairment of non-financial assetsâ.
ii) Lease Liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed
payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts
expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase
option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the
lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an
index or a rate are recognized as expenses (unless they are incurred to produce inventories) in the period in which the
event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease
commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments
made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease
term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used
to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the
lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The Companiesâ lease liabilities are included in other current and non-current financial liabilities.
Variable lease payments that depend on sales are recognized in profit or loss in the period in which the condition that
triggers those payments occurs.
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a
lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the
lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on short¬
term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.
2.06) ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions
where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating
during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and
the tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against
which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward
tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can
be realized against future taxable profits.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax
asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable
income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount
of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient
future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the
extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be
available.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against
current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation
authority.
MAT credit 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 Minimum Alternative tax (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 a credit to the profit and loss account and shown as MAT Credit
Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during
the specified period.
2.07) IMPAIRMENT OF NON FINANCIAL ASSETS
A. At each Balance Sheet date, the carrying amount of assets is tested based on internal/external factors, for impairment so
as to determine:
(I) The provision for impairment loss, if any; and
(ii) The reversal of impairment loss recognized in previous periods, if any,
B. Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Recoverable
amount is determined:
(I) In the case of an individual asset, higher of the net selling price and the value in use.
(ii) In the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the
higher of the cash generating unitâs net selling price and the value in use.
(Value in use is determined as the present value of estimated future cash flows discounted to their present value at
the weighted average cost of Capital, from the continuing use of an asset and from its disposal at the end of its
useful life).
Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.
2.08) CASH AND CASH EQUIVALENTS
Cash and cash equivalents balances include cash in hand, fixed deposits, margin money deposits, earmarked balances with
banks, other bank balances such as dividend accounts, which have restrictions on repatriation, highly liquid investments with
original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of change in value.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposit held
at call with financial institutions, other short - term, highly liquid investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank
overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet
2.09) INVENTORIES
a) Basis of valuation:
I) Inventories other than scrap materials are valued at lower of cost or net realisable value after providing cost of
obsolescence, if any. The comparison of cost and net realisable value is made on an item-by-item basis.
b) Method of Valuation:
i) Cost of raw materials has been determined by using moving weighted average cost method and comprises all costs
of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs
incurred in bringing the inventories to their present location and condition.
ii) Cost of finished goods and work-in-progress includes direct labour and an appropriate share of fixed and variable
production overheads. Fixed production overheads are allocated on the basis of normal capacity of production
facilities. Cost is determined on moving weighted average basis
iii) Cost of traded goods has been determined by using moving weighted average cost method and comprises all costs
of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs
incurred in bringing the inventories to their present location and condition.
iv) Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion
and estimated costs necessary to make the sale. The net realisable value of work-in-progress is determined with
reference to the selling prices of related finished products. Raw materials and other supplies held for use in the
production of finished products are not written down below cost except in cases where material prices have declined
and it is estimated that the cost of the finished products will exceed their net realisable value.
v) Appropriate adjustments are made to the carrying value of damaged, slow moving and obsolete inventories based
on managementâs current best estimate.
2.10) FINANCIAL INSTRUMENT
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument
of another entity.
i) Financial Assets
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss)
- those measured at amortised cost
The classification of financial assets at initial recognition depends on the financial assetâs contractual cash flow
characteristics and the Companyâs business model for managing them.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive
income. For investments in equity instruments that are not held for trading, this will depend on whether the group has
made an irrevocable election at the time of initial recognition to account for the equity investment at FVOCI.
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other
comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial assetâs contractual cash flow
characteristics and the Companyâs business model for managing them. With the exception of trade receivables that do
not contain a significant financing component, the Company initially measures a financial asset at its fair value plus, in the
case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a
significant financing component are measured at the transaction price determined under Ind AS 115. Refer to the accounting
policies in section âRevenue from contracts with customersâ.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give
rise to cash flows that are âsolely payments of principal and interest (SPPI)â on the principal amount outstanding. This
assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that
are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.
The Companyâs business model for managing financial assets refers to how it manages its financial assets in order to
generate cash flows. The business model determines whether cash flows will result from collecting contractual cash
flows, selling the financial assets, or both.
Financial assets classified and measured at amortised cost are held within a business model with the objective to hold
financial assets in order to collect contractual cash flows while financial assets classified and measured at fair value
through OCI are held within a business model with the objective of both holding to collect contractual cash flows and
selling.
Subsequent measurement
For purposes of subsequent measurement financial assets are classified in following categories:
- Financial assets at amortised cost (debt instruments)
- Financial assets at fair value through other comprehensive income (FVTOCI) with recycling of cumulative gains and
losses (debt instruments)
- Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition
(equity instruments)
- Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
A âfinancial assetâ is measured at the amortised cost if both the following conditions are met:
a) Business Model Test: The objective is to hold the financial asset to collect the contractual cash flows (rather than to sell
the instrument prior to its contractual maturity to realise its fair value changes) and
b) Cash flow characteristics test: The contractual terms of the financial asset give rise on specific dates to cash flows that
are solely payments of principal and interest on principal amount outstanding.
This category is most relevant to the Company. 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 EIR. EIR is the rate that exactly discounts
the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate,
to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates
the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the
expected credit losses. The EIR amortisation is included in other income in profit or loss. The losses arising from impairment
are recognised in the profit or loss. This category generally applies to trade and other receivables.
Financial assets at fair value through OCI (FVTOCI) (debt instruments)
A âfinancial assetâ is classified as at the FVTOCI if both of the following criteria are met:
a) Business Model Test: The objective of financial instrument is achieved by both collecting contractual cash flows and
selling the financial assets; and
b) Cash flow characteristics test: The contractual terms of the Debt instrument give rise on specific dates to cash flows
that are solely payments of principal and interest on principal amount outstanding.
Debt instrument included within the FVTOCI category are measured initially as well as at each reporting date at fair value.
Fair value movements are recognised in the other comprehensive income (OCI), except for the recognition of interest
income, impairment gains or losses and foreign exchange gains or losses which are recognised in statement of profit and
loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value
changes are recognised in OCI. Upon derecognition, the cumulative fair value changes recognised in OCI is reclassified
from the equity to profit or loss.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair
value recognised in the statement of profit and loss. This category includes derivative instruments and listed equity
investments which the Company had not irrevocably elected to classify at fair value through OCI. Dividends on listed
equity investments are recognised in the statement of profit and loss when the right of payment has been established.
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Company can elect to classify irrevocably its equity investments as equity instruments designated
at fair value through OCI when they meet the definition of equity under Ind AS 32 Financial Instruments: Presentation and
are not held for trading. The classification is determined on an instrument-by-instrument basis. Equity instruments which
are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS103
applies are classified as at FVTPL.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income
in the statement of profit and loss when the right of payment has been established, except when the Company benefits
from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI.
Equity instruments designated at fair value through OCI are not subject to impairment assessment.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is
primarily derecognised (i.e. removed from the Companyâs statement of financial position) 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 âpass throughâ 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 recognise the transferred asset to the extent of the Companyâs continuing involvement. In that
case, the Company also recognises 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.
Impairment of financial assets
In accordance with IND AS 109, the Company applies expected credit losses(ECL) model for measurement and recognition
of impairment loss on the following financial asset and credit risk exposure - Financial assets measured at amortised cost;
- Financial assets measured at fair value through other comprehensive income(FVTOCI);
- Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are
within the scope of Ind AS 115
- Loan commitments which are not measured as at FVTPL
- Financial guarantee contracts which are not measured as at FVTPL
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash
flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The
expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral
to the contractual terms.
ECLs are recognised in two stages. For recognition of impairment loss on financial assets other than mentioned below
and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since
initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. For
those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss
allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the
default (a lifetime ECL).
If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in
credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month
ECL
The Company follows âsimplified approachâ for recognition of impairment loss allowance on:
- Trade receivables or contract revenue receivables;
- All lease receivables resulting from the transactions within the scope of Ind AS 116 -Leases
Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognized impairment loss
allowance based on lifetime ECLs at each reporting date, right from its initial recognition. The Company uses a provision
matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its
historically observed default rates over the expected life of trade receivable and is adjusted for forward looking estimates.
At every reporting date, the historical observed default rates are updated and changes in the forward looking estimates
are analyzed.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the
statement of profit and loss. The balance sheet presentation for various financial instruments is described below:
(a) Financial assets measured as at amortised cost, contractual revenue receivables and lease receivables: ECL is
presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The
allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment
allowance from the gross carrying amount.
(b) Loan commitments and financial guarantee contracts: ECL is presented as a provision in the balance sheet, i.e. as a
liability.
(c) Debt instruments measured at FVTOCI: For debt instruments measured at FVTOCI, the expected credit losses do not
reduce the carrying amount in the balance sheet, which remains at fair value. Instead, an amount equal to the allowance
that would arise if the asset was measured at amortised cost is recognises in other comprehensive income as the
accumulated impairment amount.
ii) Financial Liabilities:
Initial recognition and measurement
Financial liabilities are classified at initial recognition as financial liabilities at fair value through profit or loss, loans and
borrowings, and payables, net of directly attributable transaction costs. All financial liabilities are recognised initially at fair
value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company
financial liabilities include loans and borrowings, trade payables, trade deposits, retention money, liabilities towards services,
sales incentive and other payables.
Subsequent measurement
For purposes of subsequent measurement, financial liabilities are classified in two categories:
(I) Financial liabilities at fair value through profit or loss
(ii) Financial liabilities at amortised cost (loans and borrowings)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative
financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationship
as defined by Ind AS 109. The separated embedded derivate are also classified as held for trading unless they are
designated as effective hedging instruments.
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 or 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 recognised in OCI. These gains/ loss are not subsequently
transferred to 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 or loss. the Company has not designated
any financial liability as at fair value through profit and loss.
Financial liabilities at amortized cost (Loans and borrowings)
After initial recognition, interest-bearing borrowings are subsequently measured at amortised cost using the Effective
interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as
through the Effective interest rate 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 Effective interest rate. The Effective interest
rate amortisation is included as finance costs in the statement of profit and loss.
Trade Payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year
which are unpaid. The amounts are unsecured and are usually payable basis varying trade term. Trade and other payables
are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are
recognised initially at fair value and subsequently measured at amortised cost using Effective interest rate method.
Financial Guarantee Contracts:
Financial guarantee contracts issued by the Company are those contracts that requires payment to be made to reimburse
the holders for a loss it incurs because the specified debtors fail to make a payment when due in accordance with the term
of debt instrument.
Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction cost that are
directly attributed to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of
loss allowance determined as per impairment requirement of IND AS 109 and the amount recognised less, when appropriate,
the cumulative amount of income recognised in accordance with principles of IND AS 115.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the
statement of profit and loss.
Offsetting of financial instruments
Financials assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a
currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to
realise the assets and settle the liabilities simultaneously.
Reclassification of financial assets/ financial liabilities
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no
reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets
which are debt instruments, a reclassification is made only if there is a change in the business model for managing those
assets. Changes to the business model are expected to be infrequent. The Companyâs senior management determines
change in the business model as a result of external or internal changes which are significant to the Companyâs operations.
Such changes are evident to external parties. A change in the business model occurs when the Company either begins or
ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the
reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period
following the change in business model. The Company does not restate any previously recognised gains, losses (including
impairment gains or losses) or interest.
2.11) PROPERTY, PLANT AND EQUIPMENT (PPE)
Fixed assets are stated at original cost net of tax/duty credit availed, if any, less accumulated depreciation and cumulative
impairment and those which have been revaluated are stated at the values determined by the values less accumulated depreciation
and cumulative impairment. Cost of acquisition is inclusive of freight and other incidental expenses and interest on loan taken
for the acquisition of qualifying assets up to the date of commissioning of assets.
Subsequent expenditure related to PPE is capitalized only when it is probable that future economic benefits associated with
these will flow to the company and cost of the item can be measured reliably. All other expenses on existing fixed assets,
including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and
loss for the period during which such expenses are incurred.
Gain or losses arising from de-recognition of fixed assets are measured as the difference between the net disposable proceeds
and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
The exchange differences arising on reporting of long term foreign currency monetary items at rates different from those at
which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the
acquisition of a depreciable capital asset, have been added to or deducted from the cost of the asset and shall be depreciated
over the balance useful life of the asset.
Die Tooling, developed in-house, includes cost of material and other direct/ incidental expense on in-house development.
Tangible Assets not ready for the intended use on the date of the balance Sheet are disclosed as âcapital work in progressâ.
DEPRECIATION / AMORTIZATION ON TANGIBLE FIXED ASSETS
Depreciation is the systematic allocation of the depreciable amount of an asset over useful life. The depreciable amount of an
asset is the cost of an asset or other amount substituted for cost, less its residual value.
A. OWNED ASSETS
(i) Pursuant to applicability of Schedule II, of Companies Act 2013, with effect from 1st April 2014, Management has reassessed
the useful life of tangible assets based on the internal and external technical evaluation. The Depreciation on fixed assets
is provided on straight line method in accordance with applicable Schedule of the Companies Act, 2013.
(ii) Depreciation for addition to/ deductions from, owned assets is calculated on pro-rata basis from the date of such addition
or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed.
(iii) Residual values of assets have been considered at 5% of the original cost of the assets.
(iv) Difference of Exchange Rate fluctuation on imported plant and machineries procured out of long term foreign currency
loans is amortized over the residual life of relevant plant and machineries.
(v) The depreciation calculation is based on the balance useful lives of assets and shift working. Depreciation on assets used
on double shift basis have been increased by 50% for that period and Depreciation on assets used in triple shift basis
have been increased by 100% for that period, except for assets in respect of which no extra shift depreciation is permitted
(indicated by NESD in Part C of the schedule).
(vi) The estimated useful lives for the categories of property, plant and equipment are:
B. INTANGIBLE ASSETS AND AMORTIZATION
Intangible assets are stated at original cost net of tax/duty credit availed, if any, less accumulated amortization and cumulative
impairment. Intangible assets are recognized when it is probable that the future economic benefits are attributable to the asset
will flow to the enterprise and the cost of asset can be measured reliably. Intangible assets are amortized over their estimated
useful life. The estimated useful life of an identifiable intangible asset is based on number of factors including the effects of
obsolescence etc.
Intangible Assets not ready for the intended use on the date of balance sheet are disclosed as âintangible assets under
developmentâ
2.12) Investment properties
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment
properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any. The cost includes the cost
of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant
parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on
their specific useful lives. All other repair and maintenance costs are recognised in profit or loss as incurred. The Company
depreciates building on a straight line basis over a period of 30 years from the date of original purchase.
Though the Company measures investment property using cost based measurement, the fair value of investment property is
disclosed in notes. Fair values are determined based on an annual evaluation performed by an accredited external independent
valuer applying a valuation model recommended by the international valuation standards committee.
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from
use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the
carrying amount of the asset is recognised in profit or loss in the period of derecognition.
Transfers are made to (or from) investment properties only when there is a change in use. Transfer between investment property
and owner occupied property do not change the carrying amount of the property transferred and they do not change the cost of
that property for measurement or disclosure purpose.
2.13) BORROWINGS
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in
profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that
some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the
period of the facility to which it relates. Borrowings are removed from the balance sheet when the obligation specified in the
contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities
assumed, is recognized in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting period.
2.14) BORROWING COST
Borrowing cost includes interest and other costs incurred in connection with the borrowing of funds and charged to Statement of
Profit & Loss on the basis of effective interest rate (EIR) method. Borrowing cost also includes exchange differences to the
extent regarded as an adjustment to the borrowing cost.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other
borrowing costs are recognized as expense in the period in which they occur.
Mar 31, 2024
1. CORPORATE INFORMATION
Steel Strips Wheels Limited (the Company) is a public limited Company incorporated on 28th February 1985 under the Companies Act, 1956. Its Shares are listed on both Bombay Stock Exchange and National Stock Exchange. The Company is a leading manufacturer of Automotive Wheel Rims and other auto components.
These financial statements were approved for issue in accordance with a resolution of the board of directors on 23rd May 2024.
2. SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of the significant accounting policies adopted in the preparation of these Indian Accounting Standards (Ind-AS) financial statements. These policies have been consistently applied to all the years except where newly issued accounting standard is initially adopted.
The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of schedule III to the Companies Act, 2013 (Ind AS compliant schedule III) as applicable to these standalone financial statements.
The Company has prepared the standalone financial statements on the basis that it will continue to operate as going concern. These policies have been consistently applied to all the years presented, unless otherwise stated.
The standalone financial statements have been prepared on a historical cost basis, except for the following assets and liabilities
(i) Certain financial assets and liabilities that is measured at fair value.
(ii) Assets held for sale-measured at fair value less cost to sell.
(iii) Defined benefit plans-plan assets measured at fair value.
(iv) Share based payments.
2.02) Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/non- current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle - Held primarily for purpose of trading,
- Expected to be realised within twelve months after the reporting period, or
- cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle,
- It is held primarily for purpose of trading,
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.
The term of the liability that could, at the option of counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Deferred tax assets and deferred tax liabilities are classified as non- current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
2.03) Revenue from contract with customers
Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
A receivable is recognized when the control of the product is transferred as the consideration is unconditional and payment becomes due upon passage of time as per the terms of contract with customers. The Company collects GST on behalf of the government and, therefore, it is not an economic benefit flowing to the Company. Hence, it is excluded from revenue.
Revenue from sales of products
Revenue from sale of products is recognized at the point in time when control of the goods is transferred to the customer, generally on delivery of the goods and there are no unfulfilled obligations.
The Company considers, whether there are other promises in the contract in which there are separate performance obligations, to which a portion of the transaction price needs to be allocated. In determining the transaction price for the sale of equipment, the Company considers the effects of variable consideration, the existence of significant financing components, noncash consideration, and consideration payable to the customer, if any.
If the consideration in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved. Some contracts for the sale of product provide customers with a right of return the goods within a specified period. The Company also provides retrospective volume rebates to certain customers once the quantity of product purchased during the period exceeds the threshold specified in the contract. The rights of return and volume rebates give rise to variable consideration. The Company uses the expected value method to estimate the goods that will not be returned because this method best predicts the amount of variable consideration to which the Company will be entitled. The requirements in Ind AS 115 on constraining estimates of variable consideration are also applied in order to determine the amount of variable consideration that can be included in the transaction price. For goods that are expected to be returned, instead of revenue, the Company recognizes a refund liability. A right of return asset (and corresponding adjustment to cost of sales) is also recognized for the right to recover products from a customer.
Warranty obligations
The Company generally provides for warranties for general repair of defects that existed at the time of sale. These warranties are assurance-type warranties under Ind AS 115, which are accounted for under Ind AS 37 (Provisions, Contingent Liabilities and Contingent Assets).
Significant Financing Components
In respect of short-term advances from its customers, using the practical expedient in Ind AS 115, the Company is not required to adjust the promised amount of consideration for the effects of a significant financing component because it expects, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be within normal operating cycle.
The Company recognizes revenue from sales of services over period of time, because the customer simultaneously receives and consumes the benefits provided by the Company. Revenue from services related activities is recognized as and when services are rendered and on the basis of contractual terms with the parties.
Contract assets is right to consideration in exchange for goods or services transferred to the customer and performance obligation satisfied. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. Upon completion of the attached condition and acceptance by the customer, the amounts recognized as contract assets is reclassified to trade receivables upon invoicing. A receivable represents the Company''s right to an amount of consideration that is unconditional. Contract assets are subject to impairment assessment. Refer to accounting policies on impairment of financial assets in section (Financial instruments - initial recognition and subsequent measurement).
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer or has raised the invoice in advance. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company performs under the contract (i.e., transfers control of the related goods or services to the customer).
A trade receivable is recognised if an amount of consideration is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section (Financial instruments).
2.04) Other Operating Revenues Export incentives
Revenue from export benefits arising from duty drawback scheme, rodtep scheme, remission of duties and taxes on exported product scheme are recognised on export of goods in accordance with their respective underlying scheme at fair value of consideration received or receivable.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. For these short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the underlying assets. If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Refer to the accounting policies in section âImpairment of non-financial assets''.
ii) Lease Liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re-measured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The Companies'' lease liabilities are included in other current and non-current financial liabilities.
Variable lease payments that depend on sales are recognized in profit or loss in the period in which the condition that triggers those payments occurs.
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered to be low value. Lease payments on shortterm leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term.
2.06) ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.
MAT credit 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 Minimum Alternative tax (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 a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.
2.07) IMPAIRMENT OF NON FINANCIAL ASSETS
A. At each Balance Sheet date, the carrying amount of assets is tested based on internal/external factors, for impairment so as to determine:
(I) The provision for impairment loss, if any; and
(ii) The reversal of impairment loss recognized in previous periods, if any,
B. Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined:
(I) In the case of an individual asset, higher of the net selling price and the value in use.
(ii) In the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the
higher of the cash generating unit''s net selling price and the value in use.
(Value in use is determined as the present value of estimated future cash flows discounted to their present value at the weighted average cost of Capital, from the continuing use of an asset and from its disposal at the end of its useful life).
Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.
2.08) CASH AND CASH EQUIVALENTS
Cash and cash equivalents balances include cash in hand, fixed deposits, margin money deposits, earmarked balances with banks, other bank balances such as dividend accounts, which have restrictions on repatriation, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposit held at call with financial institutions, other short - term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet
a) Basis of valuation:
I) Inventories other than scrap materials are valued at lower of cost or net realisable value after providing cost of obsolescence, if any. The comparison of cost and net realisable value is made on an item-by-item basis.
b) Method of Valuation:
i) Cost of raw materials has been determined by using moving weighted average cost method and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
ii) Cost of finished goods and work-in-progress includes direct labour and an appropriate share of fixed and variable production overheads. Fixed production overheads are allocated on the basis of normal capacity of production facilities. Cost is determined on moving weighted average basis
iii) Cost of traded goods has been determined by using moving weighted average cost method and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
iv) Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. The net realisable value of work-in-progress is determined with reference to the selling prices of related finished products. Raw materials and other supplies held for use in the production of finished products are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realisable value.
v) Appropriate adjustments are made to the carrying value of damaged, slow moving and obsolete inventories based on management''s current best estimate.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
i) Financial Assets
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss)
- those measured at amortised cost
The classification of financial assets at initial recognition depends on the financial asset''s contractual cash flow characteristics and the Company''s business model for managing them.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at FVOCI.
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset''s contractual cash flow characteristics and the Company''s business model for managing them. With the exception of trade receivables that do not contain a significant financing component, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component are measured at the transaction price determined under Ind AS 115. Refer to the accounting policies in section âRevenue from contracts with customersâ.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are âsolely payments of principal and interest (SPPI)'' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.
The Company''s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows while financial assets classified and measured at fair value through OCI are held within a business model with the objective of both holding to collect contractual cash flows and selling.
Subsequent measurement
For purposes of subsequent measurement financial assets are classified in following categories:
- Financial assets at amortised cost (debt instruments)
- Financial assets at fair value through other comprehensive income (FVTOCI) with recycling of cumulative gains and losses (debt instruments)
- Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)
- Financial assets at fair value through profit or loss Financial assets at amortised cost (debt instruments)
A âfinancial asset'' is measured at the amortised cost if both the following conditions are met:
a) Business Model Test: The objective is to hold the financial asset to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realise its fair value changes) and
b) Cash flow characteristics test: The contractual terms of the financial asset give rise on specific dates to cash flows that are solely payments of principal and interest on principal amount outstanding.
This category is most relevant to the Company. 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 EIR. EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. The EIR amortisation is included in other income in profit or loss. The losses arising from impairment are recognised in the profit or loss. This category generally applies to trade and other receivables.
Financial assets at fair value through OCI (FVTOCI) (debt instruments)
A âfinancial asset'' is classified as at the FVTOCI if both of the following criteria are met:
a) Business Model Test: The objective of financial instrument is achieved by both collecting contractual cash flows and selling the financial assets; and
b) Cash flow characteristics test: The contractual terms of the Debt instrument give rise on specific dates to cash flows that are solely payments of principal and interest on principal amount outstanding.
Debt instrument included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the other comprehensive income (OCI), except for the recognition of interest income, impairment gains or losses and foreign exchange gains or losses which are recognised in statement of profit and loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value changes recognised in OCI is reclassified from the equity to profit or loss.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognised in the statement of profit and loss. This category includes derivative instruments and listed equity investments which the Company had not irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are recognised in the statement of profit and loss when the right of payment has been established.
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Company can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under Ind AS 32 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis. Equity instruments which are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS103 applies are classified as at FVTPL.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit and loss when the right of payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised (i.e. removed from the Company''s statement of financial position) 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 âpass throughâ 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 recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises 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.
Impairment of financial assets
In accordance with IND AS 109, the Company applies expected credit losses(ECL) model for measurement and recognition of impairment loss on the following financial asset and credit risk exposure - Financial assets measured at amortised cost;
- Financial assets measured at fair value through other comprehensive income(FVTOCI);
- Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115
- Loan commitments which are not measured as at FVTPL
- Financial guarantee contracts which are not measured as at FVTPL
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For recognition of impairment loss on financial assets other than mentioned below and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL
The Company follows âsimplified approachâ for recognition of impairment loss allowance on:
- Trade receivables or contract revenue receivables;
- All lease receivables resulting from the transactions within the scope of Ind AS 116 -Leases
Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognized impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward looking estimates are analyzed.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:
(a) Financial assets measured as at amortised cost, contractual revenue receivables and lease receivables: ECL
is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
(b) Loan commitments and financial guarantee contracts: ECL is presented as a provision in the balance sheet, i.e. as a liability.
(c) Debt instruments measured at FVTOCI: For debt instruments measured at FVTOCI, the expected credit losses do not reduce the carrying amount in the balance sheet, which remains at fair value. Instead, an amount equal to the allowance that would arise if the asset was measured at amortised cost is recognised in other comprehensive income as the accumulated impairment amount.
ii) Financial liabilities:
Initial recognition and measurement
Financial liabilities are classified at initial recognition as financial liabilities at fair value through profit or loss, loans and borrowings, and payables, net of directly attributable transaction costs. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company financial liabilities include loans and borrowings, trade payables, trade deposits, retention money, liabilities towards services, sales incentive and other payables.
For purposes of subsequent measurement, financial liabilities are classified in two categories:
(I) Financial liabilities at fair value through profit or loss
(ii) Financial liabilities at amortised cost (loans and borrowings)
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationship as defined by Ind AS 109. The separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
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 or 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 recognised in OCI. These gains/ loss are not subsequently transferred to 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 or loss. the Company has not designated any financial liability as at fair value through profit and loss.
Financial liabilities at amortized cost (Loans and borrowings)
After initial recognition, interest-bearing borrowings are subsequently measured at amortised cost using the Effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the Effective interest rate 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 Effective interest rate. The Effective interest rate amortisation is included as finance costs in the statement of profit and loss.
Trade Payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually payable basis varying trade term. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at fair value and subsequently measured at amortised cost using Effective interest rate method.
Financial Guarantee Contracts:
Financial guarantee contracts issued by the Company are those contracts that requires payment to be made to reimburse the holders for a loss it incurs because the specified debtors fail to make a payment when due in accordance with the term of debt instrument.
Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction cost that are directly attributed to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirement of IND AS 109 and the amount recognised less, when appropriate, the cumulative amount of income recognised in accordance with principles of IND AS 115.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
Offsetting of financial instruments
Financials assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Reclassification of financial assets/ financial liabilities
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such
changes are evident to external parties. A change in the business model occurs when the Company either begins or ceases to perform an activity that is significant to its operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
2.11) PROPERTY, PLANT AND EQUIPMENT (PPE)
Fixed assets are stated at original cost net of tax/duty credit availed, if any, less accumulated depreciation and cumulative impairment and those which have been revaluated are stated at the values determined by the values less accumulated depreciation and cumulative impairment. Cost of acquisition is inclusive of freight and other incidental expenses and interest on loan taken for the acquisition of qualifying assets up to the date of commissioning of assets.
Subsequent expenditure related to PPE is capitalized only when it is probable that future economic benefits associated with these will flow to the company and cost of the item can be measured reliably. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Gain or losses arising from de-recognition of fixed assets are measured as the difference between the net disposable proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
The exchange differences arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset, have been added to or deducted from the cost of the asset and shall be depreciated over the balance useful life of the asset.
Die Tooling, developed in-house, includes cost of material and other direct/ incidental expense on in-house development. Tangible Assets not ready for the intended use on the date of the balance Sheet are disclosed as âcapital work in progressâ. DEPRECIATION / AMORTIZATION ON TANGIBLE FIXED ASSETS
Depreciation is the systematic allocation of the depreciable amount of an asset over useful life. The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value.
(i) Pursuant to applicability of Schedule II, of Companies Act 2013, with effect from 1st April 2014, Management has reassessed the useful life of tangible assets based on the internal and external technical evaluation. The Depreciation on fixed assets is provided on straight line method in accordance with applicable Schedule of the Companies Act, 2013.
(ii) Depreciation for addition to/ deductions from, owned assets is calculated on pro-rata basis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed.
(iii) Residual values of assets have been considered at 5% of the original cost of the assets.
(iv) Difference of Exchange Rate fluctuation on imported plant and machineries procured out of long term foreign currency loans is amortized over the residual life of relevant plant and machineries.
(v) The depreciation calculation is based on the balance useful lives of assets and shift working. Depreciation on assets used on double shift basis have been increased by 50% for that period and Depreciation on assets used in triple shift basis have been increased by 100% for that period, except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C of the schedule).
(vi) The estimated useful lives for the categories of property, plant and equipment are:
|
Particulars |
Estimated useful life (years) |
|
Buildings |
30-60 Years |
|
Plant and machinery |
15-28 Years |
|
Furniture and fixtures |
3-10 Years |
|
Office Equipment |
3-10 Years |
|
Vehicles |
5-8 Years |
B. INTANGIBLE ASSETS AND AMORTIZATION
Intangible assets are stated at original cost net of tax/duty credit availed, if any, less accumulated amortization and cumulative impairment. Intangible assets are recognized when it is probable that the future economic benefits are attributable to the asset will flow to the enterprise and the cost of asset can be measured reliably. Intangible assets are amortized over their estimated useful life. The estimated useful life of an identifiable intangible asset is based on number of factors including the effects of obsolescence etc.
Intangible Assets not ready for the intended use on the date of balance sheet are disclosed as âintangible assets under developmentâ
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any. The cost includes the cost of replacing parts and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of the investment property are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in profit or loss as incurred. The Company depreciates building on a straight line basis over a period of 30 years from the date of original purchase.
Though the Company measures investment property using cost based measurement, the fair value of investment property is disclosed in notes. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer applying a valuation model recommended by the international valuation standards committee.
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.
Transfers are made to (or from) investment properties only when there is a change in use. Transfer between investment property and owner occupied property do not change the carrying amount of the property transferred and they do not change the cost of that property for measurement or disclosure purpose.
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facilities will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facilities will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates. Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.
Borrowing cost includes interest and other costs incurred in connection with the borrowing of funds and charged to Statement of Profit & Loss on the basis of effective interest rate (EIR) method. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing cost.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are recognized as expense in the period in which they occur.
2.15) PROVISION AND CONTINGENT LIABILITIES PROVISIONS
Provisions are recognized when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent liabilities are disclosed when there is a possible obligation arising from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from part events where it is not probable that an outflow of resources will be required to settle the
obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.
2.16) EMPLOYEE BENEFITS Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
Provident Fund & Employee State Insurance
Retirement benefit in the form of provident fund is a defined contribution scheme. the Company has no obligation, other than the contribution payable to the provident fund. The Company recognises contribution payable through provident fund scheme as an expense, when an employee renders the related services. If the contribution payable to scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excesses recognised as an asset to the extent that the prepayment will lead to, for example, a reduction in future payment or a cash refund.
Gratuity
The Employee''s Gratuity Fund Scheme, which is defined benefit plan, is managed by Trust with its investments maintained with Life Insurance Corporation of India. The liabilities with respect to Gratuity Plan are determined by actuarial valuation on projected unit credit method on the balance sheet date, based upon which the Company contributes to the Gratuity Scheme. The difference, if any, between the actuarial valuation of the gratuity of employees at the year end and the balance of funds is provided for as assets/ (liability) in the books. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognizes the following changes in the net defined benefit obligation under Employee benefit expense in statement of profit or loss:
a) Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements.
b) Net interest expense or income.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amount included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Re measurements are not reclassified to profit or loss in subsequent periods
Compensated Absences
Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year end are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end. Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the year are treated as other long term employee benefits. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in profit or loss in the period in which they arise. Past-service costs are recognized immediately in profit or loss.
Other Long term incentive plan - Employee stock option plan
The Company provides long term incentive plan to employees via equity settled share based payments. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. That cost is recognised, together with a corresponding increase in employee stock option reserves in other equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense.
The amount recognised as expense is based on the estimate of the number of awards for which the related service and nonmarket vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that do meet the related service and non-market vesting conditions at the vesti
Mar 31, 2023
1. CORPORATE INFORMATION
Steel Strips Wheels Limited (the Company) is a public limited Company registered in India under the Companies Act 2013 (Erstwhile Companies Act 1956). Its Shares are listed on both Bombay Stock Exchange and National Stock Exchange. The Company is a leading manufacturer of Automotive Wheel rims.
These financial statements were approved and adopted by company''s board of directors in its meeting held on 26th May 2023.
2. SIGNIFICANT ACCOUNTING POLICIES1) BASIS OF PREPARATION1.1 Statement of Compliance
These financial statements have been prepared in accordance with Indian Accounting Standards (âInd AS'') notified under section 133 of the Companies Act 2013 (the Act) (to the extent notified), read together with the Companies (Indian Accounting Standards) Rules, 2015 and other relevant amendment rules issued thereafter.
Effective April 1, 2016, the company has adopted all the Ind AS and the adoption was carried out in accordance with Ind AS 101, âFirst Time Adoption of Indian Accounting Standards, with April 1, 2015 as the transition date. The transition was carried out from Indian Accounting Principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP.
The accounting policies have been consistently applied by the Company and except for the changes in accounting policy discussed more fully below, are consistent with those used in the previous year.
The Standalone financial statements have been prepared under the historical convention, on the accrual basis of accounting except for certain financial instruments that are measured at fair value.
1.3 Use of estimates and judgements
The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. Actual results may differ from these estimates.
2) revenue recognition
Revenue is recognized to the extent that it is probable that economic benefits will flow to the Company and the revenue can be reliably measured.
Revenue from sale of goods is recognized when the significant risks and rewards of ownership in the goods are transferred to the buyer of goods as per the terms of contracts, the Company retains no effective control of the goods transferred to a degree usually associated with the ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. The Company collects GST on the behalf of the Government and therefore these are not economic benefits flowing to the company. Hence they are excluded from Revenue.
Further Revenue is measured by the Company at the fair value of the consideration received/receivable from its customers and in determining the transaction price for the sale of finished goods, the Company considers the effect of various factors such as price differences and volume-based discounts, rebates and other promotion incentive schemes (âtrade schemesâ) provided to the customers. Adequate provisions have been made for such price differences and trade schemes with a corresponding impact on the revenue. Accordingly, revenue for the current year is net of price differences, trade schemes, rebates, discounts, etc.
Interest income from a financial instrument is recognized when it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably using EIR method. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
(i) Dividend Income is recognized when the right to receive the payment is established, which is generally when shareholders approve the dividend.
(ii) Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.
D. Duty drawback and export incentives
Income from duty drawback and export incentives is recognized on accrual basis.
The Company has adopted Ind AS 116-Leases effective 1st April, 2019, using the modified retrospective method. The Company has applied the standard to its leases with the cumulative impact recognized on the date of initial application (1st April, 2019). Accordingly, previous period information has not been restated.
The Company''s lease asset classes primarily consist of leases for Land and Buildings. The Company assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset (âROUâ) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short term leases) and leases of low value assets. For these short term and leases of low value assets, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently re-measured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made. A lease liability is re-measured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The re-measurement normally also adjusts the leased assets.
4) ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.
MAT credit 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 Minimum Alternative tax (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 a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.
5) IMPAIRMENT OF NON FINANCIAL ASSETS
A. At each Balance Sheet date, the carrying amount of assets is tested based on internal/external factors, for impairment so as to determine:
(i) The provision for impairment loss, if any; and
(ii) The reversal of impairment loss recognized in previous periods, if any,
B. Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined:
(i) In the case of an individual asset, higher of the net selling price and the value in use.
(ii) In the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unit''s net selling price and the value in use.
(Value in use is determined as the present value of estimated future cash flows discounted to their present value at the weighted average cost of Capital, from the continuing use of an asset and from its disposal at the end of its useful life).
Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.
Cash and cash equivalents balances include cash in hand, fixed deposits, margin money deposits, earmarked balances with banks, other bank balances such as dividend accounts, which have restrictions on repatriation, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
7) inventories
Inventories are valued at cost or net realizable value, whichever is lower. The cost in respect of the various items of inventory is computed as under:
a) In case of raw materials at weighted average cost plus direct expenses. The cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
b) In case of stores and spares at weighted average cost plus direct expenses. The cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
c) In case of work in progress at raw material cost plus conversion costs depending upon the stage of completion.
d) In case of finished goods at raw material cost plus conversion costs, packing cost, GST/Taxes/duties (if applicable) and other overheads incurred to bring the goods to their present location and condition.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Initial recognition and measurement
On initial recognition, all the financial assets and liabilities are recognized at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability except trade receivables which are recognized at transaction price.
Subsequent measurement Non-derivative financial instruments
(i) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(ii) Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(iii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories is subsequently measured at fair value through profit or loss.
The financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Derivative financial instruments
The Company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank.
Although the Company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind-AS 109, Financial Instruments. Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind-AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss.
Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in the statement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included in statement of profit and loss. Assets/ liabilities in this category are presented as current assets/current liabilities if they are either held for trading or are expected to be realized within 12 months after the balance sheet date.
Equity shares issued by the Company are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are recognized as a deduction from equity, net of any tax effects.
De-recognition of financial instruments
A financial asset is derecognized when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind-AS 109. A financial liability is derecognized when the obligation specified in the contract is discharged or cancelled or expired.
Fair value measurement of financial instruments
The fair value of financial instruments is determined using the valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
Based on the three level fair value hierarchies, the methods used to determine the fair value of financial assets and liabilities include quoted market price, discounted cash flow analysis and valuation certified by the external valuer.
In case of financial instruments where the carrying amount approximates fair value due to the short maturity of those instruments, carrying amount is considered as fair value.
9) PROPERTY, PLANT AND EQUIPMENT (PPE)
Fixed assets are stated at original cost net of tax/duty credit availed, if any, less accumulated depreciation and cumulative impairment and those which have been revaluated are stated at the values determined by the valuers less accumulated depreciation and cumulative impairment. Cost of acquisition is inclusive of freight and other incidental expenses and interest on loan taken for the acquisition of qualifying assets up to the date of commissioning of assets.
Subsequent expenditure related to PPE is capitalized only when it is probable that future economic benefits associated with these will flow to the company and cost of the item can be measured reliably. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Gain or losses arising from de-recognition of fixed assets are measured as the difference between the net disposable proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
The exchange differences arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset, have been added to or deducted from the cost of the asset and shall be depreciated over the balance useful life of the asset.
Die Tooling, developed in-house, includes cost of material and other direct/ incidental expense on in-house development.
Tangible Assets not ready for the intended use on the date of the balance Sheet are disclosed as âcapital work in progressâ. transition to Ind As
For transition to Ind AS, The Company has elected to continue with the carrying value of all of its PPE recognized as of 01 April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
10) DEPRECIATION / AMORTIZATION ON TANGIBLE FIXED ASSETS
Depreciation is the systematic allocation of the depreciable amount of an asset over useful life. The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value.
(i) Pursuant to applicability of Schedule II, of Companies Act 2013, with effect from 1st April 2014, Management has reassessed the useful life of tangible assets based on the internal and external technical evaluation. The Depreciation on fixed assets is provided on straight line method in accordance with applicable Schedule of the Companies Act, 2013.
(ii) Depreciation for addition to/ deductions from, owned assets is calculated on pro-rata basis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed.
(iii) Residual values of assets have been considered at 5% of the original cost of the assets.
(iv) Difference of Exchange Rate fluctuation on imported plant and machineries procured out of long term foreign currency loans is amortized over the residual life of relevant plant and machineries.
(v) Depreciation on assets carried at carrying amount as on 01.04.2014 and is depreciated as per Straight line method over the remaining useful life of the assets. Further the assets whose remaining useful life are nil, has been recognized in the opening balance of retained earnings. Refer the same as transitional provision
(vi) The depreciation calculation is based on the balance useful lives of assets and shift working. Depreciation on assets used on double shift basis have been increase by 50% for that period and Depreciation on assets used in triple shift basis have be calculated on the basis of 100% for that period, Except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C of the schedule).
(vii) Management has reassessed the useful life of plant and machineries based on the internal and external technical evaluation which is higher than useful life prescribed under the act. The reassessed useful life is tabulated as:
|
Location |
Useful Life as per Act (in Years) |
Average useful life (in years) |
Balance Avg. useful Life as on 01/04/2014 |
|
Dappar |
15.00 |
23.85 |
17.11 |
|
chennai |
15.00 |
23.29 |
19.72 |
|
jsr |
15.00 |
24.96 |
23.17 |
|
Seraikella |
15.00 |
15.00 |
15.00 |
The Company has adopted Ind AS 116 effective 1st April, 2019, using the modified retrospective method. The Company has applied the standard to its leases with the cumulative impact recognized on the date of initial application (1st April, 2019). Accordingly, previous period information has not been restated.
In the statement of profit and loss for the current year, operating lease expenses which were recognized as other expenses in previous periods is now recognized as depreciation expense for the right-of-use asset and finance cost for interest accrued on lease liability. The adoption of this standard did not have any significant impact on the profit for the year and earnings per share.
11) intangible assets and amortization
Intangible assets are stated at original cost net of tax/duty credit availed, if any, less accumulated amortization and cumulative impairment. Intangible assets are recognized when it is probable that the future economic benefits are attributable to the asset will flow to the enterprise and the cost of asset can be measured reliably. Intangible assets are amortized over their estimated useful life. The estimated useful life of an identifiable intangible asset is based on number of factors including the effects of obsolescence etc.
Intangible Assets not ready for the intended use on the date of balance sheet are disclosed as âintangible assets under developmentâ
12) borrowings
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates. Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.
Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalized/ inventorized as part of cost of such assets till such time the asset is ready for its intended use/or sale. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
All other borrowing costs are expensed in the period in which they are incurred.
Provisions are recognized when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Contingent liabilities are disclosed when there is a possible obligation arising from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from part events where it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.
16) EMPLOYEE BENEFITS Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
Provident Fund & Employee State Insurance
Contribution towards provident fund and employee state insurance for employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis.
Gratuity
The Company provides for gratuity, a defined benefit plan (the âGratuity Planâ) covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. The gratuity plan in Company is funded through annual contributions to Life Insurance Corporation of India (LIC) under its Company''s Gratuity Scheme whereas others are not funded. The liability or asset recognized in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds. Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. They are included in retained earnings in the statement of changes in equity and in the balance sheet. Past-service costs are recognized immediately in profit or loss. compensated Absences
Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year end are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end. Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the year end are treated as other long term employee benefits. The Company''s liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds. Actuarial gains and losses arising from experience adjustments and changes in
actuarial assumptions are recognized in profit or loss in the period in which they arise. Past-service costs are recognized immediately in profit or loss.
17) SHARE-BASED PAYMENT ARRANGEMENTS
Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in the statement of profit and loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity settled share option outstanding account. Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. For cash-settled share-based payments, a liability is recognized for the goods or services acquired, measured initially at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognized in profit or loss for the year.
18) TRANSACTIONS IN FOREIGN CURRENCY
A) Functional and Presentation currency
The functional currency of the Company is Indian Rupee. These financial statements are presented in Indian Rupee (rounded off to lakhs).
B) transaction and balances
The foreign currency transactions are recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.
The foreign currency monetary items are translated using the closing rate at the end of each reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency shall be translated using the exchange rate at the date of the transaction. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements shall be recognized in profit or loss in the period in which they arise.
Foreign exchange differences recorded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance cost. All other foreign exchange gains and losses are presented in the statement of profit and loss on net basis.
19) segment reporting
Operating segments are reported in a manner consistent with the internal reporting to the Chief Operating Decision Maker âCODMâ of the Company. The CODM is responsible for allocating resources and assessing performance of the operating segment. The Company has monthly review and forecasting procedure in place and CODM reviews the operations of the Company as a whole.
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes and dividend on cumulative preference shares for the year) by the weighted average number of equity shares outstanding during the year. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for event of bonus issue/right issue etc; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
21) operating cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
22) significant AccoUNTING JUDGMENTS, ESTIMATES AND ASSUMPTioNS
In the process of applying the Company''s accounting policies, management has made the following estimates, assumptions and judgments which have significant effect on the amounts recognized in the financial statement:
A) coNTINGENcIES
Judgment of the Management is required for estimating the possible outflow of resources, if any, in respect of contingencies/claim/ litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
B) ALLOWANCE FOR UNCOLLECTED ACCOUNTS RECEIVABLE AND ADVANCES
Trade receivables do not carry any interest and are stated at their normal value as reduced by appropriate allowances for estimated irrecoverable amounts. Individual trade receivables are written off when management deems them not collectible. Impairment is made on ECL, which are the present value of the cash shortfall over the expected life of the financial assets.
The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in future. These includes the determination of the discount rate, future salary increases, mortality rates and attrition rate. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
D) FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the Discounted Cash Flow (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
Mar 31, 2018
Significant Accounting Policies for the period ended 31st March,2018
1) CORPORATE INFORMATION
Steel Strips Wheels Limited (the Company) is a public limited Company registered in India under the Companies Act 2013 (Erstwhile Companies Act 1956). Its Shares are listed on both BSE Limited (Formerly Bombay Stock Exchange Limited) and National Stock Exchange of India Ltd. (NSE). The Company is a leading manufacturer of Automotive Wheel rims.
2) SIGNIFICANT ACCOUNTING POLICIES
1) BASIS OF PREPARATION
The financial statements have been prepared in accordance with Indian Accounting Standards (''Ind AS'') notified under section 133 of the Companies Act 2013, read together with the Companies (Indian Accounting Standards) Rules, 2015.
For all the periods up to and including the year ended 31March, 2017, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (''Previous GAAP''). These are the Company first Ind AS financial statements and the date of transition to Ind AS is 01 April, 2016. Detailed explanation of how the transition from previous GAAP to Ind AS has affected the Company Balance Sheet, financial performance and cash fows is given under Note 3.22.
The Standalone financial statements have been prepared under the historical convention, on the accrual basis of accounting except for certain financial assets and financials liabilities that are measured at fair value at the end of the each reporting period, as stated in the accounting policies below. The accounting policies have been applied consistently over all the periods presented in the Standalone financial statements.
The accounting policies have been consistently applied by the Company and except for the changes in accounting policy discussed more fully below, are consistent with those used in the previous year.
2) REVENUE RECOGNITION
Revenue is recognized to the extent that it is probable that economic benefits will fow to the Company and the revenue can be reliably measured.
A. SALE OF GOODS
Revenue from sale of goods is recognized when the significant risks and rewards of ownership in the goods are transferred to the buyer of goods as per the terms of contracts, the Company retains no effective control of the goods transferred to a degree usually associated with the ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. The Company collects CST/VAT/GST on the behalf of the Government and therefore these are not economic benefits flowing to the company. Hence they are excluded from Revenue.
However, the revenue up to Q1 of the F.Y. 2017-18 includes the excise duty amounts that have been collected from customers, which is shown separately in the expenditure head of the statement of profit & loss as per the disclosure requirements.
Thereafter, with the introduction of Goods & Service Tax as on 01 June 2017, the tax amounts are excluded from the revenue for the period from Q2 to Q4 of F.Y. 2017-18.
B. INTEREST INCOME
Interest income from a financial asset is recognized when it is probable that the economic benefits will fow to the company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
C. OTHER INCOME
(i) Dividend Income is accounted in the period in which the right to receive the same is established, which is generally when shareholders approve the dividend.
(ii) Revenue in respect of claims is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.
D. DUTY DRAWBACK AND EXPORT INCENTIVES
Income from duty drawback and export incentives is recognized on an accrual basis.
3) Leasing As a Lessee
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 present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other Financial liabilities, as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the asset''s useful life or over the shorter of the asset''s useful life and the lease term if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term. Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
As a Lessor
Lease income from operating leases where the Company is a lessor is recognized in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate the lessor for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
4) ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Deferred income taxes refect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.
MAT credit 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 Minimum Alternative tax (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 a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.
5) IMPAIRMENT OF NON FINANCIAL ASSETS
A. At each Balance Sheet date, the carrying amount of assets is tested based on internal/external factors, for impairment so as to determine:
(i) The provision for impairment loss, if any; and
(ii) The reversal of impairment loss recognized in previous periods, if any,
B. Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined:
(i) In the case of an individual asset, higher of the net selling price and the value in use.
(ii) In the case of a cash generating unit (a group of assets that generates identified, independent cash fows), at the higher of the cash generating unit''s net selling price and the value in use.
(Value in use is determined as the present value of estimated future cash fows discounted to their present value at the weighted average cost of Capital, from the continuing use of an asset and from its disposal at the end of its useful life).
Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.
6) CASH AND CASH EQUIVALENTS
Cash and cash equivalents balances include cash in hand, fixed deposits, margin money deposits, earmarked balances with banks, other bank balances such as dividend accounts, which have restrictions on repatriation, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
7) INVENTORIES
Inventories are valued at cost or net realizable value, whichever is lower. The cost in respect of the various items of inventory is computed as under:
a) In case of raw materials at weighted average cost plus direct expenses. The cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
b) In case of stores and spares at weighted average cost plus direct expenses. The cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
c) In case of work in progress at raw material cost plus conversion costs depending upon the stage of completion.
d) In case of finished goods at raw material cost plus conversion costs, packing cost, excise duty (if applicable) and other overheads incurred to bring the goods to their present location and condition.
8) FINANCIAL INSTRUMENT
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Initial recognition and measurement
On initial recognition, all the financial assets and liabilities are recognized at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability except trade receivables which are recognized at transaction price.
Subsequent measurement Non-derivative financial instruments
(i) Financial assets carried at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash fows and the contractual terms of the financial asset give rise on specified dates to cash fows that are solely payments of principal and interest on the principal amount outstanding.
(ii) Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash fows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash fows that are solely payments of principal and interest on the principal amount outstanding.
(iii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories is subsequently measured at fair value through profit or loss.
(iv) Financial liabilities
The financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Derivative financial instruments
The Company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counter party for these contracts is generally a bank.
Although the Company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind-As 109, Financial Instruments. Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind-AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss.
Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in the statement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included in statement of profit and loss. Assets/ liabilities in this category are presented as current assets/current liabilities if they are either held for trading or are expected to be realized within 12 months after the balance sheet date.
Equity Share Capital
(i) Equity shares
Equity shares issued by the Company are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are recognized as a deduction from equity, net of any tax effects.
De-recognition of financial instruments
A financial asset is derecognized when the contractual rights to the cash fows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind-AS 109. A financial liability is derecognized when the obligation specified in the contract is discharged or cancelled or expired.
Fair value measurement of financial instruments
The fair value of financial instruments is determined using the valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Based on the three level fair value hierarchies, the methods used to determine the fair value of financial assets and liabilities include quoted market price, discounted cash fow analysis and valuation certified by the external valuer.
In case of financial instruments where the carrying amount approximates fair value due to the short maturity of those instruments, carrying amount is considered as fair value.
9) PROPERTY, PLANT AND EQUIPMENT(PPE)
Fixed assets are stated at original cost net of tax/duty credit availed, if any, less accumulated depreciation and cumulative impairment and those which have been revaluated are stated at the values determined by the valuers less accumulated depreciation and cumulative impairment. Cost of acquisition is inclusive of freight and other incidental expenses and interest on loan taken for the acquisition of qualifying assets up to the date of commissioning of assets.
Subsequent expenditure related to PPE is capitalized only when it is probable that future economic benefits associated with these will fow to the company and cost of the item can be measured reliably. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Gain or losses arising from de-recognition of fixed assets are measured as the difference between the net disposable proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
The exchange differences arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset, have been added to or deducted from the cost of the asset and shall be depreciated over the balance useful life of the asset.
Significant Accounting Policies for the period ended 31st March,2018
Die Tooling, developed in-house, includes cost of material and other direct/ incidental expense on in-house development.
Tangible Assets not ready for the intended use on the date of the balance Sheet are disclosed as "capital work in progress". (Also refer to policy on leases, borrowing costs, impairment of assets and foreign currency transactions infra.)
Transition to Ind AS
For transition to Ind AS, The Company has elected to continue with the carrying value of all of its PPE recognised as of 01 April, 2016 (transition date) measured as per the previous GAAP and use that carrying value as its deemed cost as of the transition date.
10) DEPRECIATION / AMORTIZATION ON TANGIBLE FIXED ASSETS
Depreciation is the systematic allocation of the depreciable amount of an asset over useful life. The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value.
A. OWNED ASSETS
(i) Pursuant to applicability of Schedule II, of Companies Act 2013, with effect from 1st April 2014, Management has reassessed the useful life of tangible assets based on the internal and external technical evaluation. The Depreciation on fixed assets is provided on straight line method in accordance with applicable Schedule of the Companies Act, 2013.
(ii) Depreciation for addition to/deductions from, owned assets is calculated on pro-rata basis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed.
(iii) Residual values of assets have been considered at 5% of the original cost of the assets.
(iv) Difference of Exchange Rate fluctuation on imported plant and machineries procured out of long term foreign currency loans is amortized over the residual life of relevant plant and machineries.
(v) Depreciation on assets carried at carrying amount as on 01.04.2014 and is depreciated as per Straight line method over the remaining useful life of the assets. Further the assets whose remaining useful life are nil, has been recognized in the opening balance of retained earnings. Refer the same as transitional provision
(vi) The depreciation calculation is based on the balance useful lives of assets and shift working. Depreciation on assets used on double shift basis have been increase by 50% for that period and Depreciation on assets used in triple shift basis have be calculated on the basis of 100% for that period, Except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C of the schedule).
(vii) Management has reassessed the useful life of plant and machineries based on the internal and external technical evaluation which is higher than useful life prescribed under the act. The reassessed useful life is tabulated as:
B. LEASED ASSETS
Land acquired under long term lease is classified under "Tangible Assets" and is amortized over the period of lease.
Mar 31, 2017
1) USE OF ESTIMATES
The preparation of financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of contingent liabilities, as at the date of the financial statements. Although these estimates are based upon managementâs best knowledge of current events and actions, actual results could differ from those estimates. Uncertainties about these estimates and assumptions could result in the outcomes requiring a material adjustment to the carrying amount of assets or liabilities in the future periods.
2) PRESENTATION OF FINANCIAL STATEMENTS
The Balance Sheet and Statement of Profit and Loss are prepared and presented in the format prescribed in the schedule III of the Companies Act, 2013(âthe Actâ). The disclosure requirements are presented as per the Companies (Accounting Standards) rules 2006, read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of Companies Act, 2013.
3) REVENUE RECOGNITION
Revenue is recognized to the extent that it is probable that economic benefits will flow to the Company and the revenue can be reliably measured.
A. SALE OF GOODS
Revenue from sale of goods is recognized when the significant risks and rewards of ownership in the goods are transferred to the buyer of goods as per the terms of contracts, the Company retains no effective control of the goods transferred to a degree usually associated with the ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. The Company collects Central Sales tax and value added taxes(VAT) on the behalf of the Government and therefore these are not economic flowing to the Company. Hence they are excluded from Revenue. Excise duty deducted from revenue (Gross) is the amount that is included in the revenue(Gross) and not the entire amount of liability arising during the year.
B. INTEREST INCOME
Interest from bank is recognized on time proportion basis taking into account the amount outstanding and applicable interest rate. Interest income is included under the head âother incomeâ in the statement of profit and loss account.
C. OTHER INCOME
(i) Dividend Income is accounted in the period in which the right to receive the same is established.
(ii) Insurance claim is recognized on acceptance of claim by Insurance Company.
(iii) Vat Subsidy (granted in the state of Jharkhand) has been accounted on the basis of 50%of the Net VAT paid per annum up to a maximum of 75% of the total fixed capital investment for different duration. The subsidy is as per Mega Incentive Policy of Jharkhand Government. As per policy, industry with investment above Rs.50 crore are eligible for following incentives:
* 75%/50% of the VAT/CST paid up to maximum of 75% of cost of project (Net of land/building) within 7 years whichever is earlier.
4) RECOGNITION OF EXPENSES
All Expenses are recognized on accrual basis.
A. COST OF MATERIAL CONSUMED AND CHANGE IN INVENTORIES
Cost of material consumed is primarily comprised of landed cost of direct materials and supplies consumed in the manufacture of product including the effect of changes in the finished goods, Work in progress and Scrap material.
B. EMPLOYEE BENEFIT EXPENSES
Employee benefit expenses comprises of Salaries, wages, bonus and incentives, employee welfare expenses, share options and statutory contributions such as Provident funds, ESI, gratuity etc.
C. OTHEREXPENSES
Other Expenses comprises of Manufacturing expenses, Administrative Expenses, Selling and distribution expenses and Research and development expense.
(i) Manufacturing Expenses includes expenses such as consumption of stores and spares, power consumed, repairs to plant and machinery and other direct expenses related to production of goods etc.
(ii) Administrative Expenses includes expenses like Rent (including lease rent), Insurance charges, Rates fees and taxes, auditorâs remunerations, advertisements expenses, other repairs, travelling expenses of staff, Managerial commissions, telephone and telex etc.
(iii) Selling and Distribution Expenses include business promotion, Freight charges on dispatches to customers, rebate and discounts, royalties on sales etc.
(iv) Research and Development Expenses
a) Revenue Expenses
A research and development expense comprises revenue expenses on research are expensed under the respective head of accounts in the period in which it is occurred.
b) Development Expenses
Development expenditure on new products is capitalized as intangible assets so that it will amortized over the useful life of the assets. If all of the following can be demonstrated:
. The technical feasibility of completing the intangible asset so that it will be available for use or sale.
- The Company has intention to complete the intangible asset and use or sell it.
. The Company has ability to use or sell the intangible asset.
- The manner in which the probable future economic benefits will be generated including the existence of a market for output of the intangible asset or intangible asset itself or if it is to be used internally, the usefulness of intangible assets.
- The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.
The Company has ability to measure the expenditure attributable to the intangible asset during its development reliably.
Other development costs that do not meet above criteria are expensed in the period in which they are incurred.
5) EXTRAORDINARY AND EXCEPTIONAL ITEMS
Income or expenses that arise from events or transactions that clearly differs from the ordinary activities of the Company are classified as extraordinary items. Specific disclosure of such events/transactions is made in the financial statements. Similarly, any external events beyond the control of the Company, significantly impacting income or expense, is also treated as extraordinary item and are disclosed as such.
Item of income or expense pertaining to ordinary activities of Company that demands separate disclosure considering the size, type or incidence, to improve understanding of the performance of the Company are classified as an exceptional item and accordingly disclosed in the notes to accounts.
6) INVENTORIES
A. Raw materials lying at Factory and job workers have been valued lower of weighted average cost or net realizable value. However these items are considered to be realizable at cost if the finished products in which they will be used are expected to be sold at or above cost.
B. Stocks in process have been valued at lower of cost or net realizable value. Cost includes raw material cost plus proportionate of conversion cost (based on normal capacity of production) comprising of direct materials; direct labour, power consumed, and other overheads directly associated with production process.
C. Finished goods lying at factory have been valued at lower of weighted average cost or net realizable value. Cost includes related overheads and excise duty paid/payable on such goods.
D. Scrap has been valued at net realizable value.
E. Stores and Spares have been valued at weight average cost.
(Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated cost necessary to make the sale)
7) TANGIBLE FIXED ASSETS
Fixed assets are stated at original cost net of tax/duty credit availed, if any, less accumulated depreciation and cumulative impairment and those which have been revaluated are stated at the values determined by the valuers less accumulated depreciation and cumulative impairment. Cost of acquisition is inclusive of freight and other incidental expenses and interest on loan taken for the acquisition of qualifying assets up to the date of commissioning of assets.
Subsequent expenditure related to item of fixed asset is added to its book value only if it increases the future benefits from the existing assets beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day to day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Gain or losses arising from de-recognition of fixed assets are measured as the difference between the net disposable proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
The exchange differences arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital asset, have been added to or deducted from the cost of the asset and shall be depreciated over the balance useful life of the asset.
Die Tooling, developed in-house, includes cost of material and other direct/ incidental expense on in-house development.
Tangible Assets not ready for the intended use on the date of the balance Sheet are disclosed as âcapital work in progressâ. (Also refer to policy on leases, borrowing costs, impairment of assets and foreign currency transactions infra.)
8) DEPRECIATION / AMORTIZATION ON TANGIBLE FIXED ASSETS
Depreciation is the systematic allocation of the depreciable amount of an asset over useful life. The depreciable amount of an asset is the cost of an asset or other amount substituted for cost, less its residual value.
A. OWNED ASSETS
(i) Pursuant to applicability of Schedule II, of Companies Act 2013,with effect from 1st April 2014, Management has reassessed the useful life of tangible assets based on the internal and external technical evaluation. The Depreciation on fixed assets is provided on straight line method in accordance with applicable Schedule of the Companies Act, 2013.
(ii) Depreciation for addition to/deductions from, owned assets is calculated on pro-rata basis from the date of such addition or, as the case may be, up to the date on which such asset has been sold, discarded, demolished or destroyed.
(iii) Residual values of assets have been considered at 5% of the original cost of the assets.
(iv) Difference of Exchange Rate fluctuation on imported plant and machineries procured out of long term foreign currency loans is amortized over the residual life of relevant plant and machineries.
(v) Depreciation on assets carried at carrying amount as on 01.04.2014 and is depreciated as per Straight line method over the remaining useful life of the assets. Further the assets whose remaining useful life are nil, has been recognized in the opening balance of retained earnings. Refer the same as transitional provision
(vi) The depreciation calculation is based on the balance useful lives of assets and shift working. Depreciation on assets used on double shift basis have been increase by 50% for that period and Depreciation on assets used in triple shift basis have been calculated on the basis of 100% for that period, Except for assets in respect of which no extra shift depreciation is permitted (indicated by NESD in Part C of the schedule).
(vii) Management has reassessed the useful life of plant and machineries based on the internal and external technical evaluation which is different from useful life prescribed under the act. The reassessed useful life is tabulated as:
B. LEASED ASSETS
Land acquired under long term lease is classified under âTangible Assetsâ and is amortized over the period of lease.
9) INTANGIBLE ASSETS AND AMORTIZATION
Intangible assets are stated at original cost net of tax/duty credit availed, if any, less accumulated amortization and cumulative impairment. Intangible assets are recognized when it is probable that the future economic benefits are attributable to the asset will flow to the enterprise and the cost of asset can be measured reliably. Intangible assets are amortized over their useful life.
Intangible Assets not ready for the intended use on the date of balance sheet are disclosed as âintangible assets under developmentâ
10) IMPAIRMENT OF ASSETS
A. At each Balance Sheet date, the carrying amount of assets is tested based on internal/external factors, for impairment so as to determine:
(i) The provision for impairment loss, if any; and
(ii) The reversal of impairment loss recognized in previous periods, if any,
B. Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount. Recoverable amount is determined:
(i) In the case of an individual asset, higher of the net selling price and the value in use.
(ii) In the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at the higher of the cash generating unitâs net selling price and the value in use.
(Value in use is determined as the present value of estimated future cash flows discounted to their present value at the weighted average cost of Capital, from the continuing use of an asset and from its disposal at the end of its useful life).
Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.
11) TRANSACTIONS IN FOREIGN CURRENCY
A. INITIAL RECOGNITION
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the applicable exchange rate on date of the transaction.
B. CONVERSION
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
C. EXCHANGE DIFFERENCES
Exchange differences arising on the settlement of monetary items or on reporting companyâs monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.
Exchange differences relating to acquisition of imported fixed assets are adjusted in the carrying cost of the respective Fixed Assets.
D. FORWARD EXCHANGE CONTRACTS NOT INTENDED FOR TRADING OR SPECULATION PURPOSES
The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year.
Gain or loss on contracts relating to acquisition of imported Fixed Assets is adjusted to the carrying cost of Fixed Assets.
12) BORROWING COST
Borrowing costs that are attributable to acquisition or construction of a qualifying asset are capitalized/inventories as part of cost of such assets till such time the asset is ready for its intended use/or sale. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
All other borrowing costs are recognized as expenses in the period in which they are incurred.
13) EMPLOYEE BENEFITS
A. SHORT TERM EMPLOYEE BENEFITS
All employee benefits falling due wholly within twelve months of rendering the services are classified as short term employee benefits. The benefit likes salaries, wages, short term compensated absence etc. and the expected cost of bonus, and ex-gratia is recognized in the period in which the employee renders the related services.
B. POST EMPLOYMENT BENEFITS
(i) DEFINED CONTRIBUTION PLANS
(Provident fund, family pension fund and employee state insurance scheme)
As per the employee Provident funds and misc provisions Act 1952, all employee of the Company are entitled to receive benefits under the provident fund and family pension fund which is defined contribution plan. These contributions are made to the funds administrated and managed by Government of India. In addition some employee of the Company are covered under employee state insurance scheme Act 1948 which is also defined contribution schemes recognized and administered by Government of India.
The Companyâs contributions to these schemes are recognized as expense in profit and loss account during the period in which the employee renders the related service
(ii) DEFINED BENEFIT PLANS
a) GRATUITY
The company provides for gratuity obligations through a defined benefits retirement plan (âThe Gratuity Planâ) covering all employees. The present value of the obligation under such Defined benefits plan is determined based on actuarial valuation using the Project Unit Credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measure each unit separately to build up final obligation. The obligation is measured at the present value of the estimated cash flows. The discount rate used for determining the present value of the defined obligation under defined benefit plan, is based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognized in profit and loss account as and when determined.
The company makes annual contribution to LIC for the gratuity plan in respect of all the employeesâ liability on the basis of actuarial valuation done by the LIC. The company also provides for additional liability, in case of excess contribution, determined by the independent actuary based on actuarial valuation using the Project Unit Credit method as compared to actuarial valuation determined by LIC and vice versa
b) LEAVE LIABILITY
The Company provides for the liability at the year end on account of unavailed earned leave as per the actuarial valuation.
The leave encashment liability is covered through a policy taken from Life Insurance Corporation of India. The contribution towards premium of the policy is charged to revenue every year.
Actuarial gain or losses are recognized immediately in the statement of profit and loss.
The interest element in the actuarial valuation of defined benefits plans, which comprises the implicit interest cost and the impact of the changes in discount rate, is classified under finance costs. The balance charge is recognized as employee benefit expenses in the statement of profit and loss account
C. LONG TERM EMPLOYEE BENEFITS
The obligation for long term employee benefits such as long term compensated absences, long service award etc are recognized in the similar manner as in the case of defined benefit plans as mention in (ii).
D. EMPLOYEE TERMINATION BENEFITS
Termination benefits such as compensation under voluntary retirement cum pension scheme are recognized as expense in the period in which they are incurred.
14) INVESTMENTS
A. CURRENT INVESTMENTS
Investments, which are readily realizable and are intended to be held for not more than one year from the date of acquisition, are classified as current investments. All other investments are classified as long term investments.
B. LONG TERM INVESTMENTS
Long-term investments including unquoted shares are carried at cost after providing diminution in value, if such diminution is other than temporary in nature. However mutual funds investments are valued at its net realizable value.
Purchase and sale of investments are recognized based on the trade date accounting.
15) LEASES
A. FINANCE LEASE
Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Such assets are capitalized at the inception of the lease at the lower of the fair value or the present value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.
B. OPERATING LEASE
Assets acquired on leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are charged to the Statement of Profit and Loss on accrual basis.
16) SEGMENT REPORTING
A. IDENTIFICATION OF SEGMENTS
The Companyâs operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.
B. SEGMENT ACCOUNTING POLICIES
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
17) ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.
MAT credit 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 Minimum Alternative tax (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 a credit to the profit and loss account and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.
18) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions for expenses are recognized for liabilities that can be measured only by using a substantial degree of estimation, if
(i) The Company has a present obligation as a result of a past event
(ii) A probable outflow of resources is expected to settle the obligation and
(iii) The amount of the obligation can be reliably estimated.
Contingent liability is disclosed in case of
(i) A present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation.
(ii) A present obligation arising from past events, when no reliable estimate is possible.
(iii) A possible obligation arising from past events where the probability of outflow of resources is not remote.
However contingent assets are neither recognized, nor disclosed.
Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date and adjusted to reflect the correct management estimates.
19) EARNING PER SHARE
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting attributable taxes and dividend on cumulative preference shares for the year) by the weighted average number of equity shares outstanding during the year. Partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for event of bonus issue/right issue etc; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
20) CASH AND CASH EQUIVALENTS
Cash and cash equivalents balances include cash in hand, fixed deposits, margin money deposits, earmarked balances with banks and other bank balances such as dividend accounts, which have restrictions on repatriation.
21) EMPLOYEE STOCK OPTION SCHEME.
Stock Options granted to employee under the Stock option scheme are accounted at intrinsic value as per the accounting treatment prescribed by the Securities and Exchange Board of India (Employee stock Option scheme and Employee Stock purchase Scheme) Guidelines 1999 and Guidance Note on Accounting for Employee Share-based Payments, issued by the Institute of Chartered Accountants of India. Accordingly the excess of market price, determined as per the guidelines and guidance note, of underlying equity shares (market value), over the exercise price of the options is recognized as deferred stock compensation expenses as is charged to the statement of profit and loss account on straight line basis over the vesting period of the options. The amortized portion of the cost is shown under share holder funds.
Mar 31, 2015
1) CORPORATE INFORMATION
Steel Strips Wheels Limited (the Company) is a public limited Company
registered in India under the Companies Act 1956. Its Shares are listed
on both Bombay stock Exchange and National Stock Exchange. The Company
is a leading manufacturer of Automotive Wheel rims.
2) BASIS OF PREPARATION
The financial statements have been prepared in accordance with
generally accepted accounting principles in India(Indian GAAP) and to
comply in all material respects with the mandatory Accounting Standards
notified by Companies (Accounting Standards) rules 2006, read with the
General Circular 15/2013 dated 13th September 2013 of the Ministry of
Corporate Affairs in respect of Section 133 of Companies Act, 2013 and
relevant provisions of the Companies Act, 1956 (as amended) read with
General Circular 1/19/2013 dated 4th April 2014 of Ministry of
Corporate Affairs in respect of the relevant provisions/schedules/rules
of Companies Act 2013. Further, the guidance notes/announcements issued
by the institute of Chartered Accounts of India (ICAI) are also
considered, wherever applicable except to the extent where compliance
with other statutory promulgations overrides the same requiring a
different treatment. The financial statements have been prepared under
the historical cost convention on accrual basis.
The accounting policies have been consistently applied by the Company
and except for the changes in accounting policy discussed more fully
below, are consistent with those used in the previous year.
1) USE OF ESTIMATES
The preparation of financial statements in conformity with Indian GAAP
requires the management to make estimates and assumptions that affect
the reported amounts of revenue, expenses, assets and liabilities and
disclosure of contingent liabilities, as at the date of the financial
statements. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from those estimates. Uncertainties about these estimates and
assumptions could result in the outcomes requiring a material
adjustment to the carrying amount of assets or liabilities in the
future periods.
2) PRESENTATION OFF INANCIAL STATEMENTS
The Balance-sheet and statement of profit and loss are prepared and
presented in the format prescribed in the schedule III of the Companies
Act, 2013 ("the Act"). The disclosure requirements are presented as per
the Companies (Accounting Standards) rules 2006, read with the General
Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate
Affairs in respect of section 133 of Companies Act, 2013.
3) REVENUE RECOGNITION
Revenue is recognized to the extent that it improbable That economic
benefits will flow to the Company and the revenue can be reliably
measured.
A. SALE OF GOODS
Revenue from sale of goods is recognized when the significant risks and
rewards of ownership in the goods are transferred to the buyer of goods
as per the terms of contracts, the Company retains no effective control
of the goods transferred to a degree usually associated with the
ownership and no significant uncertainty exists regarding the amount of
the consideration that will be derived from the sale of goods. The
Company collects Central Sales tax and value added taxes (VAT) on the
behalf of the Government and therefore these are not economic flowing
to the company. Hence they are excluded from Revenue. Excise duty
deducted from revenue (Gross)is the amount that in included in the
revenue (Gross)and not the entire amount of liability arising during
the year.
B. INTEREST INCOME
Interest from bank is recognized on time proportion basis taking into
account the amount outstanding and applicable interest rate. Interest
income is included under the head "other income" in the statement of
profit and loss account.
C. OTHER INCOME
(i) Dividend Income is accounted in the period in which the right to
receive the same is established.
(ii) Insurance claim is recognized on acceptance of claim by Insurance
Company.
(iii) Vat Subsidy(granted in the state of Jharkh and) has been
accounted on the basisof75%of the Net VAT paid per annum up to a
maximum of 75%of the total fixed capital investment for different
duration. The subsidy is as per Mega Incentive Policy of Jharkhand
Government. As per policy, industry with investment above Rs 50 crore
are eligible for following incentives:
75% of the VAT paid up to maximum of 75% of cost of project (Net of
land/building) within 7yearswhichever is earlier.
4) RECOGNITION OF EXPENSES
All Expenses are recognized on accrual basis.
A. COST OF MATERIAL CONSUMED AND CHANGE IN INVENTORIES
Cost of material consumed is primarily comprised of landed cost Of
direct materials and supplies consumed in the manufacture of product
including the effect of changes in the finished goods, Work-in progress
and Scrap material.
B. EMPLOYEE BENEFIT EXPENSES
Employee benefit expenses comprises of Salaries, wages, bonus and
incentives, employee welfare expenses, share options and statutory
contributions such as Provident funds, ESI, gratuity etc.
C. OTHER EXPENSES
Other Expenses comprises of Manufacturing expenses, Administrative
Expenses, Selling and distribution expenses and Research and
development expense.
(i) Manufacturing Expenses includes expenses such as consumption of
stores and spares, power consumed, repairs to plant and machinery and
other direct expenses related to production of goods etc.
(ii) Administrative Expenses includes expenses like Rent (including
lease rent), Insurance charges, Rates fees and taxes, auditor's
remunerations, advertisements expenses, other repairs, travelling
expenses of staff, Managerial commissions, telephone and telex etc.
(iii) Selling and Distribution Expenses include business promotion,
Freight charges on dispatches to customers, rebate and discounts,
Royalties on sales etc.
(iv) Research and Development Expenses
a) Revenue Expenses
Research and development expense comprises revenue expenses on research
are expensed under the respective head of accounts in the period in
which it is occurred.
b) Development Expenses
Development expenditure on new products is capitalized as intangible
assets so that it will amortized over the useful life of the assets. If
all of the following can be demonstrated:
- The technical feasibility of completing the intangible asset so that
it Will be available for use or sale.
- The Company has intention to complete the intangible asset and use
corselet.
- The Company has ability to use or sell the intangible asset.
- The manner in which the probable future economic benefits will be
generated including the existence of a market for output of the
intangible asset or intangible asset itself or if it is to bused
internally, the use fullness of intangible assets.
- The availability of adequate technical, financial and other resources
to complete the development and to use or sell the intangible asset.
- The Company has ability to measure the expenditure attributable to
the intangible asset during its development reliably. Other
development costs that do not meet above criteria are expensed in the
period in which they are incurred.
5) EXTRA ORDINARY AND EXCEPTIONAL ITEMS
Income or expenses that arise from events or transactions that are
clearly differs from the ordinary activities of the Company are
classified as extraordinary items. Specific disclosure of such
events/transactions is made in the financial statements. Similarly, any
external events beyond the control of the Company, significantly
impacting income or expense, is also treated as extra ordinary item and
disclosed as such.
Item of income or expense pertaining to ordinary activities of Company
that demands separate disclosure considering the size, type or
incidence, to improve understanding of the performance of the Company
are classified as an exceptional item and accordingly disclosed in the
notes to accounts.
6) INVENTORIES
A. Raw materials lying at Factory and job workers have been valued
lower of weighted average cost or net realizable value. However these
items are considered to be realizable at cost if the finished products
in which they will be used are expected to be spoliator above cost.
B. Stocks in process have been valued at lower of cost or net
realizable value. Cost includes raw material cost plus proportionate of
conversion cost (based on normal capacity of production) comprising of
direct materials; direct lab our, power consumed, and other overheads
directly associated with production process.
C. Finished goods lying at factory have been valued at lower of
weighted average cost or net realizable value. Cost includes related
overheads and excise duty paid/payable on such goods.
D. Scrap has-been valued at net realizable value.
E. Store and Spares have been valued at weighted average cost.
(Net realizable value is the estimated selling price in the ordinary
course of business less estimated costs of completion and estimated
cost necessary to make the sale)
7) TANGIBLE FIXED ASSETS
Fixed assets are stated at original cost net of tax/duty credit
availed, if any, less accumulated depreciation and cumulative
impairment and those which have been revaluated are stated at the
values determined by the values less accumulated depreciation and
cumulative impairment. Cost of acquisition is inclusive of freight and
other incidental expenses and interest on loan taken for the
acquisition of qualifying assets up to the date of commissioning of
assets. Subsequent expenditure related to item of fixed asset is added
to its book value only if it increases the future benefits from the
existing assets beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day to day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
Gain or losses arising from de-recognition of fixed assets are measured
as the difference between the net disposable proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
The exchange differences arising on reporting of long term foreign
currency monetary items at rates different from those at which they
were initially recorded during the period, or reported in previous
financial statements, insofar as they relate to the acquisition of a
depreciable capital asset, have been added to or deducted from the cost
of the asset and shall be depreciated over the balance useful life of
the asset.
Die Tooling, developed in-house, includes cost of material and other
direct/ incidental expense on in-house development.
Tangible Assets not ready for the intended use on the date of the
balance Sheet are disclosed as "capital work in progress". (Also refer
to policy on leases, borrowing costs, impairment of assets and foreign
currency transactions infra.)
8) DEPRECIATION/ AMORTIZATION ON TANGIBLE FIXED ASSETS
Depreciation is the systematic allocation of the depreciable amount of
an asset over useful life. The depreciable amount of an asset is the
cost of an asset or other amount substituted for cost, less its
residual value.
A. OWNED ASSETS
(i) Pursuant to applicability of Schedule II, of Companies Act 2013,
with effect from 1st April 2014, Management has reassessed the useful
life of tangible assets based on the internal and external technical
evaluation. The Depreciation on fixed assets is provided on straight
line method in accordance with applicable Schedule of the Companies
Act, 2013.
(ii) Depreciation for addition to/deductions from, owned assets is
Calculated on pro-rata basis from the date of such addition or, as the
case may be, up to the date on which such asset has been sold,
discarded, demolished or destroyed.
(iii) Residual values of assets
have been consideredat5% of the original cost of the assets.
(iv) Difference of Exchange Rate fluctuation on imported plant and
machineries procured out of long term foreign currency loans is
amortized over the residual life of relevant plant and machineries.
(v) Depreciation on assets carried at carrying amount as on 01.04.2014
and is depreciated as per Straight line method over the remaining
useful life of the assets. Further the assets whose remaining useful
life are nil, has been recognized in the opening balance of retained
earnings. Refer the same as transition a provision of the Companies
Act.
(vi) The depreciation calculation is based on the balance useful lives
of assets and shift working. Depreciation on assets used on double
shift basis have been increase by 50% for that period and Depreciation
on assets used in triple shift basis have be calculated on the basis
of100% for that period, Except for assets in respect of which no extra
shift depreciation is permitted(indicated by NESD in Part C of the
schedule).
(vii) Management has reassessed the useful life of plant and
machineries based on the internal and external technical evaluation
which is different from useful life prescribed under the act. The
reassessed useful life is tabulated as:
B. LEASED ASSETS
Land acquired under long term lease is classified under "Tangible
Assets" and Is amortized over the period of lease.
9) IN TANGIBLE ASSETS AND AMORTIZATION
Intangible assets are stated at original cost net of tax/duty credit
availed, if any, less accumulated amortization and cumulative
impairment. Intangible assets are recognized when it is probable that
the future economic benefits are attributable to the asset will flow to
the enterprise and the cost of asset can be measured reliably.
Intangible assets are amortized over their useful life. Intangible
Assets not ready for the intended use notched ate of balance sheet are
disclosed as" intangible assets under development"
10) IMPAIRMENT OF ASSETS
A. At each Balance Sheet date, the carrying amount of assets is tested
Based on internal/ external factors, for impairment so as to determine:
(i) The provision for impairment loss, if any; and
(ii) The reversal of impairment loss recognized in previous periods, if
any,
B. Impairment loss is recognized when the carrying amount of an asset
exceeds its recoverable amount. Recoverable amount is determined: (i)
In the case of an individual asset ,higher of the net selling price and
the value in use.
(ii) In the case of a cash generating unit (a group of assets that
generates identified, independent cash flows), at the higher of the
cash generating unit's net selling price and the value in use. (Value
in use is determined as the present value of estimated future cash
flows discounted to their present value at the weighted average cost of
Capital, from the continuing use of an asset and from its disposal at
the End of its useful life). Post impairment, depreciation is provided
on the revised carrying value of the asset over its remaining useful
life.
11) TRANSACTIONS IN FOREIGN CURRENCY
A. INITIAL RECOGNITION
Foreign currency transactions are recorded in the reporting currency,
By applying to the foreign currency amount the applicable exchange rate
on date of the transaction.
B. CONVERSION
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
C. EXCHANGE DIFFERENCES
Exchange differences arising on the settlement of monetary items or on
reporting company's monetary items at rates different from those at
which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise. Exchange differences relating to
acquisition of imported fixed assets Are adjusted in the carrying cost
of the respective Fixed Assets.
D. FOR WARD EXCHANGEC ON TRACTSNOT INTENDED FOR TRADING OR SPECULATION
PURPOSES
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchanged inferences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year. Gain or loss on contracts relating to acquisition of imported
Fixed Assets is adjusted to the carrying cost of Fixed Assets.
12) BORROWING COST
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset are capitalized/inventories as part of cost of such
assets till a such a time the asset is ready for its intended use/or
sale. Qualifying asset is one that necessarily takes substantial
period of time to get ready for its intended use. All other borrowing
costs are recognized as expenses in the period in which they are
incurred.
13) EMPLOYEE BENEFITS
A. SHORT TERM EMPLOYEE BENEFITS
All employee benefits falling due wholly with in twelve months of
rendering the services are classified as short term employee benefits.
The benefit likes salaries, wages, short term compensated absence etc.
and the Expected cost of bonus, and ex-gratia is recognized in the
period in which the employee renders the related services.
B. POST EMPLOYMENT BENEFITS
(i) DEFINED CONTRIBUTION PLANS
Provident fund, family pension fund and employee state in assurance
scheme
As per the employee Provident funds and misc provisions Act 1952, all
employee of the Company are entitled to receive benefits under the
provident fund and family pension fund which is defined contribution
plan. These contributions are made to the funds administrated and
managed by Government of India. In addition some employee of the
Company are covered under employee state insurance scheme Act 1948
which is also defined contribution schemes recognized and administered
by Government of India.
The Company's contributions to these schemes are recognized as expense
in profit and loss account during the period in which the employee
renders the related service
(ii) DEFINED BENEFIT PLANS
a) GRATUITY
The company provides for gratuity obligations through a defined
benefits retirement plan ('The Gratuity Plan') covering all employees.
The present value of the obligation under such Defined benefits plan is
determined based on actuarial valuation using the Project Unit Credit
method, which recognizes each period of service as giving rise to
additional unit of employee benefit entitlement and measure each unit
separately to buildup final obligation .The obligation is measured at
the present value of the estimated cash flows. The discount rate used
for determining the present value of the defined obligation under
defined benefit plan, is based on the market yields on Government
securities as at the balance sheet date. Actuarial gains and losses are
recognized in profit and loss account sand when determined. The
company makes annual contribution to LIC for the gratuity plan in
respect of all the employees' liability on the basis of actuarial
valuation done by the LIC. The company also provides for additional
liability, in case of excess contribution, determined by the
independent actuary based on actuarial valuation using the Project Unit
Credit method as compared to actuarial valuation Determined by LIC and
vice versa
b) LEAVE LIABILITY
The Company provides forth liability at the year end on account of
unveiled Earned leave as per the actuarial valuation.
The leave encashment liability is covered through ha policy taken from
Life Insurance Corporation of India. The contribution towards premium
of the policy is charged to revenue every year. Actuarial gain or
losses are recognized immediately in the statement Of profit and loss.
The interest element in the actuarial valuation of defined benefits
plans, which comprises the implicit interest cost and the impact of the
changes in discount rate, is classified under finance costs. The
balance charge is recognized as employee benefit expenses in the
statement of profit and loss account
C. LONG TERM EMPLOYEE BENEFITS
The obligation for long term employee benefits such as long term
compensated absences, long service award etc are recognized in the
similar manner as in the case of defined benefit plans as mention
in(ii).
D. EMPLOYEE TERMINATION BENEFITS
Termination benefits such as compensation under voluntary retirement
cum pension scheme are recognized as expense in the period in which
they are incurred.
14) INVESTMENTS
A. CURRENT INVESTMENTS
Investments, which are readily realizable and are intended to be held
for not more than one year from the date of acquisition, are classified
as current investments. All other investments are classified as long
term investments.
B. LONGTERM INVESTMENTS
Long-term investments including unquoted shares are carried at cost
after providing diminution in value, if such diminution is other than
temporary in nature. However mutual funds investments are valued at its
net realizable value. Purchase and sale of investments are recognized
based on the trade date accounting.
15) LEASES
A. FINANCE LEASE
Assets acquired under leases where the Company has substantially all
the risks and rewards of ownership are classified as finance leases.
Such assets are capitalized at the inception of the lease at the lower
of the air value or the present value of minimum lease payments and a
liability is created for an equivalent amount. Each lease rental paid
is allocated between the liability and the interest cost, so as to
obtain a constant periodic rate of interest on the outstanding
liability for each period.
B. OPERATING LEASE
Assets acquired on leases where a significant portion of the risks and
rewards of ownership are retained by the lesson are classified as
operating leases. Lease rentals are charged to the Statement of Profit
and Loss on accrual basis.
16) SEGMENT REPORTING
A. IDENTIFICATION OF SEGMENTS
The Company's operating businesses are organized and managed Separately
according to the nature of products and services provided, with each
segment representing strategic business unit that offers different
products and serves different markets. The analysis of geographical
segments is based on the areas in which major operating divisions of
the Company operate.
B. SEGMENT ACCOUNTING POLICIES
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
17) ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises current and deferred tax. Current income-tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income-Tax Act,1961 enacted in India and tax laws
prevailing in there sportive tax jurisdictions where the company
operates. The tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted, at their porting date.
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
taxis measured using theta rates and the tax laws enacted or
substantively enacted at the reporting date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are review detach reporting
date. The Company writes-down the carrying amount of deferred tax asset
to the extent that it is no longer reasonably certain or virtually
certain, as the case may be, that sufficient future taxable income will
be available against which deferred tax asset can be realized. Any such
write-down is reversed to the extent that it becomes reasonably certain
or virtually certain, as the case may be, that sufficient future
taxable income will be available.
Deferred tax assets and deferred tax liabilities are offset, if a Legal
yen force able right exists to set-off current tax assets against
Current tax liabilities and the deferred tax assets and deferred taxes
Relate to the same tax able entity and the same taxation authority.
MAT credit 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 Minimum
Alternative tax (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 accredit to the profit and loss account and
shown as MAT Credit Entitlement. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
18) PROVISIONS,CONTINGENT LIABILITIESANDCONTINGENT ASSETS
Provisions for expenses are recognized for liabilities that can be
measured Only by using a substantial degree of estimation, if (i) The
Company Has a present obligation as a result of past event (ii) A
probable out flow of resources is expected to settle the obligation and
(iii) The amount of the obligation can be reliably estimated.
Contingent liability is disclosed in case of
(i) A present obligation arising from past events, when it is not
probable that an outflow of resources will be required to settle the
obligation.
(ii) A Present obligation arising From past events, when no reliable
estimate is possible.
(iii) A possible obligation arising from past events where the
Probability of out flow of resources is not remote.
However contingent assets are neither recognized, nor disclosed.
Provisions, contingent liabilities and contingent assets are reviewed
at each Balance Sheet date and adjusted to reflect the correct
management estimates.
19) EARNING PER SHARE
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
attributable taxes and dividend noncumulative preference shares for the
year)by the weighted average number of equity shares outstanding during
the year. Partly paid equity shares are treated as a fraction of an
equity share to the extent that they were entitled to participate in
dividends related to a fully paid equity share during the reporting
period. The weighted average number of equity shares outstanding during
the period is adjusted for event of bonus issue/rightissueetc; bonus
Elementinarights issue to existing shareholders; share split; and
reverse share split (consolidation of shares). For the purpose of
calculating diluted earnings per share, the net profit or loss for the
period attributable to equity shareholders and the weighted average
number of shares outstanding during the period are adjusted for the
effects of all dilutive potential equity shares.
20) CASHAND CASH EQUIVALENTS
Cash and cash equivalents balances include cash in hand, fixed
deposits, margin money deposits, earmarked balances with banks and
other bank balances such as dividend accounts, which have restrictions
on repatriation.
21) EMPLOYEE STOCK OPTIONSCHEME.
Stock Options granted to employee under the Stock option scheme are
accounted at intrinsic value as per the accounting treatment prescribed
by the Securities and Exchange Board of India (Employee stock Option
scheme and Employee Stock purchase Scheme) Guidelines 1999 and
Securities Exchange Board of India (Share Based Employee Benefits)
Regulations, 2014 and Guidance Note on Accounting for Employee
Share-based Payments, issued by the Institute of Chartered Accountants
of India. Accordingly the excess of market price, determined as per the
guidelines and guidance note, of underlying equity shares (market
value), over the exercise price of the options is recognized as
deferred stock compensation expenses as is charged to the statement of
profit and loss account on straight line basis over the vesting period
of the options. The amortized portion of the cost is shown under share
holder funds.
Mar 31, 2013
I) Accounting Convention
The financial statements are prepared under the historical cost
convention in accordance with the Accounting Standards referred to in
sub-section (3C) of Section 211 of the Companies Act 1956 and relevant
presentational requirements of the Companies Act, 1956.
ii) Fixed Assets
Fixed assets are stated at cost (net of CENVAT) less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses and interest on loan taken for the
acquisition of qualifying assets up to the date of commissioning of
assets.
The exchange differences arising on reporting of long term foreign
currency monetary items at rates different from those at which they
were initially recorded during the period, or reported in previous
financial statements, in so far as they relate to the acquisition of a
depreciable capital asset, have been added to or deducted from the cost
of the asset and shall be depreciated over the balance useful life of the
asset.
Die Tooling, developed in-house, includes cost of material, taxes and
duties and other direct/ incidental expense on in-house development.
(iii) Depreciation/ amortization
a. Depreciation on fixed assets (other than those referred to in b and
c below) is provided on straight line method in accordance with
Schedule XIV to the Companies Act, 1956.
b. Depreciation on assets costing Rs. 5,000 or less is provided 100%
on prorata basis for days put in use.
c. The leasehold land is amortized over the period of lease.
d. Difference of Exchange Rate fluctuation on imported plant and
machineries procured out of long term foreign currency loans is
amortized over the residual life of relevant plant and machineries.
iv) Inventories
a. Raw materials lying at Factory and job workers have been valued at
cost.
b. Stocks in process have been valued at Raw material cost plus
proportionate of conversion cost.
c. Finished goods lying at factory have been valued at Raw material
cost plus conversion cost including excise duty payable.
d. Scrap has been valued at net realizable value.
e. Stores and Spares have been valued at cost.
v) Investments
Long-term investments are carried at cost less provision, if any, for
diminution in value which is other than temporary. Current investments
are carried at lower of cost and fair value.
vi) Transactions in Foreign Currency
i) Foreign currency transactions are recorded at the exchange rate
prevailing as at the date of transactions except export sales which are
recorded at a rate notified by the customs for invoice purposes. Such
rate is notified in the last week of the month and is adopted for
recording export sales of the next month. The exchange fluctuation
arising as a result of negotiation of export bill is accounted for as
difference in exchange rates.
ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. The reinstatement
difference is charged to profit and loss account.
Hi) Non-monetary items (fixed assets and loans) denominated in a
foreign currency are reinstated as at the date of balance sheet. The
difference on re-instatement is carried to relevant non-monetary items.
vii) Employee Benefits
The Company has various schemes of retirement benefits such as
provident fund, gratuity and leave encashment, which is dealt with as
under:
i) Contributions to provident fund are made in accordance with the
provisions of Employees'' Provident Fund and Miscellaneous Provisions
Act, 1952 and are charged to revenue every year.
ii) Provision for Gratuity is made based on actuarial valuation. The
gratuity liability in respect of employees of the Company is covered
through a policy taken by a trust from Life Insurance Corporation of
India. The contribution towards premium of the policy to the trust is
charged to revenue every year.
Hi) Provision for leave encashment is made based on actuarial
valuation. The leave encashment liability is covered through a policy
taken from Life Insurance Corporation of India. The contribution
towards premium of the policy is charged to revenue every year.
viii) Borrowing costs
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset are capitalized as part of cost of such assets.
Qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use. All other borrowing costs are
recognized as expenses in the period in which they are incurred.
ix) Cenvat
The balance in the Service Tax and Modvat account is shown as current
asset.
x) Revenue Recognition
Sales revenue is recognized as and when goods are handed overtop
carrier.
- Insurance claim is recognized on actual receipt basis.
- Interest from bank is recognized on accrual basis.
xi) Recognition of expenses
Expenses are recognized on accrual basis except Technical know-how fees
and Royalty on sales which is recognized on cash basis.
xii) Impairment of Assets
At each balance sheet date an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss, i.e., the amount by which the carrying amount of
asset exceeds its recoverable amount is provided in the books
of account.
xiii) Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of
assessable profits computed in accordance with the provisions of the
Income-tax 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 originates in one period and are capable of
reversal in one or more subsequent periods. In respect of carry forward
of losses and unabsorbed depreciation, deferred tax assets are
recognized based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax asset can be
realized.
MAT credit entitlement is recognized as an asset and carried under
Loans and advances.
xiv) Leases
Leases where lessor effectively retains substantially all the risk and
benefits of ownership of the leased items are classified as operating
leases. Operating lease payments are recognised as expenses in the
profit and loss account on straight line bases over the lease term.
xv) Provision involving substantial degree of estimate in measurement
are recognized when there is present obligation as result of past
events and it is probable that there will be an outflow of resources,
contingent liabilities are not recognized but are disclosed in the
notes. Contingent assets are neither recognized nor disclosed in the
financial statements.
Mar 31, 2012
I) Accounting Convention
The financial statements are prepared under the historical cost
convention in accordance with the Accounting Standards referred to in
sub-section (3C) of Section 211 of the Companies Act 1956 and relevant
presentational requirements of the Companies Act, 1956.
ii) Fixed Assets
Fixed assets are stated at cost (net of CENVAT) less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses and interest on loan taken for the
acquisition of qualifying assets up to the date of commissioning of
assets.
The exchange differences arising on reporting of long term foreign
currency monetary items at rates different from those at which they
were initially recorded during the period, or reported in previous
financial statements, in so far as they relate to the acquisition of a
depreciable capital asset, have been added to or deducted from the cost
of the asset and shall be depreciated overthe balance useful life of
the asset.
Die Tooling, developed in-house, includes cost of material, taxes and
duties and other direct/ incidental expense on in- house development.
iii) Depreciation/ amortization
a. Depreciation on fixed assets (other than those referred to in b and
c below) is provided on straight line method in accordance with
Schedule XIV to the Companies Act, 1956.
b. Depreciation on assets costing Rs. 5,000 or less is provided 100%
on prorata basis for days put in use.
c. The leasehold land is amortized overthe period of lease.
d. Difference of Exchange Rate fluctuation on imported plant and
machineries procured out of long term foreign currency loans is
amortized overthe residual life of relevant plantand machineries.
iv) Inventories
a. Raw materials lying at Factory and job workers have been valued at
cost.
b. Stocks in process have been valued at Raw material cost plus
proportionate of conversion cost.
c. Finished goods lying at factory have been valued at Raw material
cost plus conversion cost including excise duty payable.
d. Scrap has been valued at net realizable value.
e. Stores and Spares have been valued at cost.
v) Investments
Long-term investments are carried at cost less provision, if any, for
diminution in value which is other than temporary. Current investments
are carried at lowerofcost and fair value.
vi) Transactions in Foreign Currency
i) Foreign currency transactions are recorded at the exchange rate
prevailing as at the date of transactions except export sales which are
recorded at a rate notified by the customs for invoice purposes. Such
rate is notified in the last week of the month and is adopted for
recording export sales of the next month. The exchange fluctuation
arising as a result of negotiation of export bill is accounted foras
difference in exchange rates.
ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. The reinstatement
difference is charged to profit and loss account.
iii) Non-monetary items (fixed assets and loans) denominated in a
foreign currency are reinstated as at the date of balance sheet. The
difference on re-instatement is carried to relevant non-monetary items.
vii) Employee Benefits
The Company has various schemes of retirement benefits such as
provident fund, gratuity and leave encashment, which is dealt with as
under
i) Contributions to provident fund are made in accordance with the
provisions of Employees' Provident Fund and Miscellaneous Provisions
Act, 1952 and are charged to revenue every year.
ii) Provision for Gratuity is made based on actuarial valuation. The
gratuity liability in respect of employees of the Company is covered
through a policy taken by a trust from Life Insurance Corporation of
India. The contribution towards premium of the policy to the trust is
charged to revenue every year.
iii) Provision for leave encashment is made based on actuarial
valuation. The leave encashment liability is covered through a policy
taken from Life Insurance Corporation of India. The contribution
towards premium of the policy is charged to revenue every year.
viii) Borrowing costs
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset are capitalized as part of cost of such assets.
Qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use. All other borrowing costs are
recognized as expenses in the period in which they are incurred.
ix) Cenvat
The balance in the Service Tax and Modvat account is shown as current
asset.
x) Revenue Recognition
Sales revenue is recognized as and when goods are handed over to
carrier.
Insurance claim is recognized on actual receipt basis.
Interestfrom bank is recognized on accrual basis.
xi) Recognition of expenses
Expenses are recognized on accrual basis except Technical know-how fees
and Royalty on sales which is recognized on cash basis.
xii) Impairment of Assets
At each balance sheet date an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss, i.e., the amount by which the carrying amount of
asset exceeds its recoverable amount is provided in the books of
account.
xiii) Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of
assessable profits computed in accordance with the provisions of the
Income-tax 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 originates in one period and are capable of
reversal in one or more subsequent periods. In respect of carry forward
of losses and unabsorbed depreciation, deferred tax assets are
recognized based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax asset can be
realized.
MAT credit entitlement is recognized as an asset and carried under
Loans and advances.
xiv) Provision involving substantial degree of estimate in measurement
are recognised when there is present obligation as result of past
events and it is probable that there will be an outflow of resources,
contigent liabilities are not recognised but are disclosed in the
notes. Contingent assets are neither recognised nordisclosed in the
financial statements.
Mar 31, 2011
I) Accounting Convention
The financial statements are prepared under the historical cost
convention in accordance with the Accounting Standards referred to in
sub-section (3C) of Section 211 of the Companies Act 1956 and relevant
presentational requirements of the Companies Act, 1956.
ii) Fixed Assets
Fixed assets are stated at cost (net of CENVAT) less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses and interest on loan taken for the
acquisition of qualifying assets up to the date of commissioning of
assets. The exchange differences arising on reporting of long term
foreign currency monetary items at rates different from those at which
they were initially recorded during the period, or reported in previous
financial statements, in so far as they relate to the acquisition of a
depreciable capital asset, have been added to or deducted from the cost
of the asset and shall be depreciated over the balance useful life of
the asset.
Die Tooling, developed in-house, includes cost of material, taxes and
duties and other direct/ incidental expense on in-house development.
iii) Depreciation/ amortization
a. Depreciation on fixed assets (other than those referred to in b and
c below) is provided on straight line method in accordance with
Schedule XIVtotheCompaniesAct,1956.
b. Depreciation on assets costing Rs. 5,000 or less is provided 100%
on prorata basis for days put in use.
c. The leasehold land is amortized over the period of lease.
d. Difference of Exchange Rate fluctuation on imported plant and
machineries procured out of long term foreign currency loans is
amortized over the residual life of relevant plant and machineries.
iv) Inventories
a. Raw materials lying at Factory and job workers have been valued at
cost.
b. Stocks in process have been valued at Raw material cost plus
proportionate of conversion cost.
c. Finished goods lying at factory have been valued at Raw material
cost plus conversion cost including excise duty payable.
d. Scrap has been valued at net realizable value.
e. Stores and Spares have been valued at cost.
v) Investments
Long-term investments are carried at cost less provision, if any, for
diminution in value which is other than temporary. Current investments
are carried at lower of cost and fairvalue.
vi) Transactions in Foreign Currency
i) Foreign currency transactions are recorded at the exchange rate
prevailing as at the date of transactions except export sales which are
recorded at a rate notified by the customs for invoice purposes. Such
rate is notified in the last week of the month and is adopted for
recording export sales of the next month. The exchange fluctuation
arising as a result of negotiation of export bill is accounted for as
difference in exchange rates.
ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. The reinstatement
difference is charged to profit and loss account.
ill) Non-monetary items (fixed assets and loans) denominated in a
foreign currency are reinstated as at the date of balance sheet. The
difference on re-instatement is carried to relevant non-monetary items.
vii) Employee Benefits
The Company has various schemes of retirement benefits such as
provident fund, gratuity and leave encashment, which is dealt with as
under
i) Contributions to provident fund are made in accordance with the
provisions of Employees' Provident Fund and Miscellaneous Provisions
Act, 1952 and are charged to revenue every year.
ii) Provision for Gratuity is made based on actuarial valuation. The
gratuity liability in respect of employees of the Company is covered
through a policy taken by a trust from Life Insurance Corporation of
India. The contribution towards premium of the policy to the trust is
charged to revenue every year.
ill) Provision for leave encashment is made based on actuarial
valuation. The leave encashment liability is covered through a policy
taken from Life Insurance Corporation of India The contribution towards
premium of the policy is charged to revenue every year.
viii) Borrowing costs
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset are capitalized as part of cost of such assets.
Qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use. All other borrowing costs are
recognized as expenses in the period in which they are incurred.
ix) Cenvat
The balance in the Service Tax and Modvat account is shown as current
asset.
x) Revenue Recognition
Sales revenue is recognized as and when goods are handed overto
carrier.
- Insurance claim is recognized on actual receipt basis.
- Interest from bank is recognized on accrual basis.
xi) Recognition of expenses
Expenses are recognized on accrual basis except Technical know-how fees
and Royalty on sales which is recognized on cash basis.
xii) Impairment of Assets
At each balance sheet date an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss, i.e., the amount by which the carrying amount of
asset exceeds its recoverable amount is provided in the books of
account.
xiii) Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of
assessable profits computed in accordance with the provisions
ofthelncome-taxAct,1961.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. In respect of carry forward
of losses and unabsorbed depreciation, deferred tax assets are
recognized based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax asset can be
realized.
MAT credit entitlement is recognized as an asset and carried Under
Loans and advances.
Mar 31, 2010
I) Accounting Convention
The financial statements are prepared under the historical cost
convention in accordance with the Accounting Standards referred to in
sub-section (3C) of Section 211 of the Companies Act 1956 and relevant
presentational requirements of the Companies Act, 1956.
ii) Fixed Assets
Fixed assets are stated at cost (net of CENVAT) less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses and interest on loan taken for the
acquisition of qualifying assets up to the date of commissioning of
assets. The exchange differences arising on reporting of long term
foreign currency monetary items at rates different from those at which
they were initially recorded during the period, or reported in previous
financial statements, in so far as they relate to the acquisition of a
depreciable capital asset, have been added to or deducted from the cost
of the asset and shall be depreciated over the balance useful life of
the asset.
Die Tooling, developed in-house, includes cost of material, taxes and
duties and other direct/ incidental expense on in-house development.
iii) Depreciation / Amortization
a. Depreciation on fixed assets (other than those referred to in b and
c below) is provided on straight line method in accordance with
Schedule XIV to the Companies Act, 1956.
b. Depreciation on assets costing Rs. 5,000 or less is provided 100%
on prorata basis for days put in use.
c. The leasehold land is amortized over the period of lease.
d. Difference of Exchange Rate fluctuation on imported plant and
machineries procured out of long term foreign currency loans is
amortized over the residual life of relevant plant and machineries.
iv) Inventories
a. Raw materials lying at Factory and job workers have been valued at
cost.
b. Stocks in process have been valued at Raw material cost plus
proportionate of conversion cost.
c. Finished goods lying at factory have been valued at Raw material
cost plus conversion cost including excise duty payable.
d. Scrap has been valued at net realizable value.
e. Stores and Spares have been valued at cost.
v) Investments
Long-term investments are carried at cost less provision, if any, for
diminution in value which is other than temporary. Current investments
are carried at lower of cost and fair value.
vi) Transactions in Foreign Currency
i) Foreign currency transactions are recorded at the exchange rate
prevailing as at the date of transactions except export sales which are
recorded at a rate notified by the customs for invoice purposes. Such
rate is notified in the last week of the month and is adopted for
recording export sales of the next month. The exchange fluctuation
arising as a result of negotiation of export bill is accounted for as
difference in exchange rates.
ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. The reinstatement
difference is charged to profit and loss account.
iii) Non-monetary items (fixed assets and loans) denominated in a
foreign currency are reinstated as at the date of balance sheet. The
difference on re- instatement is carried to relevant non-monetary
items.
vii) Employee Benefits
The Company has various schemes of retirement benefits such as
provident fund, gratuity and leave encashment, which is dealt with as
under
i) Contributions to provident fund are made in accordance with the
provisions of Employees Provident Fund and Miscellaneous Provisions
Act, 1952 and are charged to revenue every year.
ii) The gratuity liability in respect of employees of the Company is
covered through a policy taken by a trust from Life Insurance
Corporation of India. The contribution towards premium of the policy to
the trust is charged to revenue every year.
iii) Provision for leave encashment is made based on actuarial
valuation. The leave encashment liability is covered through a policy
taken from Life Insurance Corporation of India. The contribution
towards premium of the policy is charged to revenue every year.
viii) Borrowing costs
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset are capitalized as part of cost of such assets.
Qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use. All other borrowing costs are
recognized as expenses in the period in which they are incurred.
ix) Cenvat
The balance in the Service Tax and Modvat account is shown as current
asset.
x) Revenue Recognition
- Sales revenue is recognized as and when goods are handed over to
carrier.
- Insurance claim is recognized on actual receipt basis.
- Interest from bank is recognized on accrual basis.
xi) Recognition of expenses
Expenses are recognized on accrual basis except Technical know-how fees
which is recognized on cash basis.
xii) Impairment of Assets
At each balance sheet date an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss, i.e., the amount by which the carrying amount of
asset exceeds its recoverable amount is provided in the books of
account.
xiii) Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of
assessable profits computed in accordance with the provisions of the
Income-tax 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 originates in one period and are capable of
reversal in one or more subsequent periods. In respect of carry forward
of losses and unabsorbed depreciation, deferred tax assets are
recognized based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax asset can be
realized
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