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Accounting Policies of The Hi-Tech Gears Ltd. Company
Mar 31, 2025
5. Material accounting policies
A summary of the material accounting policies applied in the
preparation of the Standalone Financial Statements are as given below.
These accounting policies have been applied consistently to all periods
presented in the Standalone Financial Statements.
5.1 Property, plant and equipment (PPE)
Recognition and initial measurement
Properties plant and equipment are stated at their cost of acquisition.
Any trade discount and rebates are deducted in arriving at the
purchase price. Property, plant and equipment purchased on deferred
payment basis are recorded at equivalent cash price. The difference
between the cash price equivalent and the amount payable is
recognised as interest expense over the deferred payment period.
Spares having useful life of more than one year and having material
value in each case, are capitalised under the respective heads as
and when available for use.
Subsequent measurement (depreciation and useful lives)
Property, plant and equipment are subsequently measured at cost
less accumulated depreciation and impairment losses. Depreciation
on Buildings and Plant and Equipment is charged on pro-rata basis
on Straight Line Method based on the life assigned to each asset in
accordance with Schedule II of Companies Act, 2013. Depreciation
on rest of the property, plant and equipment has been provided on
Written Down Value basis based on the life assigned to each asset in
accordance with Schedule II of Companies Act, 2013.
5.2 Intangible assets
Recognition and initial measurement
Intangible assets are stated at their cost of acquisition. Any trade
discount and rebates are deducted in arriving at the purchase price.
Subsequent measurement (amortisation)
Intangible assets are amortized over their respective individual
estimated useful life on written down value basis commencing from
the date, the asset is available to the company for its use
5.3 Inventories
Inventories are valued as follows:
Raw materials, loose tools and stores and spares
Raw materials, loose tools and stores and spares are valued at lower
cost and net realizable value. Cost of raw materials, loose tools and
stores and spares is determined on weighted average -FIFO (First in
first out) basis.
Work-in-progress and finished goods
Work-in-progress and finished goods is measured at lower of cost
and net realizable value. Cost includes direct materials and labour
and a proportion of manufacturing overheads based on normal
operating capacity.
Scrap
Scrap is measured at net realizable value.
5.4 Revenue recognition
Revenue arises mainly from the sale of manufactured and traded
goods. Revenue is recognised upon transfer of control of promised
products or services to customers for an amount that reflects the
consideration which the Company expects to receive in exchange for
those products or services. Revenue excludes taxes or duties collected
on behalf of the government.
To determine whether to recognise revenue, the Company follows a
5-step process:
(i) Identifying the contract with a customer
(ii) Identifying the performance obligations
(iii) Determining the transaction price
(iv) Allocating the transaction price to the performance obligations
(v) Recognising revenue when/as performance obligation(s) are
satisfied.
Sale of goods
Revenue towards satisfaction of a performance obligation is measured
at the amount of transaction price (net of variable consideration)
allocated to that performance obligation. The transaction price of
goods sold, and services rendered is net of variable consideration on
account of various discounts and schemes offered by the Company
as part of the contract.
Sale of services
Revenue from services is recognised when Company satisfies the
performance obligations by transferring the promised services to its
customers.
Export benefits
Export benefits constituting Duty Draw back and Export Promotion
Capital Goods scheme (EPCG) are accounted for on accrual basis
when there is reasonable assurance that the company will comply
with the conditions attached to them and the export benefits will be
received. Export benefits under Duty Draw back scheme and EPCG
are considered as other operating income.
Interest
Interest income is recorded on accrual basis using the effective interest
rate (EIR) method.
Dividend income
Dividend income is recognised at the time when right to receive the
payment is established, which is generally when the shareholders
approve the dividend.
5.5 Borrowing costs
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are charged as expense to the statement of profit
and loss in the period for which they relate to.
5.6 Leases
Company as a lessee
The Company applies a single recognition and measurement approach
for all leases, except for short-term leases and leases of low-value
assets. The Company recognises lease liabilities to make lease
payments and right-of-use assets representing the right to use the
underlying assets.
(i) Right-of-use assets
Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. Right-of-use assets are
depreciated on a straight-line basis over the shorter of the lease
term and the estimated useful lives of the assets.
(ii) Lease liabilities
At the commencement date of the lease, the Company
recognises lease liabilities measured at the present value of lease
payments to be made over the lease term.
In calculating the present value of lease payments, the Company
uses its incremental borrowing rate at the lease commencement
date because the interest rate implicit in the lease is not readily
determinable.
(iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption
to its short-term leases (i.e., those leases that have a lease term
of 12 months or less from the commencement date and do not
contain a purchase option). It also applies the lease of low-value
assets recognition exemption that are considered to be 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.
5.7 Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any
indication based on internal/external factors, that an asset may be
impaired. If any such indication exists, the recoverable amount of the
asset or the cash generating unit is estimated. If such recoverable
amount of the asset or cash generating unit to which the asset belongs
is less than its carrying amount. The carrying amount is reduced to
its recoverable amount and the reduction is treated as an impairment
loss and is recognised in the statement of profit and loss. If, at the
reporting date there is an indication that a previously assessed
impairment loss no longer exists, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount.
Impairment losses previously recognized are accordingly reversed in
the statement of profit and loss.
5.8 Foreign currency
Initial recognition
Foreign currency transactions are recorded in the functional currency,
by applying to the exchange rate between the functional currency
and the foreign currency at the date of the transaction.
Conversion
Foreign currency monetary items are converted to functional currency
using the closing rate. Non-monetary items denominated in a foreign
currency which are carried at historical cost are reported using the
exchange rate at the date of the transaction.
Exchange difference
Exchange differences arising on monetary items on settlement, or
restatement as at reporting date, at rates different from those at which
they were initially recorded, are recognised in the statement of profit
and loss in the year in which they arise.
5.9 Financial instruments
A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument of
another entity.
Financial Asset
Initial recognition and measurement
At initial recognition, the Company measures a financial assets at its
fair value and in the case of financial assets not recorded at fair value
through profit or loss at transaction costs that are attributable to the
acquisition of the financial asset. Transaction cost of financial assets
carried at fair value through profit or loss is expensed in the Statement
of Profit or Loss. However, trade receivables that do not contain a
significant financing component are measured at transaction price.
Investments in equity instruments of subsidiary
Investments in Subsidiaries, Associates and Joint Venture are carried
at cost less accumulated impairment losses, if any. Where an
indication of impairment exists, the carrying amount of the investment
is assessed and written down immediately to its recoverable amount.
On disposal of investments in subsidiaries, associates and joint
venture, the difference between net disposal proceeds and the carrying
amounts are recognised in the Statement of Profit and Loss.
Subsequent measurement
Debt Instruments:
Subsequent measurement of debts instruments depends on the
Companyâs business model for managing the assets and the cash
flows of the assets. The Company classifies its financial assets in the
following categories:
i) Financial assets at amortised cost- Assets that are held for
collection of contractual cashflows on specified dates where
those cashflows represent solely payments of principal and
interest are measured at amortised cost.
After initial measurement, such financial assets are subsequently
measured at amortised cost using the effective interest rate (EIR)
method. Amortised cost is calculated by taking into account any
discount or premium on acquisition and fees or costs that are
an integral part of the EIR. The EIR amortisation is included in
finance income in the profit or loss. The losses arising from
impairment are recognised in the profit or loss. This category
generally applies to trade receivables and Loans.
ii) Financial assets at fair value through other comprehensive
income (FVTOCI) - Assets that are held for collection of
contractual cash flows and for selling the financial assets, where
the assets cash flows represent solely payments of principal
and interest, are on specified dates are subsequently measured
at fair value through other comprehensive income. Fair value
movements are recognised in the other comprehensive income
(OCI). Interest income from these financial assets is included in
finance income using the effective interest rate method and
impairment losses, if any are recognised in the Statement of
Profit and Loss.
When the financial asset is derecognition, the cumulative gain
or loss previously recognised in OCI is reclassified from the equity
to the Statement of Profit and Loss.
iii) Financial assets at fair value through profit or loss (FVTPL)
- Financial assets which are not classified in any of the categories
above are FVTPL.
Investments in other equity instruments - Investments in
equity instruments which are held for trading are classified at
Fair Value Through Profit or Loss (FVTPL). For all other equity
instruments, the Company makes an irrevocable choice upon
initial recognition, on an instrument by instrument basis, to
classify the same either as at Fair Value through Other
Comprehensive Income (FVOCI) or Fair Value Through Profit or
Loss (FVTPL). Amounts presented in other comprehensive
income are not subsequently transferred to profit or loss.
However, the Company transfers the cumulative gain or loss
within equity. Dividends on such investments are recognized in
profit or loss unless the dividend clearly represents a recovery
of part of the cost of the investment.
Derecognition
The Company derecognises a financial asset when the contractual
rights to the cash flows from the financial asset expire, or it transfers
the contractual rights to receive the cash flows from the asset.
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and in case
of loans and borrowings net of directly attributable costs.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using
effective interest method. Financial liabilities carried at fair value
through profit or loss are measured at fair value with all changes in
fair value recognised in the Statement of Profit and Loss. For trade
and other payable maturing within one year from the balance sheet
date, the carrying value approximates fair value due to short maturity
of these instruments.
Derecognition
A financial liability is derecognised when the obligation under the
liability is discharged or cancelled or expires.
Offsetting Instruments
Financial assets and liabilities are offset and the net amount reported
in the balance sheet when there is a legally enforceable right to offset
the recognised amounts and there is an intention to settle on a net
basis or realise the asset and settle the liability simultaneously. The
legally enforceable right must not be contingent on future events and
must be enforceable in the normal course of business and in the
event of default, insolvency or bankruptcy of the Company or the
counterparty.
Forward contracts
The Company has entered into certain forward (derivative) contracts
to hedge risks which are not designated as hedges. These derivatives
are initially recognised at fair value on the date a derivative contract
is entered into and are subsequently re-measured to their fair value
at the end of each reporting period. Any profit or loss arising on
cancellation or renewal of such derivative contract is recognised as
income or as expense in statement of profit and loss.
5.10 Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit
loss (ECL) model for measurement and recognition of impairment
loss for financial assets. The Company assesses on forward looking
basis the expected credit losses associated with its assets and
impairment methodology applied depends on whether there has been
a significant increase in credit risk.
Trade receivables
In respect of trade receivables, the Company applies the simplified
approach of Ind AS 109, which requires measurement of loss
allowance at an amount equal to lifetime expected credit losses.
Other financial assets
In respect of its other financial assets, the Company assesses if the
credit risk on those financial assets has increased significantly since
initial recognition. If the credit risk has not increased significantly since
initial recognition, the Company measures the loss allowance at an
amount equal to 12-month expected credit losses, else at an amount
equal to the lifetime expected credit losses.
5.11 Income taxes
Tax expense recognized in statement of profit and loss comprises
the sum of deferred tax and current tax except the ones recognized
in other comprehensive income or directly in equity.
Current tax is determined as the tax payable in respect of taxable
income for the year and is computed in accordance with relevant tax
regulations. Current income tax relating to items recognised outside
profit or loss is recognised outside profit or loss (either in other
comprehensive income or in equity).
Deferred tax liabilities are generally recognised in full for all taxable
temporary differences. Deferred tax assets are recognised to the
extent that it is probable that the underlying tax loss or deductible
temporary difference will be utilised against future taxable income.
This is assessed based on the Companyâs forecast of future operating
results, adjusted for significant non-taxable income and expenses
and specific limits on the use of any unused tax loss. Unrecognised
deferred tax assets are re-assessed at each reporting date and are
recognised to the extent that it has become probable that future taxable
profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates (and
tax laws) that have been enacted or substantively enacted at the
reporting date. Deferred tax relating to items recognised outside
statement of profit and loss is recognised outside statement of profit
and loss (either in other comprehensive income or in equity).
5.12 Employee benefits
Short-term employee benefits
Employee benefits payable wholly within twelve months of receiving
employee services are classified as short-term employee benefits.
These benefits include salaries and wages, bonus and ex-gratia. The
undiscounted amount of short-term employee benefits to be paid in
exchange for employee services are recognized as an expense as
the related service is rendered by employees.
Defined Contribution Plan
Contribution towards provident fund for certain employees is made to
the regulatory authorities, where the Company has no further
obligations. Payments to defined contribution retirement benefit
schemes (such as Provident Fund, Employeeâs State Insurance
Corporation) are charged to the statement of profit and loss of the
year in which contribution to such schemes becomes due.
Defined Benefit Plan
For defined benefit schemes, the cost of providing benefits is
determined using Projected Unit Credit Method, with actuarial
valuation being carried out at each balance sheet date. Actuarial gains/
losses resulting from re-measurements of the liability are included in
other comprehensive income.
The retirement benefit obligation recognized in the Balance Sheet
represents the present value of the defined benefit obligations as
adjusted for unrecognized past service cost, and as reduced by the
fair value of scheme assets.
The Company makes annual contribution to the Employeeâs Company
Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation
of India, a funded defined benefit plan for qualifying employees. The
scheme provides for lump sum payment to vested employees at
retirement, death or on termination of employment.
Other long-term employee benefits
Liability in respect of leave encashment becoming due or expected
to be availed within one year from the balance sheet date is recognized
on the basis of discounted value of estimated amount required to be
paid or estimated value of benefit expected to be availed by the
employees. Liability in respect of leave encashment becoming due
or expected to be availed more than one year after the balance sheet
date is estimated on the basis of an actuarial valuation performed by
an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from past experience and changes
in actuarial assumptions are charged to statement of profit and loss
in the year in which such gains or losses are determined.
Share based payments.
The fair value on grant date of equity-settled share-based payment
arrangements granted to eligible employees of the Company under
the Employee Stock Option Scheme (âESOSâ) is recognised as
employee stock option scheme expenses in the Statement of profit
and loss, in relation to options granted to employees of the Company
(over the vesting period of the awards), with a corresponding increase
in other equity. The amount recognised as an expense to reflect the
number of awards for which the related service and non-market
performance conditions are expected to be met, such that the amount
ultimately recognised is based on the number of awards that meet
the related service and non-market performance conditions at the
vesting date. The increase in equity recognised in connection with a
share based payment transaction is presented in the âEmployee stock
options outstanding accountâ, as separate component in other equity.
For share-based payment awards with market conditions, the grant-
date fair value of the share-based payment is measured to reflect
such conditions and there is no true- up for differences between
expected and actual outcomes. At the end of each period, the
Company revises its estimates of the number of options that are
expected to be vested based on the non-market performance
conditions at the vesting date.
If vesting periods or other vesting conditions apply, the expense is
allocated over the vesting period, based on the best available estimate
of the number of share options expected to vest. Upon exercise of
share options, the proceeds received, net of any directly attributable
transaction costs, are allocated to share capital up to the nominal (or
par) value of the shares issued with any excess being recorded as
share premium.
The dilutive effect of outstanding options is reflected as additional
share dilution in the computation of diluted earnings per share.
Mar 31, 2024
5. Material accounting policies
A summary of the material accounting policies applied in the preparation of the Standalone Financial Statements are as given below. These accounting policies have been applied consistently to all periods presented in the Standalone Financial Statements.
5.1 Property, plant and equipment (PPE)
Recognition and initial measurement
Properties plant and equipment are stated at their cost of acquisition. Any trade discount and rebates are deducted in arriving at the purchase price. Property, plant and equipment purchased on deferred payment basis are recorded at equivalent cash price. The difference between the cash price equivalent and the amount payable is recognised as interest expense over the deferred payment period.
Spares having useful life of more than one year and having material value in each case, are capitalised under the respective heads as and when available for use.
Subsequent measurement (depreciation and useful lives)
Property, plant and equipment are subsequently measured at cost less accumulated depreciation and impairment losses. Depreciation on Buildings and Plant and Equipment is charged on pro-rata basis on Straight Line Method based on the life assigned to each asset in accordance with Schedule II of Companies Act, 2013. Depreciation on rest of the property, plant and equipment has been provided on Written Down Value basis based on the life assigned to each asset in accordance with Schedule II of Companies Act, 2013.
5.2 Intangible assets
Recognition and initial measurement
Intangible assets are stated at their cost of acquisition. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent measurement (amortisation)
Intangible assets are amortized over their respective individual estimated useful life on written down value basis commencing from the date, the asset is available to the company for its use
5.3 Inventories
Inventories are valued as follows:
Raw materials, loose tools and stores and spares
Raw materials, loose tools and stores and spares are valued at lower cost and net realizable value. Cost of raw materials, loose tools and stores and spares is determined on weighted average -FIFO (First in first out) basis.
Work-in-progress and finished goods
Work-in-progress and finished goods is measured at lower of cost and net realizable value. Cost includes direct materials and labour
and a proportion of manufacturing overheads based on normal operating capacity.
Scrap
Scrap is measured at net realizable value.
5.4 Revenue recognition
Revenue arises mainly from the sale of manufactured and traded goods. Revenue is recognised upon transfer of control of promised products or services to customers for an amount that reflects the consideration which the Company expects to receive in exchange for those products or services. Revenue excludes taxes or duties collected on behalf of the government.
To determine whether to recognise revenue, the Company follows a 5-step process:
(i) Identifying the contract with a customer
(ii) Identifying the performance obligations
(iii) Determining the transaction price
(iv) Allocating the transaction price to the performance obligations
(v) Recognising revenue when/as performance obligation(s) are satisfied.
Sale of goods
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold, and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract.
Sale of services
Revenue from services is recognised when Company satisfies the performance obligations by transferring the promised services to its customers.
Export benefits
Export benefits constituting Duty Draw back and Export Promotion Capital Goods scheme (EPCG) are accounted for on accrual basis when there is reasonable assurance that the company will comply with the conditions attached to them and the export benefits will be received. Export benefits under Duty Draw back scheme and EPCG are considered as other operating income.
Interest
Interest income is recorded on accrual basis using the effective interest rate (EIR) method.
Dividend income
Dividend income is recognised at the time when right to receive the payment is established, which is generally when the shareholders approve the dividend.
5.5 Borrowing costs
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged as expense to the statement of profit and loss in the period for which they relate to.
5.6 Leases
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
(i) Right-of-use assets
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any
remeasurement of lease liabilities. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
(ii) Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable.
(iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption that are considered to be 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.
5.7 Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on internal/external factors, that an asset may be impaired. If any such indication exists, the recoverable amount of the asset or the cash generating unit is estimated. If such recoverable amount of the asset or cash generating unit to which the asset belongs is less than its carrying amount. The carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If, at the reporting date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. Impairment losses previously recognized are accordingly reversed in the statement of profit and loss.
5.8 Foreign currency
Initial recognition
Foreign currency transactions are recorded in the functional currency, by applying to the exchange rate between the functional currency and the foreign currency at the date of the transaction.
Conversion
Foreign currency monetary items are converted to functional currency using the closing rate. Non-monetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transaction.
Exchange difference
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognised in the statement of profit and loss in the year in which they arise.
5.9 Financial instruments
Initial recognition and measurement
All financial assets/liabilities are recognized initially at fair value, plus in the case of financial assets/liabilities not recorded at fair value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial asset/liabilities However, trade receivables that do not contain a significant financing component are measured at transaction price.
Non-derivative financial assets
Subsequent measurement
(i) Financial assets carried at amortised cost - A financial assetâ is measured at the amortised cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
(ii) Investments in equity instruments of subsidiary- Investments in equity instruments of subsidiary are accounted for at cost less impairment (if any) in accordance with Ind AS 27 Separate Financial Statements.
(iii) Investments in other equity instruments - Investments in equity instruments which are held for trading are classified at Fair Value Through Profit or Loss (FVTPL). For all other equity instruments, the Company makes an irrevocable choice upon initial recognition, on an instrument by instrument basis, to classify the same either as at Fair Value through Other Comprehensive Income (FVOCI) or Fair Value Through Profit or Loss (FVTPL). Amounts presented in other comprehensive income are not subsequently transferred to profit or loss. However, the Company transfers the cumulative gain or loss within equity. Dividends on such investments are recognized in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
Non-derivative financial liabilities Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortised cost using the effective interest method. Forward contracts
The Company has entered into certain forward (derivative) contracts to hedge risks which are not designated as hedges. These derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. Any profit or loss arising on cancellation or renewal of such derivative contract is recognised as income or as expense in statement of profit and loss.
5.10 Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets. The Company assesses on forward looking basis the expected credit losses associated with its assets and impairment methodology applied depends on whether there has been a significant increase in credit risk.
Trade receivables
In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Other financial assets
In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.
5.11 Income taxes
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognized in other comprehensive income or directly in equity.
Current tax is determined as the tax payable in respect of taxable income for the year and is computed in accordance with relevant tax regulations. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity).
Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax assets are recognised to the
extent that it is probable that the underlying tax loss or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit and loss (either in other comprehensive income or in equity).
5.12 Employee benefits
Short-term employee benefits
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services are recognized as an expense as the related service is rendered by employees.
Defined Contribution Plan
Contribution towards provident fund for certain employees is made to the regulatory authorities, where the Company has no further obligations. Payments to defined contribution retirement benefit schemes (such as Provident Fund, Employeeâs State Insurance Corporation) are charged to the statement of profit and loss of the year in which contribution to such schemes becomes due.
Defined Benefit Plan
For defined benefit schemes, the cost of providing benefits is determined using Projected Unit Credit Method, with actuarial valuation being carried out at each balance sheet date. Actuarial gains/ losses resulting from re-measurements of the liability are included in other comprehensive income.
The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligations as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets.
The Company makes annual contribution to the Employeeâs Company Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death or on termination of employment.
Other long-term employee benefits
Liability in respect of leave encashment becoming due or expected to be availed within one year from the balance sheet date is recognized on the basis of discounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of leave encashment becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method. Actuarial gains and losses arising from past experience and changes in actuarial assumptions are charged to statement of profit and loss in the year in which such gains or losses are determined.
Share based payments.
The fair value on grant date of equity-settled share-based payment arrangements granted to eligible employees of the Company under the Employee Stock Option Scheme (âESOSâ) is recognised as employee stock option scheme expenses in the Statement of profit and loss, in relation to options granted to employees of the Company (over the vesting period of the awards), with a corresponding increase in other equity. The amount recognised as an expense to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the
vesting date. The increase in equity recognised in connection with a share based payment transaction is presented in the âEmployee stock options outstanding accountâ, as separate component in other equity. For share-based payment awards with market conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true- up for differences between expected and actual outcomes. At the end of each period, the Company revises its estimates of the number of options that are expected to be vested based on the non-market performance conditions at the vesting date.
If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
Mar 31, 2023
1. Nature of operations
The Hi -Tech Gears Limited (âthe Companyâ) is an auto component manufacturer (a Tier 1 supplier). The Company is domiciled and incorporated under the provision of the Companies Act, 1956 on October 23,1986 in India. The Company corporate office is situated at 14th Floor, Tower-B, Millennium Plaza, Sushant Lok-I, Sector-27, Gurgaon-122002, Haryana, India and registered office is situated Plot no 24,25,26 Sector-7 IMT Manesar Gurgaon-122050, Haryana, India. The Company CIN number is L29130HR1986PLC081555.
2. General information and compliance with Ind AS
These financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ) as notified by Ministry of Corporate Affairs (âMCAâ) under section 133 of the Companies Act, 2013 (âActâ) read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant provisions of the Act. The Company has uniformly applied the accounting policies for the periods presented.
These financial statements are separate financial statements of the Company. The Company has also prepared consolidated financial statements for the year ended 31 March 2023 in accordance with Ind AS 110 and the same were also approved for issue by the Board of Directors on 27 May 2023.
3. Basis of preparation
The financial statements have been prepared on going concern basis in accordance with generally accepted accounting principles in India. Further, the financial statements have been prepared on a historical cost basis except for following items:
Items Measurement basis
Certain financial assets and liabilities Fair value
Net defined benefits (assets)/liability Fair value of plan assets less
present value of defined benefits obligations.
4. Summary of significant accounting policies
The financial statements have been prepared using the significant accounting policies and measurement bases summarised below. These were used throughout all periods presented in the financial statements.
4.1 Current versus non-current classification
All assets and liabilities have been classified as current or non-current as per the Companyâs operating cycle and other criteria set out in the Companies Act, 2013.
4.2 Property, plant and equipment (PPE)
Recognition and initial measurement
Properties plant and equipment are stated at their cost of acquisition. Any trade discount and rebates are deducted in arriving at the purchase price. Property, plant and equipment purchased on deferred payment basis are recorded at equivalent cash price. The difference between the cash price equivalent and the amount payable is recognised as interest expense over the deferred payment period.
Spares having useful life of more than one year and having material value in each case, are capitalised under the respective heads as and when available for use.
Subsequent measurement (depreciation and useful lives)
Property, plant and equipment are subsequently measured at cost less accumulated depreciation and impairment losses. Depreciation on Buildings and Plant and Equipment is charged on pro-rata basis on Straight Line Method based on the life assigned to each asset in accordance with Schedule II of Companies Act, 2013. Depreciation on rest of the property, plant and equipment has been provided on
Written Down Value basis based on the life assigned to each asset in accordance with Schedule II of Companies Act, 2013.
De-recognition
An item of property, plant and equipment and any significant component initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset/significant component (calculated as the difference between the net disposal proceeds and the carrying amount of the asset/significant component) is recognised in statement of profit and loss, when the asset is derecognised.
4.3 Intangible assets
Recognition and initial measurement
Intangible assets are stated at their cost of acquisition. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent measurement (amortisation)
Intangible assets are amortized over their respective individual estimated useful life on written down value basis commencing from the date, the asset is available to the company for its use
4.4 Inventories
Inventories are valued as follows:
Raw materials, loose tools and stores and spares
Raw materials, loose tools and stores and spares are valued at lower cost and net realizable value. Cost of raw materials, loose tools and stores and spares is determined on weighted average -FIFO (First in first out) basis.
Work-in-progress and finished goods
Work-in-progress and finished goods is measured at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.
Scrap
Scrap is measured at net realizable value.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
4.5 Revenue recognition
Revenue arises mainly from the sale of manufactured and traded goods. Revenue is recognised upon transfer of control of promised products or services to customers for an amount that reflects the consideration which the Company expects to receive in exchange for those products or services. Revenue excludes taxes or duties collected on behalf of the government.
To determine whether to recognise revenue, the Company follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied.
Sale of goods
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold, and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract.
Sale of services
Revenue from services is recognised when Company satisfies the performance obligations by transferring the promised services to its customers.
Export benefits
Export benefits constituting Duty Draw back and Export Promotion Capital Goods scheme (EPCG) are accounted for on accrual basis when there is reasonable assurance that the company will comply with the conditions attached to them and the export benefits will be received. Export benefits under Duty Draw back scheme and EPCG are considered as other operating income.
Interest
Interest income is recorded on accrual basis using the effective interest rate (EIR) method.
Dividend income
Dividend income is recognised at the time when right to receive the payment is established, which is generally when the shareholders approve the dividend.
4.6 Borrowing costs
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged as expense to the statement of profit and loss in the period for which they relate to.
4.7 Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
a) Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
b) Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the underlying asset.
c) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption that are considered to be 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.
4.8 Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on internal/external factors, that an asset may be impaired. If any such indication exists, the recoverable amount of the asset or the cash generating unit is estimated. If such recoverable amount of the asset or cash generating unit to which the asset belongs is less than its carrying amount. The carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If, at the reporting date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. Impairment losses previously recognized are accordingly reversed in the statement of profit and loss.
4.9 Foreign currency
Functional and presentation currency
The financial statements are presented in Indian Rupee (1 ) which is also the functional and presentation currency of the Company.
Initial recognition
Foreign currency transactions are recorded in the functional currency, by applying to the exchange rate between the functional currency and the foreign currency at the date of the transaction.
Conversion
Foreign currency monetary items are converted to functional currency using the closing rate. Non-monetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transaction.
Exchange difference
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognised in the statement of profit and loss in the year in which they arise.
4.10 Financial instruments
Initial recognition and measurement
All financial assets/liabilities are recognized initially at fair value, plus in the case of financial assets/liabilities not recorded at fair value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial asset/liabilities However, trade receivables that do not contain a significant financing component are measured at transaction price.
Non-derivative financial assets
Subsequent measurement
i. Financial assets carried at amortised cost - A financial assetâ is measured at the amortised cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
ii. Investments in equity instruments of subsidiary- Investments in equity instruments of subsidiary are accounted for at cost in accordance with Ind AS 27 Separate Financial Statements.
iii. Investments in other equity instruments - Investments in equity instruments which are held for trading are classified at Fair Value Through Profit or Loss (FVTPL). For all other equity instruments, the Company makes an irrevocable choice upon initial recognition, on an instrument by instrument basis, to classify the same either as at Fair Value through Other Comprehensive Income (FVOCI) or Fair Value Through Profit or Loss (FVTPL). Amounts presented in other comprehensive income are not subsequently transferred to profit or loss. However, the Company transfers the cumulative gain or loss within equity. Dividends on such investments are recognized in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
De-recognition of financial assets
A financial asset is primarily de-recognised when the contractual rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Non-derivative financial liabilities
Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortised cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
Forward contracts
The Company has entered into certain forward (derivative) contracts to hedge risks which are not designated as hedges. These derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. Any profit or loss arising on cancellation or renewal of such derivative contract is recognised as income or as expense in statement of profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
4.11 Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets. The Company assesses on forward looking basis the expected credit losses associated with its assets and impairment methodology applied depends on whether there has been a significant increase in credit risk.
Trade receivables
In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
Other financial assets
In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.
When making this assessment, , the Company compares the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort..
4.12 Income taxes
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognized in other comprehensive income or directly in equity.
Current tax is determined as the tax payable in respect of taxable income for the year and is computed in accordance with relevant tax regulations. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity).
Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit and loss (either in other comprehensive income or in equity).
4.13 Cash and cash equivalents
Cash and cash equivalents include cash in hand, balance with banks in current in current accounts and other short term highly liquid investments with original maturity of three months and less.
4.14 Research and Development Costs
Revenue expenditure incurred on research and development has been charged to the statement of profit and loss for the year in which it is incurred. Capital expenditure is included in respective heads under Property, plant and equipment.
4.15 Employee benefits
Short-term employee benefits
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services are recognized as an expense as the related service is rendered by employees.
Defined Contribution Plan
Contribution towards provident fund for certain employees is made to the regulatory authorities, where the Company has no further obligations. Payments to defined contribution retirement benefit schemes (such as Provident Fund, Employeeâs State Insurance Corporation) are charged to the statement of profit and loss of the year in which contribution to such schemes becomes due.
Defined Benefit Plan
For defined benefit schemes, the cost of providing benefits is determined using Projected Unit Credit Method, with actuarial valuation being carried out at each balance sheet date. Actuarial gains/ losses resulting from re-measurements of the liability are included in other comprehensive income.
The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligations as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets.
The Company makes annual contribution to the Employeeâs Company Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of 6 months. Vesting occurs upon completion of 5 years of continued service.
Other long-term employee benefits
Liability in respect of leave encashment becoming due or expected to be availed within one year from the balance sheet date is recognized on the basis of discounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of leave encashment becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from past experience and changes in actuarial assumptions are charged to statement of profit and loss in the year in which such gains or losses are determined.
Share based payments.
The fair value on grant date of equity-settled share-based payment arrangements granted to eligible employees of the Company under the Employee Stock Option Scheme (âESOSâ) is recognised as employee stock option scheme expenses in the Statement of profit and loss, in relation to options granted to employees of the Company (over the vesting period of the awards), with a corresponding increase in other equity. The amount recognised as an expense to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. The increase in equity recognised in connection with a share based payment transaction is presented in the âEmployee stock options outstanding accountâ, as separate component in other equity. For share-based payment awards with market conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true- up for differences between expected and actual outcomes. At the end of each period, the Company revises its estimates of the number of options that are expected to be vested based on the non-market performance conditions at the vesting date.
If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Upon exercise of share options, the proceeds received, net of any directly attributable transaction costs, are allocated to share capital up to the nominal (or par) value of the shares issued with any excess being recorded as share premium.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
4.16 Provisions
Provisions are recognized when the Company has a present obligation as a result of past events, for which it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions required to settle are reviewed regularly and are adjusted where necessary to reflect the current best estimates of the obligation. Provisions are discounted to their present values, where the time value of money is material.
4.17 Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the Basis of preparation.
The financial statements have been prepared on going concern basis in accordance with generally accepted accounting principles in India. Further, the financial statements have been prepared on a historical cost basis except for following items:
occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Contingent assets are neither recognised nor disclosed except when realisation of income is virtually certain, related asset is disclosed.
4.18 Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
4.19 Derivative financial instruments and hedge accounting
Derivative financial instruments are accounted for at fair value through profit and loss (FVTPL) except for derivatives designated as hedging instruments in cash flow hedge relationships, which require a specific accounting treatment. To qualify for hedge accounting, the hedging relationship must meet all the following requirements:
⢠there is an economic relationship between the hedged item and the hedging instrument
⢠the effect of credit risk does not dominate the value changes that result from that economic relationship
⢠the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item.
The Company has designated certain derivative contracts as hedging instruments in cash flow hedge relationships.
The Company applied hedge accounting requirements in Ind AS 109 prospectively from 1 April 2019 to derivative instruments which could be designated as effective cash flow hedges. These arrangements had been entered into to mitigate foreign currency exchange risk and interest rate risk arising from highly probable forecasted sales and debt instruments denominated in foreign currency, in accordance with the Companyâs risk management policy.
All derivative financial instruments used for hedge accounting are recognised initially at fair value and reported subsequently at fair value in the balance sheet.
To the extent that the hedge is effective, changes in the fair value of derivatives designated as hedging instruments in cash flow hedges are recognised in other comprehensive income and included within the cash flow hedge reserve in equity. Any ineffectiveness in the hedge relationship is recognised immediately in profit or loss.
At the time the hedged item affects profit or loss, any gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss and presented as a reclassification adjustment within other comprehensive income.
4.20 Government Grant
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 the Statement of profit and loss on a systematic basis over the periods in which the Company recognises the related costs as expenses, if any, for which the grants are intended to compensate.
4.21 Significant management judgement and estimates
When preparing the financial statements, management makes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.
Significant management judgements
The following are significant management judgements in applying the accounting policies of the Company that have the most significant effect on the financial statements.
Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Companyâs future taxable income against which the deferred tax assets can be utilized.
Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Contingent liabilities - At each balance sheet date basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.
Significant estimates
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.
Government grants - Grants receivables are based on estimates for utilisation of grant as per the regulations as well as analysing actual outcomes on a regular basis and compliance with stipulated conditions. Changes in estimates or non-compliance of stipulated conditions could lead to significant changes in grant income and are accounted prospectively over the balance life of asset.
Defined benefit obligation (DBO) - Managementâs estimate of the DBO is based on a number of underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Useful lives of depreciable/amortisable assets - Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utilisation of assets.
Provisions - estimate for provisions recognised is based on management best estimate of the expenditure required to settle the present obligation at the year end and is based on historical experience, expected changes in economic conditions, changes in exchange rates.
5. Recent pronouncement -
The Company has applied the following amendments for the first time for their annual reporting period commencing April 1,2022:
Ind AS 16 - Property Plant and equipment-
The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment.
Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets-
The amendment specifies that the âcost of fulfillingâ a contract comprises the âcosts that relate directly to the contractâ. Costs that related directly to a contract can either be incremental costs of fulfilling that contract
(Examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).
The above amendments did not have any material impact on the amounts recognised in prior periods and current period.
New Standards/Amendments notified but not yet effective:
Ministry of Corporate Affairs (MCA), on March 31,2023, through the Companies (Indian Accounting Standards (Ind AS)) Amendment Rules, 2023 amended certain existing Ind ASs on miscellaneous issues with effect from 1st April 2023. Following are few key amendments relevant to the Company:
i. Ind AS 1 - Presentation of Financial Statements & Ind AS 34 -Interim Financial Reporting - Material accounting policy information (including focus on how an entity applied the requirements of Ind AS) shall be disclosed instead of significant accounting policies as part of financial statements.
ii. Ind AS 107 - Financial Instruments: Disclosures - Information about the measurement basis for financial instruments shall be disclosed as part of material accounting policy information.
iii. Ind AS 8 - Accounting policies, changes in accounting estimate and errors-Clarification on what constitutes an accounting estimate provided.
iv. Ind AS 12 - Income Taxes - In case of a transaction which give rise to equal taxable and deductible temporary differences, the initial recognition exemption from deferred tax is no longer applicable and deferred tax liability & deferred tax asset shall be recognized on gross basis for such cases.
The Company does not expect the effect of this on the financial statements to be material, based on preliminary evaluation.
Mar 31, 2018
1. Summary of significant accounting policies
The financial statements have been prepared using the significant accounting policies and measurement bases summarised below. These were used throughout all periods presented in the financial statements, except where the Company has applied certain exemptions upon transition to Ind AS, as summarised in note 47.
1.1 Current versus non-current classification
All assets and liabilities have been classified as current or non-current as per the Companyâs operating cycle and other criteria set out in the Companies Act, 2013.
1.2 Property, plant and equipment (PPE)
Recognition and initial measurement
Properties plant and equipment are stated at their cost of acquisition. Any trade discount and rebates are deducted in arriving at the purchase price. Property, plant and equipment purchased on deferred payment basis are recorded at equivalent cash price. The difference between the cash price equivalent and the amount payable is recognised as interest expense over the deferred payment period. Spares having useful life of more than one year and having material value in each case, are capitalised under the respective heads as and when available for use.
Subsequent measurement (depreciation and useful lives)
Property, plant and equipment are subsequently measured at cost less accumulated depreciation and impairment losses. Depreciation on Buildings and Plant and Equipment is charged on pro-rata basis on Straight Line Method based on the life assigned to each asset in accordance with Schedule II of Companies Act, 2013. Depreciation on rest of the property, plant and equipment has been provided on Written Down Value basis based on the life assigned to each asset in accordance with Schedule II of Companies Act, 2013.
De-recognition
An item of property, plant and equipment and any significant component initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset/significant component (calculated as the difference between the net disposal proceeds and the carrying amount of the asset/significant component) is recognised in statement of profit and loss, when the asset is derecognised.
1.3 Intangible assets
Recognition and initial measurement Intangible assets are stated at their cost of acquisition. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent measurement (amortisation)
Intangible assets are amortized over their respective individual estimated useful life on written down value basis commencing from the date, the asset is available to the company for its use
51.4 Inventories
Inventories are valued as follows:
Raw materials, loose tools and stores and spares Raw materials, loose tools and stores and spares are valued at lower of cost and net realizable value. Cost of raw materials, loose tools and stores and spares is determined on a FIFO(First in first out) basis. Work-in-progress and finished goods Work-in-progress and finished goods is measured at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
1.5 Revenue recognition
Revenue is recognised when it is probable that the economic benefits will flow to the Company and it can be reliably measured. Revenue is measured at the fair value of the consideration received/receivable net of rebate and taxes. The Company applies the revenue recognition criteria to each separately identifiable component of the revenue transaction as set out below.
Sale of goods
Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer. The Company collects sales taxes, value added taxes (âVATâ) and Goods and Service Tax (âGSTâ) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue.
Export benefits
Export benefits constituting Duty Draw back and Export Promotion Capital Goods scheme (EPCG) are accounted for on accrual basis when there is reasonable assurance that the company will comply with the conditions attached to them and the export benefits will be received. Export benefits under Duty Draw back scheme and EPCG are considered as other operating income.
Interest
Interest income is recorded on accrual basis using the effective interest rate (EIR) method.
1.6 Borrowing costs
Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged as expense to the statement of profit and loss in the period for which they relate to.
1.7 Leases
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss. Contingent rentals are recognised as expenses in the periods in which they are incurred. Lease management fees, legal charges and other initial direct costs are capitalized.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term, except in case where lease rentals are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost.
1.8 Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on internal/external factors, that an asset may be impaired. If any such indication exists, the recoverable amount of the asset or the cash generating unit is estimated. If such recoverable amount of the asset or cash generating unit to which the asset belongs is less than its carrying amount. The carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If, at the reporting date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. Impairment losses previously recognized are accordingly reversed in the statement of profit and loss.
1.9 Foreign currency
Functional and presentation currency
The financial statements are presented in Indian Rupee (T) which is also the functional and presentation currency of the Company.
Initial recognition
Foreign currency transactions are recorded in the functional currency, by applying to the exchange rate between the functional currency and the foreign currency at the date of the transaction.
Conversion
Foreign currency monetary items are converted to functional currency using the closing rate. Nonmonetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transaction.
Exchange difference
Exchange differences arising on settlement of transactions are recognized as income or expense in the year in which they arise. However, the Company has opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules 2009 relating to Accounting Standard-11 notified by Government of India on 31st March, 2009 (as amended on 29th December 2011), which will continue in accordance with Ind-AS 101 for all pre-existing long term foreign currency monetary items as at 31st March 2017. Accordingly, exchange differences relating to long term monetary items, arising during the year, in so far as they relate to the acquisition of fixed assets, are adjusted in the carrying amount of such assets.
1.10 Financial instruments
Initial recognition and measurement Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below.
Non-derivative financial assets
Subsequent measurement
i. Financial assets carried at amortised cost â A âfinancial assetâ is measured at the amortised cost if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
ii. Investments in equity instruments of subsidiary- Investments in equity instruments of subsidiary are accounted for at cost in accordance with Ind AS 27 Separate Financial Statements.
iii. Investments in other equity instruments -Investments in equity instruments which are held for trading are classified at Fair Value Through Profit or Loss (FVTPL). For all other equity instruments, the Company makes an irrevocable choice upon initial recognition, on an instrument by instrument basis, to classify the same either as at Fair Value through Other Comprehensive Income (FVOCI) or Fair Value Through Profit or Loss (FVTPL). Amounts presented in other comprehensive income are not subsequently transferred to profit or loss. However, the Company transfers the cumulative gain or loss within equity. Dividends on such investments are recognized in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
De-recognition of financial assets A financial asset is primarily de-recognised when the contractual rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset. Non-derivative financial liabilities Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortised cost using the effective interest method.
De-recognition of financial liabilities A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
Forward contracts
The Company has entered into certain forward (derivative) contracts to hedge risks which are not designated as hedges. These derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. Any profit or loss arising on cancellation or renewal of such derivative contract is recognised as income or as expense in statement of profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.11 Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets. The Company assesses on forward looking basis the expected credit losses associated with its assets and impairment methodology applied depends on whether there has been a significant increase in credit risk.
Trade receivables
In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
Other financial assets
In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.
When making this assessment, the Company compares the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort.
1.12 Income taxes
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognized in other comprehensive income or directly in equity.
Current tax is determined as the tax payable in respect of taxable income for the year and is computed in accordance with relevant tax regulations. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity).
Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit and loss (either in other comprehensive income or in equity).
1.13 Cash and cash equivalents
Cash and cash equivalents include cash in hand, balance with banks in current in current accounts and other short term highly liquid investments with original maturity of three months and less.
1.14 Research and Development Costs
Revenue expenditure incurred on research and development has been charged to the statement of profit and loss for the year in which it is incurred. Capital expenditure is included in respective heads under Property, plant and equipment.
1.15 Employee benefits
Short term employee benefits Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of short term employee benefits to be paid in exchange for employee services are recognised as an expense as the related service is rendered by employees.
Defined Contribution Plan
Contribution towards provident fund for certain employees is made to the regulatory authorities, where the Company has no further obligations. Payments to defined contribution retirement benefit schemes (such as Provident Fund, Employeeâs State Insurance Corporation) are charged to the statement of profit and loss of the year in which contribution to such schemes becomes due.
Defined Benefit Plan
For defined benefit schemes, the cost of providing benefits is determined using Projected Unit Credit Method, with actuarial valuation being carried out at each balance sheet date. Actuarial gains/losses resulting from re-measurements of the liability are included in other comprehensive income.
The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligations as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets.
The Company makes annual contribution to the Employeeâs Company Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of India, a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of 6 months. Vesting occurs upon completion of 5 years of continued service.
Other long-term employee benefits Liability in respect of leave encashment becoming due or expected to be availed within one year from the balance sheet date is recognised on the basis of discounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of leave encashment becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method.
Actuarial gains and losses arising from past experience and changes in actuarial assumptions are charged to statement of profit and loss in the year in which such gains or losses are determined.
1.16 Provisions
Provisions are recognized when the Company has a present obligation as a result of past events, for which it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions required to settle are reviewed regularly and are adjusted where necessary to reflect the current best estimates of the obligation. Provisions are discounted to their present values, where the time value of money is material.
1.17 Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Contingent assets are neither recognised nor disclosed except when realisation of income is virtually certain, related asset is disclosed.
1.18 Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
1.19 Significant management judgement and estimates
When preparing the financial statements, management makes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses
Significant management judgements
The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the financial statements.
Identification and Classification of leases- The Company enters into take or pay arrangements and leasing arrangements for use of various assets. The identification of arrangement as a lease and subsequent classification of leasing arrangement as a finance lease or operating lease is based on an assessment of several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lesseeâs option to purchase and estimated certainty of exercise of such option, proportion of lease term to the assetâs economic life, proportion of present value of minimum lease payments to fair value of leased asset and extent of specialized nature of the leased asset.
Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Companyâs future taxable income against which the deferred tax assets can be utilized.
Evaluation of indicators for impairment of assets -
The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Contingent liabilities - At each balance sheet date basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement. Significant estimates
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.
Government grants - Grants receivables are based on estimates for utilisation of grant as per the regulations as well as analysing actual outcomes on a regular basis and compliance with stipulated conditions. Changes in estimates or non-compliance of stipulated conditions could lead to significant changes in grant income and are accounted prospectively over the balance life of asset.
Defined benefit obligation (DBO) - Managementâs estimate of the DBO is based on a number of underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses. Useful lives of depreciable/amortisable assets -Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utilisation of assets.
Provisions - estimate for provisions recognised is based on management best estimate of the expenditure required to settle the present obligation at the year end and is based on historical experience, expected changes in economic conditions, changes in exchange rates.
Fair value measurements- Management applies valuation techniques to determine the fair value of financial instruments such as derivatives. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Estimated fair values may vary from the actual prices that would be achieved in an armâs length transaction at the reporting date.
Mar 31, 2015
1.1 Basis of Preparation of Financial Statements
The Financial Statements are prepared under the historical cost
convention on accrual basis and in accordance with the Generally
Accepted Accounting Principles in India (Indian GAAP) to comply with
the Accounting Standards specified under Section 133 of the Companies
Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and
the relevant provisions of the Companies Act, 2013.
Accounting Policies not specifically referred to otherwise are
consistent and in accordance with generally accepted accounting
principles.
1.2 Use of Estimates
In preparing Company's financial statements in conformity with
accounting principles generally accepted in India, the Management is
required to make estimates & assumptions that affect the reported
amount of Assets & Liabilities and the disclosure of Contingent
Liabilities at the date of the Financial Statements and the reported
amount of revenues & expenses during the reporting period. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognized in the period the same is determined.
1.3 Inventories
The basis of valuation for various categories of inventories is as
follows:- Stores, Spares and : At cost (First in First out) Loose Tools
and Raw Materials
Work in progress : At material cost plus conversion cost on the basis
of absorption costing or Net Realizable value, whichever is lower
Finished Goods : At material cost plus conversion cost on the basis of
absorption costing or Net Realizable value, whichever is lower
(Inclusive of excise duty payable)
Scrap : At realizable value.
Stock in Trade includes Raw Materials & Scrap.
1.4 Provisions, Contingent Liabilities and Contingent Assets
The Company makes a provision when there is a present obligation as a
result of a past event where the outflow of economic resources is
probable & a reliable estimate of the amount of obligation can be made.
The disclosure is made for possible or present obligation that may
require outflow of resources as contingent liability in the financial
statements. Depending on the facts of each case and after due
evaluation of relevant legal aspects, claims against the Company not
acknowledged as debts are disclosed as contingent liabilities. In
respect of the statutory matters, contingent liabilities are disclosed
only for those demand(s) that are contested by the Company.
Contingent assets are neither recognized nor disclosed in the financial
statements.
1.5 Revenue Recognition
The revenue from Sale of Goods is recognized on transfer of all
significant risk & rewards of ownership to the buyer. Sale value is
inclusive of excise duty. Price revisions of goods sold are accounted
for at the time of billing except in the case where reasonable
certainty has been measured up to the date of Balance Sheet.
Export Sale is accounted for at exchange rate notified on monthly basis
by Central Govt. under Custom Law. Bills outstanding on the Balance
Sheet date are reinstated with the exchange rate on that date and the
difference on this account is booked in the Profit & Loss Account.
Interest income is recognized on time proportion basis taking into
account the amount outstanding and rate applicable. Dividend income is
recognized, when right to receive is established.
1.6 Fixed Assets and Depreciation
All Tangible & Intangible Assets are stated at cost less accumulated
depreciation and impairment of Loss, if any. Depreciation on Buildings
and Plant and Equipment is charged on pro-rata basis on Straight Line
Method based on the life assigned to each asset in accordance with
Schedule II of Companies Act, 2013. Intangible assets are amortized
over their respective individual estimated useful life on written down
value basis commencing from the date, the asset is available to the
company for its use. Depreciation on rest of the fixed assets has been
provided on Written Down Value basis based on the life assigned to each
asset in accordance with Schedule II of Companies Act, 2013.
1.7 Retirement Benefits
Payments to defined contribution retirement benefit schemes are charged
as an expense as they fall due.
For defined benefit schemes, the cost of providing benefits is
determined using Projected Unit Credit Method, with actuarial valuation
being carried out at each balance sheet date. Actuarial gain & losses
are recognized in full in the Profit & Loss account for the period in
which they occur. Past service cost is recognized to the extent the
benefits are already vested, and otherwise is amortized on a
Straight-line method over the average period until the benefits become
vested.
The retirement benefit obligation recognized in the Balance Sheet
represents the present value of the defined benefit obligations as
adjusted for unrecognized past service cost, and as reduced by the fair
value of scheme assets. Any asset resulting from this calculation is
limited to past service cost, plus the present value of available
refunds and reductions in future contributions to the scheme.
(i) Gratuity Plan
The Company makes annual contribution to the Employee's Group
Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of
India, a funded defined benefit plan for qualifying employees. The
scheme provides for lump sum payment to vested employees at retirement,
death while in employment or on termination of employment of an amount
equivalent to 15 days salary payable for each completed year of service
or part thereof in excess of 6 months. Vesting occurs upon completion
of 5 years of continued service.
(ii) Leave Encashment Plan
The Company is making a provision on actuarial basis for leave
encashment benefit of the employees, the amount of provision & paid
during the year is charged to Profit & Loss Account.
1.8 Foreign Currency Transactions
(i) Transaction in foreign currencies is converted in rupees at the
rates prevailing on the date of transaction. Loans and other
outstanding balances in foreign currencies at the end of the year are
converted at the rates prevailing on that date.
Pursuant to the notification of the Companies (Accounting Standards)
Amended Rules 2009 issued on 31st March 2009, exchange differences
relating to long term monetary items, arising during the year, in so
far as they relate to the acquisition of a depreciable capital asset
are added to / deducted from the cost of the asset w.e.f 1st April 2007
and depreciated over the balance life of the asset.
(ii) Derivative Instruments and Hedge accounting:
The Company uses foreign exchange forward contracts and options to
hedge its exposure to movements in foreign exchange rates. These
foreign exchange forward contracts and options are not used for trading
or speculation purposes.
For unexpired forward contracts or options that are designated as
effective cash flow hedges the gain or loss from the effective portion
of the hedge is recorded and reported directly in the shareholders'
fund ( under the head "Hedging Reserve) and will be transferred to
Profit and Loss account upon the occurrence of the events when the
contracts get transacted.
The Company recognizes gains or losses from forward contracts and
options that are not designated as effective cash flow hedges for
accounting purposes in the profit and loss account in the period in
which they occur.
1.9 Investments
Long term investments are carried at cost. However provision for
diminution, if any, is made to recognize a decline, other than
temporary, in the value of investment.
1.10 Borrowing Cost
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to Profit and Loss account.
1.11 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
1.12 Provision for Current & Deferred Taxes
Tax expenses comprise current and deferred taxes. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the applicable tax rates and the provisions of the
Income Tax Act, 1961 and other applicable tax laws. Deferred income
taxes reflects the impact of current period timing difference between
taxable and accounting income for the period and reversal of timing
differences of earlier years. Deferred taxes is measured based on the
tax rates and the tax laws enacted or substantively enacted as at the
balance sheet date. Deferred tax assets are recognized only to the
extent that there is reasonable certainty and sufficient future taxable
income will be available against which such deferred tax assets can be
realized. Deferred tax assets are recognized on carry forward of
unabsorbed depreciation and tax losses only if there is virtual
certainty that such deferred tax assets can be realized against future
taxable profit.
1.13 Research and Development Costs
Revenue expenditure incurred on research and development has been
charged to the Profit & Loss Account in the year it is incurred.
Capital expenditure is included in respective heads under fixed assets.
1.14 Impairment of Assets
At each Balance Sheet date, the Company reviews whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount. If the carrying
amount of the asset exceeds its recoverable amount, an impairment loss
is recognized in the Profit & Loss Account to the extent the carrying
amount exceeds the recoverable amount.
1.15 Prior period and extra ordinary items and changes in accounting
policies having material impact on the financial affairs of the Company
are disclosed appropriately.
1.16 Material events occurring after the Balance Sheet date are taken
into cognizance and disclosed appropriately.
Mar 31, 2014
1.1 Basis of Preparation of Financial Statements
The Financial Statements are prepared under the historical cost
convention on accrual basis and are materially in conformity with the
mandatory accounting standards issued under Companies (Accounting
Standards) Amended Rules 2009 & relevant provisions of the Companies
Act, 1956.
Accounting Policies not specifically referred to otherwise are
consistent and in accordance with generally accepted accounting
principles.
1.2 Use of Estimates
In preparing Company''s financial statements in conformity with
accounting principles generally accepted in India, the Management is
required to make estimates & assumptions that affect the reported
amount of Assets & Liabilities and the disclosure of Contingent
Liabilities at the date of the Financial Statements and the reported
amount of revenues & expenses during the reporting period. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognized in the period the same is determined.
1.3 Inventories
The basis of valuation for various categories of inventories is as
follows:-
Stores, Spares and Loose Tools and Raw Materials: At cost (First in
First out) Work in progress: At material cost plus conversion cost on
the basis of absorption costingorNet Realisablevalue, whichever is
lower Finished Goods: At material cost plus conversion cost on the
basis of absorption costing or Net Realisable value, whichever is lower
(Inclusive of excise duty payable)
Scrap: At realizable value.
Stock in Trade includes Raw Materials & Scrap.
1.4 Provisions, Contingent Liabilities and Contingent Assets
The Company makes a provision when there is a present obligation as a
result of a past event where the outflow of economic resources is
probable & a reliable estimate of the amount of obligation can be made.
The disclosure is made for possible or present obligation that may
require outflow of resources as contingent liability in the financial
statements. Depending on the facts of each case and after due
evaluation of relevant legal aspects, claims against the Company not
acknowledged as debts are disclosed as contingent liabilities. In
respect of the statutory matters, contingent liabilities are disclosed
only for those demand(s) that are contested by the Company.
Contingent assets are neither recognized nor disclosed in the financial
statements.
1.5 Revenue Recognition
The revenue from Sale of Goods is recognized on transfer of all
significant risk & rewards of ownership to the buyer. Sale value is
inclusive of excise duty. Price revisions of goods sold are accounted
for at the time of billing except in the case where reasonable
certainty has been measured up to the date of Balance Sheet.
Export Sale is accounted for at exchange rate notified on monthly basis
by Central Govt. under Custom Law. Bills outstanding on the Balance
Sheet date are reinstated with the exchange rate on that date and the
difference on this account is booked in the Profit & Loss Account.
Interest income is recognized on time proportion basis taking into
account the amount outstanding and rate applicable. Dividend income is
recognized, when right to receive is established.
1.6 Fixed Assets and Depreciation
All Tangible & Intangible Assets are stated at cost less accumulated
depreciation and impairment of Loss, if any. Depreciation on Buildings
and Plant and Equipment is charged on pro-rata basis on Straight Line
Method at the rates prescribed in schedule XIV of the Companies Act
1956. Depreciation on Fixed Assets costing less then Rs.5000/-, each in
value, are depreciated at the rate of 100% in the year of purchase.
Intangible assets are amortized over their respective individual
estimated useful life on written down value basis commencing from the
date, the asset is available to the company for its use. Depreciation
on rest of the fixed assets has been provided at the rates prescribed
in Schedule XIV of The Companies Act 1956 on Written Down Value basis.
1.7 Retirement Benefits
Payments to defined contribution retirement benefit schemes are charged
as an expense as they fall due.
For defined benefit schemes, the cost of providing benefits is
determined using Projected Unit Credit Method, with actuarial valuation
being carried out at each balance sheet date. Actuarial gain & losses
are recognized in full in the Profit & Loss account for the period in
which they occur. Past service cost is recognized to the extent the
benefits are already vested, and otherwise is amortized on a
Straight-line method over the average period until the benefits become
vested.
The retirement benefit obligation recognized in the Balance Sheet
represents the present value of the defined benefit obligations as
adjusted for unrecognized past service cost, and as reduced by the fair
value of scheme assets. Any asset resulting from this calculation is
limited to past service cost, plus the present value of available
refunds and reductions in future contributions to the scheme.
(i) Gratuity Plan
The Company makes annual contribution to the Employee''s Group
Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of
India, a funded defined benefit plan for qualifying employees. The
scheme provides for lump sum payment to vested employees at retirement,
death while in employment or on termination of employment of an amount
equivalent to 15 days salary payable for each completed year of service
or part thereof in excess of 6 months. Vesting occurs upon completion
of 5 years of continued service.
(ii) Leave Encashment Plan
The Company is making a provision on actuarial basis for leave
encashment benefit of the employees, the amount of provision & paid
during the year is charged to Profit & Loss Account.
1.8 Foreign Currency Transactions
(i) Transaction in foreign currencies is converted in rupees at the
rates prevailing on the date of transaction. Loans and other
outstanding balances in foreign currencies at the end of the year are
converted at the rates prevailing on that date.
Pursuant to the notification of the Companies (Accounting Standards)
Amended Rules 2009 issued on 31st March 2009, exchange differences
relating to long term monetary items, arising during the year, in so
far as they relate to the acquisition of a depreciable capital asset
are added to / deducted from the cost of the asset w.e.f 1st April 2007
and depreciated over the balance life of the asset.
(ii) Derivative Instruments and Hedge accounting:
The Company uses foreign exchange forward contracts and options to
hedge its exposure to movements in foreign exchange rates. These
foreign exchange forward contracts and options are not used for trading
or speculation purposes.
For unexpired forward contracts or options that are designated as
effective cash flow hedges the gain or loss from the effective portion
of the hedge is recorded and reported directly in the shareholders''
fund ( under the head "Hedging Reserve") and will be transferred to
Profit and Loss account upon the occurrence of the events when the
contracts get transacted.
The Company recognizes gains or losses from forward contracts and
options that are not designated as effective cash flow hedges for
accounting purposes in the profit and loss account in the period in
which they occur.
1.9 Investments
Long term investments are carried at cost. However provision for
diminution, if any, is made to recognize a decline, other than
temporary, in the value of investment.
1.10 Borrowing Cost
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use. All other
borrowing costs are charged to Profit and Loss account.
1.11 Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
1.12 Provision for Current & Deferred Taxes
Tax expenses comprise current and deferred taxes. Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act, 1961. Deferred income taxes
reflects the impact of current period timing difference between taxable
and accounting income for the period and reversal of timing differences
of earlier years. Deferred taxes is measured based on the tax rates and
the tax laws enacted or substantively enacted as at the balance sheet
date. Deferred tax assets are recognized only to the extent that there
is reasonable certainty and sufficient future taxable income will be
available against which such deferred tax assets can be realized.
Deferred tax assets are recognized on carry forward of unabsorbed
depreciation and tax losses only if there is virtual certainty that
such deferred tax assets can be realized against future taxable profit.
1.13 Research and Development Costs
Revenue expenditure incurred on research and development has been
charged to the Profit & Loss Account in the year it is incurred.
Capital expenditure is included in respective heads under fixed assets.
1.14 Impairment of Assets
At each Balance Sheet date, the Company reviews whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount. If the carrying
amount of the asset exceeds its recoverable amount, an impairment loss
is recognized in the Profit & Loss Account to the extent the carrying
amount exceeds the recoverable amount.
1.15 Prior period and extra ordinary items and changes in accounting
policies having material impact on the financial affairs of the Company
are disclosed appropriately.
1.16 Material events occurring after the Balance Sheet date are taken
into cognizance and disclosed appropriately.
B) Company opted for the option to follow principles of notification of
the Companies (Accounting Standards) Amendment Rules 2009 issued on
31st March 2009. Thereby exchange differences relating to long-term
monetary items, arising during the year, in so far as they relate to
the acquisition of a depreciable capital asset are added to/ deducted
from the cost of the asset under the head "Addition / Deletion" of Note
11 and depreciated over the balance life of the asset.
Accordingly, Rs. 4,99,75,770/- (Previous Year Rs. 2,96,73,413/-) have
been included to the cost of fixed assets and profit for the year is
higher by Rs. 4,99,75,770/- (Previous Year profit for the year was
higher by Rs. 2,96,73,413/-)
Mar 31, 2012
A) Basis of Preparation of Financial Statements.
i) The Financial Statements are prepared under the historical cost
convention on accrual basis and are materially in conformity with the
mandatory accounting standards issued under Companies (Accounting
Standards) Amended Rules 2009 & relevant provisions of the Companies
Act, 1956.
ii) During the year ended 31 March 2012, the revised Schedule VI
notified under the Companies Act 1956, has become applicable to the
Company, for preparation and presentation of its financial statements.
The adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
iii) Accounting Policies not specifically referred to otherwise are
consistent and in accordance with generally accepted accounting
principles.
b) Fixed Assets and Depreciation:
All Tangible & Intangible Assets are stated at cost less accumulated
depreciation. Depreciation on Buildings and Plant and Equipment is
charged on pro-rata basis on Straight Line Method at the rates
prescribed in schedule XIV of the Companies Act 1956. Depreciation on
Fixed Assets costing less then Rs.5000/-, each in value, are
depreciated at the rate of 100% in the year of purchase. Depreciation
on rest of the fixed assets has been provided at the rates prescribed
in Schedule XIV of the Companies Act 1956 on Written Down Value basis.
c) Investments:
Long term investments are carried at cost. However provision
fordiminution, if any, is made to recognize a decline, other than
temporary, in the value of investment.
d) Inventories:
The basis of valuation for various categories of inventories is as
follows:-
Stores, Spares and Loose Tools and Raw Materials:
At cost (First in First out)
Work in progress: At material cost plus conversion cost on the basis of
absorption costing or Net Realisable value whichever is lower
Finished Goods: At material cost plus conversion cost on the basis of
absorption costing or Net
Realisable value whichever is lower (Inclusive of excise duty payable)
Scrap: At realizable value.
Stock in Trade includes Raw Materials & Scrap.
e) Impairment of Assets:
At each Balance Sheet date, the Company reviews whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount. If the carrying
amount of the asset exceeds its recoverable amount, an impairment loss
is recognized in the Profit & Loss Account to the extent the carrying
amount exceeds the recoverable amount.
f) Retirement Benefits:
Payments to defined contribution retirement benefit schemes are charged
as an expense as they fall due.
For defined benefit schemes, the cost of providing benefits is
determined using Projected Unit Credit Method, with actuarial valuation
being carried out at each balance sheet date. Actuarial gain & losses
are recognized in full in the Profit & Loss account forthe period in
which they occur. Past service cost is recognized to the extent the
benefits are already vested, and otherwise is amortized on a
Straight-line method over the average period until the benefits become
vested.
The retirement benefit obligation recognized in the Balance Sheet
represents the present value of the defined benefit obligations as
adjusted for unrecognized past service cost, and as reduced by the fair
value of scheme assets. Any asset resulting from this calculation is
limited to past service cost, plus the present value of available
refunds and reductions in future contributions to the scheme.
(a) Gratuity Plan
The Company makes annual contribution to the Employee's Group
Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of
India, a funded defined benefit plan for qualifying employees. The
scheme provides for lump sum payment to vested employees at retirement,
death while in employment or on termination of employment of an amount
equivalent to 15 days salary payable for each completed year of service
or part thereof in excess of 6 months. Vesting occurs upon completion
of 5 years of continued service.
(b) Leave Encashment Plan
The Company is making a provision on actuarial basis for leave
encashment benefit of the employees, the amount of provision & paid
during the year is charged to Profit & Loss Account.
g) Sales:
The revenue from Sale of Goods is recognized on transfer of all
significant risk & rewards of ownership to the buyer. Sale value is
inclusive of excise duty. Price revisions of goods sold are accounted
for at the time of billing except in the case where reasonable
certainty has been measured up to the date of Balance Sheet.
Export Sale is accounted for at exchange rate notified on monthly basis
by Central Govt, under Custom Law. Bills outstanding on the Balance
Sheet date are reinstated with the exchange rate on that date and the
difference on this account is booked in the Profit & Loss Account.
h) Foreign Currency Transactions:
(i) Transaction in foreign currencies is converted in rupees at the
rates prevailing on the date of transaction. Loans and other
outstanding balances in foreign currencies at the end of the year are
converted at the rates prevailing on that date.
Pursuant to the notification of the Companies (Accounting Standards)
Amended Rules 2009 issued on 31st March 2009, exchange differences
relating to long term monetary items, arising during the year, in so
far as they relate to the acquisition of a depreciable capital asset
are added to / deducted from the cost of the asset w.e.f 1st April 2007
and depreciated over the balance life of the asset.
(ii) Derivative Instruments and Hedge accounting: The Company uses
foreign exchange forward contracts and options to hedge its exposure to
movements in foreign exchange rates. These foreign exchange forward
contracts and options are not used fortrading or speculation purposes.
For unexpired forward contracts or options that are designated as
effective cash flow hedges the gain or loss from the effective portion
of the hedge is recorded and reported directly in the shareholders'
fund ( under the head "Hedging Reserve) and will be transferred to
Profit and Loss account upon the occurrence of the events when the
contracts get transacted. The Company recognizes gains or losses from
forward contracts and options that are not designated as effective cash
flow hedges for accounting purposes in the profit and loss account in
the period in which they occur.
i) Taxation:
Income Tax provision has been made as per the provisions of the Income
Tax Act, 1961.
j) Deferred Taxes:
Deferred tax resulting from timing difference between taxable and
accounting income is accounted for, using the tax rates and laws that
are enacted or substantially enacted as on the balance sheet date.
k) Prior period and extra ordinary items and changes in accounting
policies having material impact on the financial affairs of the Company
are disclosed appropriately.
I) Material events occurring afterthe Balance Sheet date are taken into
cognizance and disclosed appropriately.
m) Interest on borrowed funds: -
In respect of new units/major expansion the interest paid/payable on
borrowed funds, attributable to construction of building and
acquisition/erection of Plant & Machinery is capitalized up to the date
of completion of construction / acquisition/erection of aforesaid
assets.
n) Provisions, Contingent Liabilities and Contingent Assets
The Company makes a provision when there is a present obligation as a
result of a past event where the outflow of economic resources is
probable & a reliable estimate of the amount of obligation can be made.
The disclosure is made for possible or present obligation that may
require outflow of resources as contingent liability in the financial
statements. Depending on the facts of each case and after due
evaluation of relevant legal aspects, claims against the Company not
acknowledged as debts are disclosed as contingent liabilities. In
respect of the statutory matters, contingent liabilities are disclosed
only for those demand(s) that are contested by the Company.
Contingent assets are neither recognized nor disclosed in the financial
statements.
o) Use of Estimates:
In preparing Company's financial statements in conformity with
accounting principles generally accepted in India, the Management is
required to make estimates & assumptions that affect the reported
amount of Assets & Liabilities and the disclosure of Contingent
Liabilities at the date of the Financial Statements and the reported
amount of revenues & expenses during the reporting period. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognized in the period the same is determined.
p) Research and Development Costs:
Revenue expenditure incurred on research and development has been
charged to the Profit & Loss Account in the year it is incurred.
Capital expenditure is included in respective heads under fixed assets.
Mar 31, 2011
A) Basis of accounting.
i) The Financial Statements are prepared under the historical cost
convention on accrual basis and are materially in conformity with the
mandatory accounting standards issued under Companies (Accounting
Standards) Amended Rules 2009 & relevant provisions of the Companies
Act, 1956.
ii) Accounting Policies not specifically referred to otherwise are
consistent and in accordance with generally accepted accounting
principles.
b) Fixed Assets and Depreciation:
Tangible Fixed Assets are stated at cost less accumulated depreciation.
Depreciation on Buildings and Plant and Machinery is charged on
pro-rata basis on Straight Line Method at the rates prescribed in
schedule XIV of the Companies Act 1956. Depreciation on Fixed Assets
costing less then Rs.5000/-, each in value, are depreciated at the rate
of 100% in the year of purchase. Depreciation on rest of the fixed
assets has been provided at the rates prescribed in Schedule XIV of The
Companies Act 1956 on Written Down Value basis.
c) Investments:
Long term investments are carried at cost. However provision for
diminution, if any, is made to recognize a decline, other than
temporary, in the value of investment.
d) Inventories:
The bases of determining cost for various categories of inventories are
as follows:-
Stores, Spares and Loose Tools and Raw Materials: At cost (First in
First out)
Material in Transit: At cost
Work in progress: At material cost plus conversion cost on the basis of
absorption costing.
Finished Goods: At material cost plus conversion cost on the basis of
absorption costing. (inclusive of excise duty payable)
Scrap: At realizable value.
Stock in Trade includes Raw Materials and Scrap.
e) Impairment of Assets:
At each Balance Sheet date, the Company reviews whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount. If the carrying
amount of the asset exceeds its recoverable amount, an impairment loss
is recognized in the Profit & Loss Account to the extent the carrying
amount exceeds the recoverable amount.
f) Retirement Benefits:
Payments to defined contribution retirement benefit schemes are charged
as an expense as they fall due.
For defined benefit schemes, the cost of providing benefits is
determined using Projected Unit Credit Method, with actuarial valuation
being carried out at each balance sheet date. Actuarial gain & losses
are recognized in full in the Profit & Loss account for the period in
which they occur. Past service cost is recognized to the extent the
benefits are already vested, and otherwise is amortized on a
Straight-line method over the average period until the benefits become
vested.
The retirement benefit obligation recognized in the Balance Sheet
represents the present value of the defined benefit obligations as
adjusted for unrecognized past service cost, and as reduced by the fair
value of scheme assets. Any asset resulting from this calculation is
limited to past service cost, plus the present value of available
refunds and reductions in future contributions to the scheme.
(a) Gratuity Plan
The Company makes annual contribution to the Employee's Group
Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of
India, a funded defined benefit plan for qualifying employees. The
scheme provides for lump sum payment to vested employees at retirement,
death while in employment or on termination of employment of an amount
equivalent to 15 days salary payable for each completed year of service
or part thereof in excess of 6 months. Vesting occurs upon completion
of 5 years of continued service.
(b) Leave Encashment Plan
The Company is making a provision on actuarial basis for leave
encashment benefit of the employees, the amount of provision & paid
during the year is charged to Profit & Loss Account.
g) Sales:
The revenue from Sale of Goods is recognized on transfer of all
significant risk & rewards of ownership to the buyer which coincides
with dispatches of goods from factory to the customers in case of
domestic sales. Sale value is inclusive of excise duty. Price revisions
of goods sold are accounted for at the time of billing except in the
case where reasonable certainty has been measured up to the date of
Balance Sheet.
Export Sale is accounted for at exchange rate notified on monthly basis
by Central Govt. under Custom Law. Bills outstanding on the Balance
Sheet date are reinstated with the exchange rate on that date and the
difference on this account is booked in the Profit & Loss Account.
h) Foreign Currency Transactions:
(i) Transaction in foreign currencies is converted in rupees at the
rates prevailing on the date of transaction. Loans and other
outstanding balances in foreign currencies at the end of the year are
converted at the rates prevailing on that date.
Pursuant to the notification of the Companies (Accounting Standards)
Amended Rules 2009 issued on 31st March 2009, exchange differences
relating to long term monetary items, arising during the year, in so
far as they relate to the acquisition of a depreciable capital asset
are added to / deducted from the cost of the asset w.e.f 1st April 2007
and depreciated over the balance life of the asset.
(ii) Derivative Instruments and Hedge accounting:
The Company uses foreign exchange forward contracts and options to
hedge its exposure to movements in foreign exchange rates. These
foreign exchange forward contracts and options are not used for trading
or speculation purposes.
For unexpired forward contracts or options that are designated as
effective cash flow hedges the gain or loss from the effective portion
of the hedge is recorded and reported directly in the shareholders'
fund ( under the head ÃHedging Reserve) and will be transferred to
Profit and Loss account upon the occurrence of the events when the
contracts get transacted.
The Company recognizes gains or losses from forward contracts and
options that are not designated as effective cash flow hedges for
accounting purposes in the profit and loss account in the period in
which they occur.
i) Taxation:
Income Tax provision has been made as per the provisions of the Income
Tax Act, 1961.
j ) Deferred Taxes :
Deferred tax Liability/(Assets) for the year is charged to current
year's profit. Deferred Tax Liability (Net) is on account of timing
difference in depreciation, leave encashment etc.
k ) Prior period and extra ordinary items and changes in accounting
policies having material impact on the financial affairs of the Company
is disclosed appropriately.
l) Material events occurring after the Balance Sheet date are taken
into cognizance and disclosed appropriately.
m) Interest on borrowed funds:-
In respect of new units/major expansion the interest paid/payable on
borrowed funds, attributable to construction of building and
acquisition/erection of Plant & Machinery is capitalized up to the date
of completion of construction / acquisition/erection of aforesaid
assets.
n) Provisions, Contingent Liabilities and Contingent Assets
The Company makes a provision when there is a present obligation as a
result of a past event where the outflow of economic resources is
probable & a reliable estimate of the amount of obligation can be made.
The disclosure is made for possible or present obligation that may
require outflow of resources as contingent liability in the financial
statements.
o) Use of Estimates:
In preparing Company's financial statements in conformity with
accounting principles generally accepted in India, the Management is
required to make estimates & assumptions that affect the reported
amount of Assets & Liabilities and the disclosure of Contingent
Liabilities at the date of the Financial Statements and the reported
amount of revenues & expenses during the reporting period. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognized in the period the same is determined.
p) Research and Development Costs:
Revenue expenditure incurred on research and development has been
charged to the Profit & Loss Account in the year it is incurred.
Capital expenditure is included in respective heads under fixed assets.
Mar 31, 2010
A) Basis of accounting.
i) The Financial Statements are prepared under the historical cost
convention on accrual basis and are materially in conformity with the
mandatory accounting standards issued under Companies (Accounting
Standards) Amended Rules 2009 & relevant provisions of the Companies
Act, 1956.
ii) Accounting Policies not specifically referred to otherwise are
consistent and in accordance with generally accepted accounting
principles.
b) Fixed Assets and Depreciation:
Tangible Fixed Assets are stated at cost less accumulated depreciation.
Depreciation on Buildings and Plant and Machin- ery is charged on
pro-rata basis on Straight Line Method at the rates prescribed in
schedule XIV of the Companies Act 1956. Depreciation on Fixed Assets
costing less then Rs.5000/-, each in value, are depreciated at the rate
of 100% in the year of purchase. Depreciation on rest of the fixed
assets has been provided at the rates prescribed in Schedule XIV of The
Companies Act 1956 on Written Down Value basis.
c) Investments:
Long term investments are carried at cost. However provision for
diminution, if any, is made to recognize a decline, other than
temporary, in the value of investment.
d) Inventories:
The basis of determining cost for various categories of inventories are
as follows:- Stores, Spares and Loose Tools and Raw Materials: At cost
(First in First out) Material in Transit: At cost Work in progress:
At material cost plus conversion cost on the basis of
absorption costing. Finished Goods: At material cost plus conversion
cost on the basis of absorption costing, (inclusive of excise duty
payable) Scrap: At realizable value.
Stock in Trade includes Raw Materials and Scrap.
e) Impairment of Assets:
At each Balance Sheet date, the Company reviews whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount. If the carrying
amount of the asset exceeds its recoverable amount, an impairment loss
is recognized in the Profit & Loss Account to the extent the carrying
amount exceeds the recoverable amount.
f) Retirement Benefits:
Payments to defined contribution retirement benefit schemes are charged
as an expense as they fall due.
For defined benefit schemes, the cost of providing benefits is
determined using Projected Unit Credit Method, with actuarial valuation
being carried out at each balance sheet date. Actuarial gain & losses
are recognized in full in the Profit & Loss account for the period in
which they occur. Past service cost is recognized to the extent the
benefits are already vested, and otherwise is amortized on a
Straight-line method over the average period until the benefits become
vested.
The retirement benefit obligation recognized in the Balance Sheet
represents the present value of the defined benefit obligations as
adjusted for unrecognized past service cost, and as reduced by the fair
value of scheme assets. Any asset resulting from this calculation is
limited to past service cost, plus the present value of available
refunds and reductions in future contributions to the scheme.
(i) Gratuity Plan
The Company makes annual contribution to the Employees Group
Gratuity-cum-Life Assurance scheme of the Life Insurance Corporation of
India, a funded defined benefit plan for qualifying employees. The
scheme provides for lump sum payment to vested employees at retirement,
death while in employment or on termination of employment of an amount
equivalent to 15 days salary payable for each completed year of service
or part thereof in excess of 6 months. Vesting occurs upon completion
of 5 years of continued service.
(ii) Leave Encashment Plan
The Company is making a provision on actuarial basis for leave
encashment benefit of the employees, the amount of provision & paid
during the year is charged to Profit & Loss Account.
g) Sales:
Sale of goods is accounted for at the time of dispatch of finished
goods to the customers. Sale value is inclusive of excise duty. Price
revisions of goods sold are accounted for at the time of billing except
in the case where reasonable certainty has been measured up to the date
of Balance Sheet.
Export Sale is accounted for at exchange rate notified on monthly basis
by Central Govt, under Custom Law. Bills outstanding on the Balance
Sheet date are reinstated with the exchange rate on that date and the
difference on this account is booked in the Profit & Loss Account.
h) Foreign Currency Transactions:
(i) Transaction in foreign currencies is converted in rupees at the
rates prevailing on the date of transaction. Loans and other
outstanding balances in foreign currencies at the end of the year are
converted at the rates prevailing on that date.
Pursuant to the notification of the Companies (Accounting Standards)
Amended Rules 2009 issued on 31st March 2009, exchange differences
relating to long term monetary items, arising during the year, in so
far as they relate to the acquisi tion of a depreciable capital asset
are added to / deducted from the cost of the asset w.e.f 1st April 2007
and depreciated over the balance life of the asset.
(ii) Derivative Instruments and Hedge accounting:
The Company uses foreign exchange forward contracts and options to
hedge its exposure to movements in foreign exchange rates. These
foreign exchange forward contracts and options are not used for
trading or speculation purposes.
For unexpired forward contracts or options that are designated as
effective cash flow hedges the gain or loss from the effective portion
of the hedge is recorded and reported directly in the shareholdersfund
( under the head "Hedging Reserve) and will be transferred to Profit
and Loss account upon the occurrence of the events when the contracts
get transacted.
The Company recognizes gains or losses from forward contracts and
options that are not designated as effective cash flow hedges for
accounting purposes in the profit and loss account in the period in
which they occur.
i) Taxation: Income Tax provision has been made as per the provisions
of the Income Tax Act, 1961.
j) Deferred Taxes: Deferred tax Liability/(Assets) for the year is
charged to current years profit. Deferred Tax Liability is on account
of timing difference in depreciation, gratuity, leave encashment etc.
k) Prior period and extra ordinary items and changes in accounting
policies having material impact on the financial affairs of the Company
is disclosed appropriately.
l) Material events occurring after the Balance Sheet date are taken
into cognizance and disclosed appropriately, m) Interest on borrowed
funds:-
In respect of new units/major expansion the interest paid/payable on
borrowed funds, attributable to construction of building and
acquisition/erection of Plant & Machinery is capitalized up to the date
of completion of construction /acquisition/erection of aforesaid
assets.
m) Provisions, Contingent Liabilities and Contingent Assets
The Company makes a provision when there is a present obligation as a
result of a past event where the outflow of economic resources is
probable & a reliable estimate of the amount of obligation can be made.
The disclosure is made for possible or present obligation that may
require outflow of resources as contingent liability in the financial
statements.
n) Use of Estimates:
In preparing Companys financial statements in conformity with
accounting principles generally accepted in India, the Management is
required to make estimates & assumptions that affect the reported
amount of Assets & Liabilities and the disclosure of Contingent
Liabilities at the date of the Financial Statements and the reported
amount of revenues & expenses during the reporting period. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognized in the period the same is determined.
o) Research and Development Costs:
Revenue expenditure incurred on research and development has been
charged to the Profit & Loss Account in the year it is incurred.
Capital expenditure is included in respective heads under fixed assets.
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