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Accounting Policies of TD Power Systems Ltd. Company
Mar 31, 2025
MATERIAL ACCOUNTING POLICIES
1.1 Basis of preparation of standalone financial
statements:
The standalone financial statements have been
prepared on going concern basis and on accrual
method of accounting in accordance with Indian
Accounting Standards. Historical cost is used except
for certain financial assets and liabilities that are
measured at fair values at the end of each reporting
period, as explained in accounting policies below.
Historical cost is generally based on the fair value
of the consideration given in exchange for goods
and services. The standalone financial statements
are presented in Indian Rupees (â'' /INR/'' ) and
all values are rounded to the nearest lakhs (INR
00,000), except when otherwise indicated.
Fair value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date, regardless of whether that price
is directly observable or estimated using another
valuation technique.
1.2 Use of estimates and judgments:
The preparation of the standalone financial
statements in conformity with recognition and
measurement principles of Ind AS requires
management of the Company 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 standalone
financial statements and reported amounts of
revenues and expenses for the period presented.
Application of accounting policies that require
critical accounting estimates involving complex and
subjective judgments and the use of assumptions in
these standalone financial statements have been
disclosed below. Accounting estimates could change
from period to period and 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 standalone financial statements in the period
in which changes are made and, if material, their
effects are disclosed in the notes to the standalone
financial statements.
The areas involving significant estimates and
assumptions are as follows:
(i) Measurement of useful lives of Property, Plant
and Equipment and Intangible assets [Note
1.4(a) & (b), Note 2 & Note 5]
(ii) Estimation of Employee benefits (Defined
benefits) [Note 1.12(c), 1.12(e) & Note 44]
(iii) Impairment of assets [Note 1.10 and Note
1.17(viii)]
(iv) Estimation of taxes on income [Note 1.15 &
Note 19]
(v) Provisions and contingencies [Note 1.22, Note
47 and Note 37]
1.3 Current versus non-current classification:
The Company presents assets and liabilities in
the balance sheet based on current/ non-current
classification.
a 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.
b A liability is treated as current when it is:
- Expected to be settled in normal operating
cycle
- Held primarily for the purpose of trading
- Due to be settled within twelve months after
the reporting period, or
- There is no unconditional right to defer the
settlement of the liability for at least twelve
months after the reporting period
All other liabilities are classified as non-current.
c Deferred tax assets/ liabilities are classified as
non-current assets/ liabilities.
d Based on the nature of products/activities of the
Company and the normal time between acquisition
of the assets and the realisation in cash and cash
equivalents, the Company has determined its
operating cycle as 12 months for the purpose of
classification of its assets and liabilities as current
and non-current.
1.4 Critical Accounting Estimates:
a Property, Plant and Equipment:
Property, plant and equipment represent a
significant proportion of the asset base of the
Company. The charge in respect of periodic
depreciation is derived after determining an
estimate of an asset''s expected useful life and
the expected residual value at the end of its life.
The useful lives and residual values of company''s
assets are determined by management at the time
the asset is acquired and reviewed periodically,
including at each financial year end. The lives are
based on historical experience with similar assets
as well as anticipation of future events, which may
impact their life, such as changes in technology.
b Intangible Assets
The capitalisation of cost in intangible asset
under development is based on judgement of the
management that technological and economical
feasibility is confirmed and that the assets will
generate economic benefits in future. Based
on the evaluations carried out, the Company''s
management has determined that there is no factor
which indicate that these assets have suffered any
impairment loss.
c Investment in subsidiaries
The Company reviews its carrying value of
investments carried at cost annually, or more
frequently when there is indication for impairment.
If the recoverable amount is less than its carrying
amount, the impairment loss is accounted for. The
management of the Company is confident that
the investment does not require further provision
for impairment based on the future projections.
On disposal of investments in Subsidiaries, the
difference between net disposal proceeds and the
carrying amounts are recognised in the statement
of profit and loss.
d Provision and Contingent liability
The Company reviews pending cases, claims by
third party and other contingencies, if any on
an on-going basis. For contingent losses that are
considered probable, estimated loss is recorded as
an accrual in standalone financial statements. A
disclosure for contingent liabilities is made where
there is a possible obligation or present obligation
that may probably not require an outflow of
resources. When there is a possible obligation or
present obligation where the likelihood of outflow
of resources is remote, no provision or disclosure
is made in the standalone financial statements.
Gain contingencies are not recognised until the
contingencies are resolved and the amounts are
received or recoverable.
e Provision for Credit loss
The Company reviews the position of trade
receivable and ascertains a provision for life time
credit loss after considering the industry and
economic conditions in which customer operate,
the profile of the customer and the past experience.
f Defined benefit plans
The cost of the defined benefit plan and other
postemployment benefits and the present value
of such obligations are determined using actuarial
valuations. An actuarial valuation involves making
various assumptions that may differ from actual
developments in the future. These include the
determination of the discount rate, future salary
increases, mortality rates and future pension
increases. Due to the complexities involved in
the valuation and its long-term nature, a defined
benefit obligation is sensitive to changes in these
assumptions. All assumptions are reviewed at each
reporting date.
1.5 Revenue Recognition:
The company recognises revenue, when or as
the entity satisfies a performance obligation by
transferring a promised goods or services to a
customer; i. e. when the customer is able to direct
the use of the transferred goods or services and
obtains substantially all of the remaining benefits,
provided a contract with enforceable rights and
obligations exists and amongst others collectability
of consideration is probable taking into account our
customer''s creditworthiness. With regards to the
sale of products (a) where delivery is not considered
to have occurred, and therefore no revenues are
recognised, until the customer has taken title to
the products and assumed the risks and rewards of
ownership of the products specified in the purchase
order or sales agreement. (b) Where dispatch has
not been done but tests have been completed as
per the terms agreed with the customer, revenue
is the transaction price the company expects to be
entitled to. Consideration is adjusted for the time
value of money if the period between the transfer
of goods or services and the receipt of payment
is substantial and there is a significant financing
benefit either to the customer or Company. If a
contract contains more than one distinct good or
service, the transaction price is allocated to each
performance obligation based on relative stand¬
alone selling prices. If stand-alone selling prices are
not observable, the Company reasonably estimates
those. Revenue is recognised for each performance
obligation either at a point in time or over the time.
Revenues from services:
Revenues are recognised over time on a straight¬
line basis or, if the performance pattern is other
than straight-line, as services are provided, i. e. the
progress towards complete satisfaction using input
method or output method.
Revenue recognised by the Company where
services are rendered to the customer and for
which invoice has not been raised (which we refer
as unbilled revenue) are classified as contract
assets. Amount collected from the customer and
services have not yet been rendered are classified
as contract liabilities.
Dividend Income:
Revenue is recognised when the Company''s right to
receive the payment is established.
Interest Income:
Interest income is recognised using effective
interest rate method. The effective interest rate is
the rate that exactly discounts estimated future
cash receipts through the expected life of the
financial asset to the gross carrying amount of
financial asset. Interest income from financial asset
is recognised when it is probable that the economic
benefits will flow to the Company and the amount
of income can be measured reliably.
1.6 Export Incentives:
Export incentives are recognised in the statement
of profit and loss when the right to receive credit as
per the terms of the scheme is established in respect
of exports made and when there is no significant
uncertainty regarding the ultimate collection of the
relevant export proceeds.
1.7 Property, plant and equipment (PPE):
Initial Measurement:
Free hold land is carried at historical cost. All
other items of Property, Plant and Equipment''s are
carried at cost of acquisition/construction net of
recoverable taxes, less accumulated depreciation/
amortisation and impairment losses, if any. The
cost includes directly attributable expenses
relating to the acquisition and bringing the assets
to the location and condition of use net of any sale
proceeds and finance cost till assets are put to use,
are capitalised. Stores, spares and parts which can
be used only in connection with an item of plant or
equipment and whose useful life is expected to be
irregular are capitalised and depreciated over the
useful life of the principal item of the relevant assets.
Subsequent expenditure relating to property,
plant and equipment is capitalised only when it is
probable that future economic benefits associated
with these will flow to the Company and the cost
of the item can be measured reliably. Repairs and
maintenance costs are recognised in the statement
of profit and loss when incurred.
Interest cost incurred for constructed assets is
capitalised up to the date the asset is ready for
its intended use, based on borrowings incurred
specifically for financing the asset or the weighted
average rate of all other borrowings, if no specific
borrowings have been incurred for the asset.
Property, Plant and Equipment manufactured
internally are capitalised at Factory Cost incurred
up to the date the asset is ready for its intended use
Capital Work in Progress:
Property, Plant and Equipment which are not yet
ready for their intended use are carried at cost,
comprising direct cost and related incidental
expenses. Advances paid towards acquisition of
PPE outstanding at each balance sheet date are
classified as Capital advances under other non¬
current assets.
Depreciation and amortisation:
i. Depreciation on Property, Plant and
Equipments is provided using straight
line method (SLM) with reference to the
estimated useful life of the Property, Plant
and Equipment less its residual value as
prescribed under Schedule II of the Companies
Act 2013, or useful life of the asset as estimated
by the management, whichever is lower.
Property, Plant and Equipment costing below
'' 5,000/- are depreciated fully. Depreciation
is charged for complete quarter on addition /
deletion.
ii. Freehold land is not depreciated.
iii. Depreciation is not recorded on capital work-
in-progress until construction and installation
are complete and the asset is ready for its
intended use.
Derecognition:
An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from
the continued use of the asset. Any gain or loss
arising on the disposal or retirement of an item
of PPE is determined as the difference between
the sales proceeds and the carrying amount
of the asset and is recognised in statement of
profit or loss.
1.8 Intangible Assets:
Intangible assets with finite lives that are acquired
are carried at cost or fair value as of the date
of acquisition, as applicable, less accumulated
amortisation and accumulated impairment losses,
if any. The estimated useful life and amortisation
method are reviewed at the end of each reporting
period, with the effect of any changes in estimate
being accounted for on a prospective basis.
Intangible assets with indefinite useful lives that
are acquired separately are carried at cost less
accumulated impairment losses.
Intangible assets consist of technical knowhow /
license fees / softwares which are amortised over
a period of 5 years on a straight-line basis being the
estimated useful life.
1.9 Research & Development
Expenditure on research activity undertaken is
charged to the Statement of Profit & Loss as and
when incurred during the year to their natural head
of accounts. The expenditure incurred includes cost
of materials, salaries & wage and other revenue
expenditure.
Development costs are capitalised only after the
technical and commercial feasibility of the asset for
sale or use has been established.
Capital Expenditure is categorised and disclosed
separately as Research & Development Property
Plant and Equipment and depreciation is charged
as disclosed in Sl. No.1.7 above.
1.10 Impairment of Assets:
a. Financial assets (other than at fair value):
The Company assesses at the end of each reporting
period, whether a financial asset or a group of
financial assets is impaired. Ind AS 109 requires
expected credit losses to be measured through a
loss allowance. The Company recognises lifetime
expected losses for all contract assets and / or all
trade receivables that do not constitute a financing
transaction. For all other financial assets, expected
credit losses are measured at an amount equal
to the 12 month expected credit losses or at an
amount equal to the life time expected credit losses
if the credit risk on the financial asset has increased
significantly since initial recognition.
b. Non-Financial Assets:
Property, plant and equipments and intangible
assets
Property, plant and equipment and intangible assets
with finite life are evaluated for recoverability
whenever there is any indication that their
carrying amounts may not be recoverable. If any
such indication exists, the recoverable amount
(i.e. higher of the fair value less cost to sell and the
value-in-use) is determined on an individual asset
basis unless the asset does not generate cash flows
that are largely independent of those from other
assets. In such cases, the recoverable amount is
determined for the cash generating unit (CGU) to
which the asset belongs.
If the recoverable amount of an asset (or CGU) is
estimated to be less than its carrying amount, the
carrying amount of the asset (or CGU) is reduced
to its recoverable amount. An impairment loss is
recognised in the statement of profit and loss.
1.11 Inventories:
Inventories are valued at lower of cost and net
realisable value. Raw materials and bought out
items are valued on first in first out basis and
includes material cost, carriage inward, insurance
and purchase related expenses. Cost in respect
of work in progress and finished goods include
appropriate portion of overheads. Net realisable
value represents the estimated selling price for
inventory less all estimated cost of completion and
cost necessary to make the sale.
1.12 Employee Benefits:
Employee benefits include provident fund,
pension fund, employee state insurance scheme,
compensated absences and gratuity.
a. Short-term employee benefits:
The undiscounted amount of short-term employee
benefits expected to be paid in exchange for the
services rendered by the employees are recognised
during the year when the employees render the
service. These benefits include performance
incentive and compensated absences which are
expected to occur within twelve months after the
end of the period in which the employee renders
the related services.
b. Long-term employee benefits -
Long term employee benefits include compensated
absences which are not expected to occur within
twelve months after the end of the period in which
the employee renders the related services are
recognised as a liability at the present value of the
defined benefit obligation as at balance sheet date
less the fair value of the plan assets, if any out of
which the obligations are expected to be settled.
c. Defined Benefit Plans:
For defined benefit plans in the form of Gratuity
(funded), the cost of providing benefits is determined
using the Projected Unit Credit method, with
actuarial valuation being carried out at the end of
each reporting period, taking effect of actuarial
gains and losses which is recognised in Other
Comprehensive Income. The amount is funded to
gratuity fund administered by the trustees and
managed by Life Insurance Corporation of India.
Re-measurement of net defined benefit liability/
asset pertaining to gratuity comprise of actuarial
gains/ losses (i.e. changes in the present value
resulting from experience adjustments and effects
of changes in actuarial assumptions) and is reflected
immediately in the balance sheet with a charge or
credit recognised in other comprehensive income
in the period in which they occur. Re-measurement
recognised in other comprehensive income is
reflected immediately in retained earnings and is
not reclassified to statement of profit or loss.
The net interest cost is calculated by applying
the discount rate to the net balance of the defined
benefit obligation and the fair value of plan assets.
This cost is included in employee benefit expenses
in the statement of profit and loss.
Past service cost is recognised immediately in the
statement of profit and loss. The benefits obligation
in respect of gratuity recognised in the Balance
Sheet represents the present value of the defined
benefit obligation as adjusted for present value
plan assets including refunds and reductions if
any available as against future contributions to the
scheme.
d. Defined Contribution Plans:
The Company has contributed to provident fund
and employee state insurance scheme which is
defined contribution plan. The contribution paid/
payable under the scheme is charged to Statement
of Profit and loss during the year in which an
employee renders the related service. Company has
no further obligation beyond making the payment.
e. Termination benefits are recognised as an ex¬
pense as and when incurred.
1.13 Share based payments
The Company recognises compensation expense
relating to share-based payments in net profit
using fair-value in accordance with IND AS 102,
Share Based Payment. The estimated fair value
of awards is charged to income on straight line
basis over the requisite service period for each
separately vesting portion of the award as if the
award was in substance, multiple awards with a
corresponding credit to Employee Stock Option /
Rights outstanding Reserve.
The Company has created an Employee Stock
Options Trust (ESOP Trust) for providing share-
based payment to its employees. The Company
uses ESOP as a vehicle for distributing shares to
employees under the employee remuneration
schemes. The ESOP Trust buys shares of the
company from the market, for giving shares to
employees in addition to allotment of shares by the
Company as per the requirements of the scheme.
The Company treats ESOP as its extension and
shares held by ESOP are treated as treasury shares.
Treasury shares are recognised at cost of acquisition
and included under other equity. No gain or loss is
recognised in profit or loss on the purchase or issue
of the Company''s own equity shares. Share options
exercised during the reporting period are deducted
from treasury shares.
1.14 Leases:
Company as a Lessee:
Contracts with third party, which give the company
the right of use in respect of an Asset, are accounted
in line with the provisions of Ind AS 116 - Leases,
if the recognition criteria as specified in the
Accounting standard are met.
Lease payments associated with Short terms leases
and Leases in respect of Low value assets are
charged off as expenses on straight line basis over
lease term or other systematic basis, as applicable.
At commencement date, the value of âright of useâ
is capitalised at the present value of outstanding
lease payments plus any initial direct cost and
estimated cost, if any, of dismantling and removing
the underlying asset and presented as part of Plant,
property and equipment.
Liability for lease is created for an amount
equivalent to the present value of outstanding lease
payments and presented as Borrowing. Subsequent
measurement, if any, is made using Cost model.
Each lease payment is allocated between the
liability created and finance cost. The finance cost
is charged to the Statement of Profit and loss over
the lease period so as to produce a constant periodic
rate of interest on the remaining balance of the
liability for each period.
The right-of-use asset is depreciated over the
shorter of the asset''s useful life and the lease term
on a straight-line basis. If ownership of the leased
asset transfers to the Company at the end of the
lease term or the cost reflects the exercise of a
purchase option, depreciation is calculated using
the estimated useful life of the asset. Right-of-use
assets are subject to impairment test.
The lease payments are discounted using the
interest rate implicit in the lease, if that rate can
be determined, or the company''s incremental
borrowing rate. The Company applies the short¬
term lease recognition exemption to its short-term
leases (i.e., those leases that have a lease term of 12
months or less from the commencement date and
do not contain a purchase option). It also applies
the lease of low-value assets recognition exemption
to leases that are considered of low value. Lease
payments on short-term leases and leases of low-
value assets are recognised as expense on a straight¬
line basis over the lease term.
Lease modifications, if any are accounted as a
separate lease if the recognition criteria specified in
the standard are met.
Company as a lessor:
Leases are classified as operating lease or a finance
lease based on the recognition criteria specified in
Ind AS 116 - Leases
a) Finance Lease:
At commencement date, amount equivalent to
the ânet investment in the leaseâ is presented as
a Receivable. The implicit interest rate is used
to measure the value of the ânet investment in
Leaseâ.
Each lease payment is allocated between the
Receivable created and finance income. The
finance income is recognised in the Statement
of Profit and loss over the lease period so as to
reflect a constant periodic rate of return on the
net investment in Lease.
The asset is tested for de-recognition and
impairment requirements as per Ind AS 109 -
Financial Instruments.
Lease modifications, if any are accounted as
a separate lease if the recognition criteria
specified in the standard are met.
b) Operating Lease:
The company recognises lease payments
from operating leases as income on either a
straight-line basis or another systematic basis,
if required.
Lease modifications, if any are accounted as
a separate lease if the recognition criteria
specified in the standard are met.
1.15 Income Taxes:
The Company''s major tax jurisdictions are in India.
Significant judgements are involved in determining
the provision for income tax credits, including the
amount to be paid or refunded.
Income tax expense comprises current tax expense
and the net change in the deferred tax asset or
liability during the year. Current and deferred tax
are recognised in statement of profit or loss, except
when they relate to items that are recognised in
other comprehensive income or directly in equity,
in which case, the current and deferred tax are
also recognised in other comprehensive income or
directly in equity, respectively.
a. Current Income Taxes:
The current income tax expense includes income
taxes payable by the Company and its overseas
branches. Advance taxes and provisions for current
income taxes are presented in the balance sheet
after off-setting advance tax paid and income tax
provision arising in the same tax jurisdiction and
where the relevant tax paying units intends to settle
the asset and liability on a net basis or where it has
legally enforceable right to set off the recognised
amount.
b. Deferred Income Taxes:
Deferred income tax is recognised using the balance
sheet approach. Deferred income tax assets and
liabilities are recognised for deductible and taxable
temporary differences arising between the tax base
of assets and liabilities and their carrying amount.
Deferred income tax asset is recognised to the
extent that it is probable that taxable profit will be
available against which the deductible temporary
differences and unused tax losses, if any can be
utilised.
The carrying amount of deferred income 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 income tax asset to be utilised.
Deferred tax assets and liabilities are measured
using substantively enacted tax rates expected to
apply to taxable income in the years in which the
temporary differences are expected to be received
or settled.
Deferred tax assets and liabilities are offset when
they relate to income taxes levied by the same
taxation authority and the relevant entity intends
to settle its current tax assets and liabilities on a net
basis.
1.16 Foreign Currency:
a. Functional and presentation currency:
The Standalone financial statement is presented in
Indian Rupee (Rs/? ), which is also the Company''s
functional currency. Transaction in foreign
currencies are initially recorded by the Company at
their respective functional currency spot rates at the
date, the transaction first qualifies for recognition.
However, for practical reasons, the Company uses
an average rate, if the average approximates the
actual rate at the date of the transaction.
b. Initial Recognition:
Foreign currency transactions are recorded in the
reporting currency, by applying foreign currency
exchange rates between the reporting currency and
the foreign currency prevailing at the dates of the
transactions.
c. Measurement of foreign currency monetary items
and Non-monetary items at the balance sheet date
Monetary items outstanding at the balance sheet
date are restated at the rate as on reporting date.
Non - monetary items which are carried in terms
of historical cost denominated in a foreign currency
are not restated and hence is reported using the
exchange rate prevailing at the date of transactions.
d. Treatment of exchange differences on monetary
items
Exchange differences arising on settlement/
restatement of foreign currency assets and
liabilities of the Company are recognised as income
or expense in the statement of profit and loss in the
period in which they arise.
e. In respect of overseas branch, financial statements
are translated as if the transactions are those of the
Company itself i.e. Indian Rupees as the functional
currency since the overseas branch is primarily
involved in selling/marketing goods manufactured
by the Company in India. The net impact of the
foreign exchange difference of foreign operations is
recognised in Other Comprehensive Income.
1.17 Financial Instruments:
A financial instrument is any contract that gives
rise to a financial asset of any entity and a financial
liability or equity instrument of another entity.
Financial assets and liabilities are recognised when
the Company becomes a party to the contractual
provisions of the instrument. Financial assets
and liabilities are initially measured at fair value.
Transaction costs that are directly attributable
to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and
financial liabilities at fair value through profit or
loss) are added to or deducted from the fair value
measured on initial recognition of financial asset or
financial liability.
i. Cash and Cash equivalents:
The Company considers all highly liquid financial
instruments, which are readily convertible into
known amounts of cash that are subject to an
insignificant risk of change in value and having
original maturities of three months or less from
the date of purchase, to be cash equivalents. Cash
and cash equivalents consist of balances with banks
which are unrestricted for withdrawal and usage.
ii. Financial assets at amortised cost:
Financial assets are subsequently measured at
amortised cost if these financial assets are held
within a business whose objective is to hold these
assets in order to collect contractual cash flows and
the contractual terms of the financial asset give
rise on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.
iii. Financial assets at fair value through profit or
loss:
Financial assets are measured at fair value through
profit or loss unless it is measured at amortised
cost or at fair value through other comprehensive
income on initial recognition. The transaction costs
directly attributable to the acquisition of financial
assets and liabilities at fair value through profit or
loss are immediately recognised in statement of
profit and loss.
iv. Financial liabilities:
Financial liabilities are subsequently carried at
amortised cost using the effective interest method.
For trade and other payables maturing within one
year from the balance sheet date, the carrying
amounts approximate fair value due to the short
maturity of these instruments. Financial liabilities
at Fair value through profit and Loss are stated at
fair value, with any gains or losses arising on re¬
measurement in Profit and loss statement.
v. Equity Instrument:
An equity instrument is any contract that evidences
a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments
issued by a company are recognised at the proceeds
received, net of issue costs.
vi. De-recognition of financial instruments:
The Company derecognises a financial asset when
the contractual rights to the cash flows from the
financial asset expire or it transfers the financial
asset and the transfer qualifies for de-recognition
under Ind AS 109. A financial liability (or a part
of a financial liability) is derecognised when the
obligation specified in the contract is discharged or
cancelled or expires.
vii. Impairment of financial assets:
The Company assesses on a forward looking basis
the expected credit losses associated with its
assets carried at amortised cost. The impairment
methodology applied depends on whether there
has been a significant increase in credit risk. In
respect of trade receivables, the Company applies
simplified approach permitted by Ind AS 109
Financial Instruments, which requires expected
lifetime losses to be recognised from initial
recognition of the receivables.
viii. Investments in subsidiary:
Investments in subsidiary are carried at cost less
accumulated impairment, if any.
ix. Fair value of financial instruments:
In determining the fair value of its financial
instruments, the Company uses following hierarchy
and assumptions that are based on market
conditions and risks existing at each reporting date.
Fair value hierarchy:
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 - Quoted (unadjusted) market prices in
active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest
level input that is significant to the fair value
measurement is directly or indirectly observable
Level 3 - 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
standalone financial statements on a recurring
basis, the 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
1.18 Accounting for Derivatives:
Derivatives are initially recognised at fair value and
are subsequently re-measured to their fair value
at the end of each reporting period. The resulting
gains/losses is recognised in the statement of profit
and loss of that period.
1.19 Borrowing Cost:
General and specific borrowing cost that are
directly attributable to the acquisition, construction
or production of a qualifying asset are capitalised
during the period that is required to complete and
prepare the asset for its intended use. Qualifying
assets are assets that necessarily take a substantial
period of time to get ready for their intended use.
Investment income earned on the temporary
investment of specific borrowings pending their
expenditure on qualifying assets is deducted from
the borrowing costs eligible for capitalisation.
Other borrowing costs are charged to statement
of Profit and Loss in the period in which they are
incurred.
1.20 Government Grants:
Government grants are not recognised until there
is reasonable assurance that the Company will
comply with the conditions attached to them and
that the grants will be received. Government grants
are recognised in profit or loss on a systematic basis
over the periods in which the Company recognises
as expenses the related costs for which the grants
are intended to compensate.
1.21 Cash Flow statement
Cash flows are reported using Indirect method,
whereby profit for the period is adjusted for the
effects of transactions of non-cash nature, any
deferrals or accruals of past or future operating
cash receipts or payments and item of income or
expenses associated with investing or financing cash
flows. The cash flows from operating, financing and
investing activity of the company are segregated.
Mar 31, 2024
SIGNIFICANT ACCOUNTING POLICIES Corporate Information
The TD Power Systems Limited (''The Company'') is incorporated and domiciled in India. Consequent to a Special Resolution of the Members, passed at the Company''s Extra Ordinary General Meeting held on 17th January 2011, the Company was converted to a Public Limited Company by altering its Articles of Association in terms of Section 31 read with Section 44 of the Companies Act 1956, and a fresh Certificate of Incorporation dated 4th February 2011 was issued by the Registrar of Companies, Karnataka. The registered office of the Company is located at Dabaspet, Nelamangala Taluk Bangalore â 562 111. The Company is engaged in manufacturing AC Generators and Electric Motors for various applications which are specifically designed and tailor-made to suit the needs of the customers based on their requirements and specifications.
The standalone financial statements for the year ended March 31, 2024 were approved by the Board of Directors and authorised for issue on 23rd May 2024.
The company''s subscription to the Share Capital of its Wholly Owned Subsidiaries included in investment under noncurrent assets as at 31st March 2024 are as follows: -
- The company subscribed to a Wholly Owned Subsidiary in United States of America under the name M/s TD Power Systems (USA) Inc. incorporated as Delaware Corporation on 20th February 2013 located at Ohio. The company subscribed to 80,100 shares of USD 10/- each
- The company incorporated a Wholly Owned Subsidiary in
Japan under the name M/s TD Power Systems Japan Limited on 19th March 2013 in Tokyo. The company subscribed to 2,000 shares of JPY 10,000/- each and has been voluntarily liquidated and ceased to be in existence with effect from June 26, 2023 (Refer note 52)
- The company acquired 100% shareholding of a company named Platin 1255 Gmbh in Germany during January 2016 and subsequently changed its name to M/s TD Power Systems Europe GMBH during March 2016. The company subscribed to 5,50,000 shares of Euro 1 each
- The company acquired 100% shareholding of a company named TD Power Systems Jenerator Sanayi Anonim Sirketi in Turkey during June 2017. The company subscribed to 12,782 shares of Lira 100 each
- 59,99,998 Equity Shares of 10 each in D F Power Systems Private Limited (excluding beneficial interest relating to two shares held by the Directors of the Company)
MATERIAL ACCOUNTING POLICIES1.1 Basis of preparation of standalone financial statements:
The standalone financial statements have been prepared on going concern basis and on accrual method of
accounting in accordance with Indian Accounting Standards. Historical cost is used except for certain financial assets and liabilities that are measured at fair values at the end of each reporting period, as explained in accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. The standalone financial statements are presented in Indian Rupees ('' /INR/ '' â) and all values are rounded to the nearest lakhs (INR 00,000), except when otherwise indicated.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.
1.2 Use of estimates and judgments:
The preparation of the standalone financial statements in conformity with recognition and measurement principles of Ind AS requires management of the Company 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 standalone financial statements and reported amounts of revenues and expenses for the period presented. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these standalone financial statements have been disclosed below. Accounting estimates could change from period to period and 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 standalone financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the standalone financial statements.
The areas involving significant estimates and assumptions are as follows:
(i) Measurement of useful lives of Property, Plant and Equipment and Intangible assets [Note 1.4(b), Note 2 & Note 5]
(ii) Estimation of Employee benefits (Defined benefits) [Note 1.12(c), 1.12(e) & Note 44]
(iii) Impairment of assets [Note 1.10 and Note 1.17(viii)]
(iv) Estimation of taxes on income [Note 1.15 & Note 19]
(v) Provisions and contingencies [Note 1.22, Note 47 and Note 37]
1.3 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
a 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 non-current. b A liability is treated as current when it is:
- Expected to be settled in normal operating cycle
- Held primarily for the purpose of trading
- Due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non-current.
c Deferred tax assets/ liabilities are classified as non-current assets/ liabilities.
d Based on the nature of products/activities of the Company and the normal time between acquisition of the assets and the realization in cash and cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
1.4 Critical Accounting Estimates: a Revenue Recognition
The Company uses the percentage-of-completion method in accounting for its service contracts. Use of the percentage-of-completion method requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.
b Property, Plant and Equipment
Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of company''s assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.
c Intangible Assets
The capitalization of cost in intangible asset under development is based on judgement of the management that technological and economical feasibility is confirmed and that the assets will generate economic benefits in future. Based on the evaluations carried out, the Company''s management has determined that there is no factor which indicate that these assets have suffered any impairment loss.
d Investment in subsidiaries
The Company reviews its carrying value of investments carried at cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for. The management of the Company is confident that the investment does not require further provision for impairment based on the future projections. On disposal of investments in Subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognised in the statement of profit and loss.
e Provision and Contingent liability
The Company reviews pending cases, claims by third party and other contingencies, if any on an on-going basis. For contingent losses that are considered probable, estimated loss is recorded as an accrual in standalone financial statements. A disclosure for contingent liabilities is made where there is a possible obligation or present obligation that may probably not require an outflow of resources. When there is a possible obligation or present obligation where the likelihood of outflow of resources is remote, no provision or disclosure is made in the standalone financial statements. Gain contingencies are not recognized until the contingencies are resolved and the amounts are received or recoverable.
The Company reviews the position of trade receivable and ascertains a provision for life time credit loss after considering the industry and economic conditions in which customer operate, the profile of the customer and the past experience.
The company recognises revenue, when or as the entity satisfies a performance obligation by transferring a promised goods or services to a customer; i. e. when the customer is able to direct the use of the transferred goods or services and obtains substantially all of the remaining benefits, provided a contract with enforceable rights and obligations exists and amongst others collectability of consideration is probable taking into account our customer''s creditworthiness. With regards to the sale of products (a) where delivery is not considered to have occurred, and therefore no revenues are recognized, until the customer has taken title to the products and assumed the risks and rewards of ownership of the products specified in the purchase order or sales agreement. (b) Where dispatch has not been done but tests have been completed as per the terms agreed with the customer, revenue is the transaction price the company expects to be entitled to. Consideration is adjusted for the time value of money if the period between the transfer of goods or services and the receipt of payment is substantial and there is a significant financing benefit either to the customer or Company. If a contract contains more than one distinct good or service, the transaction price is allocated to each performance obligation based on relative stand-alone selling prices. If stand-alone selling prices are not observable, the Company reasonably estimates those. Revenue is recognized for each performance obligation either at a point in time or over the time.
Sales from construction-type contracts
Revenues are recognized over time under the percentage-of-completion method, based on the percentage of costs incurred to date compared to total estimated costs. An expected loss on the contract is recognized as an expense immediately.
The percentage-of-completion method places considerable importance on accurate estimates of the extent of progress towards completion and may involve estimates on the scope of deliveries and services required for fulfilling the contractually defined obligations. These significant estimates include total estimated costs, total estimated revenues, contract risks, including technical, political and regulatory risks,
and other judgments. Under the percentage-of-completion method, changes in estimates may lead to an increase or decrease of revenue. In addition, the company needs to assess whether the contract is expected to continue or to be terminated. In determining whether the continuation or termination of a contract is expected to be the most likely scenario, all relevant facts and circumstances relating to the contract are considered on an individual basis.
Revenues are recognized over time on a straight-line basis or, if the performance pattern is other than straight-line, as services are provided, i. e. the progress towards complete satisfaction using input method or output method.
Revenue recognised by the Company where services are rendered to the customer and for which invoice has not been raised (which we refer as unbilled revenue) are classified as contract assets. Amount collected from the customer and services have not yet been rendered are classified as contract liabilities.
Revenue is recognised when the Company''s right to receive the payment is established.
Interest income is recognised using effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of financial asset. Interest income from financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.
Export incentives are recognized in the statement of profit and loss when the right to receive credit as per the terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.
1.7 Property, plant and equipment (PPE)Initial Measurement
Free hold land is carried at historical cost. All other items of Property, Plant and Equipment''s are carried at cost of acquisition/construction net of recoverable taxes, less accumulated depreciation / amortization and impairment losses, if any. The cost includes directly
attributable expenses relating to the acquisition and bringing the assets to the location and condition of use net of any sale proceeds and finance cost till assets are put to use, are capitalized. Stores, spares and parts which can be used only in connection with an item of plant or equipment and whose useful life is expected to be irregular are capitalized and depreciated over the useful life of the principal item of the relevant assets.
Subsequent expenditure relating to property, plant and equipment is capitalised only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in the statement of profit and loss when incurred.
Interest cost incurred for constructed assets is capitalised up to the date the asset is ready for its intended use, based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been incurred for the asset.
Property, Plant and Equipment manufactured internally are capitalized at Factory Cost incurred up to the date the asset is ready for its intended use
Property, Plant and Equipment which are not yet ready for their intended use are carried at cost, comprising direct cost and related incidental expenses. Advances paid towards acquisition of PPE outstanding at each balance sheet date are classified as Capital advances under other non-current assets.
I. Depreciation on Property, Plant and Equipments is provided using straight line method (SLM) with reference to the estimated useful life of the Property, Plant and Equipment less its residual value as prescribed under Schedule II of the Companies Act 2013, or useful life of the asset as estimated by the management, whichever is lower. Property, Plant and Equipment costing below 5,000/- are depreciated fully. Depreciation is charged for complete quarter on addition / deletion.
ii. Freehold land is not depreciated.
iii. Depreciation is not recorded on capital work-inprogress until construction and installation are complete and the asset is ready for its intended use.
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The estimated useful lives are as mentioned below: |
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|
Type of Assets |
Useful Life |
|
|
Factory Building Non-factory Buildings Plant & Machinery - Double shift basis Office Equipments Furniture and Fixtures Computers Computer Server Communication Equipment Motor Vehicles |
30 Years 60 Years 10 Years 5 Years 10 Years 3 Years 6 Years 5 Years 8 Years |
|
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in statement of profit or loss.
Intangible assets with finite lives that are acquired are carried at cost or fair value as of the date of acquisition, as applicable, less accumulated amortization and accumulated impairment losses, if any. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Intangible assets consist of technical knowhow / license fees / softwares which are amortized over a period of 5 years on a straight-line basis being the estimated useful life.
Expenditure on research activity undertaken is charged to the Statement of Profit & Loss as and when incurred during the year to their natural head of accounts. The expenditure incurred includes cost of materials, salaries & wage and other revenue expenditure. Development costs are capitalized only after the technical and commercial feasibility of the asset for sale or use has been established. Capital Expenditure is categorized and disclosed separately as Research & Development Property Plant and Equipment and depreciation is charged as disclosed in Sl. No.1.7 above.
1.10 Impairment of Assetsa. Financial assets (other than at fair value)
The Company assesses at the end of each reporting period, whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognizes lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
b. Non-Financial AssetsProperty, plant and equipments and intangible assets
Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss.
Inventories are valued at lower of cost and net realizable value. Raw materials and bought out items are valued on first in first out basis and includes material cost, carriage inward, insurance and purchase related expenses. Cost in respect of work in progress and finished goods include appropriate portion of overheads. Net realizable value represents the estimated selling price for inventory less all estimated cost of completion and cost necessary to make the sale.
Employee benefits include provident fund, pension fund, employee state insurance scheme, compensated absences and gratuity.
a. Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by the employees are recognized during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related services.
b. Long-term employee benefits
Long term employee benefits include compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation as at balance sheet date less the fair value of the plan assets, if any out of which the obligations are expected to be settled.
For defined benefit plans in the form of Gratuity (funded), the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuation being carried out at the end of each reporting period, taking effect of actuarial gains and losses which is recognised in Other Comprehensive Income. The amount is funded to gratuity fund administered by the trustees and managed by Life Insurance Corporation of India.
Re-measurement of net defined benefit liability/ asset pertaining to gratuity comprise of actuarial gains/ losses (i.e. changes in the present value resulting from experience adjustments and effects of changes in actuarial assumptions) and is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Re-measurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to statement of profit or loss.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expenses in the statement of profit and loss.
Past service cost is recognized immediately in the statement of profit and loss. The benefits obligation in respect of gratuity recognized in the Balance Sheet
represents the present value of the defined benefit obligation as adjusted for present value plan assets including refunds and reductions if any available as against future contributions to the scheme.
The Company has contributed to provident fund and employee state insurance scheme which is defined contribution plan. The contribution paid/ payable under the scheme is charged to Statement of Profit and loss during the year in which an employee renders the related service. Company has no further obligation beyond making the payment.
e. Termination benefits are recognized as an expense as and when incurred.
The Company recognises compensation expense relating to share-based payments in net profit using fair-value in accordance with IND AS 102, Share Based Payment. The estimated fair value of awards is charged to income on straight line basis over the requisite service period for each separately vesting portion of the award as if the award was in substance, multiple awards with a corresponding credit to Employee Stock Option / Rights outstanding Reserve.
The Company has created an Employee Stock Options Trust (ESOP Trust) for providing share-based payment to its employees. The Company uses ESOP as a vehicle for distributing shares to employees under the employee remuneration schemes. The ESOP Trust buys shares of the company from the market, for giving shares to employees in addition to allotment of shares by the Company as per the requirements of the scheme. The Company treats ESOP as its extension and shares held by ESOP are treated as treasury shares. Treasury shares are recognized at cost of acquisition and included under other equity. No gain or loss is recognized in profit or loss on the purchase or issue of the Company''s own equity shares. Share options exercised during the reporting period are deducted from treasury shares.
1.14 Leases Company as a Lessee
Contracts with third party, which give the company the right of use in respect of an Asset, are accounted in line with the provisions of Ind AS 116 - Leases, if the recognition criteria as specified in the Accounting standard are met.
Lease payments associated with Short terms leases and Leases in respect of Low value assets are charged off as expenses on straight line basis over lease term or other systematic basis, as applicable.
At commencement date, the value of âright of useâ is capitalised at the present value of outstanding lease payments plus any initial direct cost and estimated cost, if any, of dismantling and removing the underlying asset and presented as part of Plant, property and equipment.
Liability for lease is created for an amount equivalent to the present value of outstanding lease payments and presented as Borrowing. Subsequent measurement, if any, is made using Cost model.
Each lease payment is allocated between the liability created and finance cost. The finance cost is charged to the Statement of Profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The right-of-use asset is depreciated over the shorter of the asset''s useful life and the lease term on a straight-line basis. If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. Right-of-use assets are subject to impairment test.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the company''s incremental borrowing rate. The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Lease modifications, if any are accounted as a separate lease if the recognition criteria specified in the standard are met.
Leases are classified as operating lease or a finance lease based on the recognition criteria specified in Ind AS 116 -Leases
At commencement date, amount equivalent to the ânet investment in the leaseâ is presented as a Receivable. The implicit interest rate is used to measure the value of the ânet investment in Leaseâ.
Each lease payment is allocated between the Receivable created and finance income. The finance income is recognised in the Statement of Profit and loss over the lease period so as to reflect a constant periodic rate of return on the net investment in Lease.
The asset is tested for de-recognition and impairment requirements as per Ind AS 109 - Financial Instruments.
Lease modifications, if any are accounted as a separate lease if the recognition criteria specified in the standard are met.
b) Operating Lease
The company recognises lease payments from operating leases as income on either a straight-line basis or another systematic basis, if required. Lease modifications, if any are accounted as a separate lease if the recognition criteria specified in the standard are met.
The Company''s major tax jurisdictions are in India. Significant judgements are involved in determining the provision for income tax credits, including the amount to be paid or refunded.
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred tax are recognised in statement of profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively.
The current income tax expense includes income taxes payable by the Company and its overseas branches. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant tax paying units intends to settle the asset and liability on a net basis or where it has legally enforceable right to set off the recognized amount.
Deferred income tax is recognised using the balance sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount.
Deferred income tax asset is recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and unused tax losses, if any can be utilized.
The carrying amount of deferred income 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 income tax asset to be utilized.
Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
a. Functional and presentation currency
The Standalone financial statement is presented in Indian Rupee (Rs/''), which is also the Company''s functional currency. Transaction in foreign currencies are initially recorded by the Company at their respective functional currency spot rates at the date, the transaction first qualifies for recognition. However, for practical reasons, the Company uses an average rate, if the average approximates the actual rate at the date of the transaction.
b. Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by applying foreign currency exchange rates between the reporting currency and the foreign currency prevailing at the dates of the transactions.
c. Measurement of foreign currency monetary items and Non-monetary items at the balance sheet date
Monetary items outstanding at the balance sheet date are restated at the rate as on reporting date. Non - monetary items which are carried in terms of historical cost denominated in a foreign currency are not restated and hence is reported using the exchange rate prevailing at the date of transactions.
d. Treatment of exchange differences on monetary items
Exchange differences arising on settlement / restatement of foreign currency assets and
liabilities of the Company are recognized as income or expense in the statement of profit and loss in the period in which they arise.
e. In respect of overseas branch, financial statements are translated as if the transactions are those of the Company itself i.e. Indian Rupees as the functional currency since the overseas branch is primarily involved in selling/marketing goods manufactured by the Company in India. The net impact of the foreign exchange difference of foreign operations is recognised in Other Comprehensive Income.
A financial instrument is any contract that gives rise to a financial asset of any entity and a financial liability or equity instrument of another entity. Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.
i. Cash and Cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
ii. Financial assets at amortized cost
Financial assets are subsequently measured at amortized cost if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
iii. Financial assets at fair value through profit or loss
Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through
profit or loss are immediately recognized in statement of profit and loss.
Financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments. Financial liabilities at Fair value through profit and Loss are stated at fair value, with any gains or losses arising on re-measurement in Profit and loss statement.
v. Equity Instrument
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a company are recognised at the proceeds received, net of issue costs.
vi. De-recognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expires.
vii. Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. In respect of trade receivables, the Company applies simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
viii. Investments in subsidiary
Investments in subsidiary are carried at cost less accumulated impairment, if any.
ix. Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses following hierarchy and assumptions that are based on market conditions and risks existing at each reporting date.
Fair value hierarchy
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 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 - 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 standalone financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing 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
1.18 Accounting for Derivatives
Derivatives are initially recognized at fair value and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gains/losses is recognized in the statement of profit and loss of that period.
General and specific borrowing cost that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period that is required to complete and prepare the asset for its intended use. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
Other borrowing costs are charged to statement of Profit and Loss in the period in which they are incurred.
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate.
1.21 Cash Flow statement
Cash flows are reported using Indirect method, whereby profit for the period is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, financing and investing activity of the company are segregated.
1.22 Provision and Contingencies
The Company reviews pending cases, claims by third party and other contingencies, if any on an on-going basis. For contingent losses that are considered probable, estimated loss is recorded as an accrual in financial statements. A disclosure for contingent liabilities is made where there is a possible obligation or present obligation that may probably not require an outflow of resources. When there is a possible obligation or present obligation where the likelihood of outflow of resources is remote, no provision or disclosure is made in the standalone financial statements. Gain contingencies are not recognized until the contingencies are resolved and the amounts are received or recoverable.
Provision for Warranty
Provision for warranty related cost are recognized when the product is sold. Initial recognition is based on historical experience and future estimates of claims by the management. The estimate of such warranty related cost is revised annually.
Provision for Credit Loss
The Company reviews the position of trade receivable and ascertains a provision for life time credit loss after considering the industry and economic conditions in which customer operate, the profile of the customer and the past experience.
1.23 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
1.24 Earnings per share
Basic earnings/ (loss) per share are computed by dividing profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares after adjustments for treasury shares, outstanding during the year.
Diluted earnings per share is computed by dividing the profit after tax as adjusted for dividend, interest and other changes or income relating to the dilutive potential equity shares, by the weighted average
number of equity shares considered for deriving basic earnings per share and weighted average number of shares which could have been issued on the conversion of all dilutive potential equity shares.
The number of equity shares is adjusted retrospectively for all periods presented for any share splits and bonus shares issued.
Dividend paid (including income tax thereon) is recognized in the period in which the interim dividend is approved by the Board of Directors, or in
the respect of the final dividend when approved by shareholders.
Present obligations arising under onerous contracts are recognised and measured as a provision. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
Mar 31, 2023
SIGNIFICANT ACCOUNTING POLICIES
Corporate Information
The Company is incorporated and domiciled in India. Consequent to a Special Resolution of the Members, passed at the Company''s Extra Ordinary General Meeting held on 17ft January 2011, the Company was converted to a Public Limited Company by altering its Articles of Association in terms of Section 31 read with Section 44 of the Companies Act 1956, and a fresh Certificate of Incorporation dated 4th February 2011 was issued by the Registrar of Companies, Karnataka. The registered office of the Company is located at Dabaspet, Nelamangala Taluk Bangalore â 562 111. The Company is engaged in manufacturing AC Generators and Electric Motors for various applications which are specifically designed and tailor-made to suit the needs of the customers based on their requirements and specifications.
The financial statements for the year ended March 31, 2023 were approved by the Board of Directors and authorised for issue on 9th May 2023.
The company''s subscription to the Share Capital of its Wholly Owned Subsidiaries included in investment under non-current assets as at 31st March 2023 are as follows: -
- 80,100 Equity Shares of USD 10- each in TD Power Systems USA Inc, USA
- 2000 Equity Share of JPY 10,000 each in TD Power Systems Japan Limited, JAPAN
- 550,000 * Equity Share of Euro 1 each in TD Power Systems Europe GmbH, EUROPE
(* erstwhile Platin 1255 GmbH acquired by the company during January 2016)
- 59,99,998 Equity Shares of '' 10 each in D F Power Systems Private Limited (excluding beneficial interest relating to two shares held by the Directors of the Company).
- 12,782 shares of Turkish Lira of 100 - each in TD Power System Jenerator Sanayi Anonim Sirketi which was incorporated on 21st June 2017
1.1 Basis of preparation of financial statements
The financial statements have been prepared on going concern basis and on accrual method of accounting in accordance with Indian Accounting Standards. Historical cost is used except for certain financial assets and liabilities that are measured at fair values at the end of each reporting period, as explained in accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. The standalone financial statements are presented in Indian Rupees (''Rs. /INR/ '' â) and all values are rounded to the nearest lakhs (INR 00,000), except when otherwise indicated.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.
1.2 Use of estimates and judgments
The preparation of the financial statements in confirmity with recognition and measurement principles of Ind AS requires management of the Company 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 for the period presented. 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 and 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 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current / non-current classification.
a 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 non-current.
b A liability is treated as current when it is
- Expected to be settled in normal operating cycle
- Held primarily for the purpose of trading
- Due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non-current.
c Deferred tax assets/ liabilities are classified as non-current assets/ liabilities.
d Based on the nature of products/activities of the Company and the normal time between acquisition of the assets and the realization in cash and cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
1.4 Critical Accounting Estimates
a. Revenue Recognition
The Company uses the percentage-of-completion method in accounting for its service contracts. Use of the percentage-of-completion method requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.
b Property, Plant and Equipment
Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of company''s assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.
The capitalization of cost in intangible asset under development is based on judgement of the management that technological and economical feasibility is confirmed and that the assets will generate economic benefits in future. Based on the
evaluations carried out, the Company''s management has determined that there is no factor which indicate that these assets have suffered any impairment loss.
The Company reviews its carrying value of investments carried at cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for. The management of the Company is confident that the investment does not require further provision for impairment based on the future projections.
e Provision and Contingent liability
The Company reviews pending cases, claims by third party and other contingencies, if any on an on-going basis. For contingent losses that are considered probable, estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed in the financial statements as contingent liabilities. Contingencies the likelihood of which are remote, are not disclosed in the financial statements. Gain contingencies are not recognized until the contingencies are resolved and the amounts are received or recoverable.
The Company reviews the position of trade receivable and ascertains a provision for life time credit loss after considering the industry and economic conditions in which customer operate, the profile of the customer and the past experience.
The company recognises revenue, when or as the entity satisfies a performance obligation by transferring a promised goods or services to a customer; i. e. when the customer is able to direct the use of the transferred goods or services and obtains substantially all of the remaining benefits, provided a contract with enforceable rights and obligations exists and amongst others collectability of consideration is probable taking into account our customer''s creditworthiness. With regards to the sale
of products (a) where delivery is not considered to have occurred, and therefore no revenues are recognized, until the customer has taken title to the products and assumed the risks and rewards of ownership of the products specified in the purchase order or sales agreement. (b) Where dispatch has not been done but tests have been completed as per the terms agreed with the customer, revenue is the transaction price the company expects to be entitled to. Consideration is adjusted for the time value of money if the period between the transfer of goods or services and the receipt of payment is substantial and there is a significant financing benefit either to the customer or Company. If a contract contains more than one distinct good or service, the transaction price is allocated to each performance obligation based on relative stand-alone selling prices. If stand-alone selling prices are not observable, the Company reasonably estimates those. Revenue is recognized for each performance obligation either at a point in time or over the time.
Sales from construction-type contracts
Revenues are recognized over time under the percentage-of-completion method, based on the percentage of costs incurred to date compared to total estimated costs. An expected loss on the contract is recognized as an expense immediately.
The percentage-of-completion method places considerable importance on accurate estimates of the extent of progress towards completion and may involve estimates on the scope of deliveries and services required for fulfilling the contractually defined obligations. These significant estimates include total estimated costs, total estimated revenues, contract risks, including technical, political and regulatory risks, and other judgments. Under the percentage-of-completion method, changes in estimates may lead to an increase or decrease of revenue. In addition, the company needs to assess whether the contract is expected to continue or to be terminated. In determining whether the continuation or termination of a contract is expected to be the most likely scenario, all relevant facts and circumstances relating to the contract are considered on an individual basis.
Revenues are recognized over time on a straight-line basis or, if the performance pattern is other than straight-line, as services are provided, i. e. the
progress towards complete satisfaction using input method or output method.
Revenue is recognised when the Company''s right to receive the payment is established.
Interest income is recognised using effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of financial asset.
Export incentives are recognized in the statement of profit and loss when the right to receive credit as per the terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.
1.7 Property, plant and equipment (PPE)Initial Measurement
Free hold land is carried at historical cost. All other items of Property, Plant and Equipment''s are carried at cost of acquisition/construction net of recoverable taxes, less accumulated depreciation / amortization and impairment losses, if any. The cost includes directly attributable expenses relating to the acquisition and bringing the assets to the location and condition of use net of any sale proceeds and finance cost till assets are put to use, are capitalized. Stores, spares and parts which can be used only in connection with an item of plant or equipment and whose useful life is expected to be irregular are capitalized and depreciated over the useful life of the principal item of the relevant assets. Property, Plant and Equipment manufactured internally are capitalized at Factory Cost.
Property, Plant and Equipment which are not yet ready for their intended use are carried at cost, comprising direct cost and related incidental expenses. Advances paid towards acquisition of PPE outstanding at each balance sheet date are classified as Capital advances under other non-current assets.
I. Depreciation on Property, Plant and Equipments is provided using straight line method (SLM) with reference to the estimated useful life of the Property, Plant and Equipment less its residual
value as prescribed under Schedule II of the Companies Act 2013, or useful life of the asset as estimated by the management, whichever is lower. Property, Plant and Equipment costing below '' 5,000/- are depreciated fully. Depreciation is charged for complete quarter on addition / deletion.
ii. Freehold land is not depreciated.
iii. Depreciation is not recorded on capital work-inprogress until construction and installation are complete and the asset is ready for its intended use.
The estimated useful lives are as mentioned below:
|
Type of Assets |
Useful Life |
|
Factory Building |
30 Years |
|
Non-factory Buildings |
60 Years |
|
Plant & Machinery - Double shift basis |
10 Years |
|
Office Equipments |
5 Years |
|
Furniture and Fixtures |
10 Years |
|
Computers |
3 Years |
|
Computer Server |
6 Years |
|
Communication Equipment |
5 Years |
|
Motor Vehicles |
8 Years |
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in statement of profit or loss.
Intangible assets with finite lives that are acquired are carried at cost or fair value as of the date of acquisition, as applicable, less accumulated amortization and accumulated impairment losses, if any. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. Intangible assets consist of technical knowhow / license fees / softwares which are amortized over a period of 5 years on a straight-line basis being the estimated useful life.
Expenditure Expenditure on research activity undertaken is charged to the Statement of Profit & Loss as and when incurred during the year to their natural head of accounts. The expenditure incurred includes cost of materials, salaries & wage and other revenue expenditure.
Development costs are capitalized only after the technical and commercial feasibility of the asset for sale or use has been established.
Capital Expenditure is categorized and disclosed separately as Research & Development Property Plant and Equipment and depreciation is charged as disclosed in Sl. No.1.7 above.
a. Financial assets (other than at fair value)
The Company assesses at the end of each reporting period, whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognizes lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
Property, plant and equipments and intangible assets
Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss.
1.11 Inventories
Inventories are valued at cost or net realizable value, whichever is lower. Raw materials and bought out items are valued on first in first out basis and includes material cost, carriage inward, insurance and purchase related expenses. Cost in respect of work in progress and finished goods include appropriate portion of overheads. Net realizable value represents the estimated selling price for inventory less all estimated cost of completion and cost necessary to make the sale.
1.12 Employee Benefits
Employee Employee benefits include provident fund, pension fund, employee state insurance scheme, compensated absences and gratuity.
a. Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by the employees are recognized during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related services.
b. Long-term employee benefits
Long term employee benefits include compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation as at balance sheet date less the fair value of the plan assets, if any out of which the obligations are expected to be settled.
c. Defined Benefit Plans
For defined benefit plans in the form of Gratuity (funded), the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuation being carried out at the end of each reporting period, taking effect of actuarial gains and losses which is recognised in Other Comprehensive Income. The amount is funded to gratuity fund administered by the trustees and managed by Life Insurance Corporation of India.
Re-measurement of net defined benefit liability/ asset pertaining to gratuity comprise of actuarial gains / losses (i.e. changes in the present value
resulting from experience adjustments and effects of changes in actuarial assumptions) and is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Re-measurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to statement of profit or loss.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expenses in the statement of profit and loss.
Past service cost is recognized immediately in the statement of profit and loss. The benefits obligation in respect of gratuity recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for present value plan assets including refunds and reductions if any available as against future contributions to the scheme.
The Company has contributed to provident fund and employee state insurance scheme which is defined contribution plan. The contribution paid/ payable under the scheme is charged to Statement of Profit and loss during the year in which an employee renders the related service. Company has no further obligation beyond making the payment.
e. Termination benefits are recognized as an expense as and when incurred.
The The Company recognises compensation expense relating to share-based payments in net profit using fair-value in accordance with IND AS 102, Share Based Payment. The estimated fair value of awards is charged to income on straight line basis over the requisite service period for each separately vesting portion of the award as if the award was in substance, multiple awards with a corresponding credit to Employee Stock Option / Rights outstanding Reserve.
The Company has created an Employee Stock Options Trust (ESOP) for providing share-based payment to its employees. The Company uses ESOP as a vehicle for distributing shares to employees under the employee remuneration schemes. The ESOP Trust buys shares of the company from the market, for giving shares to employees in addition to allotment of shares by the Company as per the requirements of the scheme. The Company treats ESOP as its extension and shares held
by ESOP are treated as treasury shares. Treasury shares are recognized at cost of acquisition and included under other equity. No gain or loss is recognized in profit or loss on the purchase or issue of the Company''s own equity shares. Share options exercised during the reporting period are deducted from treasury shares.
Company as a Lessee
Contracts with third party, which give the company the right of use in respect of an Asset, are accounted in line with the provisions of Ind AS 116 - Leases, if the recognition criteria as specified in the Accounting standard are met.
Lease payments associated with Short terms leases and Leases in respect of Low value assets are charged off as expenses on straight line basis over lease term or other systematic basis, as applicable.
At commencement date, the value of âright of useâ is capitalised at the present value of outstanding lease payments plus any initial direct cost and estimated cost, if any, of dismantling and removing the underlying asset and presented as part of Plant, property and equipment.
Liability for lease is created for an amount equivalent to the present value of outstanding lease payments and presented as Borrowing. Subsequent measurement, if any, is made using Cost model.
Each lease payment is allocated between the liability created and finance cost. The finance cost is charged to the Statement of Profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The right-of-use asset is depreciated over the shorter of the asset''s useful life and the lease term on a straight-line basis.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the company''s incremental borrowing rate.
Lease modifications, if any are accounted as a separate lease if the recognition criteria specified in the standard are met.
Leases are classified as operating lease or a finance lease based on the recognition criteria specified in Ind AS 116 - Leases
At commencement date, amount equivalent to the ânet investment in the leaseâ is presented as a Receivable. The implicit interest rate is used to measure the value of the ânet investment in Leaseâ. Each lease payment is allocated between the Receivable created and finance income. The finance income is recognised in the Statement of Profit and loss over the lease period so as to reflect a constant periodic rate of return on the net investment in Lease. The asset is tested for de-recognition and impairment requirements as per Ind AS 109 - Financial Instruments. Lease modifications, if any are accounted as a separate lease if the recognition criteria specified in the standard are met.
b) Operating Lease
The company recognises lease payments from operating leases as income on either a straight-line basis or another systematic basis, if required. Lease modifications, if any are accounted as a separate lease if the recognition criteria specified in the standard are met.
The Company''s major tax jurisdictions are in India. Significant judgements are involved in determining the provision for income tax credits, including the amount to be paid or refunded.
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred tax are recognised in statement of profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively.
The current income tax expense includes income taxes payable by the Company and its overseas branches. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant tax paying units intends to settle the asset and liability on a net basis or where it has legally enforceable right to set off the recognized amount.
Deferred Deferred income tax is recognised using the balance sheet approach. Deferred income tax
assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount.
Deferred income tax asset is recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and unused tax losses, if any can be utilized.
The carrying amount of deferred income 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 income tax asset to be utilized.
Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
a. Functional and presentation currency
The Standalone financial statement is presented in Indian Rupee (Rs/''), which is also the Company''s functional currency. Transaction in foreign currencies are initially recorded by the Company at their respective functional currency spot rates at the date, the transaction first qualifies for recognition. However, for practical reasons, the Company uses an average rate, if the average approximates the actual rate at the date of the transaction.
Foreign currency transactions are recorded in the reporting currency, by applying foreign currency exchange rates between the reporting currency and the foreign currency prevailing at the dates of the transactions.
c. Measurement of foreign currency monetary items and Non-monetary items at the balance sheet date
Monetary items outstanding at the balance sheet date are restated at the rate as on reporting date.
Non - monetary items which are carried in terms of historical cost denominated in a foreign currency are not restated and hence is reported using the exchange rate prevailing at the date of transactions.
d. Treatment of exchange differences on monetary items
Exchange differences arising on settlement / restatement of foreign currency assets and liabilities of the Company are recognized as income or expense in the statement of profit and loss in the period in which they arise.
e. In respect of overseas branch, financial statements are translated as if the transactions are those of the Company itself i.e. Indian Rupees as the functional currency since the overseas branch is primarily involved in selling/marketing goods manufactured by the Company in India. The net impact of the foreign exchange difference of foreign operations is recognised in Other Comprehensive Income.
A financial instrument is any contract that gives rise to a financial asset of any entity and a financial liability or equity instrument of another entity. Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
ii. Financial assets at amortized cost
Financial assets are subsequently measured at amortized cost if these financial assets are held within a business whose objective is to hold these
assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
iii. Financial assets at fair value through profit or loss
Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognized in statement of profit and loss.
Financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments. Financial liabilities at Fair value through profit and Loss are stated at fair value, with any gains or losses arising on re-measurement in Profit and loss statement.
An equity nstrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a company are recognised at the proceeds received, net of issue costs.
vi. De-recognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expires.
vii. Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. In respect of trade receivables, the Company applies simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected
lifetime losses to be recognised from initial recognition of the receivables.
viii. Investments in subsidiary
Investments in subsidiary are carried at cost less accumulated impairment, if any.
ix. Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses following hierarchy and assumptions that are based on market conditions and risks existing at each reporting date.
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 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 - 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, the 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.
1.18 Accounting for Derivatives
Derivatives are initially recognized at fair value and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gains/losses is recognized in the statement of profit and loss of that period.
General General and specific borrowing cost that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period that is required to complete and prepare the asset for its intended use. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Other borrowing costs are charged to statement of Profit and Loss in the period in which they are incurred.
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate.
Cash flows are reported using Indirect method, whereby profit for the period is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, financing and investing activity of the company are segregated.
1.22 Provision and Contingencies
The Company reviews pending cases, claims by third party and other contingencies, if any on an on-going basis. For contingent losses that are considered probable, estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed in the financial statements as contingent liabilities. Contingencies the likelihood of which are remote, are not disclosed in the financial statements. Gain contingencies are not recognized until the contingencies are resolved and the amounts are received or recoverable.
Provision for warranty related cost are recognized when the product is sold. Initial recognition is based on historical experience and future estimates of claims by the management. The estimate of such warranty related cost is revised annually.
The Company reviews the position of trade receivable and ascertains a provision for life time credit loss after considering the industry and economic conditions in which customer operate, the profile of the customer and the past experience.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker
Basic earnings/ (loss) per share are computed by dividing profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares after adjustments for treasury shares, outstanding during the year.
Diluted earnings per share is computed by dividing the profit after tax as adjusted for dividend, interest and other changes or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and weighted average number of shares which could have been issued on the conversion of all dilutive potential equity shares.
The number of equity shares is adjusted retrospectively for all periods presented for any share splits and bonus shares issued.
Dividend paid (including income tax thereon) is recognized in the period in which the interim dividend is approved by the Board of Directors, or in the respect of the final dividend when approved by shareholders.
Present obligations arising under onerous contracts are recognised and measured as a provision. An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
Mar 31, 2018
1.1 Statement of Compliance
a. In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting Standards (referred to as âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time with effect from April 1, 2017. In accordance with Ind AS 101 First time adoption of Indian Accounting Standard, the company has presented a reconciliation from the presentation of financial statements under previous GAAP to Ind AS shareholderâs equity as at March 31, 2017 and April 1, 2016.
b. Upto the year ended March 31, 2017, the company prepared its financial statements in accordance with the requirements of previous GAAP, which includes standards notified under the Companies (Accounting Standards) Rules, 2006. The Company has adopted all Ind AS and the adoption was carried out in accordance with âInd AS 101 - First time adoption of Indian Accounting Standardsâ. These financial statements are the first financial statements of the Company under Ind AS. The date of transition to Ind AS is April 1, 2016. Refer note-37 for an explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows and for the details of first-time adoption exemption availed by the Company.
1.2 Basis of preparation of financial statements
The financial statements have been prepared on going concern basis and on accrual method of accounting. Historical cost is used except for certain financial assets and liabilities that are measured at fair values at the end of each reporting period, as explained in accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. The standalone financial statements are presented in Indian Rupees (âRs./ââ) and all values are rounded to the nearest lakhs (INR 00,000), except when otherwise indicated.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.
1.3 Use of estimates and judgements
The preparation of the financial statements in conformity with recognition and measurement principles of Ind AS requires management of the Company 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 for the period presented. 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 in Note 1.5. Accounting estimates could change from period to period and have 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.
1.4 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current / non-current classification.
a. 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 non-current.
b. A liability is treated as current when it is:
- Expected to be settled in normal operating cycle
- Held primarily for the purpose of trading
- Due to be settled within twelve months after the reporting period, or
-There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
All other liabilities are classified as non-current.
c. Deferred tax assets/liabilities are classified as noncurrent assets/liabilities.
d. Based on the nature of products/activities of the Company and the normal time between acquisition of the assets and the realization in cash and cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
1.5 Critical accounting estimates
a. Revenue Recognition:
The Company uses the percentage-of-completion method in accounting for its service contracts. Use of the percentage-of-completion method requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.
b. Property, Plant and Equipment:
Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an assetâs expected useful life and the expected residual value at the end of its life. The useful lives and residual values of companyâs assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.
c. Intangible Assets
The capitalization of cost in intangible asset under development is based on judgement of the management that technological and economical feasibility is confirmed and that the assets will generate economic benefits in future. Based on evolution carried out the Companyâs management has determined that there are no factors which indicate that these assets have suffered any impairment loss.
d. Investment in subsidiaries
The Company reviews its carrying value of investments carried at cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for. The management of the Company is confident that the investment does not require further impairment based on the future projection and also considering the fact that some of the subsidiaries are at early stage of their operations.
e. Valuation of deferred tax assets
The Company reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy for the same has been explained under Note 1.15.
f. Provision and Contingent liability
The Company reviews pending cases, claims by third party and other contingencies, if any on an on-going basis. For contingent losses that are considered probable, estimated loss is recorded as an accrual in financial statements. Loss contingencies that are considered possible are not provided for but disclosed in the financial statements as contingent liabilities. Contingencies the likelihood of which are remote, are not disclosed in the financial statements. Gain contingencies are not recognized until the contingencies are resolved and the amounts are received or recoverable.
g. Provision for Credit loss
The Company reviews the position of trade receivable and ascertains a provision for life time credit loss after considering the industry and economic conditions in which customer operate, the profile of the customer and the past experience.
1.6 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty and net of returns, trade allowances, rebates, and value added tax/GST.
The Company recognizes revenue from sale of goods when the following criteria have been satisfied:
a. The entity has transferred to the buyer the significant risks and rewards of ownership of the goods;
b. The entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
c. The amount of revenue can be measured reliably;
d. It is probable that the economic benefits associated with the transaction will flow to the entity; and
e. The costs incurred or to be incurred in respect of the transaction can be measured reliably.
i. Timing of recognition
Revenue from Sale of Manufactured goods and in case of project business is recognized on shipment to customers or acceptance by the customers. On Service contracts, revenue is recognised based on the estimates made on completion as at the end of the reporting period.
ii. Measurement of revenue
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.
Dividend Income
Revenue is recognised when the Companyâs right to receive the payment is established.
Interest Income
Interest income is recognised using effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of financial asset.
1.7 Export Incentives
Export incentives are recognized in the statement of profit and loss when the right to receive credit as per the terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.
1.8 Property, plant and equipment Initial Measurement
Free hold land is carried at historical cost. All items of Property, plant and equipmentâs are carried at cost of acquisition /construction net of recoverable taxes, less accumulated depreciation/amortization and impairment losses, if any. The cost includes incidental expenses relating to the acquisition and finance cost till assets are put to use, are capitalized. Stores, spares and parts which can be used only in connecting with an item of plant or equipment and whose useful life is expected to be irregular are capitalized and depreciated over the useful life of the principal item of the relevant assets.
Property, Plant and Equipment manufactured internally are capitalized at factory cost.
Capital work in progress:
Property, Plant and Equipment which are not yet ready for their intended use are carried at cost, comprising direct cost and related incidental expenses. Advances paid towards acquisition of PPE outstanding at each balance sheet date are classified as Capital advances under other non-current assets.
Depreciation and amortization
i. Depreciation on Property, Plant and Equipments is provided using straight line method (SLM) with reference to the estimated useful life of the Property, Plant and Equipment less its residual value as prescribed under Schedule II of The Companies Act 2013, or useful life of the asset as estimated by the management, whichever is lower. Property, Plant and Equipment costing below Rs. 5,000/- are depreciated fully. Depreciation is charged for complete quarter on addition / deletion.
ii. Freehold land is not depreciated.
iii. Depreciation is not recorded on capital work-in-progress until construction and installation are complete and the asset is ready for its intended use.
The estimated useful lives are as mentioned below:
Derecognition
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in statement of profit or loss.
1.9 Intangible Assets
Intangible assets with finite lives that are acquired are carried at cost or fair value as of the date of acquisition, as applicable, less accumulated amortization and accumulated impairment losses, if any. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Intangible assets consist of technical knowhow/ license fees which are amortized over a period of 5 years on a straight-line basis being the estimated useful life.
1.10 Research & Development
Expenditure on research activity undertaken is charged to the Statement of Profit & Loss as and when incurred during the year to their natural head of accounts. The expenditure incurred includes cost of materials, salaries & wage and other revenue expenditure.
Development costs are capitalized only after the technical and commercial feasibility of the asset for sale or use has been established.
Capital Expenditure is categorized and disclosed separately as Research & Development Property, Plant and Equipment and depreciation is charged as disclosed in para 1.8 above.
1.11 Impairment of Assets
a. Financial assets (other than at fair value)
The Company assesses at the end of each reporting period, whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognizes lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
b. Non-financial assets
Tangible and intangible assets
Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss.
1.12 Inventories
Inventories are valued at cost or net realizable value, whichever is lower. Raw materials and bought out items are valued on first in first out basis and includes material cost, carriage inward, insurance and purchase related expenses. Cost in respect of work in progress and finished goods include appropriate portion of overhead. Net realizable value represents the estimated selling price for inventory less all estimated cost of completion and cost necessary to make the sale.
1.13 Employee benefits
Employee benefits includes provident fund, pension fund, employee state insurance scheme, compensated absences and gratuity.
a. Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by the employees are recognized during the year when the employee render the service. These benefits includes performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related services.
b. Long-term employee benefits
Long term employee benefits include compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation as at balance sheet date less the fair value of the plan assets, if any out of which the obligations are expected to be settled.
c. Defined benefit plans
For defined benefit plans in the form of Gratuity (funded), the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at the end of each reporting period, taking effect of actuarial gains and losses which is recognised in Other Comprehensive Income. The amount is funded to gratuity fund administered by the trustees and managed by Life Insurance Corporation of India.
Re-measurement of net defined benefit liability/ asset pertaining to gratuity comprise of actuarial gains/ losses (i.e. changes in the present value resulting from experience adjustments and effects of changes in actuarial assumptions) and is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Re-measurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to statement of profit or loss.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expenses in the statement of profit and loss.
Past service cost is recognized immediately in the statement of profit and loss. The benefits obligation in respect of gratuity recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for present value plan assets including refunds and reductions if any available as against future contributions to the scheme.
d. Defined contribution plans
The Company has contributed to provident fund and employee state insurance scheme which is defined contribution plan. The contribution paid/ payable under the scheme is charged to Statement of Profit and loss during the year in which an employee renders the related service. Company has no further obligation beyond making the payment.
e. Termination benefits are recognized as an expense as and when incurred.
1.14 Leases
Finance lease
Assets taken on lease by the Company in its capacity as lessee, where the Company has substantially all the risks and rewards of ownership are classified as finance lease. Such leases are capitalized at the inception of the lease at lower of the fair value or the present value of the minimum lease payments and a liability is recognised for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Operating lease
Lease arrangements other than a finance lease, are recognised as Operating lease. Operating lease payments are recognised on a straight-line basis over the lease term in the statement of profit and loss, unless the increase is on account of expected general inflation. Such increases are recognised in the year in which such increases accrue.
1.15 Income taxes
The Companyâs major tax jurisdictions is in India. Significant judgement are involved in determining the provision for income tax credits, including the amount to be paid or refunded.
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred tax are recognised in statement of profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively.
a. Current Income Taxes
The current income tax expense includes income taxes payable by the Company and its overseas branches. Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant tax paying units intends to settle the asset and liability on a net basis or where it has legally enforceable right to set off the recognized amount.
b. Deferred Income Taxes
Deferred income tax is recognised using the balance sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount.
Deferred income tax asset is recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits including credit in respect of minimum alternate tax (MAT) and unused tax losses can be utilized.
The carrying amount of deferred income 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 income tax asset to be utilized.
Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.
1.16 Foreign Currency
a. Functional and presentation currency
The Standalone financial statement is presented in Indian Rupee (Rs/â), which is also the Companyâs functional currency. Transaction in foreign currencies are initially recorded by the Company at their respective functional currency spot rates at the date, the transaction first qualifies for recognition. However, for practical reasons, the Company uses an average rate, if the average approximates the actual rate the date of the transaction.
b. Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying foreign currency exchange rates between the reporting currency and the foreign currency prevailing at the dates of the transactions.
c. Measurement of foreign currency monetary items and Non-monetary items at the balance sheet date
Monetary items outstanding at the balance sheet date are restated at the rate as on reporting date. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are not restated and hence is reported using the exchange rate prevailing at the date of transactions.
d. Treatment of exchange differences on monetary items
Exchange differences arising on settlement/ restatement of foreign currency assets and liabilities of the Company are recognized as income or expense in the statement of profit and loss in the period in which they arise.
e. In respect of overseas branch, financial statements are translated as if the transactions are those of the Company itself i.e. Indian Rupees (INR) as the functional currency since overseas branch are primarily involved in selling/marketing goods manufactured by the Company in India.
1.17 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of any entity and a financial liability or equity instrument of another entity. Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially easured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.
i. Cash & Cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
ii. Financial assets at amortized cost
Financial assets are subsequently measured at amortized cost if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
iii. Financial assets at fair value through profit or loss
Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognized in statement of profit and loss.
iv. Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method, for trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments. Financial liabilities at Fair value through profit and Loss are stated at fair value, with any gains or losses arising on remeasurement in Profit and loss statement.
v. Equity Instrument
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a company are recognised at the proceeds received, net of issue costs.
vi. De-recognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expires.
vii. Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. In respect of trade receivables, the Company applies simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
viii. Investments in subsidiary
Investments in subsidiary are carried at cost less accumulated impairment, if any.
ix. Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses following hierarchy and assumptions that are based on market conditions and risks existing at each reporting date.
Fair value hierarchy
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 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - 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, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing 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.
1.18 Accounting for Derivatives
Derivatives are initially recognized at fair value and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gains/ losses is recognized in the statement of profit and loss of that period.
1.19 Borrowing Cost
General and specific borrowing cost that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period that is required to complete and prepare the asset for its intended use. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.
Other borrowing costs are charged to statement of Profit and Loss in the period in which they are incurred.
1.20 Government grants
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate.
1.21 Cash Flow statement
Cash flows are reported using Indirect method, whereby profit for the period is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, financing and investing activity of the company are segregated.
1.22 Provision and contingencies
A Provision is recognized when an enterprise has a present (legal or constructive) obligation as a result of past event; and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.
These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the notes.
Provision for warranty
Provision for warranty related cost are recognized when the product is sold. Initial recognition is based on historical experience and future estimates of claims by the management. The estimate of such warranty related cost is revised annually.
1.23 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. Refer Note. 43 for segment information presented.
1.24 Earnings per share
Basic earnings/(loss) per share are computed by dividing profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period.
Diluted earnings per share is computed by dividing the profit after tax as adjusted for dividend, interest and other changes or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and weighted average number of shares which could have been issued on the conversion of all dilutive potential equity shares.
The number of equity shares is adjusted retrospectively for all periods presented for any share splits and bonus shares issued.
1.25 Dividend Distribution
Dividend paid (including income tax thereon) is recognized in the period in which the interim dividend is approved by the Board of Directors, or in the respect of the final dividend when approved by shareholders.
1.26 Standards issued but not yet effective (IND AS)
Ministry of Corporate Affairs (âMCAâ) through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new and amendments to Ind AS which the Company has not applied as they are effective for annual periods beginning on or after April 1, 2018:
Ind AS 115 -Revenue from Contracts with Customers
Ind AS 21 - The Effect of Changes in Foreign Exchange Rates
Ind AS 115 - Revenue from Contracts with Customers
Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 - Revenue, Ind AS 11 - Construction Contracts when it becomes effective.
The core principle of Ind AS 115 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach t revenue recognition:
Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligation in contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligation in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation Under Ind AS 115, an entity recognizes revenue when (or as) a performance obligation is satisfied, i.e. when âcontrolâ of the goods or services underlying the particular performance obligation is transferred to the customer.
The Company is in the process of evaluation of the possible impact of Ind AS 115 and will adopt the standard with effect from 1st April 2018.
Ind AS 21 - The Effect of Changes in Foreign Exchange Rates
The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the nonmonetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. The Company is evaluating the impact of this amendment on its financial statements.
Mar 31, 2016
1 Significant Accounting Policies
Consequent to a Special Resolution of the Members, passed at the Company''s Extra Ordinary General Meeting held on 17th January 2011, the Company is converted to a Public Limited Company by altering its Articles of Association in terms of Section 31 read with Section 44 of the Companies Act 1956, and a fresh Certificate of Incorporation dated 04th February 2011 is issued by the Registrar of Companies, Karnataka.
The company''s subscription to the Share Capital of its Wholly Owned Subsidiaries reflected as trade investments as on 31st March 2016 ar as follows:
a. 80,100 Equity Shares of USD 10- each - TD Power Systems (USA) Inc.
b. 2000 Equity Share of JPY 10,000 each - TD Power Systems Japan Limited
c. 175,000 * Equity Share of Euro 1 each - TD Power Systems Europe GmbH (* erstwhile Platin 1255 GmbH acquired by the company in January 2016)
1.1 Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared under historical cost convention method, in accordance with the Generally Accepted Accounting Principles (GAAP) applicable in India and the provisions of the Companies Act, 2013. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent liabilities as at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period.
1.2 Fixed Assets
Fixed assets are stated at cost of acquisition excluding vatable duties, inclusive of freight, taxes and incidental expenses relating to the acquisition and finance cost on borrowings utilized for acquisition of qualifying assets less depreciation/ impairment. Assets manufactured internally are capitalized at Factory Cost.
1.3 Inventories
Inventories are valued at cost or net realizable value, whichever is lower. Raw materials and bought out items are valued on first in first out basis as per Accounting Standard - 2 and includes material cost, carriage inward, insurance and purchase related expenses. Cost in respect of work in progress and finished goods are based on works cost.
1.4 Depreciation
Depreciation on tangible assets is provided with reference to the estimated useful life of the fixed assets less its residual value as prescribed under Schedule II of The Companies Act 2013, or actual useful life of the asset, whichever is lower. Fixed assets costing below Rs. 5,000/- are depreciated fully. Depreciation is charged for complete quarter on addition / deletion.
1.5 Revenue Recognition
Sale of manufactured goods is recognized on shipment to customers, and exclusive of excise duty and sales tax. Sale of goods in case of project business is recognized on shipment to customers. Erection and commissioning income is recognized as and when the services are performed/completed. Interest income is recognized based on time proportion basis. Dividend income is recognized when the right to receive the dividend is established.
1.6 Foreign currency transactions
a. Foreign currency transactions are translated into Indian rupees at the exchange rate prevailing on the date of the transaction.
b. Monetary foreign currency assets and liabilities outstanding at the end of the year are restated at the exchange rates prevailing on the reporting date. All exchange differences are accounted for in the Statement of Profit and Loss.
c. Non monetary items denominated in foreign currency, are valued at the exchange rate prevailing on the date of transaction
d. In respect of overseas branches, which are integral foreign operations, financial statements are translated as if the transactions are those of the Company itself.
1.7 Taxes on Income
Provision for tax is made in terms of Accounting Standard 22 for both current and deferred tax. Provision for current income tax if arises is made at the current tax rates based on assessable income. Deferred tax is recognised on timing difference between the accounting income and the taxable income for the year and quantified using the tax rates and laws enacted or substantively enacted as on the Balance sheet date. Deferred tax assets are recognized and carried forward to the extent that there is a reasonable/virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized.
Summary of Accounting Policies and Other Explanatory Information (contd.)
Minimum Alternate Tax (MAT) under the provisions of Income Tax Act, 1961, is recognized as current tax in the statement of Profit & Loss. The credit available under the Act in respect of MAT paid 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 period for which MAT Credit can be carried forward for set-off against the normal tax liability. MAT Credit recognized as an asset is reviewed at each Balance Sheet date and written down to the extent the aforesaid convincing evidence no longer exists.
1.8 Borrowing Cost
Interest and other borrowing cost on borrowings relatable to qualifying assets are capitalized up to the date such assets are ready for use. Other interest and borrowing cost are charged to Statement of Profit & Loss.
1.9 Contingent Liabilities
Financial effects of contingent liabilities are disclosed based on information available up to the date on which financial statements are approved. However, where a reasonable estimate of financial effect cannot be made, suitable disclosures are made with regard to this fact and the existence and nature of the contingent liability.
1.10 Employees Benefits
Long Term Employee Benefits
a. Defined Contribution Plans
The Company has contributed to provident fund, which is defined contribution plan. The contribution paid/payable under the scheme is recognized during the year in which an employee renders the related service.
b. Defined Benefit Plans
Employees gratuity and leave encashment are defined benefit plans. The present value of the obligations under such plan is determined based on actuarial valuation using the Projected Unit Credit Method which considers each year of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Actuarial gain and losses are recognized immediately in the Statement of Profit & Loss as income or expense. Obligation is measured at present value of estimated future cash flows using a discounted rate that is determined by reference to market yields available on government bonds at the Balance Sheet date with the term that matches to the liabilities.
1.11 Impairment of Assets
At each balance sheet date, the management reviews the carrying amount of its assets to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Reversal of impairment loss, if any, is recognized immediately in the Statement of profit and loss.
1.12 Accounting for Lease
i. Operating Lease
Lease of assets under which all the risks and rewards of ownership are effectively retained by the less or are classified as operating leases. Lease payments under operating leases are recognized as an expense on a straight-line basis over the lease term.
ii. Finance Lease and Hire purchase transactions
Lease rentals are charged to Statement of Profit and Loss over the period of Lease. Depreciation is provided on the primary period of the lease.
1.13 Amortization of Technical Know-how Fee / License Fee.
Technical Know-how Fees will be amortized over a period of 60 months.
1.14 Investment
Non-current investments are stated at cost. Provision for diminution if any, in the value of investments is made, to recognize a decline, other than temporary. Current investments are valued at lower of cost or market value.
1.15 Research & Development
Expenditure on Research & Development activity undertaken is charged to the Statement of Profit & Loss as and when incurred during the year, to their natural head of accounts. The expenditure incurred includes cost of materials, salaries & wages and other revenue expenditure.
Capital Expenditure is categorized and disclosed separately as Research & Development, Fixed Asset and depreciation is charged as prescribed under Companies Act, 2013 discussed in para 1.4 above.
Mar 31, 2015
1 Significant Accounting Policies
Consequent to a Special Resolution of the Members, passed at the
Company's Extra Ordinary General Meeting held on 17th January 2011, the
Company is converted to a Public Limited Company by altering its
Articles of Association in terms of Section 31 read with Section 44 of
the Companies Act, 1956 and a fresh Certificate of Incorporation dated
04th February 2011 is issued by the Registrar of Companies, Karnataka.
The Company has subscribed to a Wholly Owned Subsidiary in United
States of America under the name M/s. TD Power Systems (USA) Inc.
incorporated as Delaware Corporation on 20th February 2013 located at
Ohio. The Company has subscribed to 80,100 share of USD 10/- each and
the same is shown as trade investments.
The Company has incorporated a Wholly Owned Subsidiary in Japan under
the name M/s TD Power Systems Japan Limited on 19th March 2013 in
Tokyo. The Company has subscribed to 2,000 shares of JPY 10,000/- each
and the same is shown as trade investments.
1.1 Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared under
historical cost convention method, in accordance with the Generally
Accepted Accounting Principles (GAAP) applicable in India and the
provisions of the Companies Act, 2013. The preparation of financial
statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosures of contingent liabilities as at the date
of the financial statements, and the reported amounts of revenue and
expenses during the reported period.
1.2 Fixed Assets
Fixed assets are stated at cost of acquisition excluding vatable
duties, inclusive of freight, taxes and incidental expenses relating to
the acquisition and finance cost on borrowings utilized for acquisition
of qualifying assets less depreciation/ impairment.
1.3 Inventories
Inventories are valued at cost or net realizable value, which ever is
lower. Raw materials and bought out items are valued on first in first
out basis as per Accounting Standard - 2 and includes material cost,
carriage inward, insurance and purchase related expenses. Cost in
respect of work in progress and finished goods are based on works cost.
1.4 Depreciation
Consequent to the enactment of the Companies Act, 2013 ( the Act ) and
its applicability for Accounting period commencing after 1 April 2014
,the Company has re-worked Depreciation with reference to the estimated
useful lives of the fixed assets prescribed by Schedule II to the Act
or actual useful life of Asset , whichever is lower. In case of any
Asset whose life has completed as above, the carrying value, as at 01st
April 2014 has been adjusted to the Retained Earnings to the tune of
Rs. 1.52 Crores and in other cases the carrying value has been
depreciated over the remaining of the revised life of the Assets and
recognised in the statement of Profit and Loss. As a result the change
for depreciation is higher by Rs. 7.63 Crores for the year ended 31st
March, 2015
1.5 Revenue Recognition
Sale of manufactured goods is recognized on shipment to customers, and
exclusive of excise duty and sales tax.
Sale of goods in case of project business is recognised on shipment to
customers.
Erection and commissioning income is recognised as and when the
services are performed/completed.
Interest income is recognised based on time proportion basis.
Dividend income is recognised when the right to receive the dividend is
established.
1.6 Foreign currency transactions
a. Foreign currency transactions are translated into Indian rupees at
the exchange rate prevailing on the date of the transaction.
b. Monetary foreign currency assets and liabilities outstanding at the
end of the year are restated at the exchange rates prevailing on the
reporting date. All exchange differences are accounted for in the
Statement of Profit and Loss.
c. Non monetary items denominated in foreign currency, are valued at
the exchange rate prevailing on the date of transaction.
d. In respect of overseas branches, which are integral foreign
operations, financial statements are translated as if the transactions
are those of the Company itself.
1.7 Taxes on Income
Provision for tax is made in terms of Accounting Standard 22 for both
current and deferred tax. Provision for current income tax if arises is
made at the current tax rates based on assessable income. Deferred tax
is recognised on timing difference between the accounting income and
the taxable income for the year and quantified using the tax rates and
laws enacted or substantively enacted as on the Balance sheet date.
Deferred tax assets are recognized and carried forward to the extent
that there is a reasonable/virtual certainty that sufficient future
taxable income will be available against which such deferred tax asset
can be realized.
Minimum Alternate Tax (MAT) under the provisions of Income Tax Act,
1961, is recognised as current tax in the statement of Profit & Loss.
The credit available under the Act in respect of MAT paid is recognised
as an asset only when and to the extent there is convincing evidence
that the Company will pay normal Income Tax during the period for which
MAT Credit can be carried forward for set-off against the normal tax
liability. MAT Credit recognised as an asset is reviewed at each
Balance Sheet date and written down to the extent the aforesaid
convicing evidence no longer exists.
1.8 Borrowing Cost
Interest and other borrowing cost on borrowings relatable to qualifying
assets are capitalized up to the date such assets are ready for use.
Other interest and borrowing cost are charged to Statement of Profit &
Loss.
1.9 Contingent Liabilities
Financial effects of contingent liabilities are disclosed based on
information available up to the date on which financial statements are
approved. However, where a reasonable estimate of financial effect
cannot be made, suitable disclosures are made with regard to this fact
and the existence and nature of the contingent liability.
1.10 Employees Benefits
Long Term Employee Benefits
a. Defined Contribution Plans
The Company has contributed to provident fund, which is defined
contribution plan. The contribution paid/payable under the scheme is
recognised during the year in which an employee renders the related
service.
b. Defined Benefit Plans
Employees gratuity and leave encashment are defined benefit plans. The
present value of the obligations under such plan is determined based on
actuarial valuation using the Projected Unit Credit Method which
considers each year of service as giving rise to an additional unit of
benefit entitlement and measures each unit separately to build up the
final obligation. Actuarial gain and losses are recognised immediately
in the Statement of Profit & Loss as income or expense. Obligation is
measured at present value of estimated future cash flows using a
discounted rate that is determined by reference to market yields
available on government bonds at the Balance Sheet date with the term
that matches to the liabilities.
1.11 Impairment of Assets
At each balance sheet date, the management reviews the carrying amount
of its assets to determine whether there is any indication that those
assets are impaired. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of
impairment loss. Reversal of impairment loss, if any, is recognised
immediately in the Statement of Profit and Loss.
1.12 Accounting for Lease
i. Operating Lease
Lease of assets under which all the risks and rewards of ownership are
effectively retained by the lessor are classified as operating leases.
Lease payments under operating leases are recognized as an expense on a
straight-line basis over the lease term.
ii. Finance Lease and Hire purchase transactions
Lease rentals are charged to Statement of Profit and Loss over the
period of Lease. Depreciation is provided on the primary period of the
lease.
1.13 Amortisation of Technical Know-how Fee / Licence Fee.
Technical Know-how Fees will be amortised over a period of 60 months.
1.14 Investment
Non-current investments are stated at cost. Provision for diminution if
any, in the value of investments is made, to recognise a decline, other
than temporary. Current investments are valued at lower of cost or
market value.
1.15 Research & Development
Expenditure on Research & Development activity undertaken is charged to
the Statement of Profit & Loss as and when incurred during the year, to
their natural head of accounts. The expenditure incurred includes cost
of materials, salaries & wages and other revenue expenditure.
Capital Expenditure is categorised and disclosed separately as Research
& Development, Fixed Asset and depreciation is charged as prescribed
under Companies Act, 2013 discussed in para 1.4 above.
Mar 31, 2013
Consequent to a Special Resolution of the Members, passed at the
Company''s Extra Ordinary General Meeting held on 17th January 2011, the
Company is converted to a Public Limited Company by altering its
Articles of Association in terms of Section 31 read with Section 44 of
the Companies Act 1956, and a fresh Certificate of Incorporation dated
04th February 2011 is issued by the Registrar of Companies, Karnataka.
The company has subscribed to a Wholly Owned Subsidiary in United
States of America under the name M/s TD Power Systems (USA) Inc.
incorporated as Delaware Corporation on 20th February 2013 located at
Ohio. The company has subscribed to 100,100 share of USD 10/- each and
the same is shown as nontrade investments. The transactions upto 31st
March 2013 since incorporation is consolidated in terms of Accounting
Standard 21.
The company has incorporated a Wholly Owned Subsidiary in Japan under
the name M/s TD Power Systems (Japan) Limited on 19th March 2013 in
Tokyo. The transactions upto 31st March 2013 since incorporation is
consolidated in terms of Accounting Standard 21.
1.1 Basis of preparation of financial statements
The financial statements of the Company have been prepared under
historical cost convention method, in accordance with the Generally
Accepted Accounting Principles (GAAP) applicable in India and the
provisions of the Companies Act, 1956. The preparation of financial
statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosures of contingent liabilities as at the date
of the financial statements, and the reported amounts of revenue and
expenses during the reported period.
1.2 Fixed Assets
Fixed assets are stated at cost of acquisition excluding vatable
duties, inclusive of freight, taxes and incidental expenses relating to
the acquisition and finance cost on borrowings utilized for acquisition
of qualifying assets less depreciation.
1.3 Inventories
Inventories are valued at cost or net realizable value, which ever is
lower. Raw materials and bought out items are valued on first in first
out basis as per Accounting Standard - 2 and includes material cost,
carriage inward, insurance and purchase related expenses. Cost in
respect of work in progress and finished goods are based on works cost.
1.4 Depreciation
Depreciation is charged on straight line method as stipulated under
section 205 (2) (b) of the Companies Act, 1956, atthe rates specified
in schedule XIV, prorata from the quarter of addition / deletion.
1.5 Revenue Recognition
Sale of manufactured goods is recognized on shipment to customers, and
exclusive of excise duty and sales tax.
Sale of goods in case of project business is recognised on shipment to
customers.
Erection and commissioning income is recognised as and when the
services are performed/completed.
Interest income is recognised based on time proportion basis.
Dividend income is recognised when the right to receive the dividend is
established.
1.6 Foreign currency transactions
a) Foreign currency transactions are translated into Indian rupees at
the exchange rate prevailing on the date of the transaction.
b) Monetary foreign currency assets and liabilities outstanding at the
end of the year are restated at the exchange rates prevailing on the
reporting date. All exchange differences are accounted for in the
profit and loss account.
c) Non monetary items denominated in foreign currency, are valued at
the exchange rate prevailing on the date of transaction.
d) In respect of overseas branches, which are integral foreign
operations, financial statements are translated as if the transactions
are those of the Company itself.
1.7 Taxes on Income
Provision for tax is made in terms of Accounting Standard 22 for both
current and deferred tax. Provision for current income tax if arises is
made at the current tax rates based on assessable income. Deferred tax
is recognised on timing difference between the accounting income and
the taxable income for the year and quantified using the tax rates and
laws enacted or substantively enacted as on the Balance sheet date.
Deferred tax assets are recognized and carried forward to the extent
that there is a reasonable/virtual certainty that sufficient future
taxable income will be available against which such deferred tax asset
can be realized.
1.8 Borrowing Cost
Interest and other borrowing cost on borrowings relatable to qualifying
assets are capitalized up to the date such assets are ready for use.
Other interest and borrowing cost are charged to Statement of Profit &
Loss.
1.9 Contingent Liabilities
Financial effects of contingent liabilities are disclosed based on
information available up to the date on which financial statements are
approved. However, where a reasonable estimate of financial effect
cannot be made, suitable disclosures are made with regard to this fact
and the existence and nature of the contingent liability.
1.10 Employees Benefits
Long Term Employee Benefits
a. Defined Contribution Plans:
The Company has contributed to provident fund, which is defined
contribution plan. The contribution paid/ payable under the scheme is
recognised during the year in which an employee renders the related
service.
b. Defined Benefit Plans:
Employees gratuity and leave encashment are defined benefit plans. The
present value of the obligations under such plan is determined based on
actuarial valuation using the Projected Unit Credit Method which
considers each year of service as giving rise to an additional unit of
benefit entitlement and measures each unit separately to build up the
final obligation. Actuarial gain and losses are recognised immediately
in the statement of profit & loss account as income or expense.
Obligation is measured at present value of estimated future cash flows
using a discounted rate that is determined by reference to market
yields available on government bonds at the Balance Sheet date with
term that matches to the liabilities.
1.11 Impairment of assets
At each balance sheet date, the management reviews the carrying amount
of its assets to determine whether there is any indication that those
assets are impaired. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of
impairment loss. Reversal of impairment loss, if any, is recognised
immediately in the profit and loss account.
1.12 Accounting for lease
i. Operating Lease
Lease of assets under which all the risks and rewards of ownership are
effectively retained by the lessor are classified as operating leases.
Lease payments under operating leases are recognized as an expense on a
straight-line basis over the lease term.
ii. Finance Lease and Hire purchase transactions
Lease rentals are charged to Profit and Loss Account over the period of
Lease. Depreciation is provided on the primary period of the lease.
1.13 Amortisation of Technical Know-how Fee / Licence Fee
Technical Know-how Fees will be amortised over a period of 60 months.
1.14 Investments
Non-current investments are stated at cost. Provision for dimunition if
any, in the value of investments is made, to recognise a decline, other
than temporary. Current investments are valued at lower of cost or
market value.
Mar 31, 2011
1.1 Accrual System of Accounting:
Company follows accrual system of accounting for all items of
expenditure and income. Provision for warranties is made on an
estimated basis.
1.2 Fixed Assets:
Fixed assets are stated at cost of acquisition excluding duties,
inclusive of freight, taxes and incidental expenses relating to the
acquisition and finance cost on specific borrowings utilized for
acquisition of Fixed Assets less Depreciation.
1.3 Inventories:
Inventories are valued at cost or net realizable value for item
specific, which ever is lower. Raw materials is valued under FIFO
method as per Accounting Standard - 2 (Inventories) and raw material
cost includes Material Cost, Carriage Inward, Insurance and Purchase
related expenses.
1.4 Depreciation:
Depreciation is charged on Straight Line method as stipulated In
Section 205 (2) (b) of the Companies Act, 19S6, at the rates specified
in Schedule XIV, prorata for the quarter of additions / deletions.
1.5 Construction Contracts:
Revenue in respect of indivisible contracts is on the basis of
confirmation of delivery at site for full value of the equipment
inclusive of corresponding erection and commissioning charges as
indicated in the contract.
1.6 Revenue Recognition:
Sale of goods is recognized on shipment to customers, and exclusive of
Excise duty and Sales tax.
1.7 Foreign currency translation on overseas branch:
The financial statement of foreign branch is translated in accordance
with Accounting Standard 11 prescribed by the Institute of Chartered
Accountants of India.
1.8 Amortisation of Technical Know-how Fees:
Technical Know-how Fees has been amortised over a period of 60 months.
1.9 Taxes on Income:
Provision for tax is made in terms of AS 22 for both current and
deferred tax. Provision for current income tax if arises is made at the
current tax rates based on assessable income. Deferred tax is
recognised on timing difference between the accounting income and the
taxable income for the year and quantified using the tax rates and laws
enacted or substantively enacted as on the Balance sheet date. Deferred
tax assets are recognized and carried forward to the extent that there
is a reasonable/virtual certainty that sufficient future taxable income
will be available against which such deferred tax asset can be
realized.
1.10 Borrowing Cost:
Interest and other borrowing cost on specific borrowings relatable to
qualifying assets are capitalized up to the date such assets are ready
for use. Other interest and borrowing cost are charged to Profit & Loss
Account.
1.11 Contingent Liabilities:
Financial effects of contingent liabilities are disclosed based on
information available up to the date on which financial statements are
approved. However, where a reasonable estimate of financial effect
cannot be made, suitable disclosures are made with regard to this fact
and the existence and nature of the contingent liability.
1.12 Employees Benefits:
i. Short Term Employee Benefits:
Employee benefits payable wholly within twelve months of rendering the
service are classified as short term. Benefits such as salaries, bonus,
leave travel allowance etc. are recognized in the period in which an
employee renders the related service.
ii. Long Term Employee Benefits:
a. Defined Contribution Plans:
The Company has contributed to provident funds, which is defined
contribution plan. The contribution paid/ payable under the scheme is
recognised during the year in which an employee renders the related
service.
b. Defined Benefit Plans:
Employees gratuity and leave encashment are defined benefit plans. The
present value of the obligations under such plan is determined based on
actuarial valuation using the Projected Unit Credit Method which
considers each year of service as giving rise to an additional unit of
benefit entitlement and measures each unit separately to build up the
final obligation. Actuarial gain and losses are recognised immediately
in the statement of profit & loss account as income or expense.
Obligation is measured at present value of estimated future cash flows
using a discounted rate that is determined by reference to market
yields at the balance sheet date on government bonds where the currency
and terms of the defined benefit obligation.
1.13 Impairment of assets
At each balance sheet date, the management reviews the carrying amount
of its asset to determine whether there is any indication that those
assets are impaired. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of
impairment loss. Reversal of impairment loss, if any, is recognised
immediately in the profit and loss account.
1.14 Accounting for lease:
i. Operating Lease:
Leases of assets under which all the risks and rewards of ownership are
effectively retained by the lesser are classified as operating leases.
Lease payments under operating leases are recognized as an expense on a
straight-line basis over the lease term.
ii. Finance Lease and Hire purchase transactions:
Lease rentals are charged to Profit and Loss Account over the period of
Lease. Depreciation is provided on the primary period of the lease.
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