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Accounting Policies of Talbros Automotive Components Ltd. Company
Mar 31, 2025
1.1 Material Accounting policies
a) Basis of preparation
These financial statements have been prepared in
accordance with the Indian Accounting Standards
(hereinafter referred to as the âInd ASâ) as notified by
Ministry of Corporate Affairs pursuant to section 133
of the Companies Act, 2013 read with Companies
(Indian Accounting Standards) Rules, 2015 amended
from time to time.
The financial statements have been prepared on a
historical cost basis, except for the following assets
and liabilities which have been measured at fair
value or revalued amount:
⢠Certain financial assets and liabilities measured
at fair value (refer accounting policy regarding
financial instruments); and
⢠Defined benefit plans - plan assets measured
using actuarial valuation.
The significant accounting policies that are used in
the preparation of these financial statements are
summarised below. These accounting policies are
consistently used throughout the periods presented
in the financial statements.
b) Significant accounting judgements, estimates
and assumptions
The preparation of the financial statements in
conformity with Ind AS requires management to
make estimates, judgements and assumptions.
These estimates, judgements and assumptions
affect the application of accounting policies and
the reported amounts of assets and liabilities, the
disclosures of contingent assets and liabilities at
the date of the financial statements and reported
amounts of revenues and expenses during the
period. Application of accounting policies that
require critical accounting estimates involving
complex and subjective judgements and the use
of assumptions in these financial statements have
been disclosed below. Accounting estimates could
change from period to period. Actual results could
differ from those estimates. Appropriate changes
in estimates are made as management becomes
aware of changes in circumstances surrounding the
estimates. Changes in estimates are reflected in the
financial statements in the period in which changes
are made and, if material, their effects are disclosed
in the notes to the financial statements.
Significant management judgements
Recognition of deferred tax assets - The extent
to which deferred tax assets can be recognised is
based on an assessment of the probability of the
future taxable income against which the deferred
tax assets can be utilised.
Provisions, contingent liabilities and contingent
assets - The Company is the subject of legal
proceedings and tax issues covering a range of
matters, which are pending in various jurisdictions.
Due to the uncertainty inherent in such matters, it is
difficult to predict the final outcome of such matters.
The cases and claims against the Company often
raise difficult and complex factual and legal issues,
which are subject to many uncertainties, including
but not limited to the facts and circumstances of
each particular case and claim, the jurisdiction and
the differences in applicable law. In the normal
course of business, management consults with
legal counsel and certain other experts on matters
related to litigation and taxes. The Company
accrues a liability when it is determined that an
adverse outcome is probable and the amount of the
loss can be reasonably estimated.
Impairment of financial assets - At each balance
sheet date, based on historical default rates
observed over expected life, the management
assesses the expected credit loss on outstanding
financial assets.
Evaluation of indicators for impairment of assets
- The evaluation of applicability of indicators of
impairment of assets requires assessment of
several external and internal factors which could
result in deterioration of recoverable amount of the
assets.
Leases - The Company evaluates if an
arrangement qualifies to be a lease as per the
requirements of Ind AS 116. Identification of a lease
requires significant judgement. The Company uses
significant judgement in assessing the lease term
(including anticipated renewals) and the applicable
discount rate. The Company determines the lease
term as the non-cancellable period of a lease,
together with both periods covered by an option
to extend the lease if the Company is reasonably
certain to exercise that option; and periods covered
by an option to terminate the lease if the Company
is reasonably certain not to exercise that option.
In assessing whether the Company is reasonably
certain to exercise an option to extend a lease,
or not to exercise an option to terminate a lease,
it considers all relevant facts and circumstances
that create an economic incentive for the Company
to exercise the option to extend the lease, or not
to exercise the option to terminate the lease. The
Company revises the lease term if there is a change
in the non-cancellable period of a lease. The
discount rate is generally based on the incremental
borrowing rate specific to the lease being evaluated
or for a portfolio of leases with similar characteristics.
Significant estimates
Useful lives of depreciable/amortisable assets -
Management reviews its estimate of the useful lives
of depreciable/amortisable assets at each reporting
date, based on the expected utility of the assets.
Uncertainties in these estimates relate to technical
and economic obsolescence that may change the
utility of certain software, IT equipment and other
plant and equipment.
Defined benefit obligation - Managementâs
estimate of the DBO is based on a number of critical
underlying assumptions such as standard rates of
inflation, mortality, discount rate and anticipation
of future salary increases. Variation in these
assumptions may significantly impact the DBO
amount and the annual defined benefit expenses.
Fair value measurements
Management applies valuation techniques to
determine the fair value of financial instruments
(where active market quotes are not available). This
involves developing estimates and assumptions
consistent with how market participants would price
the instrument.
c) Current versus non-current classification
The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification. An asset is treated as current when it
is:
⢠Expected to be realised or intended to be sold
or consumed in normal operating cycle*
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months
after the reporting period, or
⢠Cash or cash equivalent unless restricted from
being exchanged or used to settle a liability
for at least twelve months after the reporting
period.
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating
cycle*
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months
after the reporting period, or
⢠There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period
The Company classifies all other liabilities as non¬
current.
Deferred tax assets and liabilities are classified as
non-current assets and liabilities respectively.
âBased on the nature of products and the time
between acquisition of assets for processing and
their realisation in cash and cash equivalents, the
Company has ascertained its operating cycle as 12
months for the purpose of current or non-current
classification of assets and liabilities.
d) Inventory
Inventories are valued as follows:
Raw material, stores and spares
Raw materials, stores and spares are valued at lower
of cost and net realisable value. However, materials
and other items held for use in the production of
inventories are not written down below cost if the
finished products in which they will be incorporated
are expected to be sold at or above cost. Cost of
raw materials, components and stores and spares
is determined on a first in first out (FIFO) basis.
Stores and spares having useful life of more than
twelve months are capitalised as âProperty, plant
and equipmentâ and are depreciated prospectively
over their remaining useful lives in accordance with
In AS 16.
Work in progress and finished goods
Work in progress and finished goods are valued
at lower of cost and net realisable value. Cost
includes raw material cost and a proportion of
direct and indirect overheads up to estimated stage
of completion. Cost is determined on a weighted
average basis.
Net realisable value is the estimated selling price
in the ordin ary course of business, less estimated
costs of completion and estimated costs necessary
to make the sale.
e) Property, plant and equipment
Recognition and initial measurement
Items of property, plant and equipment are
measured at cost less accumulated depreciation
and accumulated impairment losses. The cost
comprises purchase price, borrowing cost
if capitalisation criteria are met and directly
attributable cost of bringing the asset to its working
condition for the intended use. Any trade discount
and rebates are deducted in arriving at the purchase
price. Subsequent costs are included in the assetâs
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits attributable to such subsequent
cost associated with the item will flow to the
Company and the benefit shall be availed over
a period of more than 1 year. All other repair and
maintenance costs are recognised in statement of
profit or loss as incurred.
Subsequent measurement (depreciation and
useful lives)
Depreciation on Plant & Machinery and Computers
is provided on straight-line basis and for all other
categories of Property, Plant and Equipment,
depreciation is provided on written down value
method.
Depreciation is provided on the useful life of the
assets as prescribed in Schedule II of the Companies
Act, 2013 except in respect of the following assets,
where useful life is different than those prescribed
in Schedule II:
âComputers and Mould and dies are classified
under Plant and Machinery in Note 2 to the financial
statements.
The residual values, useful lives and method of
depreciation of are reviewed at each financial year
end and adjusted prospectively, if appropriate.
I n case during any financial year, any addition has
been made to any asset, or where any asset has
been sold, discarded, demolished or destroyed,
or significant components replaced; depreciation
on such assets is calculated on a pro rata basis
on individual assets with specific useful life 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 or replaced.
De-recognition
An item of property, plant and equipment and any
significant part initially recognised is de-recognised
upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain
or loss arising on de-recognition of the asset
(calculated as the difference between the net
disposal proceeds and the carrying amount of the
asset) is included in the statement of profit and loss
when the asset is derecognised.
Transition to Ind AS
On transition to Ind AS, the Company has elected to
continue with the carrying value of all its property,
plant and equipment recognised as at April 01, 2016
measured as per the provisions of previous GAAP
and use that carrying value as the deemed cost of
property, plant and equipment.
f) Intangible assets
Recognition and initial measurement
Intangible assets acquired separately are measured
on initial recognition at cost. Following initial
recognition, intangible assets are carried at cost
less accumulated amortisation and accumulated
impairment losses, if any. Internally generated
intangible assets, excluding product development
costs, are not capitalised and expenditure is
reflected in the statement of profit and loss in the
year in which the expenditure is incurred.
Subsequent measurement (Amortisation and
useful lives)
All finite-lived intangible assets, including internally
developed intangible assets, are accounted for
using the cost model whereby capitalised costs
are amortised on a straight-line basis over their
estimated useful lives. Residual values and useful
lives are reviewed at each reporting date and any
change in the same is accounted for prospectively.
The following useful lives are applied:
De-recognition
Gains or losses arising from de-recognition of an
intangible asset are measured as the difference
between the net disposal proceeds and the
carrying amount of the asset and are recognised
in the statement of profit or loss when the asset is
derecognised.
Transition to Ind AS
On transition to Ind AS, the Company has elected to
continue with the carrying value of all its intangible
assets recognised as at April 01, 2016 measured as
per the provisions of previous GAAP and use that
carrying value as the deemed cost of intangible
assets.
g) Investment property
I nvestment properties are properties held to earn
rentals and/or for capital appreciation. Investment
properties are measured initially at cost including
transaction costs. Subsequent to initial recognition
the investment properties are stated at cost less
accumulated depreciation.
Depreciation is recognised on a straight-line basis
to write down the cost less estimated residual value
of investment properties other than land.
An investment property is derecognised upon
disposal or when the investment property is
permanently withdrawn from use and no future
economic benefits are expected from the disposal.
Any gain or loss arising on de-recognition of the
property (calculated as the difference between the
net disposal proceeds and the carrying amount of
the asset) is included in statement of profit or loss
in the period in which the investment property is
derecognised.
Transition to Ind AS
On transition to Ind AS, the Company has elected to
continue with the carrying value of all its investment
properties recognised as at April 01, 2016 measured
as per the provisions of previous GAAP and use that
carrying value as the deemed cost of investment
properties.
h) Leases
Company as a lessee
The Company assesses whether a contract contains
a lease, at inception of a contract. A contract is, or
contains, a lease if the contract conveys the right to
control the use of an identified asset for a period
of time in exchange for consideration. To assess
whether a contract conveys the right to control the
use of an identified 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 recognises 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 low value leases. 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.
Certain lease arrangements includes the options to
extend or terminate the lease before the end of the
lease term. ROU assets and lease liabilities includes
these options when it is reasonably certain that they
will be exercised.
The right-of-use assets are initially recognised 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.
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 amortised
cost 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
in the country of domicile of these leases. Lease
liabilities are remeasured with a corresponding
adjustment to the related right of use asset if the
Company changes its assessment if whether it will
exercise an extension or a termination option.
Company as a lessor
Leases in which the Company does not transfer
substantially all the risks and rewards of ownership
of an asset are classified as operating leases.
Rental income from operating lease is recognised
on a straight-line basis over the term of the relevant
lease. Contingent rents are recognised as revenue
in the period in which they are earned.
The Company does not have any finance lease as a
lessor.
i) Fair value measurement
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date. The fair value measurement is
based on the presumption that the transaction to
sell the asset or transfer the liability takes place
either:
⢠In the principal market for the asset or liability,
or
⢠I n the absence of a principal market, in the
most advantageous market for the asset or
liability.
The principal or the most advantageous market
must be accessible by the Company.
The fair value of an asset or a liability is measured
using the assumptions that market participants
would use when pricing the asset or liability,
assuming that market participants act in their
economic best interest.
A fair value measurement of a non-financial asset
takes into account a market participantâs ability to
generate economic benefits by using the asset in
its highest and best use or by selling it to another
market participant that would use the asset in its
highest and best use.
Company uses 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.
All assets and liabilities for which fair value is
measured or disclosed in the financial statements
are categorised within the fair value hierarchy,
described as follows, based on the lowest level
input that is significant to the fair value measurement
as a whole:
Level 1 â Quoted (unadjusted) market prices in
active markets for identical assets or liabilities.
Level 2 â Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is directly or indirectly observable.
Level 3 â Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is Unobservable.
For assets and liabilities that are recognised in the
financial statements on a recurring basis, company
determines whether transfers have occurred
between levels in the hierarchy by re-assessing
categorisation (based on the lowest level input that
is significant to the fair value measurement as a
whole) at the end of each reporting period or each
case.
j) Revenue recognition
Revenue arises mainly from the sale of manufactured
and traded goods. To determine whether to
recognise revenue, the Company follows a 5-step
process:
1. Identifying the contract with a customer.
2. Identifying the performance obligations.
3. Determining the transaction price.
4. Allocating the transaction price to the
performance obligations.
5. Recognising revenue when/as performance
obligation(s) are satisfied.
Revenue is measured at fair value of the
consideration received or receivable, exclusive of
any trade discounts, volume rebates and any taxes
or duties collected on behalf of the government
which are levied on sales such as sales tax, value
added tax, etc. Revenue is recognised either at a
point in time or over time, when (or as) the Company
satisfies performance obligations by transferring the
promised goods or services to its customers.
The Company recognises contract liabilities for
consideration received in respect of unsatisfied
performance obligations and reports these amounts
as other liabilities in the balance sheet. Similarly, if
the Company satisfies a performance obligation
before it receives the consideration, the Company
recognises either a contract asset or a receivable in
its balance sheet, depending on whether something
other than the passage of time is required before
the consideration is due.
The Company applies the revenue recognition
criteria to each separately identifiable component
of the revenue transaction as set out below:
Sale of goods and services
Revenue from sale of goods is recognised when
the control of goods is transferred to the buyer
as per the terms of the contract, in an amount that
reflects the consideration the Company expects to
be entitled to in exchange for those goods. Control
of goods refers to the ability to direct the use of and
obtain substantially all of the remaining benefits
from goods. The Company considers whether there
are other promises in the contract that are separate
performance obligations to which a portion of the
transaction price is allocated.
Revenue from services is recognised when
Company satisfies the performance obligations by
transferring the promised services to its customers.
k) Financial instruments
Recognition and initial measurement
Financial assets and financial liabilities are
recognised when the Company becomes a party
to the contractual provisions of the instrument and
are measured initially at fair value adjusted for
transaction costs, except for those carried at fair
value through profit or loss which are measured
initially at fair value.
Subsequent measurement
Financial assets
i. Financial assets carried at amortised cost -
A financial instrument is measured at amortised
cost if both the following conditions are met:
⢠The asset is held within a business model
whose objective is to hold assets for
collecting contractual cash flows, and
⢠Contractual terms of the asset give rise
on specified dates to cash flows that
are solely payments of principal and
interest (SPPI) on the principal amount
outstanding.
After initial measurement, such financial assets
are subsequently measured at amortised cost
using the effective interest method.
ii. Financial assets at fair value
⢠Investments in equity instruments
- Investments in equity instruments
which are held for trading are classified
as at fair value through profit and loss
(FVTPL). For all other equity instruments,
the Company makes irrevocable choice
upon initial recognition, on an instrument-
to-instrument basis, to classify the same
either as at fair value through other
comprehensive income (FVOCI) or fair
value through profit and loss (FVTPL).
⢠If the Company decides to classify an
equity instrument as at FVOCI, then all
fair value changes on the instrument,
excluding dividends, are recognised in
the other comprehensive income (OCI).
There is no recycling of the amounts
from OCI to statement of profit and loss,
even on sale of investment. However,
the Company transfers the cumulative
gain or loss within equity. Dividends on
such investments are recognised in the
statement of profit or loss unless the
dividend clearly represents a recovery of
part of the cost of the investment.
De-recognition of financial assets
A financial asset is de-recognised 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.
Financial liabilities
Subsequent to initial recognition, all non-derivative
financial liabilities, other than derivative liabilities,
are subsequently measured at amortised cost using
the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognised when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the terms
of an existing liability are substantially modified,
such an exchange or modification is treated as
the de-recognition of the original liability and the
recognition of a new liability. The difference in the
respective carrying amounts is recognised in the
statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset
and the net amount is reported in the balance sheet
if there is a currently enforceable legal right to offset
the recognised amounts and there is an intention to
settle on a net basis, to realise the assets and settle
the liabilities simultaneously.
l) Impairment of financial assets
In accordance with Ind AS 109, the Company applies
Expected Credit Loss (ECL) model for measurement
and recognition of impairment loss for financial
assets.
ECL is the difference between all contractual cash
flows that are due to the Company in accordance
with the contract and all the cash flows that the
Company expects to receive. When estimating the
cash flows, the Company considers the following:
⢠All contractual terms of the Financial
Assessments (including prepayment and
extension) over the expected life of the assets.
⢠Cash flows from the sale of collateral held or
other credit enhancements that are integral to
the contractual terms.
Trade receivables
As a practical expedient the Company has adopted
âsimplified approachâ using the provision matrix
method for recognition of expected loss on trade
receivables. The provision matrix is based on three-
years rolling average default rates observed over
the expected life of the trade receivables and is
adjusted for forward-looking estimates. These
average default rates are applied on total credit
risk exposure on trade receivables and outstanding
for more than one year at the reporting date to
determine lifetime Expected Credit Losses.
Other financial assets
For recognition of impairment loss on other financial
assets and risk exposure, the Company determines
whether there has been a significant increase in
the credit risk since initial recognition and if credit
risk has increased significantly, impairment loss is
provided.
m) Investment in joint ventures
Investments in joint ventures are carried at cost less
accumulated impairment losses, if any. Where an
indication of impairment exists, the carrying amount
of the investment is assessed and written down
immediately to its recoverable amount. On disposal
of these investments, the difference between net
disposal proceeds and the carrying amounts are
recognised in the Statement of Profit and Loss.
n) Retirement and other employee benefits
Provident fund
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 to the provident fund scheme
as an expense, when an employee renders the
related service. The Company has no obligation
other than the contribution payable to the Provided
Fund.
Gratuity
A defined benefit plan is a post-employment benefit
plan other than a defined contribution plan. The
Companyâs net obligation in respect of the gratuity
plan, which is a defined benefit plan, is calculated
by estimating the ultimate cost to the entity of the
benefit that employees have earned in return for
their service in the current and prior periods. This
requires an entity to determine how much benefit
is attributable to the current and prior periods and
to make estimates (actuarial assumptions) about
demographic variables and financial variables
that will affect the cost of the benefit. The cost of
provid ing benefits un der the d efined benefit plan
is determined using actuarial valuation performed
annually by a qualified actuary using the projected
unit credit method. Actuarial gains/losses resulting
from re-measurements of the liability are included
in other comprehensive income.
Compensated absence
Compensated absence, which is expected to be
utilised within the next 12 months, is treated as short
term employee benefit. The Company measures
the expected cost of such absences as the
additional amount that it expects to pay as a result
of the unused entitlement that has accumulated at
the reporting date.
The Company treats compensated absence
expected to be carried forward beyond twelve
months, as long-term employee benefit for
measurement purposes. Such long-term
compensated absences are provided for based
on the actuarial valuation using the projected unit
credit method at the year-end. Actuarial gains/
losses are immediately taken to the statement of
profit and loss and are not deferred.
Other short-term benefits
Expense in respect of other short-term benefits is
recognised on the basis of amount paid or payable
for the period during which services are rendered
by the employees.
o) Taxes
Tax expense recognised in statement of profit
and loss comprises the sum of deferred tax and
current tax except the ones recognised in other
comprehensive income or directly in equity.
Current tax is determined as the tax payable
in respect of taxable income for the year and
is computed in accordance with relevant tax
regulations. Current income tax relating to items
recognised outside profit or loss is recognised
outside profit or loss (either in other comprehensive
income or in equity).
Deferred tax is recognised in respect of temporary
differences between carrying amount of assets
and liabilities for financial reporting purposes and
corresponding amount used for taxation purposes.
Deferred tax assets on unrealised tax loss are
recognised to the extent that it is probable that
the underlying tax loss will be utilised against
future taxable income. This is assessed based
on the Companyâs forecast of future operating
results, adjusted for significant non-taxable income
and expenses and specific limits on the use of
any unused tax loss. Unrecognised deferred tax
assets are re-assessed at each reporting date and
are recognised to the extent that it has become
probable that future taxable profits will allow the
deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at
the tax rates that are expected to apply in the year
when the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting
date. Deferred tax relating to items recognised
outside statement of profit and loss is recognised
outside statement of profit or loss (either in other
comprehensive income or in equity).
Mar 31, 2024
1.1 Material Accounting policies
a) Basis of preparation
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015 amended from time to time.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value or revalued amount:
⢠Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments); and
⢠Defined benefit plans - plan assets measured using actuarial valuation.
The significant accounting policies that are used in the preparation of these financial statements are summarised below. These accounting policies are consistently used throughout the periods presented in the financial statements.
b) Significant accounting judgements, estimates and assumptions
The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions.
These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed below. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
Significant management judgments Recognition of deferred tax assets - The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilised.
Provisions, contingent liabilities and contingent assets - The Company is the subject of legal proceedings and tax issues covering a range of matters, which are pending in various jurisdictions. Due to the uncertainty inherent in such matters, it is difficult to predict the final outcome of such matters. The cases and claims against the Company often raise difficult and complex factual and legal issues, which are subject to many uncertainties, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction and the differences in applicable law. In the normal course of business, management consults with legal counsel and certain other experts on matters related to litigation and taxes. The Company accrues a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated.
Impairment of financial assets - At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding financial assets.
Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Leases - The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate. The Company determines the lease term as the noncancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease. The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.
Significant estimates
Useful lives of depreciable/amortisable assets -
Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, IT equipment and other plant and equipment.
Defined benefit obligation - Managementâs estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Fair value measurements
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument.
c) Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle*
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle*
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as noncurrent.
Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.
*Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.
d) Inventory
Inventories are valued as follows:
Raw material, stores and spares
Raw materials, stores and spares are valued at lower of cost and net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a first in first out (FIFO) basis. Stores and spares having useful life of more than twelve months are capitalised as âProperty, plant and equipmentâ and are depreciated prospectively over their remaining useful lives in accordance with In AS 16.
Work in progress and finished goods
Work in progress and finished goods are valued at lower of cost and net realisable value. Cost includes raw material cost and a proportion of direct and indirect overheads up to estimated stage of completion. Cost is determined on a weighted average basis.
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.
e) Property, plant and equipment
Recognition and initial measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working
condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits attributable to such subsequent cost associated with the item will flow to the Company and the benefit shall be availed over a period of more than 1 year. All other repair and maintenance costs are recognised in statement of profit or loss as incurred.
Subsequent measurement (depreciation and useful lives)
Depreciation on Plant & Machinery and Computers is provided on straight-line basis and for all other categories of Property, Plant and Equipment, depreciation is provided on written down value method.
Depreciation is provided on the useful life of the assets as prescribed in Schedule II of the Companies Act, 2013 except in respect of the following assets, where useful life is different than those prescribed in Schedule II:
âComputers and Mould and dies are classified under Plant and Machinery in Note 2 to the financial statements.
The residual values, useful lives and method of depreciation of are reviewed at each financial year end and adjusted prospectively, if appropriate.
I n case during any financial year, any addition has been made to any asset, or where any asset has been sold, discarded, demolished or destroyed,
or significant components replaced; depreciation on such assets is calculated on a pro rata basis on individual assets with specific useful life 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 or replaced.
De-recognition
An item of property, plant and equipment and any significant part initially recognised is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognised as at April 01, 2016 measured as per the provisions of previous GAAP and use that carrying value as the deemed cost of property, plant and equipment.
f) Intangible assets
Recognition and initial measurement
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Internally generated intangible assets, excluding product development costs, are not capitalised and expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.
Subsequent measurement (Amortisation and useful lives)
All finite-lived intangible assets, including internally developed intangible assets, are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives. Residual values and useful lives are reviewed at each reporting date and any
change in the same is accounted for prospectively. The following useful lives are applied:
De-recognition
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its intangible assets recognised as at April 01, 2016 measured as per the provisions of previous GAAP and use that carrying value as the deemed cost of intangible assets.
g) Investment property
I nvestment properties are properties held to earn rentals and/or for capital appreciation. Investment properties are measured initially at cost including transaction costs. Subsequent to initial recognition the investment properties are stated at cost less accumulated depreciation.
Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of investment properties other than land.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on de-recognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in statement of profit or loss in the period in which the investment property is derecognised.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its investment
properties recognised as at April 01, 2016 measured as per the provisions of previous GAAP and use that carrying value as the deemed cost of investment properties.
h) Leases
Company as a lessee
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) t he 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 recognises 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 (shortterm leases) and low value leases. For these shortterm 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.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognised 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. 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 amortised cost 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 in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Contingent rents are recognised as revenue in the period in which they are earned.
The Company does not have any finance lease as a lessor.
i) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
Company uses 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.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is Unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period or each case.
j) Revenue recognition
Revenue arises mainly from the sale of manufactured and traded goods. To determine whether to recognise revenue, the Company follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied.
Revenue is measured at fair value of the consideration received or receivable, exclusive of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government which are levied on sales such as sales tax, value added tax, etc. Revenue is recognised either at a point in time or over time, when (or as) the Company satisfies performance obligations by transferring the promised goods or services to its customers.
The Company recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as other liabilities in the balance sheet. Similarly, if the Company satisfies a performance obligation before it receives the consideration, the Company recognises either a contract asset or a receivable in its balance sheet, depending on whether something other than the passage of time is required before the consideration is due.
The Company applies the revenue recognition criteria to each separately identifiable component of the revenue transaction as set out below:
Sale of goods and services
Revenue from sale of goods is recognised when the control of goods is transferred to the buyer as per the terms of the contract, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Control of goods refers to the ability to direct the use of and obtain substantially all of the remaining benefits from goods. The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price is allocated.
Revenue from services is recognised when Company satisfies the performance obligations by transferring the promised services to its customers.
k) Financial instruments
Recognition and initial measurement
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value.
Subsequent measurement Financial assets
i. Financial assets carried at amortised cost -
A financial instrument is measured at amortised cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest method.
ii. Financial assets at fair value
⢠Investments in equity instruments
- Investments in equity instruments which are held for trading are classified as at fair value through profit and loss (FVTPL). For all other equity instruments, the Company makes irrevocable choice upon initial recognition, on an instrument-to-instrument basis, to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit and loss (FVTPL).
⢠If the Company decides to classify an equity instrument as at FVOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the other comprehensive income (OCI).
There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company transfers the cumulative gain or loss within equity. Dividends on such investments are recognised in the statement of profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
De-recognition of financial assets A financial asset is de-recognised 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.
Financial liabilities
Subsequent to initial recognition, all non-derivative financial liabilities, other than derivative liabilities, are subsequently measured at amortised cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
l) Impairment of financial assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for financial assets.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive. When estimating the cash flows, the Company considers the following:
⢠All contractual terms of the Financial Assessments (including prepayment and extension) over the expected life of the assets.
⢠Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables
As a practical expedient the Company has adopted âsimplified approachâ using the provision matrix method for recognition of expected loss on trade receivables. The provision matrix is based on three-years rolling average default rates observed over the expected life of the trade receivables and is adjusted for forward-looking estimates. These average default rates are applied on total credit risk exposure on trade receivables and outstanding for more than one year at the reporting date to determine lifetime Expected Credit Losses.
Other financial assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
m) Investment in joint ventures
Investments in joint ventures are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of these investments, the difference between net disposal proceeds and the carrying amounts are recognised in the Statement of Profit and Loss.
n) Retirement and other employee benefits Provident fund
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 to the provident fund scheme as an expense, when an employee renders the related service. The Company has no obligation other than the contribution payable to the Provided Fund.
Gratuity
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Companyâs net obligation in respect of the gratuity plan, which is a defined benefit plan, is calculated by estimating the ultimate cost to the entity of the benefit that employees have earned in return for their service in the current and prior periods. This requires an entity to determine how much benefit is attributable to the current and prior periods and to make estimates (actuarial assumptions) about demographic variables and financial variables that will affect the cost of the benefit. The cost of providing benefits under the defined benefit plan is determined using actuarial valuation performed annually by a qualified actuary using the projected unit credit method. Actuarial gains/losses resulting from re-measurements of the liability are included in other comprehensive income.
Compensated absence
Compensated absence, which is expected to be utilised within the next 12 months, is treated as short term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats compensated absence expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/ losses are immediately taken to the statement of profit and loss and are not deferred.
Other short-term benefits
Expense in respect of other short-term benefits is recognised on the basis of amount paid or payable for the period during which services are rendered by the employees.
o) Taxes
Tax expense recognised in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognised in other comprehensive income or directly in equity.
Current tax is determined as the tax payable in respect of taxable income for the year and is computed in accordance with relevant tax regulations. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity).
Deferred tax is recognised in respect of temporary differences between carrying amount of assets and liabilities for financial reporting purposes and corresponding amount used for taxation purposes. Deferred tax assets on unrealised tax loss are recognised to the extent that it is probable that the underlying tax loss will be utilised against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit or loss (either in other comprehensive income or in equity).
Mar 31, 2023
1. CORPORATE INFORMATION
Talbros Automotive Components Limited (âthe Companyâ) is a public company incorporated and domiciled in India. The Companyâs shares are listed with Bombay Stock Exchange and National Stock Exchange. The Company is in the business of manufacturing Gaskets and forging. The Company has its registered place of business at 14/1, Mathura Road, P.O Amar Nagar, Faridabad 121003, Haryana, India.
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 read with Companies (Indian Accounting Standards) Rules, 2015 amended from time to time.
These financial statements are separate financial statements of the Company. The Company has also prepared consolidated financial statements for the year ended March 31, 2023 in accordance with Ind AS 110 and the same were also approved for issue by the Board of Directors on May 16, 2023.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value or revalued amount:
⢠Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments); and
⢠Defined benefit plans - plan assets measured using actuarial valuation.
The significant accounting policies that are used in the preparation of these financial statements are summarised below. These accounting policies are consistently used throughout the periods presented in the financial statements.
The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities,
the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in note 1.4. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
1.3 Significant accounting policies
The significant accounting policies that are used in the preparation of these financial statements are summarised below. These accounting policies are consistently used throughout the periods presented in the financial statements.
a) Current versus non-current classification
The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification. An asset is treated as current when it
is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle*
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle*
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as noncurrent.
Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.
*Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.
Inventories are valued as follows:
Raw material, stores and spares
Raw materials, stores and spares are valued at lower of cost and net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a first in first out (FIFO) basis. Stores and spares having useful life of more than twelve months are capitalised as âProperty, plant and equipmentâ and are depreciated prospectively over their remaining useful lives in accordance with Ind AS 16.
Work in progress and finished goods
Work in progress and finished goods are valued at lower of cost and net realisable value. Cost includes raw material cost and a proportion of direct and indirect overheads up to estimated stage of completion. Cost is determined on a weighted average basis.
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.
c) Property, plant and equipment
Recognition and initial measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits attributable to such subsequent cost associated with the item will flow to the Company and the benefit shall be availed over a period of more than 1 year. All other repair and maintenance costs are recognised in statement of profit or loss as incurred.
Subsequent measurement (depreciation and useful lives)
Depreciation on property, plant and equipment is provided based on the methods given hereunder:
|
S. |
Plant |
Method of depreciation |
|
|
No. |
Straight line |
Written down value |
|
|
1 |
Gasket Plants at Faridabad, Pune and Sohna (except on items acquired prior to December 31, 1985 at Faridabad Plant) |
Plant, machinery and Equipment |
All other depreciable Assets |
|
2 |
Assets acquired prior to December 31, 1985 at Faridabad Plant |
All depreciable assets |
|
|
3 |
Gasket Plant at Sitarganj, Forging Plant at Bawal and assets transferred to Gasket Plant at Faridabad from erstwhile Rubber Division |
All depreciable assets other than vehicles |
Vehicles |
Depreciation is provided on the useful life of the assets as prescribed in Schedule II of the Companies Act, 2013 except in respect of the following assets, where useful life is different than those prescribed in Schedule II:
|
Particulars |
Useful life |
|
Plant, machinery & equipment |
22 years |
|
Computers |
6 years |
|
Furniture & fixtures |
5 years |
|
Vehicles |
10 years |
|
Electrical installations |
15 years |
|
Mould and dies |
6 years |
|
Tube wells |
10 years |
|
Canteen equipment |
10 years |
|
Air-conditioning plant |
10 years |
Th e residu al values, useful lives and method of depreciation of are reviewed at each financial year end and adjusted prospectively, if appropriate.
I n case during any financial year, any addition has been made to any asset, or where any asset has been sold, discarded, demolished or destroyed, or significant components replaced; depreciation on such assets is calculated on a pro rata basis on individual assets with specific useful life from the month of such addition or, as the case may be, up to the month on which such asset has been sold, discarded, demolished or destroyed or replaced.
De-recognition
An item of property, plant and equipment and any significant part initially recognised is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
Transition to ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment recognised as at 1 April 2016 measured as per the provisions of previous GAAP and use that carrying value as the deemed cost of property, plant and equipment.
Recognition and initial measurement
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Internally generated intangible assets, excluding product development costs, are not capitalised and expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.
Subsequent measurement (Amortisation and useful lives)
All finite-lived intangible assets, including internally developed intangible assets, are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives. Residual values and useful lives are reviewed at each reporting date and any change in the same is accounted for prospectively. The following useful lives are applied:
|
Intangible assets |
Amortisation period |
|
Major computer software |
3-5 years |
|
Technical know how |
10 years |
De-recognition
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its intangible assets recognised as at 1 April 2016 measured as per the provisions of previous GAAP and use that carrying value as the deemed cost of intangible assets.
I nvestment properties are properties held to earn rentals and/or for capital appreciation. Investment properties are measured initially at cost including transaction costs. Subsequent to initial recognition
the investment properties are stated at cost less accumulated depreciation.
Depreciation is recognised on a straight-line basis to write down the cost less estimated residual value of investment properties other than land.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on de-recognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in statement of profit or loss in the period in which the investment property is derecognised.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the carrying value of all its investment properties recognised as at 1 April 2016 measured as per the provisions of previous GAAP and use that carrying value as the deemed cost of investment properties.
f) Impairment of non-financial assets
The carrying amounts of the Companyâs nonfinancial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assetâs recoverable amount is estimated.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ). The recoverable amount of an asset or cashgenerating unit is the greater of its value in use or its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit
exceeds its estimated recoverable amount. Impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit on a pro-rata basis. Impairment losses are recognised in the statement of profit and loss.
I mpairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Grants and subsidies from the government are recognised when there is reasonable assurance that (i) the Company will comply with the conditions attached to them, and (ii) the grant/subsidy will be received.
Grant or subsidy relates to revenue, it is recognised as income on a systematic basis in statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate.
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 capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest calculated using the effective interest rate and other costs like finance charges in respect of the leases recognised in accordance with Ind AS 116, that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
i) Foreign currency transactions
Functional and presentation currency
The financial statements are presented in Indian Rupees (''), which is also the Companyâs functional and presentation currency.
Foreign currencies
Initial recognition
Transactions in foreign currencies are initially recorded by the Company at exchange rates at the date the transaction first qualifies for recognition.
Subsequent measurement
Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in the statement of profit or loss in the year in which they arise.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
All other exchange differences are charged to the statement of profit and loss.
Company as a lessee
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified 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 recognises 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 (shortterm leases) and low value leases. For these shortterm 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.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognised 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. 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 amortised cost 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 in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Contingent rents are recognised as revenue in the period in which they are earned.
The Company does not have any finance lease as a lessor.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠I n the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
Company uses 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.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is Unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period or each case.
Revenue arises mainly from the sale of manufactured and traded goods. To determine whether to recognise revenue, the Company follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied.
Revenue is measured at fair value of the consideration received or receivable, exclusive of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government which are levied on sales such as sales tax, value added tax, etc. Revenue is recognised either at a point in time or over time, when (or as) the Company satisfies performance obligations by transferring the promised goods or services to its customers.
The Company recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as other liabilities in the balance sheet. Similarly, if the Company satisfies a performance obligation before it receives the consideration, the Company recognises either a contract asset or a receivable in its balance sheet, depending on whether something other than the passage of time is required before the consideration is due.
The Company applies the revenue recognition criteria to each separately identifiable component of the revenue transaction as set out below:
Sale of goods and services
Revenue from sale of goods is recognised when the control of goods is transferred to the buyer as per the terms of the contract, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Control of goods refers to the ability to direct the use of and obtain substantially all of the remaining benefits from goods.
Revenue from services is recognised when Company satisfies the performance obligations by transferring the promised services to its customers.
Dividend income
Dividend income is recognised at the time when right to receive the payment is established, which is generally when the shareholders approve the dividend.
interest income
I nterest income is recorded on accrual basis using the effective interest rate (EIR) method.
Export incentives
Export incentives are accounted on accrual basis.
Recognition and initial measurement
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value.
Subsequent measurement Financial assets
i. Financial assets carried at amortised cost - A financial instrument is measured at amortised cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that
are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest method.
ii. Financial assets at fair value⢠Investments in equity instruments -
Investments in equity instruments which are held for trading are classified as at fair value through profit and loss (FVTPL). For all other equity instruments, the Company makes irrevocable choice upon initial recognition, on an instrument to instrument basis, to classify the same either as at fair value th roug h oth er comprehensive income (FVOCI) or fair value through profit and loss (FVTPL).
⢠If the Company decides to classify an equity instrument as at FVOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the other comprehensive income (OCI). There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company transfers the cumulative gain or loss within equity. Dividends on such investments are recognised in the statement of profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
⢠Investments in mutual funds - Investments in mutual funds are measured at fair value through profit or loss (FVTPL).
De-recognition of financial assets
A financial asset is de-recognised 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.
Financial liabilities
Subsequent to initial recognition, all non-derivative financial liabilities, other than derivative liabilities,
are subsequently measured at amortised cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
n) Impairment of financial assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for financial assets.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive. When estimating the cash flows, the Company considers the following:
⢠All contractual terms of the Financial Assessments (including prepayment and extension) over the expected life of the assets.
⢠Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables
As a practical expedient the Company has adopted âsimplified approachâ using the provision matrix method for recognition of expected loss on trade receivables. The provision matrix is based on three-years rolling average default rates observed over
the expected life of the trade receivables and is adjusted for forward-looking estimates. These average default rates are applied on total credit risk exposure on trade receivables and outstanding for more than one year at the reporting date to determine lifetime Expected Credit Losses.
Other financial assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
o) Investment in joint ventures
Investments in joint ventures are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of these investments, the difference between net disposal proceeds and the carrying amounts are recognised in the Statement of Profit and Loss.
p) Retirement and other employee benefits Provident fund
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 to the provident fund scheme as an expense, when an employee renders the related service. The Company has no obligation other than the contribution payable to the Provided Fund.
Gratuity
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Companyâs net obligation in respect of the gratuity plan, which is a defined benefit plan, is calculated by estimating the ultimate cost to the entity of the benefit that employees have earned in return for their service in the current and prior periods. This requires an entity to determine how much benefit is attributable to the current and prior periods and to make estimates (actuarial assumptions) about
demographic variables and financial variables that will affect the cost of the benefit. The cost of providing benefits under the defined benefit plan is determined using actuarial valuation performed annually by a qualified actuary using the projected unit credit method. Actuarial gains/losses resulting from re-measurements of the liability are included in other comprehensive income.
Compensated absence
Compensated absence, which is expected to be utilised within the next 12 months, is treated as short term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats compensated absence expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/ losses are immediately taken to the statement of profit and loss and are not deferred.
Other short-term benefits
Expense in respect of other short-term benefits is recognised on the basis of amount paid or payable for the period during which services are rendered by the employees.
Basic earnings per share is calculated by d ividin g the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
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.
Tax expense recognised in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognised in other comprehensive income or directly in equity.
Current tax is determined as the tax payable in respect of taxable income for the year and is computed in accordance with relevant tax regulations. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity).
Deferred tax is recognised in respect of temporary differences between carrying amount of assets and liabilities for financial reporting purposes and corresponding amount used for taxation purposes. Deferred tax assets on unrealised tax loss are recognised to the extent that it is probable that the underlying tax loss will be utilised against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit or loss (either in other comprehensive income or in equity).
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
t) Provisions, contingent liabilities and contingent assets
A provision is recognised when the Company has a present obligation as a result of past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions determined based on the best estimate required to settle the obligation at the reporting date and adjusted to reflect the current best estimates.
Provisions are discounted to their present values, where the time value of money is material.
Contingent liabilities are disclosed on the basis of judgement of management after a careful evaluation of facts and legal aspects of matter involved.
Contingent assets are disclosed when probable and recognised when the realisation of income is virtually certain.
1.4 Significant management judgments in applying accounting policies and estimation uncertainty
The preparation of the Companyâs financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the related disclosures.
Significant management judgments
Recognition of deferred tax assets - The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilised.
Provisions, contingent liabilities and contingent assets -
The Company is the subject of legal proceedings and tax issues covering a range of matters, which are pending in various jurisdictions. Due to the uncertainty inherent in such matters, it is difficult to predict the final outcome of such matters. The cases and claims against the Company often raise difficult and complex factual and legal issues, which are subject to many uncertainties, including but not limited to the facts and circumstances of each particular case and claim, the jurisdiction and the differences in applicable law. In the normal course of business, management consults with legal counsel and certain other experts on matters related to litigation and taxes. The Company accrues a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated.
Impairment of financial assets - At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding financial assets.
Evaluation of indicators for impairment of assets -
The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Leases - The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate. The Company determines the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease. The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.
Significant estimates
Useful lives of depreciable/amortisable assets -
Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of certain software, IT equipment and other plant and equipment.
Defined benefit obligation - Managementâs estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact
the DBO amount and the annual defined benefit expenses.
Fair value measurements
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument.
1.5 Standard issued but not yet effective:
Ministry of Corporate Affairs (âMCAâ) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 01, 2023, as below:
Ind AS 1 - Presentation of Financial Statements
The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general-purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements.
The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company is evaluating the impact, if any, in its financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are âmonetary amounts in financial statements that are subject to measurement uncertaintyâ. Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company does not expect this amendment to have any significant impact in its financial statements.
Mar 31, 2018
NOTES TO IND AS FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2018
1 COMPANY OVERVIEW
Talbros Engineering Limited (the âCompany'') is a public company in India and incorporated under the provisions of the Companies Act, 1956. The company is engaged in manufacturing of Rear Axle Shafts. The company caters to both international and domestic market. The company has its manufacturing plants at Plot No 74-75-76, Sector-6, Faridabad-121006, Plot No 35-38 & 57, Industrial Area, Hathin, Palwal, Plot No. 3, Sector 5, Faridabad, Plot No. 2, 20/4, Nepco Compound, Faridabad and Plot No. 77, Sector 68, IMT Faridabad
2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS
2.1 Basis of preparation and compliance with Ind AS
(i) For all periods upto and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with Generally Accepted Accounting Principles (GAAP) in India and complied with the accounting standards (Previous GAAP) as notified under Section 133 of the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules, 2014, as amended, to the extent applicable, and the presentation requirements of the Companies Act, 2013.In accordance with the notification dated February 16, 2015, issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (Ind AS) notified under Section 133 read with Rule 4A of Companies (Indian Accounting Standards) Rules, 2015, as amended, and the relevant provisions of the Companies Act, 2013 (collectively, âInd ASsâ) with effect from April 1, 2016 and the Company is required to prepare its financial statements in accordance with Ind AS''s for the year ended March 31, 2018. These financial statements as and for the year ended March 31, 2018 (the âInd AS Financial Statementsâ) are the first financial statements, the Company has prepared in accordance with Ind AS.
(ii) The Company had prepared a separate set of financial statements for the year ended March 31, 2017 and March 31, 2016 in accordance with the Accounting Standards referred to in section 133 of the Companies Act, 2013 (the âAudited Previous GAAP Financial Statementsâ), which were approved by the Board of Directors of the Company. The management of the Company has compiled the Special Purpose Comparative Ind AS Financial Statements using the Audited Previous GAAP Financial Statements and made required Ind AS adjustments. The Audited Previous GAAP Financial Statements, and the Special purpose Comparative Ind AS Financial Statements, do not reflect the effects of events that occurred subsequent to the respective dates of approval of the Audited Previous GAAP Financial Statements.
(iii) The Company has followed the provisions of Ind AS 101-âFirst Time adoption of Indian Accounting Standardsâ (Ind AS 101), in preparing its opening Ind AS Balance Sheet as of the date of transition, i.e. April 1, 2016. In accordance with Ind AS 101, the Company has presented reconciliations of Shareholders'' equity under Previous GAAP and Ind ASs as at March 31, 2017, and April 1, 2016 and of the Profit/ (Loss) after Tax as per Previous GAAP and Total Comprehensive Income under Ind AS for the year ended March 31, 2017.
2.2 Basis of measurement
The Ind AS Financial Statements have been prepared on a going concern basis using historical cost convention and on an accrual method of accounting, except defined benefit plans which have been measured at actuarial valuation as required by relevant Ind ASs.
2.3 Functional and presentation currency
These Ind AS Financial Statements are prepared in Indian Rupee which is the Company''s functional currency. All financial information presented in Rupees has been rounded to the nearest lacs.
3 SIGNIFICANT ACCOUNTING POLICIES
The Company has applied following accounting policies to all periods presented in the Ind AS Financial Statement.
3.1 Revenue Recognition
a) Revenue is measured at the fair value of the consideration received or receivable, net of discounts, volume rebates, outgoing sales taxes and other indirect taxes excluding excise duty. Revenue from sales is recognized when all significant risks and rewards of ownership of the commodity sold are transferred to the customer which generally coincides with delivery.
b) Export benefits are accounted on recognition of export sales. Dividend income is recognized when the right to receive payment is established. Interest income is recognized using effective rate of interest method.
c) Interest income is recognized on accrual basis determined by the amount outstanding and the rate applicable and when there is no significant uncertainty as to measurability or collectability exists.
3.2 Property, Plant and Equipment
3.2.1 Property, plant and equipment
The Company has applied Ind AS 16 with retrospective effect for all of its property, plant and equipment as at the transition date, viz., 1 April 2016. The initial cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, attributable borrowing cost and any other directly attributable costs of bringing an asset to working condition and location for its intended use. Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance, are normally charged to the statements of profit and loss in the period in which the costs are incurred. All other repair and maintenance costs are recognized in the statement of profit and loss as incurred.
3.2.2 Capital work in progress
Assets in the course of construction are capitalized in capital work in progress account. At the point when an asset is capable of operating in the manner intended by management, the cost of construction is transferred to the appropriate category of property, plant and equipment.
3.2.3 Depreciation
a) Depreciation on all fixed assets is charged on straight line method basis (SLM) over the estimated useful life of the assets. Useful life of the assets is determined in accordance with schedule II to the Companies Act,2013.
b) During the current year, depreciation has been charged on double and triple shift basis, as per actual running of plants.
c) Depreciation is not recorded on capital work in progress until construction and installation are complete and asset is ready for its intended use.
3.2.4 Intangible assets
Intangible assets are recognized as per the criteria specified in Ind Accounting Standard 38 â Intangible Assetsâ and recorded at the consideration paid for acquisition, whenever acquired.
3.2.5 Borrowing Costs
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 asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
3.2.6 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.
3.2.7 Impairment of Non-financial assets
At the end of each year the company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that on impairment loss may have occurred in accordance with the Ind accounting standard 36 on impairment of assets issued by the Institute of Chartered Accountants of India. An impairment loss is charged to statement of profit and loss in the year in which asset is identified as impaired when the carrying value of the asset exceeds its recoverable value. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.
3.2.8 Inventories
Cost of inventory comprise of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective present location and condition. closing inventories have been valued as follows:
* Raw materials, Stores, Spares & Packing Material are valued at lower of cost or net realizable value. Cost is determined on First in First Out (FIFO) basis.
* Finished goods and work in progress are valued at cost. Cost includes variable and fixed overheads allocated to work in progress and finished goods.
3.2.9 Taxation
a) Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
b) The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
c) Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Profit and Loss Account and shown as MAT Credit Entitlement under Loans & Advances. 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.
3.2.10 Employee benefit schemes
Retirement benefits to employees comprise contribution to Provident Fund, Gratuity and Leave Encashment under the scheme of the company. The company makes yearly contribution to the Provident Fund authorities in accordance with the provisions of the relevant statute. The contributions to the provident fund are charged to the statement of profit and loss for the year.
a) Gratuity
Gratuity is a defined benefit obligation. The liability is provided for on the basis of actuarial valuation made at the end of each financial year. Valuation is done on âProjected Unit Credit Methodâ. Gratuity is administered by a trust formed for this purpose through the Group Gratuity with Life Incorporation of India.
b) Leave encashment
Leave Encashment liability, being a retirement benefit, is accounted for on actuarial valuation basis.
3.2.11 Provision for liabilities and charges, Contingent liabilities and contingent assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent, and disclosed by way of notes to the accounts. Contingent assets are neither recognized nor disclosed in the Financial statements.
3.2.12 Foreign currency transactions
In the financial statements of the Company, transactions in currencies other than the functional currency are translated into the functional currency at the exchange rates ruling at the date of the transaction. All exchange differences are included in the statement of profit and loss except any exchange differences on monetary items designated as an effective hedging instrument of the currency risk of designated forecasted sales or purchases, which are recognized in the other comprehensive income. The Company has applied paragraph 46A of AS 11 under Indian GAAP. Ind AS 101 gives an option, which has been exercised by the Company, whereby a first time adopter can continue its Indian GAAP policy for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognized in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period. Hence, foreign exchange gain/loss on long-term foreign currency monetary items recognized up to March 31, 2017 has been deferred/ capitalized.
3.2.13 Earnings per share
Earnings Per Share (EPS) is calculated by dividing the Net Profit or Loss for the period attributable to equity shareholders by the Weighted Average Number of equity shares outstanding during the period determined as per Accounting Standard.
For the purpose of calculating Diluted Earning Per share, the Net Profit or Loss for the period attributable to equity shareholders is divided by the Weighted Average Number of shares outstanding during the period determined as per Accounting Standard after adjusting for the effects of all dilutive potential equity shares.
The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.
3.2.14 Segment Reporting
The entire operations of the company relates to only one Segment, VIZ. Automobile Components. Hence, as per IND AS-108 issued by ICAI, there is no reportable Segment
3.2.15 Cash Flow Statement
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits. Cash flows are reported using the indirect method, whereby a profit before tax is adjusted for the effects of transactions of non cash nature and any deferrals or accruals of past or future cash payments or receipts. The cash flows from operating, financing and investing activities of the company are segregated.
3.2.16 Research and development
Revenue expenditure towards research and development is charged to the statement of profit and loss in the year it is incurred. Capital expenditure on research and development related to property, plant and equipments is included in the cost of related property, plant and equipments.
3.2.17 Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement. For arrangements entered into prior to 1 April 2016, the Company has determined whether the arrangement contains lease on the basis of facts and circumstances existing on the date of transition. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
3.2.18 Use Of Estimates
The preparation of the financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the date of these financial statements and the reported amounts of revenues and expenses for the years presented. Actual results may differ from these estimates under different assumptions and conditions. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements.
3.2.19 Share Issue Expenses
Share issue expenses are adjusted from Securities Premium Account at the time of issue of respective shares as prescribed under the provisions of companies Act.
16.4 TERMS/ RIGHTS AND RESTRICTIONS ATTACHED TO EQUITY SHARES
The company has only one class of equity shares having par value of INR '' 10/-.per share. Each holder of equity share is entitled to one vote per share. The company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the company, the holders of equity shares will be entitled to receive assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
During the year ended 31st March 2018, the amount of dividend per share distributed to equity holders was INR 2.00/- per share. The total dividend appropriation paid for the year ended 31st March 2017 amounts to INR 50,76,504/
- excluding Dividend Distribution Tax of INR 10,62,250/-. For the Financial year ended on 31st March 2018, the directors have proposed a dividend distribution to equity shareholders at 15%, being '' 1.50/-per share.
39.1 LEAVE ENCASHMENT
Following Basis were adopted for the computation of the said liabilities
a) Mortality Table : LIC 1994-96 Ultimate
b) Suitable adjustment in respect of withdrawals and other Restrictive provisions.
c) Future (expected) payment based on terminals salary.
Determined by assuming salary rise of 6% per annum have been discounted by assuming the imputed rate of interest of 8 % per annum
Defined Contribution Plans :-
The Company has recognized INR 4,01,737/- as income in the Statement of Profit and loss account for the year, (P.Y. INR 12,46,811/- as expense) in Statement of Profit & Loss.)
Defined Benefit Plans :-
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded.
The following tables summarize the components of net benefit expense recognized in the Statement of Profit & Loss, the funded status and amounts recognized in the balance sheet for the respective plans (as per Actuarial Valuation as on 31st March 2018).
Mar 31, 2018
NOTES TO IND AS FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2018
1 COMPANY OVERVIEW
Talbros Engineering Limited (the âCompany'') is a public company in India and incorporated under the provisions of the Companies Act, 1956. The company is engaged in manufacturing of Rear Axle Shafts. The company caters to both international and domestic market. The company has its manufacturing plants at Plot No 74-75-76, Sector-6, Faridabad-121006, Plot No 35-38 & 57, Industrial Area, Hathin, Palwal, Plot No. 3, Sector 5, Faridabad, Plot No. 2, 20/4, Nepco Compound, Faridabad and Plot No. 77, Sector 68, IMT Faridabad
2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS
2.1 Basis of preparation and compliance with Ind AS
(i) For all periods upto and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with Generally Accepted Accounting Principles (GAAP) in India and complied with the accounting standards (Previous GAAP) as notified under Section 133 of the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules, 2014, as amended, to the extent applicable, and the presentation requirements of the Companies Act, 2013.In accordance with the notification dated February 16, 2015, issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (Ind AS) notified under Section 133 read with Rule 4A of Companies (Indian Accounting Standards) Rules, 2015, as amended, and the relevant provisions of the Companies Act, 2013 (collectively, âInd ASsâ) with effect from April 1, 2016 and the Company is required to prepare its financial statements in accordance with Ind AS''s for the year ended March 31, 2018. These financial statements as and for the year ended March 31, 2018 (the âInd AS Financial Statementsâ) are the first financial statements, the Company has prepared in accordance with Ind AS.
(ii) The Company had prepared a separate set of financial statements for the year ended March 31, 2017 and March 31, 2016 in accordance with the Accounting Standards referred to in section 133 of the Companies Act, 2013 (the âAudited Previous GAAP Financial Statementsâ), which were approved by the Board of Directors of the Company. The management of the Company has compiled the Special Purpose Comparative Ind AS Financial Statements using the Audited Previous GAAP Financial Statements and made required Ind AS adjustments. The Audited Previous GAAP Financial Statements, and the Special purpose Comparative Ind AS Financial Statements, do not reflect the effects of events that occurred subsequent to the respective dates of approval of the Audited Previous GAAP Financial Statements.
(iii) The Company has followed the provisions of Ind AS 101-âFirst Time adoption of Indian Accounting Standardsâ (Ind AS 101), in preparing its opening Ind AS Balance Sheet as of the date of transition, i.e. April 1, 2016. In accordance with Ind AS 101, the Company has presented reconciliations of Shareholders'' equity under Previous GAAP and Ind ASs as at March 31, 2017, and April 1, 2016 and of the Profit/ (Loss) after Tax as per Previous GAAP and Total Comprehensive Income under Ind AS for the year ended March 31, 2017.
2.2 Basis of measurement
The Ind AS Financial Statements have been prepared on a going concern basis using historical cost convention and on an accrual method of accounting, except defined benefit plans which have been measured at actuarial valuation as required by relevant Ind ASs.
2.3 Functional and presentation currency
These Ind AS Financial Statements are prepared in Indian Rupee which is the Company''s functional currency. All financial information presented in Rupees has been rounded to the nearest lacs.
3 SIGNIFICANT ACCOUNTING POLICIES
The Company has applied following accounting policies to all periods presented in the Ind AS Financial Statement.
3.1 Revenue Recognition
a) Revenue is measured at the fair value of the consideration received or receivable, net of discounts, volume rebates, outgoing sales taxes and other indirect taxes excluding excise duty. Revenue from sales is recognized when all significant risks and rewards of ownership of the commodity sold are transferred to the customer which generally coincides with delivery.
b) Export benefits are accounted on recognition of export sales. Dividend income is recognized when the right to receive payment is established. Interest income is recognized using effective rate of interest method.
c) Interest income is recognized on accrual basis determined by the amount outstanding and the rate applicable and when there is no significant uncertainty as to measurability or collectability exists.
3.2 Property, Plant and Equipment
3.2.1 Property, plant and equipment
The Company has applied Ind AS 16 with retrospective effect for all of its property, plant and equipment as at the transition date, viz., 1 April 2016. The initial cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, attributable borrowing cost and any other directly attributable costs of bringing an asset to working condition and location for its intended use. Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance, are normally charged to the statements of profit and loss in the period in which the costs are incurred. All other repair and maintenance costs are recognized in the statement of profit and loss as incurred.
3.2.2 Capital work in progress
Assets in the course of construction are capitalized in capital work in progress account. At the point when an asset is capable of operating in the manner intended by management, the cost of construction is transferred to the appropriate category of property, plant and equipment.
3.2.3 Depreciation
a) Depreciation on all fixed assets is charged on straight line method basis (SLM) over the estimated useful life of the assets. Useful life of the assets is determined in accordance with schedule II to the Companies Act,2013.
b) During the current year, depreciation has been charged on double and triple shift basis, as per actual running of plants.
c) Depreciation is not recorded on capital work in progress until construction and installation are complete and asset is ready for its intended use.
3.2.4 Intangible assets
Intangible assets are recognized as per the criteria specified in Ind Accounting Standard 38 â Intangible Assetsâ and recorded at the consideration paid for acquisition, whenever acquired.
3.2.5 Borrowing Costs
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 asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
3.2.6 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above.
3.2.7 Impairment of Non-financial assets
At the end of each year the company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that on impairment loss may have occurred in accordance with the Ind accounting standard 36 on impairment of assets issued by the Institute of Chartered Accountants of India. An impairment loss is charged to statement of profit and loss in the year in which asset is identified as impaired when the carrying value of the asset exceeds its recoverable value. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.
3.2.8 Inventories
Cost of inventory comprise of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective present location and condition. closing inventories have been valued as follows:
* Raw materials, Stores, Spares & Packing Material are valued at lower of cost or net realizable value. Cost is determined on First in First Out (FIFO) basis.
* Finished goods and work in progress are valued at cost. Cost includes variable and fixed overheads allocated to work in progress and finished goods.
3.2.9 Taxation
a) Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
b) The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
c) Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Profit and Loss Account and shown as MAT Credit Entitlement under Loans & Advances. 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.
3.2.10 Employee benefit schemes
Retirement benefits to employees comprise contribution to Provident Fund, Gratuity and Leave Encashment under the scheme of the company. The company makes yearly contribution to the Provident Fund authorities in accordance with the provisions of the relevant statute. The contributions to the provident fund are charged to the statement of profit and loss for the year.
a) Gratuity
Gratuity is a defined benefit obligation. The liability is provided for on the basis of actuarial valuation made at the end of each financial year. Valuation is done on âProjected Unit Credit Methodâ. Gratuity is administered by a trust formed for this purpose through the Group Gratuity with Life Incorporation of India.
b) Leave encashment
Leave Encashment liability, being a retirement benefit, is accounted for on actuarial valuation basis.
3.2.11 Provision for liabilities and charges, Contingent liabilities and contingent assets
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent, and disclosed by way of notes to the accounts. Contingent assets are neither recognized nor disclosed in the Financial statements.
3.2.12 Foreign currency transactions
In the financial statements of the Company, transactions in currencies other than the functional currency are translated into the functional currency at the exchange rates ruling at the date of the transaction. All exchange differences are included in the statement of profit and loss except any exchange differences on monetary items designated as an effective hedging instrument of the currency risk of designated forecasted sales or purchases, which are recognized in the other comprehensive income. The Company has applied paragraph 46A of AS 11 under Indian GAAP. Ind AS 101 gives an option, which has been exercised by the Company, whereby a first time adopter can continue its Indian GAAP policy for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognized in the Indian GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period. Hence, foreign exchange gain/loss on long-term foreign currency monetary items recognized up to March 31, 2017 has been deferred/ capitalized.
3.2.13 Earnings per share
Earnings Per Share (EPS) is calculated by dividing the Net Profit or Loss for the period attributable to equity shareholders by the Weighted Average Number of equity shares outstanding during the period determined as per Accounting Standard.
For the purpose of calculating Diluted Earning Per share, the Net Profit or Loss for the period attributable to equity shareholders is divided by the Weighted Average Number of shares outstanding during the period determined as per Accounting Standard after adjusting for the effects of all dilutive potential equity shares.
The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.
3.2.14 Segment Reporting
The entire operations of the company relates to only one Segment, VIZ. Automobile Components. Hence, as per IND AS-108 issued by ICAI, there is no reportable Segment
3.2.15 Cash Flow Statement
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits. Cash flows are reported using the indirect method, whereby a profit before tax is adjusted for the effects of transactions of non cash nature and any deferrals or accruals of past or future cash payments or receipts. The cash flows from operating, financing and investing activities of the company are segregated.
3.2.16 Research and development
Revenue expenditure towards research and development is charged to the statement of profit and loss in the year it is incurred. Capital expenditure on research and development related to property, plant and equipments is included in the cost of related property, plant and equipments.
3.2.17 Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement. For arrangements entered into prior to 1 April 2016, the Company has determined whether the arrangement contains lease on the basis of facts and circumstances existing on the date of transition. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
3.2.18 Use Of Estimates
The preparation of the financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, expenses and disclosures of contingent assets and liabilities at the date of these financial statements and the reported amounts of revenues and expenses for the years presented. Actual results may differ from these estimates under different assumptions and conditions. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements.
3.2.19 Share Issue Expenses
Share issue expenses are adjusted from Securities Premium Account at the time of issue of respective shares as prescribed under the provisions of companies Act.
16.4 TERMS/ RIGHTS AND RESTRICTIONS ATTACHED TO EQUITY SHARES
The company has only one class of equity shares having par value of INR '' 10/-.per share. Each holder of equity share is entitled to one vote per share. The company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the company, the holders of equity shares will be entitled to receive assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
During the year ended 31st March 2018, the amount of dividend per share distributed to equity holders was INR 2.00/- per share. The total dividend appropriation paid for the year ended 31st March 2017 amounts to INR 50,76,504/
- excluding Dividend Distribution Tax of INR 10,62,250/-. For the Financial year ended on 31st March 2018, the directors have proposed a dividend distribution to equity shareholders at 15%, being '' 1.50/-per share.
39.1 LEAVE ENCASHMENT
Following Basis were adopted for the computation of the said liabilities
a) Mortality Table : LIC 1994-96 Ultimate
b) Suitable adjustment in respect of withdrawals and other Restrictive provisions.
c) Future (expected) payment based on terminals salary.
Determined by assuming salary rise of 6% per annum have been discounted by assuming the imputed rate of interest of 8 % per annum
Defined Contribution Plans :-
The Company has recognized INR 4,01,737/- as income in the Statement of Profit and loss account for the year, (P.Y. INR 12,46,811/- as expense) in Statement of Profit & Loss.)
Defined Benefit Plans :-
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded.
The following tables summarize the components of net benefit expense recognized in the Statement of Profit & Loss, the funded status and amounts recognized in the balance sheet for the respective plans (as per Actuarial Valuation as on 31st March 2018).
Mar 31, 2018
1.1 Significant accounting policies
The significant accounting policies that are used in the preparation of these financial statements are summarized below. These accounting policies are consistently used throughout the periods presented in the financial statements.
a) 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 realized or intended to be sold or consumed in normal operating cycle*
- Held primarily for the purpose of trading
- Expected to be realized within twelve months after the reporting period, or
- Cash 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 noncurrent.
A liability is current when:
- It is expected to be settled in normal operating cycle*
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.
*Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.
b) Inventory
Inventories are valued as follows:
Raw material, stores and spares
Raw materials, stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a first in first out (FIFO) basis. Stores and spares having useful life of more than twelve months are capitalised as âProperty, plant and equipmentâ and are depreciated prospectively over their remaining useful lives in accordance with Ind AS 16.
Work in progress and finished goods
Work in progress and finished goods are valued at lower of cost and net realizable value. Cost includes raw material cost and a proportion of direct and indirect overheads up to estimated stage of completion. Cost is determined on a weighted average basis.
Net realizable 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.
c) Property, plant and equipment
Recognition and initial measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the assetâs carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits attributable to such subsequent cost associated with the item will flow to the Company and the benefit shall be availed over a period of more than 1 year. All other repair and maintenance costs are recognized in statement of profit or loss as incurred.
Subsequent measurement (depreciation and useful lives)
Depreciation on property, plant and equipment is provided based on the methods given hereunder:
Depreciation is provided on the useful life of the assets as prescribed in Schedule II of the Companies Act, 2013 except in respect of the following assets, where useful life is different than those prescribed in Schedule II:
The residual values, useful lives and method of depreciation of are reviewed at each financial year end and adjusted prospectively, if appropriate.
In case during any financial year, any addition has been made to any asset, or where any asset has been sold, discarded, demolished or destroyed, or significant components replaced; depreciation on such assets is calculated on a pro rata basis on individual assets with specific useful life from the month of such addition or, as the case may be, up to the month on which such asset has been sold, discarded, demolished or destroyed or replaced.
De-recognition
An item of property, plant and equipment and any significant part initially recognized is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognized.
d) Intangible assets
Recognition and initial measurement Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding product development costs, are not capitalized and expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred.
Subsequent measurement (Amortization and useful lives)
All finite-lived intangible assets, including internally developed intangible assets, are accounted for using the cost model whereby capitalized costs are amortized on a straight-line basis over their estimated useful lives. Residual values and useful lives are reviewed at each reporting date and any change in the same is accounted for prospectively. The following useful lives are applied:
De-recognition
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit or loss when the asset is derecognized.
e) Impairment of non-financial assets
The carrying amounts of the Companyâs non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assetâs recoverable amount is estimated.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ). The recoverable amount of an asset or cash-generating unit is the greater of its value in use or its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit on a pro-rata basis. Impairment losses are recognized in the statement of profit and loss. Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
f) Borrowing costs
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 asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest calculated using the effective interest rate and other costs like finance charges in respect of the finance leases recognized in accordance with Ind AS 17, that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
g) Foreign currency transactions
Functional and presentation currency The financial statements are presented in Indian Rupees (INR), which is also the Companyâs functional and presentation currency.
Foreign currencies Initial recognition
Transactions in foreign currencies are initially recorded by the Company at exchange rates at the date the transaction first qualifies for recognition. Subsequent measurement Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in the statement of profit or loss in the year in which they arise.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
All other exchange differences are charged to the statement of profit and loss.
h) Leases Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the statement of profit and loss. Contingent rentals are recognized as expenses in the periods in which they are incurred. Lease management fees, legal charges and other initial direct costs are capitalized.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term, except in case where lease rentals are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognized on a straight-line basis over the term of the relevant lease except in case where lease rentals are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost. Contingent rents are recognized as revenue in the period in which they are earned.
The Company does not have any finance lease as a lessor.
i) Fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
Company uses 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.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is Unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, company determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period or each case.
j) Revenue recognition
Revenue is measured at fair value of the consideration received or receivable, exclusive of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government which are levied on sales such as sales tax, value added tax, etc.
The Company applies the revenue recognition criteria to each separately identifiable component of the revenue transaction as set out below:
Sale of goods and services
Revenue from sale of goods is recognized when all the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract, there is neither continuing managerial involvement with the goods nor effective control over the goods sold, it is probable that economic benefits will flow to the Company, the costs incurred or to be incurred in respect of the transaction can be measured reliably and the amount of revenue can be measured reliably. Revenue from services rendered is recognized in the statement of profit and loss over the period the underlying services are performed.
Dividend income
Dividend income is recognized at the time when right to receive the payment is established, which is generally when the shareholders approve the dividend.
Interest income
Interest income is recorded on accrual basis using the effective interest rate (EIR) method.
Export incentives
Export incentives are accounted on accrual basis.
k) Financial instruments
Recognition and initial measurement Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value.
Subsequent measurement
Financial assets
i. Financial assets carried at amortized cost -A financial instrument is measured at amortized cost if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest method.
ii. Financial assets at fair value
- Investments in equity instruments-Investments inequity instruments which are held for trading are classified as at fair value through profit and loss (FVTPL). For all other equity instruments, the Company makes irrevocable choice upon initial recognition, on an instrument to instrument basis, to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit and loss (FVTPL).
- If the Company decides to classify an equity instrument as at FVOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the other comprehensive income (OCI). There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company transfers the cumulative gain or loss within equity. Dividends on such investments are recognized in the statement of profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
- Investments in mutual funds
- Investments in mutual funds are measured at fair value through profit or loss (FVTPL).
De-recognition of financial assets A financial asset is de-recognized 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.
Financial liabilities
Subsequent to initial recognition, all non-derivative financial liabilities, other than derivative liabilities, are subsequently measured at amortized cost using the effective interest method. De-recognition of financial liabilities A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
l) Impairment of financial assets
In accordance with Ind AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss for financial assets.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive. When estimating the cash flows, the Company considers the following:
- All contractual terms of the Financial Assessments (including prepayment and extension) over the expected life of the assets.
- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables
For practical expediency the Company has adopted a âsimplified approachâ using the provision matrix method for recognition of expected loss on trade receivables. The provision matrix is based on three- years rolling average default rates observed over the expected life of the trade receivables and is adjusted for forward-looking estimates. These average default rates are applied on total credit risk exposure on trade receivables and outstanding for more than one year at the reporting date to determine lifetime Expected Credit Losses.
Other financial assets
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition and if credit risk has increased significantly, impairment loss is provided.
m) Investment in joint ventures
Investments in joint ventures are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of these investments, the difference between net disposal proceeds and the carrying amounts are recognized in the Statement of Profit and Loss.
n) Retirement and other employee benefits Provident fund
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 recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service. The Company has no obligation other than the contribution payable to the Provided Fund.
Gratuity
A defined benefit plan is a postemployment benefit plan other than a defined contribution plan. The Companyâs net obligation in respect of the gratuity plan, which is a defined benefit plan, is calculated by estimating the ultimate cost to the entity of the benefit that employees have earned in return for their service in the current and prior periods. This requires an entity to determine how much benefit is attributable to the current and prior periods and to make estimates (actuarial assumptions) about demographic variables and financial variables that will affect the cost of the benefit. The cost of providing benefits under the defined benefit plan is determined using actuarial valuation performed annually by a qualified actuary using the projected unit credit method. Actuarial gains/losses resulting from re-measurements of the liability are included in other comprehensive income.
Compensated absence
Compensated absence, which is expected to be utilized within the next 12 months, is treated as short term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
The Company treats compensated absence expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred.
Other short-term benefits
Expense in respect of other short-term benefits is recognized on the basis of amount paid or payable for the period during which services are rendered by the employees.
o) Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
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.
p) Taxes
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognized in other comprehensive income or directly in equity.
Current tax is determined as the tax payable in respect of taxable income for the year and is computed in accordance with relevant tax regulations. Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Minimum alternate tax (âMATâ) credit entitlement is recognized as an asset only when and to the extent there is convincing evidence that normal income tax will be paid during the specified period. In the year in which MAT credit becomes eligible to be recognized as an asset, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. This is reviewed at each balance sheet date and the carrying amount of MAT credit entitlement is written down to the extent it is not reasonably certain that normal income tax will be paid during the specified period.
Deferred tax is recognized in respect of temporary differences between carrying amount of assets and liabilities for financial reporting purposes and corresponding amount used for taxation purposes. Deferred tax assets on unrealized tax loss are recognized to the extent that it is probable that the underlying tax loss will be utilized against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized outside statement of profit and loss is recognized outside statement of profit or loss (either in other comprehensive income or in equity).
q) Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
r) Provisions, contingent liabilities and contingent assets
A provision is recognized when the Group has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions determined based on the best estimate required to settle the obligation at the reporting date and adjusted to reflect the current best estimates.
Provisions are discounted to their present values, where the time value of money is material.
Contingent liabilities are disclosed on the basis of judgement of management after a careful evaluation of facts and legal aspects of matter involved. Contingent assets are disclosed when probable and recognized when the realization of income is virtually certain.
Mar 31, 2016
1 CORPORATE INFORMATION
Talbros Engineering Limited (the âCompany'') is a public company in India and incorporated under the provisions of the Companies Act, 1956. The company is engaged in manufacturing of Rear Axle Shafts. The company caters to both international and domestic market. The company has its manufacturing plants at Plot No 74-75, Sector-6, Faridabad-121006 and Plot No 35-38 & 57, Industrial Area, Hathin, Palwal.
2 SIGNIFICANT ACCOUNTING POLICIES
2.1 BASIS FOR ACCOUNTING
The financial statements are prepared under historical cost convention on accrual basis and in accordance with the requirements of the Companies Act, 2013 and in compliance with the applicable Accounting Standards (AS) referred to in section 133 of Companies Act 2013. The accounting policies, except otherwise stated, have been consistently applied by the Company.
2.2 USE OF ESTIMATES
The preparation of financial statements is in conformity with the generally accepted accounting principles, which requires estimates and assumptions to be made that affect the reportable amount of assets and liabilities on the date of financial statements and the reportable amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results are known / materialized.
2.3 REVENUE RECOGNITION
a) The company recognizes revenues on the sale of products, net of discounts and sales incentives, at the time of dispatch, which is when risks and rewards of ownership pass to the customer. Sale of product is presented gross of excise duty where applicable , and net of other indirect taxes.
b) Export benefits/incentives are recognized in the profits & loss accounts, when the right to receive credit as per terms of the scheme is established in respect of export goods.
c) Interest income is recognized on accrual basis determined by the amount outstanding and the rate applicable and when there is no significant uncertainty as to measurability or collectability exists
2.4 INVENTORIES
Cost of inventory comprise of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective present location and condition. Closing inventories have been valued as follows:
a) Raw Materials, Stores, Spares & Packing Material are valued at lower of cost or net realizable value. Costs of inventories are determined on First in First out (âFIFO'') basis in the ordinary course of business.
b) Work-in-Progress and Finished Goods are valued at cost. Cost includes variable and fixed overheads allocated to work in progress and finished goods.
2.5 TANGIBLE ASSETS Fixed Assets
Fixed assets are stated at cost of acquisition or construction and amount added on revaluation less accumulated depreciation, amortization. Cost includes purchase price, taxes and duties, labour cost and other direct costs incurred up to the date the asset is ready for its intended use. Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.
Capital Works-in-Progress
Capital Works-in-Progress is carried at cost, comprising direct cost, related incidental expenses and interest on borrowings to the extent attributed to them.
2.6 INTANGIBLE ASSETS
Intangible assets are recognized as per the criteria specified in Accounting Standard 26 â Intangible Assetsâ and recorded at the consideration paid for acquisition, whenever acquired.
2.7 DEPRECIATION ON FIXED ASSETS
a) Depreciation on all fixed assets is charged on straight line method basis (SLM) over the estimated useful life of the assets. Useful life of the assets is determined in accordance with schedule II to the Companies Act,2013.
b) During the current year, depreciation has been charged on double and triple shift basis, as per actual running of plants.
c) Depreciation is not recorded on capital work in progress until construction and installation are complete and asset is ready for its intended use.
2.8 PROVISIONS AND CONTINGENCIES
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent, and disclosed by way of notes to the accounts. Contingent assets are neither recognized nor disclosed in the Financial statements.
2.9 RESEARCH AND DEVELOPMENT EXPENSE
Research and Development costs (other than cost of fixed asset acquired) are charged as an expense in the year in which they are incurred.
2.10 FOREIGN CURRENCY TRANSACTIONS
a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transactions.
b) Monetary items denominated in foreign currencies at the yearend are restated at year end rates.
c) Any income or expense on account of exchange difference either on settlement or on restatement is recognized and reflected separately in the profit & loss accounts.
2.11 INVESTMENTS
Current investments are stated at lower of cost and fair market value. Long-term investments are valued at their acquisition cost. The provision for any diminution in the value of long- term investments is made only if such a decline is other than temporary.
2.12 EMPLOYEE BENEFITS
Retirement benefits to employees comprise contribution to Provident Fund, Gratuity and Leave Encashment under the scheme of the company. The company makes yearly contribution to the Provident Fund authorities in accordance with the provisions of the relevant statute. The contributions to the provident fund are charged to the statement of profit and loss for the year.
a) Gratuity
Gratuity is a defined benefit obligation. The liability is provided for on the basis of actuarial valuation made at the end of each financial year. Valuation is done on â Projected Unit Credit Method â. Gratuity is administered by a trust formed for this purpose through the Group Gratuity with Life Incorporation of India.
b) Leave encashment
Leave Encashment liability, being a retirement benefit, is accounted for on actuarial valuation basis.
2.13 BORROWING COSTS
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of Assets. Qualifying Asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are treated as period cost and charged to the profit and loss account in the year in which it was incurred.
2.14 LEASES
Assets taken on lease under which all risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Operating lease payments are recognized as expense in the profit and loss account on a straight line basis over the lease term.
2.15 CASH FLOW STATEMENT
Cash Flows are reported using the indirect method, whereby a profit before tax is adjusted for the effects of transactions of non cash nature and any deferrals or accruals of past or future cash payments or receipts. The cash flows from operating, financing and investing activities of the company are segregated.
2.16 TAXATION
a) Provision for Taxation is ascertained on the basis of assessable profit computed in accordance with the provisions of Income Tax Act, 1961.
b) Minimum Alternate Tax 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 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 under Loans & Advances. 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.
c) Deferred Tax is recognized, subject to the consideration of prudence, as the tax effect of timing difference between the taxable income & accounting income computed for the current accounting year and reversal of earlier yearsâ timing difference.
Deferred Tax Assets are recognized and carried forward to the extent that there is a reasonable certainty, except arising from unabsorbed depreciation and carry forward losses, which are recognized to the extent that there is virtual certainty, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
2.17 IMPAIRMENT OF ASSETS
At the end of each year the company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that on impairment loss may have occurred in accordance with the accounting standard 28 on impairment of assets issued by the Institute of Chartered Accountants of India. An impairment loss is charged to statement of profit and loss in the year in which asset is identified as impaired when the carrying value of the asset exceeds its recoverable value. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.
2.18 SHARE ISSUE EXPENSES
Share issue expenses are adjusted from Securities Premium Account at the time of issue of respective shares as prescribed under the provisions of company Act.
2.19 EARNING PER SHARE
Earnings Per Share (EPS) is calculated by dividing the Net Profit or Loss for the period attributable to equity shareholders by the Weighted Average Number of equity shares outstanding during the period determined as per Accounting Standard. For the purpose of calculating Diluted Earnings Per share, the Net Profit or Loss for the period attributable to equity shareholders is divided by the Weighted Average Number of shares outstanding during the period determined as per Accounting Standard after adjusting for the effects of all dilutive potential equity shares.
Mar 31, 2016
1 CORPORATE INFORMATION
Talbros Engineering Limited (the âCompany'') is a public company in India and incorporated under the provisions of the Companies Act, 1956. The company is engaged in manufacturing of Rear Axle Shafts. The company caters to both international and domestic market. The company has its manufacturing plants at Plot No 74-75, Sector-6, Faridabad-121006 and Plot No 35-38 & 57, Industrial Area, Hathin, Palwal.
2 SIGNIFICANT ACCOUNTING POLICIES
2.1 BASIS FOR ACCOUNTING
The financial statements are prepared under historical cost convention on accrual basis and in accordance with the requirements of the Companies Act, 2013 and in compliance with the applicable Accounting Standards (AS) referred to in section 133 of Companies Act 2013. The accounting policies, except otherwise stated, have been consistently applied by the Company.
2.2 USE OF ESTIMATES
The preparation of financial statements is in conformity with the generally accepted accounting principles, which requires estimates and assumptions to be made that affect the reportable amount of assets and liabilities on the date of financial statements and the reportable amount of revenue and expenses during the reporting period. Difference between the actual results and estimates are recognized in the year in which the results are known / materialized.
2.3 REVENUE RECOGNITION
a) The company recognizes revenues on the sale of products, net of discounts and sales incentives, at the time of dispatch, which is when risks and rewards of ownership pass to the customer. Sale of product is presented gross of excise duty where applicable , and net of other indirect taxes.
b) Export benefits/incentives are recognized in the profits & loss accounts, when the right to receive credit as per terms of the scheme is established in respect of export goods.
c) Interest income is recognized on accrual basis determined by the amount outstanding and the rate applicable and when there is no significant uncertainty as to measurability or collectability exists
2.4 INVENTORIES
Cost of inventory comprise of cost of purchase, cost of conversion and other costs including manufacturing overheads incurred in bringing them to their respective present location and condition. Closing inventories have been valued as follows:
a) Raw Materials, Stores, Spares & Packing Material are valued at lower of cost or net realizable value. Costs of inventories are determined on First in First out (âFIFO'') basis in the ordinary course of business.
b) Work-in-Progress and Finished Goods are valued at cost. Cost includes variable and fixed overheads allocated to work in progress and finished goods.
2.5 TANGIBLE ASSETS Fixed Assets
Fixed assets are stated at cost of acquisition or construction and amount added on revaluation less accumulated depreciation, amortization. Cost includes purchase price, taxes and duties, labour cost and other direct costs incurred up to the date the asset is ready for its intended use. Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.
Capital Works-in-Progress
Capital Works-in-Progress is carried at cost, comprising direct cost, related incidental expenses and interest on borrowings to the extent attributed to them.
2.6 INTANGIBLE ASSETS
Intangible assets are recognized as per the criteria specified in Accounting Standard 26 â Intangible Assetsâ and recorded at the consideration paid for acquisition, whenever acquired.
2.7 DEPRECIATION ON FIXED ASSETS
a) Depreciation on all fixed assets is charged on straight line method basis (SLM) over the estimated useful life of the assets. Useful life of the assets is determined in accordance with schedule II to the Companies Act,2013.
b) During the current year, depreciation has been charged on double and triple shift basis, as per actual running of plants.
c) Depreciation is not recorded on capital work in progress until construction and installation are complete and asset is ready for its intended use.
2.8 PROVISIONS AND CONTINGENCIES
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Liabilities which are material and whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent, and disclosed by way of notes to the accounts. Contingent assets are neither recognized nor disclosed in the Financial statements.
2.9 RESEARCH AND DEVELOPMENT EXPENSE
Research and Development costs (other than cost of fixed asset acquired) are charged as an expense in the year in which they are incurred.
2.10 FOREIGN CURRENCY TRANSACTIONS
a) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transactions.
b) Monetary items denominated in foreign currencies at the yearend are restated at year end rates.
c) Any income or expense on account of exchange difference either on settlement or on restatement is recognized and reflected separately in the profit & loss accounts.
2.11 INVESTMENTS
Current investments are stated at lower of cost and fair market value. Long-term investments are valued at their acquisition cost. The provision for any diminution in the value of long- term investments is made only if such a decline is other than temporary.
2.12 EMPLOYEE BENEFITS
Retirement benefits to employees comprise contribution to Provident Fund, Gratuity and Leave Encashment under the scheme of the company. The company makes yearly contribution to the Provident Fund authorities in accordance with the provisions of the relevant statute. The contributions to the provident fund are charged to the statement of profit and loss for the year.
a) Gratuity
Gratuity is a defined benefit obligation. The liability is provided for on the basis of actuarial valuation made at the end of each financial year. Valuation is done on â Projected Unit Credit Method â. Gratuity is administered by a trust formed for this purpose through the Group Gratuity with Life Incorporation of India.
b) Leave encashment
Leave Encashment liability, being a retirement benefit, is accounted for on actuarial valuation basis.
2.13 BORROWING COSTS
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of Assets. Qualifying Asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are treated as period cost and charged to the profit and loss account in the year in which it was incurred.
2.14 LEASES
Assets taken on lease under which all risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Operating lease payments are recognized as expense in the profit and loss account on a straight line basis over the lease term.
2.15 CASH FLOW STATEMENT
Cash Flows are reported using the indirect method, whereby a profit before tax is adjusted for the effects of transactions of non cash nature and any deferrals or accruals of past or future cash payments or receipts. The cash flows from operating, financing and investing activities of the company are segregated.
2.16 TAXATION
a) Provision for Taxation is ascertained on the basis of assessable profit computed in accordance with the provisions of Income Tax Act, 1961.
b) Minimum Alternate Tax 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 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 under Loans & Advances. 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.
c) Deferred Tax is recognized, subject to the consideration of prudence, as the tax effect of timing difference between the taxable income & accounting income computed for the current accounting year and reversal of earlier yearsâ timing difference.
Deferred Tax Assets are recognized and carried forward to the extent that there is a reasonable certainty, except arising from unabsorbed depreciation and carry forward losses, which are recognized to the extent that there is virtual certainty, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
2.17 IMPAIRMENT OF ASSETS
At the end of each year the company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that on impairment loss may have occurred in accordance with the accounting standard 28 on impairment of assets issued by the Institute of Chartered Accountants of India. An impairment loss is charged to statement of profit and loss in the year in which asset is identified as impaired when the carrying value of the asset exceeds its recoverable value. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of recoverable amount.
2.18 SHARE ISSUE EXPENSES
Share issue expenses are adjusted from Securities Premium Account at the time of issue of respective shares as prescribed under the provisions of company Act.
2.19 EARNING PER SHARE
Earnings Per Share (EPS) is calculated by dividing the Net Profit or Loss for the period attributable to equity shareholders by the Weighted Average Number of equity shares outstanding during the period determined as per Accounting Standard. For the purpose of calculating Diluted Earnings Per share, the Net Profit or Loss for the period attributable to equity shareholders is divided by the Weighted Average Number of shares outstanding during the period determined as per Accounting Standard after adjusting for the effects of all dilutive potential equity shares.
Mar 31, 2016
1. Summary of significant accounting policies
a) Basis of preparation:
The financial statements of the Company have been prepared and presented under the historical cost convention on the accrual basis of accounting in accordance with generally accepted accounting principles in India (GAAP) and comply with the accounting standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013.
b) 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 amount of assets and liabilities on the date of the financial statements, disclosure of contingent liabilities as at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. The management believes that the estimates used in the preparation of financial statements are prudent and reasonable. Actual results could differ from these estimates. Difference between the actual results and the estimate are recognized in the period in which the results are known / materialized.
c) Investments:
Long term investments are stated at cost, less any provision for diminution other than temporary in nature.
d) Inventory valuation:
Raw materials and stores & spare parts are valued at lower of cost or net realizable value. Cost represents purchase price and other expenditure directly attributable to the acquisition and is determined on first in first out (FIFO) basis.
Tools are amortized over a period of 72 months from the month put to use.
Finished goods & work-in-progress are valued at lower of cost or net realizable value. Cost for this purpose includes materials, labour and appropriate allocation of overheads. Excise duty on stock lying with the Company is added to the cost of finished goods inventory.
e) Fixed assets
i) Tangible
Fixed assets are stated at cost of acquisition or construction and include amounts added on revaluation, less accumulated depreciation.
ii) Intangible
Technical know-how fee is recognized as an Intangible Asset in accordance with Accounting Standard -26 "Intangible Assets" less accumulated amortization.
Major software products are carried at cost less accumulated amortization and accumulated impairment losses, if any.
Depreciation is provided on the useful life of the assets as prescribed in Schedule II of the Companies Act, 2013 except in respect of the following assets, where useful life is different than those prescribed in Schedule II:
The estimates of useful lives of the assets are based on independent technical evaluation, taking into account the nature of the asset, the estimated usage of the asset and the operating conditions surrounding the use of the asset etc.
In respect of additions to/deductions from fixed assets during the year, depreciation is charged on pro-rata basis. Assets costing H5,000 or less are fully depreciated in the year of acquisition.
Leasehold land and leasehold improvements are amortized on straight line basis over the period of the lease.
Technical know how fee is amortized on straight line basis over the period of agreement but not exceeding ten years starting from the use of technical know how. Expenditure on major software products is written off on straight line basis over a period of 36 months from the month put to use except Forging Division where the Software Products are written off over a period of 60 months from the month put to use.
g) Revenue recognition:
i) Revenue from operations includes excise duty and is net of returns and trade discounts. Excise duty relating to sales is adjusted against revenue from operations. Excise duty on the increase/decrease in the stock of finished goods is recognized as part of the ''Other Expenses''.
ii) Dividend is accounted for on accrual basis when the right to receive the dividend is established.
iii) Export incentives are accounted on accrual basis.
h) Foreign currency transactions:
Transactions in foreign currency are accounted at the exchange rates prevailing at the dates of the transactions. Gains / losses arising out of fluctuation in exchange rates, if any, on settlement are recognized in the statement of profit and loss except in the case of long term monetary items relating to acquisition of fixed assets where such gains / losses are adjusted to the cost of fixed assets.
Foreign currency monetary items are converted at the exchange rate prevailing as at the year end and resultant gain / loss is charged to the statement of profit and loss, except in case of long term monetary items representing liabilities relating to acquisition of fixed assets which are adjusted to the cost of the respective assets. In respect of transactions covered by foreign exchange forward contracts, the difference between the contract rate and the spot rate on the date of the transaction is charged to the statement of profit and loss over the period of the contract.
i) Employee benefits:
i) Provident fund is a defined contribution scheme and the contributions are charged to the statement of profit and loss of the year when the contributions to the respective funds are due.
ii) Superannuation fund is a defined contribution scheme and the contributions are charged to the statement of profit and loss of the year when the contributions to the fund are due.
iii) Gratuity liability is a defined benefit obligation and is provided for based on actuarial valuation made at the end of each financial year based on the projected unit credit method.
iv) Long term compensated absences are provided for based on actuarial valuation made at the end of each financial year based on the projected unit credit method.
v) Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. j) Borrowing costs:
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of cost of such assets upto the date the assets are ready for its intended use. All other borrowing costs are recognized as an expense in the year in which they are incurred.
k) Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. The Company is both a lessee and a lessor under such arrangements. Payments and receipts under such leases are charged or credited to the statement of profit and loss on a straight line basis over the lease term. Initial direct costs such as legal cost, brokerage cost etc. are recognized immediately in the statement of profit and loss.
l) Deferred tax
Deferred tax is recognized, subject to the consideration of prudence on timing differences, representing the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using tax rates and the tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets in case of unabsorbed depreciation and carry forward losses are recognized if there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
m) Impairment of assets:
At each balance sheet date, the Company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the asset exceeds its recoverable amount, an impairment loss is recognized in the statement of profit and loss to the extent the carrying amount exceeds recoverable amount.
n) Provisions, contingent liabilities and contingent assets
Provisions are recognized for liabilities that can be measured only by using a substantial degree of estimation, if
a) the Company has a present obligation as a result of past event,
b) a probable outflow of resources is expected to settle the obligation and
c) the amount of obligation can be reliably estimated.
Reimbursements expected in respect of expenditure required to settle a provision are recognized only when it is virtually certain that the reimbursements will be received.
Contingent liability is disclosed in the case of
a) a present obligation arising from the past event, when it is not probable that an outflow of resources will be required to settle the obligation.
b) A possible obligation, of which the probability of outflow of resources is remote.
Provisions, contingent liabilities and contingent assets are reviewed at each balance sheet date. Contingent assets are neither recognized nor disclosed.
Mar 31, 2015
1.1 BASIS FOR ACCOUNTING
The financial statements are prepared under historical cost convention
on accrual basis and in accordance with the requirements of the
Companies Act, 2013 and in compliance with the applicable Accounting
Standards (AS) referred to in section 133 of Companies Act 2013. The
accounting policies, except otherwise stated, have been consistently
applied by the Company.
2.2 USE OF ESTIMATES
The preparation of financial statements is in conformity with the
generally accepted accounting principles, which requires estimates and
assumptions to be made that affect the reportable amount of assets and
liabilities on the date of financial statements and the reportable
amount of revenue and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the year in
which the results are known / materialized.
2.3 REVENUE RECOGNITION
a) The company recognises revenues on the sale of products, net of
discounts and sales incentives, at the time of dispatch, which is when
risks and rewards of ownership pass to the customer. Sale of product is
presented gross of excise duty where applicable, and net of other
indirect taxes.
b) Export benefits/incentives are recognized in the profits & loss
accounts, when the right to receive credit as per terms of the scheme
is established in respect of export goods.
c) Interest income is recognised on accrual basis determined by the
amount outstanding and the rate applicable and when there is no
significant uncertainty as to measurability or collectability exists
2.4 INVENTORIES
Cost of inventory comprise of cost of purchase, cost of conversion and
other costs including manufacturing overheads incurred in bringing them
to their respective present location and condition. Closing inventories
have been valued as follows:
a) Raw Materials, Stores, Spares & Packing Material are valued at lower
of cost or net realisable value. Costs of inventories are determined on
First in First out ('FIFO') basis in the ordinary course of
business.
b) Work-in-Progress and Finished Goods are valued at cost. Cost
includes variable and fixed overheads allocated to work in progress and
finished goods.
2.5 TANGIBLE ASSETS
Fixed Assets
Fixed assets are stated at cost of acquisition or construction and
amount added on revaluation less accumulated depreciation,
amortisation. Cost includes purchase price, taxes and duties, labour
cost and other direct costs incurred upto the date the asset is ready
for its intended use. Subsequent expenditures related to an item of
fixed asset are added to its book value only if they increase the
future benefits from the existing asset beyond its previously assessed
standard of performance.
Capital Works-in-Progress
Capital Works-in-Progress is carried at cost, comprising direct cost,
related incidental expenses and interest on borrowings to the extent
attributed to them.
2.6 INTANGIBLE ASSETS
Intangible assets will be recognized as per the criteria specified in
Accounting Standard 26 "Intangible Assets" and recorded at the
consideration paid for acquisition, whenever acquired.
2.7 DEPRECIATION ON FIXED ASSETS
a) Depreciation on all fixed assets is charged on straight line method
basis (SLM) over the estimated useful life of the assets. Useful life
of the assets is determined in accordance with schedule II to the
Companies Act,2013.
b) During the current year, depreciation has been charged on double and
triple shift basis, as per actual running of plants.
c) Depreciation is not recorded on capital work in progress until
construction and installation are complete and asset is ready for its
intended use.
2.8 PROVISIONS AND CONTINGENCIES
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Liabilities which are material and whose future outcome cannot be
ascertained with reasonable certainty, are treated as contingent, and
disclosed by way of notes to the accounts. Contingent assets are
neither recognized nor disclosed in the Financial statements.
2.9 RESEARCH AND DEVELOPMENT EXPENSE
Research and Development costs (other than cost of fixed asset
acquired) are charged as an expense in the year in which they are
incurred.
2.10 FOREIGN CURRENCY TRANSACTIONS
a) Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transactions.
b) Monetary items denominated in foreign currencies at the year end are
restated at year end rates.
c) Any income or expense on account of exchange difference either on
settlement or on restatement is recognized and reflected separately in
the profit & loss accounts.
2.11 INVESTMENTS
Current investments are stated at lower of cost and fair market value.
Long-term investments are valued at their acquisition cost. The
provision for any diminution in the value of long- term investments is
made only if such a decline is other than temporary.
2.12 EMPLOYEE BENEFITS
Retirement benefits to employees comprise contribution to Provident
Fund, Gratuity and Leave Encashment under the scheme of the company.
The company makes Yearly contribution to the Provident Fund authorities
in accordance with the provisions of the relevant statute. The
contributions to the provident fund are charged to the statement of
profit and loss for the year.
a) Gratuity
Gratuity is a defined benefit obligation. The liability is provided for
on the basis of actual valuation made at the end of each financial
year. Valuation is done on "Projected Unit Credit Method". Gratuity
is administered by a trust formed for this purpose through the Group
Gratuity with Life Incorporation of India.
b) Leave encashment
Leave Encashment liability, being a retirement benefit, is accounted
for on actuarial valuation basis.
2.13 BORROWING COSTS
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of Assets. Qualifying Asset is one that necessarily takes substantial
period of time to get ready for intended use. All other borrowing costs
are treated as period cost and charged to the profit and loss account
in the year in which it was incurred.
2.14 LEASES
Assets taken on lease under which all risks and rewards of ownership
are effectively retained by the lessor are classified as operating
lease. Operating lease payments are recognised as expense in the profit
and loss account on a straight line basis over the lease term.
2.15 CASH FLOW STATEMENT
Cash Flows are reported using the indirect method, whereby a profit
before tax is adjusted for the effects of transactions of non cash
nature and any deferrals or accruals of past or future cash payments or
receipts. The cash flows from operating, financing and investing
activities of the company are segregated.
2.16 TAXATION
a) Provision for Taxation is ascertained on the basis of assessable
profit computed in accordance with the provisions of Income Tax Act,
1961.
b) Minimum Alternate Tax 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 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 under Loans & Advances. 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.
c) Deferred Tax is recognized, subject to the consideration of
prudence, as the tax effect of timing difference between the taxable
income & accounting income computed for the current accounting year and
reversal of earlier years' timing difference.
Deferred Tax Assets are recognized and carried forward to the extent
that there is a reasonable certainty, except arising from unabsorbed
depreciation and carry forward losses, which are recognized to the
extent that there is virtual certainty, that sufficient future taxable
income will be available against which such deferred tax assets can be
realized.
2.17 IMPAIRMENT OF ASSETS
At the end of each year the company determines whether a provision
should be made for impairment loss on fixed assets by considering the
indications that on impairment loss may have occurred in accordance
with the accounting standard 28 on impairment of assets issued by the
Institute of Chartered Accountants of India. An impairment loss is
charged to statement of profit and loss in the year in which asset is
identified as impaired when the carrying value of the asset exceeds its
recoverable value. The impairment loss recognized in prior accounting
periods is reversed if there has been a change in the estimate of
recoverable amount.
2.18 SHARE ISSUE EXPENSES
Share issue expenses are adjusted from Securities Premium Account at
the time of issue of respective shares as prescribed under the
provisions of company Act.
2.19 EARNING PER SHARE
Earning Per Share (EPS) is calculated by dividing the Net Profit or
Loss for the period attributable to equity shareholders by the Weighted
Average Number of equity shares outstanding during the period
determined as per Accounting Standard. For the purpose of calculating
Diluted Earning Per share, the Net Profit or Loss for the period
attributable to equity shareholders is divided by the Weighted Average
Number of shares outstanding during the period determined as per
Accounting Standard after adjusting for the effects of all dilutive
potential equity shares.
Mar 31, 2014
A) Accounting Convention:
The financial statements are prepared on accrual basis, under the
historical cost convention in accordance with applicable Accounting
Principles in India, applicable Accounting Standards referred to in
section 211(3C) of the Companies Act, 1956, which have been notified by
the Companies (Accounting Standards) Rules, 2006 and the provisions of
the Companies Act, 1956.
b) 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 amount of assets and liabilities on the date of the
financial statements, disclosure of contingent liabilities as at the
date of the financial statements and the reported amount of revenues
and expenses during the reporting period. The management believes that
the estimates used in the preparation of financial statements are
prudent and reasonable. Actual results could differ from these
estimates. Difference between the actual results and the estimate are
recognized in the period in which the results are known / materialized.
c) Investments:
Long term investments are stated at cost, less any provision for
diminution other than temporary in nature.
d) Inventory Valuation:
Raw Materials and Stores & spare parts are valued at lower of cost or
net realizable value. Cost represents purchase price and other
expenditure directly attributable to the acquisition and is determined
on First in First Out (FIFO) basis. Tools are amortised over a period
of 36 months of usage at Forging Plant and over a period of 36 months
from the month put to use at Gasket Plants.
Finished Goods & Work-in-Progress are valued at lower of cost or net
realizable value. Cost for this purpose includes materials, labour and
appropriate allocation of overheads. Excise duty on stock lying with
Company is added to the cost of finished goods inventory.
e) Fixed Assets
i) Tangible
Fixed Assets are stated at cost of acquisition or construction and
include amounts added on revaluation, less accumulated depreciation.
ii) Intangible
Technical know-how fee is recognized as an Intangible Asset in
accordance with Accounting Standard -26 "Intangible Assets".
Major Software Products are carried at cost less accumulated
amortisation and accumulated impairment losses, if any.
f) Depreciation / Amortisation
Depreciation in Gasket Plants situated at Faridabad, Chennai, Pune and
Sohna is charged on straight line method on assets comprising plant,
machinery and equipments (except on items acquired prior to 1.9.1978 at
the Chennai Plant and prior to 31.12.1985 at Faridabad Plant which are
depreciated on written down value method) and on written down value
method on all other depreciable assets as per the rates prescribed in
Schedule XIV to the Companies Act, 1956. Depreciation on assets
transferred to Gasket Plant at Faridabad from erstwhile Rubber Division
are depreciated on Straight Line method except for vehicles which are
depreciated on written down value method, as per the rates prescribed
in Schedule XIV to the Companies Act, 1956.
Depreciation in Sitarganj Gasket Plant and Forging Plant is charged on
straight line method on all fixed assets other than vehicles and on
written down value method on vehicles as per the rates prescribed in
Schedule XIV to the Companies Act, 1956.
In respect of additions to/deductions from fixed assets during the
year, depreciation is charged on pro-rata basis. Assets costing Rs.
5,000 or less are fully depreciated in the year of acquisition.
Leasehold Land is amortized over the period of the lease.
Technical know how fee is amortized over the period of agreement but
not exceeding ten years starting from the use of technical know how.
Expenditure on Major Software Products is written off over a period of
36 months from the month put to use except Forging Division where the
Software Products are written off over a period of 60 months from the
month put to use.
g) Revenue Recognition:
i) Revenue from Operations includes excise duty and is net of returns
and trade discounts. Excise duty relating to sales is adjusted against
Revenue from Operation. Excise duty on the increase/decrease in the
stock of finished goods is recognized as part of the Other Expenses.
ii) Dividend is accounted for on accrual basis when the right to
receive the dividend is established.
iii) Export incentives are accounted on accrual basis.
h) Foreign Currency Transactions:
Transactions in foreign currency are accounted at the exchange rates
prevailing at the dates of the transactions. Gains/ losses arising out
of fluctuation in exchange rates, if any, on settlement are recognized
in the Statement of Profit and Loss except in the case of long term
monetary items relating to acquisition of fixed assets where such
gains/losses are adjusted to the cost of fixed assets.
Foreign currency monetary items are converted at the exchange rate
prevailing as at the year end and resultant gain/loss is charged to
Statement of Profit and Loss, except in case of long term monetary
items representing liabilities relating to acquisition of fixed assets
which are adjusted to the cost of the respective assets. In respect of
transactions covered by foreign exchange forward contracts, the
difference between the contract rate and the spot rate on the date of
the transaction is charged to the Statement of Profit and Loss over the
period of the contract. i) Employee Benefits:
i) Provident Fund is a defined contribution scheme and the
contributions are charged to the Statement of Profit and Loss of the
year when the contributions to the respective funds are due.
ii) Superannuation Fund is a defined contribution scheme and the
contributions are charged to the Statement of Profit and Loss of the
year when the contributions to the fund are due.
iii) Gratuity liability is a defined benefit obligation and is provided
for based on actuarial valuation made at the end of each financial year
based on the projected unit credit method.
iv) Long Term compensated absences are provided for based on actuarial
valuation made at the end of each financial year based on the projected
unit credit method.
v) Actuarial gains/losses are immediately taken to the Statement of
Profit and Loss and are not deferred. j) Borrowing Costs:
Borrowing Costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of cost of
such assets upto the date the assets are ready for its intended use.
All other borrowing costs are recognized as an expense in the year in
which they are incurred.
k) Leases:
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at an amount equal to Present Value of future lease
payments and corresponding amount is recognized as a liability. Lease
payments are apportioned between the finance charges and reduction of
the lease liability based on the implicit rate of return. Lease
management fees, legal charges and other initial direct costs, if any,
are capitalized.
l) Deferred Tax:
Deferred tax is recognized, subject to the consideration of prudence on
timing differences, representing the difference between taxable income
and accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets and
liabilities are measured using tax rates and the tax laws that have
been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets in case of unabsorbed depreciation and carry
forward losses are recognized if there is virtual certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. m) Impairment of Assets:
At each balance sheet date, the Company assesses whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount. If the carrying
amount of the asset exceeds its recoverable amount, an impairment loss
is recognized in the Statement of Profit and Loss to the extent the
carrying amount exceeds recoverable amount.
n) Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognized for liabilities that can be measured only by
using a substantial degree of estimation, if
a) the Company has a present obligation as a result of past event,
b) a probable outflow of resources is expected to settle the obligation
and
c) the amount of obligation can be reliably estimated.
Reimbursements expected in respect of expenditure required to settle a
provision are recognized only when it is virtually certain that the
reimbursements will be received.
Contingent Liability is disclosed in the case of
a) a present obligation arising from the past event, when it is not
probable that an outflow of resources will be required to settle the
obligation.
b) A possible obligation, of which the probability of outflow of
resources is remote.
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each Balance Sheet date. Contingent Assets are neither recognized
nor disclosed.
o) Financial Instruments:
The Company uses derivatives and other instruments such as foreign
currency forward contracts to hedge its risks associated with foreign
currency fluctuations relating to certain firm commitments as and when
required.
Mar 31, 2013
A) Accounting Convention:
The financial statements are prepared on accrual basis, under the
historical cost convention in accordance with applicable Accounting
Principles in India, applicable Accounting Standards referred to in
section 211(3C) of the Companies Act, 1956, which have been notified by
the Companies (Accounting Standards) Rules, 2006 and the provisions of
the Companies Act, 1956.
b) 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 amount of assets and liabilities on the date of the
financial statements, disclosure of contingent liabilities as at the
date of the financial statements and the reported amount of revenues
and expenses during the reporting period. The management believes that
the estimates used in the preparation of financial statements are
prudent and reasonable. Actual results could differ from these
estimates. Difference between the actual results and the estimate are
recognized in the period in which the results are known / materialized.
c) Investments:
Long term investments are stated at cost, less any provision for
diminution other than temporary in nature.
d) Inventory Valuation:
Raw Materials and Stores & spare parts are valued at lower of cost or
net realizable value. Cost represents purchase price and other
expenditure directly attributable to the acquisition and is determined
on First in First Out (FIFO) basis.
Tools are amortised over a period of 36 months of usage.
Finished Goods & Work-in-Progress are valued at lower of cost or net
realizable value. Cost for this purpose includes materials, labour and
appropriate allocation of overheads. Excise duty on stock lying with
Company is added to the cost of finished goods inventory.
e) Fixed Assets
i) Tangible
Fixed Assets are stated at cost of acquisition or construction and
include amounts added on revaluation, less accumulated depreciation.
ii) Intangible
Technical know-how fee is recognized as an Intangible Asset in
accordance with Accounting Standard -26 "cIntangible Assets"c. Major
Software Products are carried at cost less accumulated amortisation and
accumulated impairment losses, if any.
f) Depreciation / Amortisation
Depreciation in Gasket Plants situated at Faridabad, Chennai, Pune and
Sohna is charged on straight line method on assets comprising plant,
machinery and equipments (except on items acquired prior to 1.9.1978 at
the Chennai Plant and prior to 31.12.1985 at Faridabad Plant which are
depreciated on written down value method) and on written down value
method on all other depreciable assets, as per the rates prescribed in
Schedule XIV to the Companies Act, 1956.
In IT Division, plant, machinery and equipments are depreciated on
straight line method @ 14.12% while office and air conditioning
equipments are depreciated on written down value method @ 35%. These
rates have been arrived at on the basis of their useful life.
Depreciation on all other assets is charged on written down value
method as per the rates prescribed in Schedule XIV to the Companies
Act, 1956.
Depreciation in Sitarganj Gasket Plant, Forging Plant and Rubber
Division is charged on straight line method on all fixed assets other
than vehicles and on written down value method on vehicles as per the
rates prescribed in Schedule XIV to the Companies Act, 1956.
In respect of additions to/deductions from fixed assets during the
year, depreciation is charged on pro-rata basis. Assets costing Rs. 5,000
or less are fully depreciated in the year of acquisition.
Leasehold Land is amortised over the period of the lease.
Technical know how fee is amortised over the period of agreement but
not exceeding ten years.
Expenditure on Major Software Products is written off over a period of
36 months from the month put to use except Forging Division where the
Software Products are written off over a period of 60 months from the
month put to use.
g) Revenue Recognition:
i) Revenue from Operations includes excise duty and is net of returns
and trade discounts. Excise duty relating to sales is adjusted against
Revenue from Operation. Excise duty on the increase/decrease in the
stock of finished goods is recognized as part of the Other Expenses.
ii) Dividend is accounted for on accrual basis when the right to
receive the dividend is established.
iii) Export incentives are accounted on accrual basis.
h) Foreign Currency Transactions:
Transactions in foreign currency are accounted at the exchange rates
prevailing at the dates of the transactions. Gains/ losses arising out
of fluctuation in exchange rates, if any, on settlement are recognized
in the Statement of Profit and Loss except in the case of long term
monetary items relating to acquisition of fixed assets where such
gains/losses are adjusted to the cost of fixed assets.
Foreign currency monetary items are converted at the exchange rate
prevailing as at the year end and resultant gain/loss is charged to
Statement of Profit and Loss, except in case of long term monetary
items representing liabilities relating to acquisition of fixed assets
which are adjusted to the cost of the respective assets. In respect of
transactions covered by foreign exchange forward contracts, the
difference between the contract rate and the spot rate on the date of
the transaction is charged to the Statement of Profit and Loss over the
period of the contract.
i) Employee Benefits:
i) Provident Fund is a defined contribution scheme and the
contributions are charged to the Statement of Profit and Loss of the
year when the contributions to the respective funds are due.
ii) Superannuation Fund is a defined contribution scheme and the
contributions are charged to the Statement of Profit and Loss of the
year when the contributions to the fund are due.
iii) Gratuity liability is a defined benefit obligation and is provided
for based on actuarial valuation made at the end of each financial year
based on the projected unit credit method.
iv) Long Term compensated absences are provided for based on actuarial
valuation made at the end of each financial year based on the projected
unit credit method.
v) Actuarial gains/losses are immediately taken to the Statement of
Profit and Loss and are not deferred. j) Borrowing Costs:
Borrowing Costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of cost of
such assets upto the date the assets are ready for its intended use.
All other borrowing costs are recognized as an expense in the year in
which they are incurred.
k) Leases
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at an amount equal to Present Value of future lease
payments and corresponding amount is recognized as a liability. Lease
payments are apportioned between the finance charges and reduction of
the lease liability based on the implicit rate of return. Lease
management fees, legal charges and other initial direct costs, if any,
are capitalized.
l) Deferred Tax
Deferred tax is recognized, subject to the consideration of prudence on
timing differences, representing the difference between taxable income
and accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets and
liabilities are measured using tax rates and the tax laws that have
been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets in case of unabsorbed depreciation and carry
forward losses are recognized if there is virtual certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized.
m) Impairment of Assets:
At each balance sheet date, the Company assesses whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount. If the carrying
amount of the asset exceeds its recoverable amount, an impairment loss
is recognized in the Statement of Profit and Loss to the extent the
carrying amount exceeds recoverable amount.
n) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized for liabilities that can be measured only by
using a substantial degree of estimation, if
a) the Company has a present obligation as a result of past event,
b) a probable outflow of resources is expected to settle the obligation
and
c) the amount of obligation can be reliably estimated.
Reimbursements expected in respect of expenditure required to settle a
provision are recognized only when it is virtually certain that the
reimbursements will be received.
Contingent Liability is disclosed in the case of
a) a present obligation arising from the past event, when it is not
probable that an outflow of resources will be required to settle the
obligation.
b) A possible obligation, of which the probability of outflow of
resources is remote.
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each Balance Sheet date. Contingent Assets are neither recognized
nor disclosed.
o) Financial Instruments
The Company uses derivatives and other instruments such as foreign
currency forward contracts to hedge its risks associated with foreign
currency fluctuations relating to certain firm commitments as and when
required.
Mar 31, 2012
1.1 Accounting Convention:
The financial statements are prepared on accrual basis, under the
historical cost convention in accordance with applicable Accounting
Principles in India, applicable Accounting Standards referred to in
section 211(3C) of the Companies Act, 1956, which have been notified by
the Companies (Accounting Standards) Rules, 2006 and the provisions of
Companies Act, 1956.
1.2 Investments:
Long term investments are stated at cost, less any provision for
diminution other than temporary in nature.
1.3 Inventory Valuation:
Raw Materials and Stores & spare parts are valued at lower of cost or
net realizable value. Cost represents purchase price and other
expenditure directly attributable to the acquisition and is determined
on First in First Out (FIFO) basis. Tools are amortised over their
expected useful life.
Finished Goods & Work-in-Progress are valued at lower of cost or net
realizable value. Cost for this purpose includes materials, labour and
appropriate allocation of overheads. Excise duty on stock lying with
Company is added to the cost of finished goods inventory.
1.4 Fixed Assets Tangible
1.4.1 Fixed Assets are stated at cost of acquisition or construction
and include amounts added on revaluation, less accumulated
depreciation.
Intangible
1.4.2 Technical know-how fee is recognized as an Intangible Asset in
accordance with Accounting Standard 26 (AS-26) "Intangible Assets".
Amortization of the asset is being done over the period of the
Agreement but not exceeding ten years.
1.4.3 Expenditure on Major Software Products is written off over a
period of three years except Forging Division where the Software
Products are written off over a period of five years.
1.5 Depreciation / Amortisation
Depreciation in Gasket Plants situated at Faridabad, Chennai, Pune and
Sohna is charged on straight line method on assets comprising plant,
machinery and equipments (except on items acquired prior to 1.9.1978 at
the Chennai Plant and prior to 31.12.1985 at Faridabad Plant which are
depreciated on written down value method) and on written down value
method on all other depreciable assets, as per the rates prescribed in
Schedule XIV to the Companies Act, 1956.
In IT Division, plant, machinery and equipments are depreciated on
straight line method @ 14.12% while office and air conditioning
equipments are depreciated on written down value method @ 35%. These
rates have been arrived at on the basis of their useful life.
Depreciation on all other assets is charged on written down value
method as per the rates prescribed in Schedule XIV to the Companies
Act, 1956.
Depreciation in Sitarganj Gasket Plant, Forging Plant and Stamping
Plant is charged on straight line method on all fixed assets other than
vehicles as per the rates prescribed in Schedule XIV to the Companies
Act, 1956. Depreciation on vehicles is provided on written down value
method.
In respect of additions to/deductions from fixed assets during the
year, depreciation is charged on pro-rata basis. Assets costing Rs. 5,000
or less are fully depreciated in the year of acquisition.
Leasehold Land is amortised over the period of the lease.
1.6 Revenue Recognition:
1.6.1 Revenue from Operations includes excise duty and is net of
returns and trade discounts. Excise duty relating to sales is adjusted
against Revenue from Operations. Excise duty on the increase/decrease
in the stock of finished goods is recognized as part of the Other
Expenses.
1.6.2 Dividend is accounted for on accrual basis when the right to
receive the dividend is established.
1.6.3 Export incentives are accounted on accrual basis.
1.7 Foreign Currency Transactions:
Transactions in foreign currency are accounted at the exchange rates
prevailing at the dates of the transactions. Gains/losses arising out
of fluctuation in exchange rates, if any, on settlement are recognized
in the Statement of Profit and Loss except in the case of long term
monetary items relating to acquisition of fixed assets where such
gains/losses are adjusted to the cost of fixed assets.
Foreign currency monetary items are converted at the exchange rate
prevailing as at the year end and resultant gain/loss is charged to
Statement of Profit and Loss, except in case of long term monetary
items representing liabilities relating to acquisition of fixed assets
which are adjusted to the cost of the respective assets. In respect of
transactions covered by foreign exchange forward contracts, the
difference between the contract rate and the spot rate on the date of
the transaction is charged to the Statement of Profit and Loss over the
period of the contract.
1.8 Employee Benefits:
i) Provident Fund is a defined contribution scheme and the
contributions are charged to the Statement of Profit and Loss of the
year when the contributions to the respective funds are due.
ii) Superannuation Fund is a defined contribution scheme and the
contributions are charged to the Statement of Profit and Loss of the
year when the contributions to the fund are due.
iii) Gratuity liability is a defined benefit obligation and is provided
for based on actuarial valuation made at the end of each financial year
based on the projected unit cost method.
iv) Long Term compensated absences are provided for based on actuarial
valuation made at the end of each financial year based on the projected
unit cost method.
v) Actuarial gains/losses are immediately taken to the Statement of
Profit and Loss and are not deferred.
1.9 Borrowing Costs:
Borrowing Costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of cost of
such assets upto the date the assets are ready for its intended use.
All other borrowing costs are recognized as an expense in the year in
which they are incurred.
1.10 Leases
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at an amount equal to Present Value of future lease
payments and corresponding amount is recognized as a liability. Lease
payments are apportioned between the finance charges and reduction of
the lease liability based on the implicit rate of return. Lease
management fees, legal charges and other initial direct costs, if any,
are capitalized.
1.11 Deferred Tax
Deferred tax is recognized, subject to the consideration of prudence on
timing differences, representing the difference between taxable income
and accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets and
liabilities are measured using tax rates and the tax laws that have
been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets in case of unabsorbed depreciation and carry
forward losses are recognized if there is virtual certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized.
1.12 Impairment of Assets:
At each balance sheet date, the Company assesses whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount. If the carrying
amount of the asset exceeds its recoverable amount, an impairment loss
is recognized in the Statement of Profit and Loss to the extent the
carrying amount exceeds recoverable amount.
1.13 Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized for liabilities that can be measured only by
using a substantial degree of estimation, if
a) the Company has a present obligation as a result of past event,
b) a probable outflow of resources is expected to settle the obligation
and
c) the amount of obligation can be reliably estimated.
Reimbursements expected in respect of expenditure required to settle a
provision are recognized only when it is virtually certain that the
reimbursements will be received.
Contingent Liability is disclosed in the case of
a) A present obligation arising from the past event, when it is not
probable that an outflow of resources will be required to settle the
obligation.
b) A possible obligation, of which the probability of outflow of
resources is remote.
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each Balance Sheet date. Contingent Assets are neither recognized
nor disclosed.
1.14 Financial Instruments
The Company uses derivatives and other instruments such as foreign
currency forward contracts to hedge its risks associated with foreign
currency fluctuations relating to certain firm commitments as and when
required.
Mar 31, 2011
1. Accounting Convention:
The financial statements are prepared on accrual basis, under the
historical cost convention in accordance with applicable Accounting
principles in India, applicable Accounting Standards referred to in
section 211(3C) of the Companies Act, 1956, which have been notified by
the Companies (Accounting Standards) Rules, 2006 and the provisions of
Companies Act, 1956.
2. Investments:
Long term investments are stated at cost, less any provision for
diminution other than temporary in nature.
3. Inventory Valuation:
Raw Materials and Stores & spare parts are valued at lower of cost or
net realizable value. Cost represents landed cost and is determined on
First in First Out (FIFO) basis. Tools are amortised over their
expected useful life.
Finished Goods & Work-in-Progress are valued at lower of cost or net
realizable value. Cost for this purpose includes materials, labour and
appropriate allocation of overheads. Excise duty on stock lying with
Company is added to the cost of finished goods inventory.
4. Fixed Assets Tangible
4.1 Fixed Assets are stated at cost of acquisition or construction and
include amounts added on revaluation, less accumulated depreciation.
Intangible
4.2 Technical know-how fee is recognized as an Intangible Asset in
accordance with Accounting Standard 26 (AS-26) ÃIntangible AssetsÃ.
Amortization of the asset is being done over the period of the
Agreement.
4.3 Expenditure on Major Software Products is written off over a period
of three years excepting Forging Division where the Software products
are written off over a period of five years.
5. Depreciation / Amortisation
Depreciation in Gasket plants situated at Faridabad, Chennai, Pune and
Sohna is charged on straight line method on assets comprising plant,
machinery and equipments (except on items acquired prior to 1.9.1978 at
the Chennai plant and prior to 31.12.1985 at Faridabad plant which are
depreciated on written down value method) and on written value method
on all other depreciable assets, as per the rates prescribed in
schedule XIV to the Companies Act 1956.
In IT Division, plant, machinery and equipments are depreciated at a
rate arrived at on the basis of their useful life and on all other
assets depreciation is charged on written value method as per the rates
prescribed in schedule XIV to the Companies Act 1956.
Depreciation in Sitarganj Gasket Plant, Forging Plant and Stamping
Plant is charged on straight line method on all fixed assets other than
vehicles as per the rates prescribed in schedule XIV to the Companies
Act 1956. Depreciation on vehicles is provided on written down value
method.
In respect of additions to/deductions from fixed assets during the
year, depreciation is charged on pro-rata basis. Assets costing Rs.
5,000 or less are fully depreciated in the year of acquisition.
6. Revenue Recognition:
6.1 Revenue from Operations includes excise duty and is net of returns
and trade discounts. Excise duty relating to sales is adjusted against
Revenue from Operation. Excise duty on the increase/decrease in the
stock of finished goods is recognized as part of the manufacturing
expenses.
6.2 Dividend is accounted for on accrual basis when the right to
receive the dividend is established.
6.3 Export incentives are accounted on accrual basis.
7. Foreign Currency Transactions:
Transactions in foreign currency are accounted at the exchange rates
prevailing at the dates of the transactions. Gains/losses arising out
of fluctuation in exchange rates, if any, on settlement are recognized
in the Profit and Loss Account except in the case of long term monetary
items relating to acquisition of fixed assets where such gains/losses
are adjusted to the cost of fixed assets.
Foreign currency monetary items are converted at the exchange rate
prevailing as at the year end and resultant gain/loss is charged to
Profit and Loss Account, except in case of long term monetary items
representing liabilities relating to acquisition of fixed assets which
are adjusted to the cost of the respective assets. In respect of
transactions covered by foreign exchange forward contracts, the
difference between the contract rate and the spot rate on the date of
the transaction is charged to the Profit and Loss Account over the
period of the contract.
8. Employee Benefits:
i) Provident Fund is a defined contribution scheme (Government scheme)
and the contributions are charged to the Profit & Loss Account of the
year when the contributions to the respective funds are due.
ii) Superannuation Fund is a defined contribution scheme and the
contributions are charged to the Profit & Loss Account of the year when
the contributions to the fund are due.
iii) Gratuity liability is a defined benefit obligation and is provided
for based on actuarial valuation made at the end of each financial year
based on the projected unit cost method.
iv) Long Term compensated absences are provided for based on actuarial
valuation made at the end of each financial year based on the projected
unit cost method.
v) Actuarial gains/losses are immediately taken to the Profit & Loss
Account and are not deferred.
9. Borrowing Costs:
Borrowing Costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of cost of
such assets upto the date the assets are ready for its intended use.
All other borrowing costs are recognized as an expense in the year in
which they are incurred.
10. Leases
Financial leases, which effectively transfer to the Company
substantially all the risks and benefits incidental to ownership of the
leased item, are capitalized at an amount equal to Present value of
future lease payments and corresponding amount is recognized as a
liability. Lease payments are apportioned between the finance charges
and reduction of the lease liability based on the implicit rate of
return. Finance charges are charged directly against income. Lease
management fees, legal charges and other initial direct costs, if any,
are capitalized.
11. Deferred Tax
Deferred tax is recognized, subject to the consideration of prudence on
timing differences, representing the difference between taxable income
and accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets and
liabilities are measured using tax rates and the tax laws that have
been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets viz, unabsorbed depreciation and carry forward
losses are recognized if there is virtual certainty that sufficient
future taxable income will be available against which such deferred tax
assets can be realized.
12. Impairment of Assets:
At each balance sheet date, the Company assesses whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount. If the carrying
amount of the asset exceeds its recoverable amount, an impairment loss
is recognized in the Profit & Loss Account to the extent the carrying
amount exceeds recoverable amount.
13. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized for liabilities that can be measured only by
using a substantial degree of estimation, if
a) the Company has a present obligation as a result of past event,
b) a probable outflow of resources is expected to settle the obligation
and
c) the amount of obligation can be reliably estimated.
Reimbursements expected in respect of expenditure required to settle a
provision are recognized only when it is virtually certain that the
reimbursements will be received.
Contingent Liability is disclosed in the case of
a) a present obligation arising from the past event, when it is not
probable that an outflow of resources will be required to settle the
obligation.
b) A possible obligation, of which the probability of outflow of
resources is remote.
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each Balance Sheet date. Contingent Assets are neither recognized
nor disclosed.
14. Financial Instruments
The Company uses derivatives and other instruments such as foreign
currency forward contracts to hedge its risks associated with foreign
currency fluctuations relating to certain firm commitments as and when
required.
Mar 31, 2010
1. Accounting Convention:
The financial statements are prepared on accrual basis, under the
historical cost convention in accordance with applicable Accounting
principles in India, applicable Accounting Standards referred to in
section 211(3C) of the Companies Act, 1956, which have been notified by
the Companies (Accounting Standards) Rules, 2006 and the provisions of
Companies Act, 1956.
2. Investments:
Long term investments are stated at cost, less any provision for
diminution other than temporary in nature.
3. Inventory Valuation:
Raw Materials and Stores & spare parts are valued at lower of cost or
net realizable value. Cost represents landed cost and is determined on
First In First Out (FIFO) basis. Tools are amortised over their
expected useful life.
Finished Goods & Work in Progress are valued at lower of cost or net
realizable value. Cost for this purpose includes materials, labour and
appropriate allocation of overheads. Excise duty on stock lying with
Company is added to the cost of finished goods inventory.
4. Fixed Assets Tangible
4.1 Fixed Assets are stated at cost of acquisition or construction and
include amounts added on revaluation, less accumulated depreciation.
Intangible
4.2 Technical know-how fee is recognized as an Intangible Asset in
accordance with Accounting Standard 26 "Intangible Assets".
Amortization of the asset is being done over the period of the
Agreement.
4.3 Expenditure on Major Software Products is written off over a period
of three years excepting Forging Division where the Software products
are written off over a period of five years.
5. Depreciation / Amortisation
Depreciation in Gasket Division is charged on straight line method on
assets comprising plant, machinery and equipments (except on items
acquired prior to 1.9.1978 at the Chennai plant and prior to 31.12.1985
at Faridabad plant which are depreciated on written down value method)
and on written value method on all other depreciable assets, as per the
rates prescribed in schedule XIV to the Companies Act 1956.
In IT Division, plant, machinery and equipments are depreciated at a
rate arrived at on the basis of their useful life and on all other
assets depreciation is charged on written value method as per the rates
prescribed in schedule XIV to the Companies Act 1956.
Depreciation in Forging and Stamping Division is charged on straight
line method on all fixed assets other than vehicles as per the rates
prescribed in schedule XIV to the Companies Act 1956. Depreciation on
vehicles is provided on written down value method.
In respect of additions to/deductions from fixed assets during the
year, depreciation is charged on pro-rata basis. Assets costing
Rs.5,000 or less are fully depreciated in the year of acquisition.
Leasehold Land is amortised over the period of the lease.
6. Revenue Recognition:
6.1 Revenue from Operations includes excise duty and is net of returns
and trade discounts. Excise duty relating to sales is adjusted against
Revenue from Operation. Excise duty on the increase/decrease in the
stock of finished goods is recognized as part of the manufacturing
expenses.
6.2 Dividend is accounted for on accrual basis when the right to
receive the dividend is established.
6.3 Export incentives are accounted on accrual basis.
forward contracts, the difference between the contract rate and the
spot rate on the date of the transaction is charged to the Profit and
Loss Account over the period of the contract.
7. Employee Benefits:
i) Provident Fund is a defined contribution scheme (Government scheme)
and the contributions are charged to the Profit &
Loss Account of the year when the contributions to the respective funds
are due.
ii) Superannuation Fund is a defined contribution scheme and the
contributions are charged to the Profit & Loss Account of the year when
the contributions to the fund are due.
ill) Gratuity liability is a defined benefit obligations and is
provided for based on actuarial valuation made at the end of each
financial year based on the projected unit cost method.
Iv) Long Term compensated absences are provided for based on actuarial
valuation made at the end of each financial year based on the projected
unit cost method.
v) Actuarial gains/losses are immediately taken to the Profit & Loss
Account and are not deferred.
vi) Payments made under the Voluntary Retirement Scheme are charged to
the Profit & Loss Account over a five years period.
8. Borrowing Costs:
Borrowing Costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of cost of
such assets upto the date the assets are ready for its intended use.
All other borrowing costs are recognized as an expense in the year in
which they are incurred.
9. Leases
Financial leases, which effectively transfer to the Company
substantially all the risks and benefits incidental to ownership of the
leased item, are capitalized at an amount equal to Present value of
future lease payments and corresponding amount is recognized as a
liability. Lease payments are apportioned between the finance charges
and reduction of the lease liability based on the implicit rate of
return. Finance charges are charged directly against income. Lease
management fees, legal charges and other initial direct costs, if any,
are capitalized.
10. Deferred Tax
Deferred tax is recognized, subject to the consideration of prudence on
timing, differences, representing the difference between taxable income
and accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets and
liabilities are measured using tax rates and the tax laws that have
been enacted or substantively enacted by the Balance Sheet date.
Deferred tax assets viz, unabsorbed depreciation and carry forward
losses are recognized if there is virtual certainty that sufficient
future taxable income will be available against which such deferred tax
assets can be realized.
11. Impairment of Assets:
At each balance sheet date, the Company assesses whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount. If the carrying
amount of the asset exceeds its recoverable amount, an impairment loss
is recognized in the Profit & Loss Account to the extent the carrying
amount exceeds recoverable amount.
12. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized for liabilities that can be measured only by
using a substantial degree of estimation, if
a) the Company has a present obligation as a result of past event,
b) a probable outflow of resources is expected to settle the obligation
and
c) the amount of obligation can be reliably estimated.
Reimbursements expected in respect of expenditure required to settle a
provision is recognized only when it is virtually certain that the
reimbursements will be received.
Contingent Liability is disclosed in the case of
a) a present obligation arising from the past event, when it is not
probable that an outflow of resources will be required to settle the
obligation.
b) A possible obligation, of which the probability of outflow of
resources is remote.
Provisions, Contingent Liabilities and Contingent Assets are reviewed
at each Balance Sheet date. Contingent Assets are neither recognized
nor disclosed.
13. Financial Instruments
The Company uses derivatives and other instruments such as foreign
currency forward contracts to hedge its risks associated with foreign
currency fluctuations relating to certain firm commitments.
In respect of derivatives that qualify for hedge accounting and/or
other financial assets and liabilities being derivative not qualifying
for hedge accounting, the company has pre-adopted the Accounting
Standard (AS-30).
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