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Accounting Policies of Transformers & Rectifiers (India) Ltd. Company
Mar 31, 2025
3 Material Accounting Policies
(a) Property, Plant and Equipment
The Company has elected to continue with the carrying value of its Property Plant & Equipment (PPE) recognised as of April 1,
2016 (transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition
date as per Para D7AA of Ind AS 101.
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the
Balance Sheet at cost less accumulated depreciation and impairment losses, if any. Freehold land is not depreciated.
Property, Plant & Equipment (PPE) comprises of Tangible assets and Capital Work in progress (except Right Of Use assets). PPE are
stated at cost, net of tax/duty credit availed, if any, after reducing accumulated depreciation and accumulated impairment losses,
if any; until the date of the Balance Sheet. The cost of PPE comprises of its purchase price or its construction cost (net of applicable
tax credit, if any), any cost directly attributable to bring the asset into the location and condition necessary for it to be capable of
operating in the manner intended by the management. Direct costs are capitalized until the asset is ready for use and includes
borrowing cost capitalised in accordance with the Company''s accounting policy.
Capital work in progress includes the cost of PPE that are not yet ready for the intended use.
An item of PPE is de-recognized upon disposal or when no future economic benefits are expected to arise from the continued use
of the asset. Any gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the
sales proceeds and the carrying amount of the asset and is recognized in the Statement of Profit and Loss.
Depreciation of these PPE commences when the assets are ready for their intended use.
Depreciation is provided on the cost of Property, Plant and Equipment (other than land and properties under construction) less
their estimated residual value, using the straight-line method over the useful life of PPE as stated in the Schedule II to the
Companies Act, 2013 or based on technical assessment by the Company.
Useful lives of each class of PPE as prescribed under Part C of Schedule II to the Companies Act, 2013 and adopted by the
company are as under:
The estimated useful lives, residual values and depreciation method are reviewed on an annual basis and if necessary, changes in
estimates are accounted for prospectively.
As per internal technical evaluation carried out by the management, the management of the company believes that its PPE are of
such nature that separate components are not distinctly identifiable having different useful life and therefore, Component level
accounting and reporting is not practically feasible for the company.
Depreciation on additions/deletions to PPE during the year is provided for on a pro-rata basis with reference to the date of
additions/deletions.
Depreciation on subsequent expenditure on PPE arising on account of capital improvement or other factors is provided for
prospectively over the remaining useful life.
(b) Intangible Assets
Company has elected to continue with the carrying value of its Intangible assets recognised as of April 1,2016 (transition date)
measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition date as per Para D7AA of
Ind AS 101.
Intangible assets with finite useful life acquired separately, are recognized only if it is probable that future economic benefits that
are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are
recorded at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortized over the estimated period of benefit, not exceeding ten years.
Intangible assets is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or
losses arising from derecognition of an intangible asset are determined as the difference between the net disposal proceeds and
the carrying amount of the asset, and recognized in the Statement of Profit and Loss when the asset is derecognized.
Intangible assets are amortised on Straight Line Method from the date they are available for use, over the useful lives of the assets
(c) Impairment of non-financial assets
The Company reviews at each reporting period whether there is any indication that an asset may be impaired. If at the end of
reporting period any such indication exists, the company estimates the recoverable amount of the asset. If such recoverable
amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying
amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is
recognized in the Statement of Profit & Loss. If at the reporting period, there is an indication that there is change in the previously
assessed impairment loss, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately
in the Statement of Profit and Loss.
An assessment is made at an interval of 3 years to see if there are any indications that impairment losses recognized earlier may no
longer exist or may have come down. The impairment loss is reversed, if there has been a change in the estimates which has the
effect of increasing the asset''s recoverable amount since the previous impairment loss was recognized. If it is so, the carrying
amount of the asset is increased to the lower of its recoverable amount and the carrying amount that has been determined, net of
depreciation, had no impairment loss been recognized for the asset in prior years. After a reversal, the depreciation charge is
adjusted in future periods to allocate the asset''s revised carrying amount, less any residual value, on a systematic basis over its
remaining useful life. Reversals of Impairment loss are recognized in the Statement of Profit and Loss.
(d) Inventories
Inventories are valued at lower of cost and net realizable value after providing for obsolescence and other losses, where
considered necessary. The basis of determining the value of each class of inventory is as follows:
(e) Revenue and Income Recognition
Revenues are recognized when the Company satisfies the performance obligation by transferring a promised product or service
to a customer, in an amount that reflects the consideration which the company expects to receive in exchange of those goods or
services. A product is transferred when the customer obtains control of that product, which is either at the point in time when the
product is delivered to the Customer premises or at the point in time when the title is passed to the customer based on the
contractual terms.
Revenue from services is recognised at a point in time or over the time depending upon the terms of the contract as and when
performance obligations are fulfilled.
Revenue is measured at the transaction price of the consideration received or receivable duly adjusted for variable consideration
and the same represents amounts receivable for goods and services provided in the normal course of business. Revenue also
excludes tax collected from customers. Contract modifications are accounted for as a part of existing contract or separate
contract based on conditions prescribed in Ind AS 115. Any retrospective revision in prices is accounted for in the year of such
revision.
Interest income is recognised using effective interest method. The effective interest rate is the rate that exactly discounts
estimated future cash receipts through expected life of the financial asset to the gross carrying amount of the financial asset.
When calculating the effective interest rate, the company estimates the expected cash flows by considering all the contractual
terms of the financial instrument but does not consider the expected credit losses.
Dividend income is recognised when the right to receive the same is established.
Export incentives are accrued in the year when the right to receive the same is established in respect of exports made and are
accounted to the extent there is no significant uncertainty about the measurability and ultimate realization/ utilization of such
benefits/ duty credit.
Other income is recognized on accrual basis except when realization of such income is uncertain.
(f) Foreign Exchange Transactions
Transactions in currencies other than the Company''s functional currency (foreign currencies) are recognized at the rates of
exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign
currencies are translated using exchange rate prevailing on the last day of the reporting period.
Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the
exchange rate at the date of transaction.
Exchange differences on monetary items are recognized in the Statement of Profit and Loss in the period in which they arise.
(g) Leases
As Lessee
The Company assesses whether a contract, is, or contains a lease, at inception of a contract. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess
whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
- the contract involves the use of an identified asset;
- the Company has substantially all of the economic benefits from use of the asset throughout the period of the lease and
- the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a lease liability for all lease arrangements in which it is a
lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases and corresponding Right-
of-use Asset . For these short-term and low value leases, the Company recognises the lease payments as an operating expense on
a straight-line basis over the term of the lease.
The Right-of-use Assets are initially recognized at cost, which comprises the initial amount of the lease liabilities adjusted for any
lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They
are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement
of the lease liabilities.
Right-of-use Assets are depreciated on a straight-line basis over the shorter of the lease term and useful life of the underlying
asset.
The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using
the interest rate implicit in the lease or, if it is not readily determinable, using the incremental borrowing rate. Lease liabilities are
remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it
will exercise an extension or a termination option.
The Company accounts for each lease component within the contract as a lease separately from non-lease components of the
contract and allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of
the lease component and the aggregate stand-alone price of the non-lease components, except for leases where the company
has elected to use practical expedient not to separate non-lease payments from the calculation of the lease liability and ROU asset
where the entire consideration is treated as lease component.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of Property, Plant and Equipment (i.e.,
those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It
also applies the lease of low-value assets recognition exemption to leases that are considered of low value. Lease payments on
short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term or another
systematic basis if that basis is more representative of the pattern of the lessee''s benefit.
As lessor
Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease except where:
(i) Another systematic basis is more representative of the time pattern of the benefit derived from the asset given on lease.; or
(ii) The payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessor''s
expected inflationary cost increases.
(h) Employees Benefits
(i) Defined Contribution Plan
The company''s contribution to defined contribution plan paid/payable for the year is charged to the Statement of Profit and
loss.
(ii) Defined Benefit Plan
The liabilities towards defined benefit schemes are determined using the Projected Unit Credit method. Actuarial valuations
under the Projected Unit Credit method are carried out at the balance sheet date. Actuarial gains and losses are recognized in
the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognized
immediately to the extent that the benefits are already vested and otherwise it is amortized on straight-line basis over the
remaining average period until the benefits become vested.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit
obligation as reduced by plan assets.
(iii) Short Term Employee Benefits
Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized
undiscounted during the period employee renders services. These benefits include salaries, wages, bonus, performance
incentives, etc.
(iv) Other Long Term Employee Benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the
employee renders the related services are recognized as an actuarially determined liability at present value of the defined
benefit obligation at the balance sheet date.
(i) Borrowing Cost
Borrowing costs are interest and ancillary costs incurred in connection with the arrangement of borrowings. Income earned on
temporary deployement of borrowed funds, pending utilization for expenditure on the qualifying assets, is deducted from the
borrowing costs eligible for capitalization.
General and specific borrowing costs attributable to acquisition and construction of qualifying assets is added to the cost of
the assets upto the date the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial
period of time to get ready for its intended use. Capitalisation of borrowing costs is suspended and charged to the Statement
of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted. All other
borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.
(j) Income Taxes
Income tax expense represents the sum of the current tax and deferred tax.
(i) Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in
the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and
items that are never taxable or deductible. The Company''s current tax is calculated using tax rates and laws that have been
enacted or substantively enacted by the end of the reporting period.
(ii) Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Financial
Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally
recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary
differences to the extent that it is probable that taxable profits will be available against which those deductible temporary
differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it
is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be
utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability
is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end
of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in
which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and
liabilities.
(iii)Current and Deferred Tax Expense for the Year
Current and deferred tax expense is recognized in the Statement of Profit and Loss, except when they relate to items that
are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also
recognized in other comprehensive income or directly in equity respectively.
(k) Financial Instruments
Financial assets and financial liabilities are recognized when Company becomes a party to the contractual provisions of the
instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or
financial liabilities at fair value through profit or loss are recognized immediately in the Statement of Profit and Loss.
(l) Financial Assets
a. Classfication and Measurement
i) Cash and Cash Equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash
that are subject to an insignificant risk of change in value and having original maturities of three months or less from the
date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted
for withdrawal and usage.
ii) Financial Assets at Amortized Cost
Financial assets are subsequently measured at amortized cost using the effective interest method if these financial assets
are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the
contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
iii) Financial Assets at Fair Value through Other Comprehensive Income
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a
business whose objective is achieved by both collecting contractual cash flows and selling financial assets and the
contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
iv) Financial Assets at Fair Value through Profit and Loss
Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value
through other comprehensive income on initial recognition.
b. 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 on the financial assets and credit risk exposure.
i) Simplified Approach
The Company follows ''simplified approach'' for recognition of impairment loss allowance on Trade Receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises
impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
ii) General Approach
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there
has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-
months ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If,
in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit
risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-months ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial
instrument. The 12-months ECL is a portion of the lifetime ECL which results from default events that are possible within
12 months after the reporting date.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on its trade
receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade
receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are
updated and changes in the forward-looking estimates are analysed. On that basis, the Company estimates provision on
trade receivables at the reporting date. The specific/individual impairment assessment is carried out for major customers.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as expense (or income) in the
Statement of Profit and Loss.
c. Derecognition of Financial Assets
The Company derecognizes a financial asset when the contractual right to receive the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If
the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the
transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may
have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the
Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds
received.
On derecognition of a financial asset in its entirety (except for equity instruments designated as FVTOCI), the difference
between the asset''s carrying amount and the sum of the consideration received and receivable is recognized in the
Statement of Profit and Loss.
(II) Financial Liabilities
a. Classification and Measurement
i) Financial Guarantee Contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for
a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt
instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and, if not designated as at
FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with
principles enunciated in Ind AS 115.
ii) Other Liabilities
Other Financial liabilities are measured at amortized cost using the effective interest method.
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest
income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts
through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on
initial recognition.
iii) Financial Liabilities and Equity Instruments
Classification as Debt or Equity:
Debt and equity instruments issued by the Company are classified as financial liabilities or as equity in accordance with the
substance of the Contractual arrangements and the definitions of a financial liability and an equity instrument.
iv) Derecognition of Financial Liabilities
The company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire. The
difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is
recognized in Statement of Profit and Loss.
(III) Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of it''s
liabilities.
Equity Instruments issued by a Company are recognized at the proceeds received.
(IV) Offsetting
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally
enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and
settle the liability simultaneously.
(l) Government grants
Government grants are recognized only when there is reasonable assurance that the conditions attached to them shall be
complied with, and the grants will be received. Deferred income is recognized in the statement of profit or loss on a systematic
and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis in
the statement of profit or loss over the periods as and when related obligations are achieved to match them with the related costs
which they are intended to compensate.
(m) Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of exceptional items, if
any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by
dividing the profit / (loss) after tax (including the post-tax effect of exceptional items, if any) as adjusted for dividend, interest and
other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted
average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity
shares which could have been issued on the conversion of all dilutive potential equity shares.
Mar 31, 2024
1 Corporate Information
Transformers and Rectifiers (India) Ltd. (âTRILâ or âthe Companyâ) is a public limited company domiciled and incorporated in India having its registered office at Survey No. 427 P/3-4 and 431 P/1-2 Sarkhej-Bavla Highway, Village: Moraiya, Taluka: Sanand. The Companyâs shares are listed and traded on the National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange of India Ltd. (BSE). The company is a manufacturer of Power, Furnace and Rectifier Transformers.
2 Basis of Preparation
(a) Statement of Compliance
These Financial Statements have been prepared in accordance with the applicable Indian Accounting Standards (âInd ASâ) prescribed under Section 133 of the Companies Act, 2015 (âActâ) read with the Companies (Indian Accounting Standards) Rules and other relevant provisions of the Act and Rules thereunder, as amended from time to time.
(b) Basis of Measurement
The Financial Statements have been prepared on the historical cost convention on accrual basis except for certain financial assets and liabilities that are measured at fair value, amortised cost or present value, as disclosed in accounting policies and Defined Benefit Plans where Plan Assets are measured at fair value at the end of each reporting period:
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
As the operating cycle cannot be identified in normal course due to the special nature of the industry, the same has been assumed to have duration of 12 months. Accordingly, all assets and liabilities have been classified as current or non-current as per the Companyâs operating cycle and other criteria set out in Ind AS-1 âPresentation of Financial Statementsâ and Schedule III to the Companies Act, 2013.
The Financial Statements have been presented in Indian Rupees (INR), which is also the Companyâs functional currency. All values are rounded off to the nearest two decimal lakhs, unless otherwise indicated.
(c) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.
The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed in their measurement which are described as follows:
(i) Level 1: Quoted Prices (unadjusted) in active markets for identical assets or liabilities
(ii) Level 2: inputs that are observable, either directly or indirectly, other than quoted prices included within level 1 for the asset or liability.
(iii) Level 3 : inputs are unobservable inputs for the asset or liability reflecting significant modifications to observable related market data or Companyâs assumptions about pricing by market participants.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
Investments in Subsidiaries
The Company records the investments in equity instruments of subsidiaries at cost less impairment loss, if any.
When the Company issues financial guarantees on behalf of subsidiaries, initially it measures the financial guarantees at their fair values and subsequently measures at the higher of:
(i) the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109 âFinancial Instrumentsâ; and
(ii) the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with principles enunciated in Ind AS 115 âRevenue from Contracts with Customersâ
The Company records the initial fair value of financial guarantee as deemed investment with a corresponding liability recorded as deferred revenue under financial guarantee obligation. Such deemed investment is added to the carrying amount of investment in subsidiaries. Deferred revenue is recognized in the Statement of Profit and Loss over the remaining period of financial guarantee issued as other income.
On disposal of investment in subsidiary, the difference between net disposal proceeds and the carrying amounts (including corresponding value of dilution in deemed investment) are recognized in the Statement of Profit and Loss.
(d) Recent Accounting Pronouncements
Ministry of Corporate Affairs (âMCAâ) notifies new standard or amendments to the existing standards. There is no such notification which would have been applicable from April 1st, 2024.
3 Material Accounting Policies
(a) Property, Plant and Equipment
The Company has elected to continue with the carrying value of its Property Plant & Equipment (PPE) recognised as of April 1, 2016 (transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition date as per Para D7AA of Ind AS 101.
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the Balance Sheet at cost less accumulated depreciation and impairment losses, if any. Freehold land is not depreciated. Property, Plant & Equipment (PPE) comprises of Tangible assets and Capital Work in progress (except Right Of Use assets). PPE are stated at cost, net of tax/duty credit availed, if any, after reducing accumulated depreciation and accumulated impairment losses, if any; until the date of the Balance Sheet. The cost of PPE comprises of its purchase price or its construction cost (net of applicable tax credit, if any), any cost directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended by the management. Direct costs are capitalized until the asset is ready for use and includes borrowing cost capitalised in accordance with the Companyâs accounting policy.
Capital work in progress includes the cost of PPE that are not yet ready for the intended use.
An item of PPE is de-recognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the Statement of Profit and Loss.
Depreciation of these PPE commences when the assets are ready for their intended use.
Depreciation is provided on the cost of Property, Plant and Equipment (other than land and properties under construction) less their estimated residual value, using the straight-line method over the useful life of PPE as stated in the Schedule II to the Companies Act, 2013 or based on technical assessment by the Company.
Useful lives of each class of PPE as prescribed under Part C of Schedule II to the Companies Act, 2013 and adopted by the company are as under:-
|
Asset Description |
Assets Useful life (in Years) |
|
Factory Building |
30 |
|
Building other than Factory Building |
60 |
|
Plant and Equipments |
15 |
|
Electrical installations |
10 |
|
Air conditioners & refrigerators |
5 |
|
Office Equipments |
5 |
|
Computers |
3 |
|
Furniture and Fixtures |
10 |
|
Vehicles |
8 & 10 |
|
Useful lives of following class of PPE is based on technical assessment by the Company which is as under:- |
|
|
Asset Description |
Assets Useful life (in Years) |
|
Plant and Machinery acquired before 1st April 2014 |
21 |
|
Electrical Installation acquired before 1st April 2014 |
21 |
The estimated useful lives, residual values and depreciation method are reviewed on an annual basis and if necessary, changes in estimates are accounted for prospectively.
As per internal technical evaluation carried out by the management, the management of the company believes that its PPE are of such nature that separate components are not distinctly identifiable having different useful life. And therefore, Component level accounting and reporting is not practically feasible for the company.
Depreciation on additions/deletions to PPE during the year is provided for on a pro-rata basis with reference to the date of additions/deletions.
Depreciation on subsequent expenditure on PPE arising on account of capital improvement or other factors is provided for prospectively over the remaining useful life.
(b) Intangible Assets
Company has elected to continue with the carrying value of its Intangible assets recognised as of April 1, 2016 (transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition date as per Para D7AA of Ind AS 101.
Intangible assets with finite useful life acquired separately, are recognized only if it is probable that future economic benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortized over the estimated period of benefit, not exceeding ten years.
Intangible assets is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset, and recognized in the Statement of Profit and Loss when the asset is derecognized.
Intangible assets are amortised on Straight Line Method from the date they are available for use, over the useful lives of the assets as estimated by the Management as under:
|
Asset Description |
Assets Useful life (in Years) |
|
Computer Software |
3 to 5 |
|
Technical Know - How |
10 |
|
Design and Prototype |
5 |
(c) Impairment of non-financial assets
The Company reviews at each reporting period whether there is any indication that an asset may be impaired. If at the end of reporting period any such indication exists, the company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit & Loss. If at the reporting period, there is an indication that there is change in the previously assessed impairment loss, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the Statement of Profit and Loss.
An assessment is made at an interval of 3 years to see if there are any indications that impairment losses recognized earlier may no longer exist or may have come down. The impairment loss is reversed, if there has been a change in the estimates which has the effect of increasing the assetâs recoverable amount since the previous impairment loss was recognized. If it is so, the carrying amount of the asset is increased to the lower of its recoverable amount and the carrying amount that has been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. After a reversal, the depreciation charge is adjusted in future periods to allocate the assetâs revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. Reversals of Impairment loss are recognized in the Statement of Profit and Loss.
(d) Inventories
Inventories are valued at lower of cost and net realizable value after providing for obsolescence and other losses, where considered necessary. The basis of determining the value of each class of inventory is as follows:
|
Inventories |
Cost Formulae |
|
Raw Material & Store & Spares |
At Moving Weighted Average Cost (Net of eligible credit) |
|
Raw Material in Transit |
At Invoice Price |
|
Scrap |
At net realisable value |
|
Process Stock |
At Cost comprising of raw material cost, labour cost and appropriate proportion of manufacturing expenses and overheads as per stage of completion. |
|
Finished Goods (including Finished goods in transit) |
At Cost comprising of raw material cost, labour cost and appropriate proportion of manufacturing expenses and overheads. |
(e) Revenue and Income Recognition
Revenues are recognized when the Company satisfies the performance obligation by transferring a promised product or service to a customer, in an amount that reflects the consideration which the company expects to receive in exchange of those goods or services. A product is transferred when the customer obtains control of that product, which is either at the point in time when the product is delivered to the Customer premises or at the point in time when the title is passed to the customer based on the contractual terms.
Revenue from services is recognised at a point in time or over the time depending upon the terms of the contract as and when performance obligations are fulfilled.
Revenue is measured at the transaction price of the consideration received or receivable duly adjusted for variable consideration and the same represents amounts receivable for goods and services provided in the normal course of business. Revenue also excludes tax collected from customers. Contract modifications are accounted for as a part of existing contract or separate contract based on conditions prescribed in Ind AS 115. Any retrospective revision in prices is accounted for in the year of such revision.
Interest income is recognised using effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through expected life of the financial asset to the gross carrying amount of the financial asset.When calculating the effective interest rate, the company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
Dividend income is recognised when the right to receive the same is established.
Export incentives are accrued in the year when the right to receive the same is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate realization/ utilization of such benefits/ duty credit.
Other income is recognized on accrual basis except when realization of such income is uncertain.
(f) Foreign Exchange Transactions
Transactions in currencies other than the Companyâs functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated using exchange rate prevailing on the last day of the reporting period.
Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of transaction.
Exchange differences on monetary items are recognized in the Statement of Profit and Loss in the period in which they arise.
(g) Leases As Lessee
The Company assesses whether a contract, is, or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
- the contract involves the use of an identified asset;
- the Company has substantially all of the economic benefits from use of the asset throughout the period of the lease and
- the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases and corresponding Right-of-use Asset . For these short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
The Right-of-use Assets are initially recognized at cost, which comprises the initial amount of the lease liabilities adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities.
Right-of-use Assets are depreciated on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if it is not readily determinable, using the incremental borrowing rate. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
The Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative standalone price of the lease component and the aggregate stand-alone price of the non-lease components, except for leases where the company has elected to use practical expedient not to separate non-lease payments from the calculation of the lease liability and ROU asset where the entire consideration is treated as lease component.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of Property, Plant and Equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term or another systematic basis if that basis is more representative of the pattern of the lesseeâs benefit.
As lessor
Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease except where-
(i) Another systematic basis is more representative of the time pattern of the benefit derived from the asset given on lease.; or
(ii) The payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
(h) Employees Benefits
(i) Defined Contribution Plan
The companyâs contribution to defined contribution plan paid/payable for the year is charged to the Statement of Profit and loss.
(ii) Defined Benefit Plan
The liabilities towards defined benefit schemes are determined using the Projected Unit Credit method. Actuarial valuations under the Projected Unit Credit method are carried out at the balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise it is amortized on straight-line basis over the remaining average period until the benefits become vested.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as reduced by plan assets.
(iii) Short Term Employee Benefits
Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized undiscounted during the period employee renders services. These benefits include salaries, wages, bonus, performance incentives, etc.
(iv) Other Long Term Employee Benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as an actuarially determined liability at present value of the defined benefit obligation at the balance sheet date.
(i) Borrowing Cost
Borrowing costs are interest and ancillary costs incurred in connection with the arrangement of borrowings.
General and specific borrowing costs attributable to acquisition and construction of qualifying assets is added to the cost of the assets upto the date the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.
(j) Income Taxes
Income tax expense represents the sum of the current tax and deferred tax.
(i) Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before taxâ as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Companyâs current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the end of the reporting period.
(ii) Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
(iii) Current and Deferred Tax Expense for the Year
Current and deferred tax expense is recognized in the Statement of Profit and Loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
(k) Financial Instruments
Financial assets and financial liabilities are recognized when Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in the Statement of Profit and Loss.
(I) Financial Assets
a. Classfication and Measurement
(i) Cash and Cash Equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
(ii) Financial Assets at Amortized Cost
Financial assets are subsequently measured at amortized cost using the effective interest method if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(iii) Financial Assets at Fair Value through Other Comprehensive Income
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(iv) Financial Assets at Fair Value through Profit and Loss
Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition.
b. 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 on the financial assets and credit risk exposure.
i) Simplified Approach
The Company follows âsimplified approachâ for recognition of impairment loss allowance on Trade Receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
ii) General Approach
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-months ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-months ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-months ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. On that basis, the Company estimates provision on trade receivables at the reporting date. The specific/individual impairment assessment is carried out for major customers.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as expense (or income) in the Statement of Profit and Loss.
c. Derecognition of Financial Assets
The Company derecognizes a financial asset when the contractual right to receive the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety (except for equity instruments designated as FVTOCI), the difference between the assetâs carrying amount and the sum of the consideration received and receivable is recognized in the Statement of Profit and Loss.
(II) Financial Liabilities
a. Classification and Measurement
(i) Financial Guarantee Contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with principles enunciated in Ind AS 115.
(ii) Other Liabilities
Other Financial liabilities are measured at amortized cost using the effective interest method.
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
(iii) Financial Liabilities and Equity Instruments
Classification as Debt or Equity:
Debt and equity instruments issued by the Company are classified as financial liabilities or as equity in accordance with the substance of the Contractual arrangements and the definitions of a financial liability and an equity instrument.
(iv) Derecognition of Financial Liabilities
The company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in Statement of Profit and Loss.
(III) Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of itâs liabilities.
Equity Instruments issued by a Company are recognized at the proceeds received.
(IV) Offsetting
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
(l) Government grants
Government grants are recognized only when there is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received. Deferred income is recognized in the statement of profit or loss on a systematic and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis in the statement of profit or loss over the periods as and when related obligations are achieved to match them with the related costs which they are intended to compensate.
(m) Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of exceptional items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of exceptional items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
(n) Provisions, Contingent Liabilities and Contingent Assets
(i) Provisions
Provisions are recognized when, based on the Companyâs present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
(ii) Contingent Liabilities and Assets
Show-cause notices issued by various Government Authorities are generally not considered as obligations. When the demand notices are raised against such show cause notices and are disputed by the Company, these are classified as disputed obligations.
The treatment in respect of disputed obligations are as under:
a) a provision is recognized in respect of present obligations where the outflow of resources is probable;
b) all other cases are disclosed as contingent liabilities unless the possibility of outflow of resources is remote.
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability. Contingent liabilities are disclosed on the basis of judgment of the management/independent experts and reviewed at each balance sheet date to reflect the current management estimate.
Contingent assets are disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
(o) Statement of Cash Flow
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows are segregated into operating, investing and financing activities.
(p) Segment Reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the Chief Operating Decision Making Body (CODM) in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.
4 Critical Accounting Judgments, Estimates, Assumptions and Key Sources of Estimation Uncertainty
The preparation of the Companyâs financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the financial statements. Estimates and assumptions are continuously evaluated and are based on managementâs experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
(a) Judgements
In the process of applying the Companyâs accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognized in the financial statements:
Evaluation of Indicators for Impairment of Property, Plant and Equipment
The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant decline assetâs value, significant changes in the technological, market, economic or legal environment, market interest rates etc.) and internal factors (obsolescence or physical damage of an asset, poor economic performance of the asset etc.) which could result in significant change in recoverable amount of the Property, Plant and Equipment.
(b) Assumptions and Estimation Uncertainties
Information about estimates and assumptions that have the significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may differ from these estimates.
(i) Defined Benefit Obligations
The cost of the defined benefit gratuity plan, the present value of the gratuity obligation and compensated absences are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the respective countries.
(ii) Useful lives of Property, Plant and Equipment/Intangible Assets
Property, Plant and Equipment/ Intangible Assets are depreciated/amortised over their estimated useful lives, after taking into account estimated residual value. The useful lives and residual values are based on the Companyâs historical experience with similar assets and taking into account anticipated technological changes or commercial obsolescence. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation/amortisation to be recorded during any reporting period. The depreciation/ amortisation for future periods is revised, if there are significant changes from previous estimates and accordingly, the unamortised/depreciable amount is charged over the remaining useful life of the assets.
(iii) Contingent Liabilities
In the normal course of business, Contingent Liabilities may arise from litigation and other claims against the Company. Potential liabilities that are possible but not probable of crystallising or are very difficult to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the Notes but are not recognised.
Potential liabilities that are remote are neither recognised nor disclosed as contingent liability. The management decides whether the matters need to be classified as âremoteâ, âpossibleâ or âprobableâ based on expert advice, past judgements, experiences etc.
(iv) Evaluation of Indicators for Impairment of Property, Plant and Equipment
The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant decline in assetâs value, economic or legal environment, market interest rates etc.) and internal factors (obsolescence or physical damage of an asset, poor economic performance of the idle assets etc.) which could result in significant change in recoverable amount of the Property, Plant and Equipment and such assessment is based on estimates, future plans as envisaged by Company.
(v) Allowance for impairment of trade receivables
The expected credit loss is mainly based on the ageing of the receivable balances and historical experience. The receivables are assessed on an individual basis or assessed for impairment collectively, depending on their significance. Moreover, trade receivables are written off on a case-to-case basis if deemed not to be collectible on the assessment of the underlying facts and circumstances.
(vi) Provisions
Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
(vii) Revenue Recognition
The Companyâs contracts with customers include promises to transfer products and service to the customers. The Company assesses the products and service promised in a contract and identifies distinct performance obligations, if any, in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables. Judgement is also required to determine the transaction price for the contract. The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over time. The Company considers indicators such as to who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product, bill and hold agreements, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc. The judgment is also exercised in determining the variable consideration, if any, involved in transaction price.
Mar 31, 2023
COMPANY OVERVIEW AND SIGNIFICANT ACCOUNTING POLICIES
1 Corporate Information
Transformers and Rectifiers (India) Ltd. (''TRIL'' or the Company) is a public limited company domiciled and incorporated in India having its registered office at Survey No. 427 P/3-4 and 431 P/1-2 Sarkhej-Bavla Highway, Village: Moraiya, Taluka: Sanand. The Companyâs shares are listed and traded on the National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange of India Ltd. (BSE). The company is a manufacturer of Power, Furnace and Rectifier Transformers.
2 Basis of Preparation
(a) Statement of Compliance
These Financial Statements have been prepared in accordance with the applicable Indian Accounting Standards (âInd ASâ) prescribed under Section 133 of the Companies Act, 2015 (âActâ) read with the Companies (Indian Accounting Standards) Rules and other relevant provisions of the Act and Rules thereunder, as amended from time to time.
(b) Basis of Measurement
The Financial Statements have been prepared on the historical cost convention on accrual basis except for certain financial assets and liabilities that are measured at fair value, amortised cost or present value, as disclosed in accounting policies and Defined Benefit Plans where Plan Assets are measured at fair value at the end of each reporting period: Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
As the operating cycle cannot be identified in normal course due to the special nature of the industry, the same has been assumed to have duration of 12 months. Accordingly, all assets and liabilities have been classified as current or noncurrent as per the Companyâs operating cycle and other criteria set out in Ind AS-1 âPresentation of Financial Statementsâ and Schedule III to the Companies Act, 201 3.
The Financial Statements have been presented in Indian Rupees (INR), which is also the Company''s functional currency. All values are rounded off to the nearest two decimal lakhs, unless otherwise indicated.
(c) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.
The Company categorizes assets and liabilities measured at fair value into one of three levels depending on the ability to observe inputs employed in their measurement which are described as follows:
(i) Level 1: Quoted Prices (unadjusted) in active markets for identical assets or liabilities
(ii) Level 2: inputs that are observable, either directly or indirectly, other than quoted prices included within level 1 for the asset or liability.
(iii) Level 3 : inputs are unobservable inputs for the asset or liability reflecting significant modifications to observable related market data or Companyâs assumptions about pricing by market participants.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
Investments in Subsidiaries and Joint ventures
The Company records the investments in equity instruments of subsidiaries and joint ventures at cost less impairment loss, if any.
When the Company issues financial guarantees on behalf of subsidiaries, initially it measures the financial guarantees at their fair values and subsequently measures at the higher of:
(i) the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109 âFinancial Instrumentsâ; and
(ii) the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with principles enunciated in Ind AS 115 "Revenue from Contracts with Customersâ
The Company records the initial fair value of financial guarantee as deemed investment with a corresponding liability recorded as deferred revenue under financial guarantee obligation. Such deemed investment is added to the carrying amount of investment in subsidiaries. Deferred revenue is recognized in the Statement of Profit and Loss over the remaining period of financial guarantee issued as other income.
On disposal of investment in subsidiary and joint venture, the difference between net disposal proceeds and the carrying amounts (including corresponding value of dilution in deemed investment) are recognized in the Statement of Profit and Loss.
(d) Recent Accounting Pronouncements
Recent pronouncements Ministry of Corporate Affairs (âMCAâ) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1, 2023, as below:
The following amendments are relevant to the company:
(a) Amendments :
Ind 1 Presentation of Financial Statements The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements. Ind AS 12 â Income Taxes The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company is evaluating the impact, if any, in its financial statements.
Ind AS 8 â Accounting Policies, Changes in Accounting Estimates and Errors The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are âmonetary amounts in financial statements that are subject to measurement uncertaintyâ. Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company does not expect this amendment to have any significant impact in its financial statements.
3 Significant Accounting Policies
(a) Property, Plant and Equipment
The Company has elected to continue with the carrying value of its Property Plant & Equipment (PPE) recognised as of April 1, 2016 (transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition date as per Para D7AA of Ind AS 101.
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the Balance Sheet at cost less accumulated depreciation and impairment losses, if any. Freehold land is not depreciated.
Property, Plant & Equipment (PPE) comprises of Tangible assets and Capital Work in progress (except Right Of Use assets). PPE are stated at cost, net of tax/duty credit availed, if any, after reducing accumulated depreciation and accumulated impairment losses, if any; until the date of the Balance Sheet. The cost of PPE comprises of its purchase price or its construction cost (net of applicable tax credit, if any), any cost directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended by the management. Direct costs are capitalized until the asset is ready for use and includes borrowing cost capitalised in accordance with the Companyâs accounting policy.
Capital work in progress includes the cost of PPE that are not yet ready for the intended use.
An item of PPE is de-recognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the Statement of Profit and Loss.
Depreciation of these PPE commences when the assets are ready for their intended use.
Depreciation is provided on the cost of Property, Plant and Equipment (other than land and properties under construction) less their estimated residual value, using the straight-line method over the useful life of PPE as stated in the Schedule II to the Companies Act, 2013 or based on technical assessment by the Company.
Useful lives of each class of PPE as prescribed under Part C of Schedule II to the Companies Act, 2013 and adopted by the company are as under:-
|
Asset Description |
Assets Useful life (in Years) |
|
Factory Building |
30 |
|
Building other than Factory Building |
60 |
|
Plant and Equipments |
15 |
|
Electrical installations |
10 |
|
Air conditioners & refrigerators |
5 |
|
Office Equipments |
5 |
|
Computers |
3 |
|
Furniture and Fixtures |
10 |
|
Vehicles |
8 & 10 |
|
Useful lives of following class of PPE is based on technical assessment by the Company which is as under:- |
|
|
Asset Description |
Assets Useful life (in Years) |
|
Plant and Machinery acquired before 1st April 2014 |
21 |
|
Electrical Installation acquired before 1st April 2014 |
21 |
The estimated useful lives, residual values and depreciation method are reviewed on an annual basis and if necessary, changes in estimates are accounted for prospectively.
As per internal technical evaluation carried out by the management, the management of the company believes that its Property, Plant & Equipment are of such nature that separate components are not distinctly identifiable having different useful life. And therefore, Component level accounting and reporting is not practically feasible for the company.
Depreciation on additions/deletions to PPE during the year is provided for on a pro-rata basis with reference to the date of additions/deletions.
Depreciation on subsequent expenditure on PPE arising on account of capital improvement or other factors is provided for prospectively over the remaining useful life.
(b) Intangible Assets
Company has elected to continue with the carrying value of its Intangible assets recognised as of April 1, 2016 (transition date) measured as per the Previous GAAP and used that carrying value as its deemed cost as on the transition date as per Para D7AA of Ind AS 101.
Intangible assets with finite useful life acquired separately, are recognized only if it is probable that future economic benefits that are attributable to the assets will flow to the enterprise and the cost of assets can be measured reliably. The intangible assets are recorded at cost and are carried at cost less accumulated amortization and accumulated impairment losses, if any.
Intangible assets are amortized over the estimated period of benefit, not exceeding ten years.
Intangible assets is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset, and recognized in the Statement of Profit and Loss when the asset is derecognized.
Intangible assets are amortised on Straight Line Method from the date they are available for use, over the useful lives of the assets as estimated by the Management as under:
|
Asset Description |
Assets Useful life (in Years) |
|
Computer Software |
3 to 5 |
|
Technical Know - How |
10 |
|
Design and Prototype |
5 |
(c) Impairment of non-financial assets
The Company reviews at each reporting period whether there is any indication that an asset may be impaired. If at the end of reporting period any such indication exists, the company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of Profit & Loss. If at the reporting period, there is an indication that there is change in the previously assessed impairment loss, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the Statement of Profit and Loss.
An assessment is made at an interval of 3 years to see if there are any indications that impairment losses recognized earlier may no longer exist or may have come down. The impairment loss is reversed, if there has been a change in the estimates which has the effect of increasing the assetâs recoverable amount since the previous impairment loss was recognized. If it is so, the carrying amount of the asset is increased to the lower of its recoverable amount and the carrying amount that has been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. After a reversal, the depreciation charge is adjusted in future periods to allocate the assetâs revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. Reversals of Impairment loss are recognized in the Statement of Profit and Loss.
(d) Inventories
Inventories are valued at lower of cost and net realizable value after providing for obsolescence and other losses, where considered necessary. The basis of determining the value of each class of inventory is as follows:
|
Inventories |
Cost Formulae |
|
Raw Material & Store & Spares |
At Moving Weighted Average Cost (Net of eligible credit) |
|
Raw Material in Transit |
At Invoice Price |
|
Scrap |
At net realisable value |
|
Process Stock |
At Cost comprising of raw material cost, labour cost and appropriate proportion of manufacturing expenses and overheads as per stage of completion. |
|
Finished Goods (including Finished goods in transit) |
At Cost comprising of raw material cost, labour cost and appropriate proportion of manufacturing expenses and overheads. |
(e) Revenue and Income Recognition
Revenues are recognized when the Company satisfies the performance obligation by transferring a promised product or service to a customer, in an amount that reflects the consideration which the company expects to receive in exchange of those goods or services. A product is transferred when the customer obtains control of that product, which is either at the point in time when the product is delivered to the Customer premises or at the point in time when the title is passed to the customer based on the contractual terms.
Revenue from services is recognised at a point in time or over the time depending upon the terms of the contract as and when performance obligations are fulfilled.
Revenue is measured at the transaction price of the consideration received or receivable duly adjusted for variable consideration and the same represents amounts receivable for goods and services provided in the normal course of business. Revenue also excludes tax collected from customers. Contract modifications are accounted for as a part of existing contract or separate contract based on conditions prescribed in Ind AS 115. Any retrospective revision in prices is accounted for in the year of such revision.
Interest on investments is booked on a time proportion basis taking into account the amounts invested and the rate of interest.
Dividend income is recognised when the right to receive the same is established.
Export incentives are accrued in the year when the right to receive the same is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate realization/ utilization of such benefits/ duty credit.
Other income is recognized on accrual basis except when realization of such income is uncertain.
(f) Foreign Exchange Transactions
Transactions in currencies other than the Companyâs functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated using exchange rate prevailing on the last day of the reporting period.
Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of transaction.
Exchange differences on monetary items are recognized in the Statement of Profit and Loss in the period in which they arise.
(g) Leases As Lessee
The Company assesses whether a contract, is, or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
- the contract involves the use of an identified asset;
- the Company has substantially all of the economic benefits from use of the asset throughout the period of the lease and
- the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases and corresponding Right-of-use Asset . For these short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.
The Right-of-use Assets are initially recognized at cost, which comprises the initial amount of the lease liabilities adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities.
Right-of-use Assets are depreciated on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if it is not readily determinable, using the incremental borrowing rate. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
The Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components, except for leases where the company has elected to use practical expedient not to separate non-lease payments from the calculation of the lease liability and ROU asset where the entire consideration is treated as lease component.
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of Property, Plant and Equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term or another systematic basis if that basis is more representative of the pattern of the lesseeâs benefit.
As lessor
Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease except where-
(i) Another systematic basis is more representative of the time pattern of the benefit derived from the asset given on lease.; or
(ii) The payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
(h) Employees Benefits
(i) Defined Contribution Plan
The company''s contribution to defined contribution plan paid/payable for the year is charged to the Statement of Profit and loss.
(ii) Defined Benefit Plan
The liabilities towards defined benefit schemes are determined using the Projected Unit Credit method. Actuarial valuations under the Projected Unit Credit method are carried out at the balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period of occurrence of such gains and losses. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise it is amortized on straight-line basis over the remaining average period until the benefits become vested.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as reduced by plan assets.
(iii) Short Term Employee Benefits
Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized undiscounted during the period employee renders services. These benefits include salaries, wages, bonus, performance incentives, etc.
(iv) Other Long Term Employee Benefits
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as an actuarially determined liability at present value of the defined benefit obligation at the balance sheet date.
(i) Borrowing Cost
Borrowing costs are interest and ancillary costs incurred in connection with the arrangement of borrowings.
General and specific borrowing costs attributable to acquisition and construction of qualifying assets is added to the cost of the assets upto the date the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.
(j) Income Taxes
Income tax expense represents the sum of the current tax and deferred tax.
(i) Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before taxâ as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Companyâs current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the end of the reporting period.
(ii) Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognized as deferred tax asset in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with asset will be realized.
(iii) Current and Deferred Tax Expense for the Year
Current and deferred tax expense is recognized in the Statement of Profit and Loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
(k) Financial Instruments
Financial assets and financial liabilities are recognized when Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in the Statement of Profit and Loss.
(l) Financial Assets
a. Classification and Measurement (i) Cash and Cash Equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
(ii) Financial Assets at Amortized Cost
Financial assets are subsequently measured at amortized cost using the effective interest method if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(iii) Financial Assets at Fair Value through Other Comprehensive Income
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(iv) Financial Assets at Fair Value through Profit and Loss
Financial assets are measured at fair value through Statement of profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition.
b. 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 on the financial assets and credit risk exposure.
i) Simplified Approach
The Company follows âsimplified approachâ for recognition of impairment loss allowance on Trade Receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
ii) General Approach
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-months ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-months ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-months ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. On that basis, the Company estimates provision on trade receivables at the reporting date. The specific/individual impairment assessment is carried out for major customers.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as expense (or income) in the Statement of Profit and Loss.
c. Derecognition of Financial Assets
The Company derecognizes a financial asset when the contractual right to receive the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety (except for equity instruments designated as FVTOCI), the difference between the assetâs carrying amount and the sum of the consideration received and receivable is recognized in the Statement of Profit and Loss.
(m) Financial Liabilities
a. Classification and Measurement
(i) Financial Guarantee Contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with principles enunciated in Ind AS 115.
(ii) Other Liabilities
Other Financial liabilities are measured at amortized cost using the effective interest method.
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
(iii) Financial Liabilities and Equity Instruments Classification as Debt or Equity:
Debt and equity instruments issued by the Company are classified as financial liabilities or as equity in accordance with the substance of the Contractual arrangements and the definitions of a financial liability and an equity instrument.
(iv) Derecognition of Financial Liabilities
The company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in Statement of Profit and Loss.
Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of itâs liabilities.
Equity Instruments issued by a Company are recognized at the proceeds received.
Offsetting
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
(n) Government grants
Government grants are recognized only when there is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received. Deferred income is recognized in the statement of profit or loss on a systematic and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis in the statement of profit or loss over the periods as and when related obligations are achieved to match them with the related costs which they are intended to compensate.
(o) Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of exceptional items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of exceptional items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
(p) Provisions, Contingent Liabilities and Contingent Assets (i) Provisions
Provisions are recognized when, based on the Company''s present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows (when the effect of the time value of money is material) (ii) Contingent Liabilities and Assets
Show-cause notices issued by various Government Authorities are generally not considered as obligations. When the demand notices are raised against such show cause notices and are disputed by the Company, these are classified as disputed obligations.
"The treatment in respect of disputed obligations are as under:âa) a provision is recognized in respect of present obligations where the outflow of resources is probable;âb) all other cases are disclosed as contingent liabilities unless the possibility of outflow of resources is remote."
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability. Contingent liabilities are disclosed on the basis of judgment of the management/independent experts and reviewed at each balance sheet date to reflect the current management estimate.
Contingent assets are disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
(q) Statement of Cash Flow
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows are segregated into operating, investing and financing activities.
(r) Segment Reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the Chief Operating Decision Making Body (CODM) in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company.
4 Critical Accounting Judgments, Estimates, Assumptions and Key Sources of Estimation Uncertainty
The preparation of the Companyâs financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the financial statements. Estimates and assumptions are continuously evaluated and are based on managementâs experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
(a) Judgements
In the process of applying the Companyâs accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognized in the financial statements:
(i) Classification of Investment in T & R Switchgear Private Limited (Earlier known as T&R Jingke Electrical Equipments Pvt. Limited) as subsidiary
The Company has entered into a Joint Venture Agreement on October 5 2016 with Jiangsu Jingke Smart Electric Company Limited (JV partner incorporated under the laws of Peoples Republic of China). As per agreement, the company acquired 60% equity shares in the special purpose entity incorporated namely TARIL Switchgear Private Limited (formely known as T&R Jingke Electrical Equipments Private Limited). Till March 31, 2022, the Company accounted for investment in TARIL Switchgear Private Limited as joint venture.The company has reassessed such investment and considered such investment as investment in subsidiary due to control over board of the special purpose entity from the current financial year.
(ii) Evaluation of Indicators for Impairment of Property, Plant and Equipment
The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant decline assetâs value, significant changes in the technological, market, economic or legal environment, market interest rates etc.) and internal factors (obsolescence or physical damage of an asset, poor economic performance of the asset etc.) which could result in significant change in recoverable amount of the Property, Plant and Equipment.
(b) Assumptions and Estimation Uncertainties
Information about estimates and assumptions that have the significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may differ from these estimates.
(i) Defined Benefit Obligations
The cost of the defined benefit gratuity plan, the present value of the gratuity obligation and compensated
absences are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the respective countries.
(ii) Useful lives of Property, Plant and Equipment/Intangible Assets
Property, Plant and Equipment/ Intangible Assets are depreciated/amortised over their estimated useful lives, after taking into account estimated residual value. The useful lives and residual values are based on the Companyâs historical experience with similar assets and taking into account anticipated technological changes or commercial obsolescence. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation/amortisation to be recorded during any reporting period. The depreciation/ amortisation for future periods is revised, if there are significant changes from previous estimates and accordingly, the unamortised/depreciable amount is charged over the remaining useful life of the assets.
(iii) Contingent Liabilities
In the normal course of business, Contingent Liabilities may arise from litigation and other claims against the Company. Potential liabilities that are possible but not probable of crystallising or are very difficult to quantify reliably are treated as contingent liabilities. Such liabilities are disclosed in the Notes but are not recognised. Potential liabilities that are remote are neither recognised nor disclosed as contingent liability. The management decides whether the matters need to be classified as remote'', possible'' or probable'' based on expert advice, past judgements, experiences etc.
(iv) Evaluation of Indicators for Impairment of Property, Plant and Equipment
The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant decline in assetâs value, economic or legal environment, market interest rates etc.) and internal factors (obsolescence or physical damage of an asset, poor economic performance of the idle assets etc.) which could result in significant change in recoverable amount of the Property, Plant and Equipment and such assessment is based on estimates, future plans as envisaged by Company.
(v) Allowance for impairment of trade receivables
The expected credit loss is mainly based on the ageing of the receivable balances and historical experience. The receivables are assessed on an individual basis or assessed for impairment collectively, depending on their significance. Moreover, trade receivables are written off on a case-to-case basis if deemed not to be collectible on the assessment of the underlying facts and circumstances.
(vi) Provisions
Provisions and liabilities are recognised in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgement to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.
(vii) Revenue Recognition
The Companyâs contracts with customers include promises to transfer products and service to the customers. The Company assesses the products and service promised in a contract and identifies distinct performance obligations, if any, in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables. Judgement is also required to determine the transaction price for the contract. The Company exercises judgement in determining whether the performance obligation is satisfied at a point in time or over time. The Company considers indicators such as to who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product, bill and hold agreements, transfer of significant risks and rewards to the customer, acceptance of delivery by the customer, etc. The judgment is also exercised in determining the variable consideration, if any, involved in transaction price.
Mar 31, 2018
1 Significant Accounting Policies
(a) Property, Plant and Equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the Balance Sheet at cost less accumulated depreciation and impairment losses, if any. Freehold land is not depreciated. Property, Plant and Equipment (PPE) in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. The cost of an asset comprises its purchase price or its construction cost (net of applicable tax credits), any cost directly attributable to bring the asset into the location and condition necessary for it to be capable of operating in the manner intended by the Management. For qualifying assets, borrowing costs are capitalized in accordance with the Companyâs accounting policy. Such properties are classified to the appropriate categories of PPE when completed and ready for intended use. Parts of an item of PPE having different useful lives and significant value and subsequent expenditure on Property, Plant and Equipment arising on account of capital improvement or other factors are accounted for as separate components.
Capital work in progress includes the cost of PPE that are not yet ready for the intended use.
An item of PPE is de-recognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of PPE is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the Statement of Profit and Loss. Depreciation of these PPE commences when the assets are ready for their intended use.
Depreciation is provided on the cost of Property, Plant and Equipment (other than land and properties under construction) less their estimated residual value, using the straight-line method over the useful life of PPE as stated in the Schedule II to the Companies Act, 201 3 or based on technical assessment by the Company.
Useful lives of each class of PPE as prescribed under Part C of Schedule II to the Companies Act, 2013 are as under:-
The estimated useful lives, residual values and depreciation method are reviewed on an annual basis and if necessary, changes in estimates are accounted for prospectively.
Depreciation on additions/deletions to PPE during the year is provided for on a pro-rata basis with reference to the date of additions/deletions.
Depreciation on subsequent expenditure on PPE arising on account of capital improvement or other factors is provided for prospectively over the remaining useful life.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets.
(b) Intangible Assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a straight-line basis. The estimated useful life is reviewed at the end of each reporting period and the effect of any changes in estimate being accounted for prospectively.
Intangible assets is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset, and recognized in the Statement of Profit and Loss when the asset is derecognized.
(c) Impairment of Tangible and Intangible Assets
The Company reviews the carrying amount of its tangible and intangible assets Property, Plant and Equipment (including Capital Works in Progress) of a âCash Generating Unitâ (CGU) at an interval of 3 years to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in the Statement of Profit and Loss.
An assessment is made at an interval of 3 years to see if there are any indications that impairment losses recognized earlier may no longer exist or may have come down. The impairment loss is reversed, if there has been a change in the estimates used to determine the assetâs recoverable amount since the previous impairment loss was recognized. If it is so, the carrying amount of the asset is increased to the lower of its recoverable amount and the carrying amount that have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. After a reversal, the depreciation charge is adjusted in future periods to allocate the assetâs revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. Reversals of Impairment loss are recognized in the Statement of Profit and Loss.
(d) Inventories
Inventories are valued at lower of cost and net realizable value after providing for obsolescence and other losses, where considered necessary. The basis of determining the value of each class of inventory is as follows:
(e) Revenue Recognition
Revenue arising from sale of products is recognized when significant risks and rewards of ownership have passed to the buyer under the terms of contract and the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the Company.
Revenue from services is recognized when the outcome of services can be estimated reliably and it is probable that the economic benefits associated with rendering of services will flow to the Company, and the amount of revenue can be measured reliably.
Contract revenue is recognized on percentage completion method. The stage of completion is determined as a proportion to the contract cost incurred up to the reporting date to the estimated total contract costs. When it is probable that the total contract cost will exceed total contract revenue, the expected loss is recognized as an expense immediately. Total contract cost is determined based on technical and other assessment of cost to be incurred.
Interest income from financial assets is recognized at the effective interest rate applicable on initial recognition.
Dividend income from investments is recognized when the shareholderâs right to receive payment is established.
Export incentives are accrued in the year when the right to receive credit is established in respect of exports made and are accounted to the extent there is no significant uncertainty about the measurability and ultimate realization/ utilization of such benefits/ duty credit.
Other income is recognized on accrual basis except when realization of such income is uncertain.
(f) Foreign Exchange Transactions
Transactions in currencies other than the Companyâs functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated using exchange rate prevailing on the last day of the reporting period.
Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of transaction.
Exchange differences on monetary items are recognized in the Statement of Profit and Loss in the period in which they arise.
(g) Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards incidental to the ownership of an asset to the Company. All other leases are classified as operating leases.
Assets acquired under lease where the company has substantially all risk and rewards incidental to ownership are classified as finance leases. Such assets are capitalized at the inception of lease at the lower of fair value or the present value of minimum lease payment and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability of each period.
Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis over the lease term.
(h) Employees Benefits
(i) Short Term Employee Benefits
Short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized undiscounted during the period employee renders services. These benefits include salaries, wages, bonus, performance incentives, etc.
(ii) Defined Contribution Plan
The Companyâs contributions paid / payable for the year to Provident Fund are recognized based on the undiscounted amount of obligation to the Statement of profit and loss.
(iii) Defined Benefit Plan
Defined retirement benefit plans comprising of gratuity and leave encashment are recognized based on the present value of defined benefit obligation which is computed using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period.
Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest as defined above), are recognized in other comprehensive income as permitted in the period in which they occur and are not subsequently reclassified to profit or loss.
The retirement benefit obligation recognized in the Financial Statements represents the actual deficit or surplus in the Companyâs defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of reductions in future contributions to the plans.
(iv) Other Long Term Employee Benefits
Other long term employee benefit comprises of leave encashment towards un-availed leave and Compensated absences, these are recognized based on the present value of defined obligation which is computed using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period.
Remeasurement of leave encashment towards un-availed leave and compensated absences are recognized in the statement of profit and loss in the period in which they occur.
(i) Borrowing Cost
Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as part of such assets. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as expense in the period in which they are incurred.
(j) Income Taxes
Income tax expense represents the sum of the current tax and deferred tax.
(i) Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from âprofit before taxâ as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Companyâs current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the end of the reporting period.
(ii) Deferred Tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognized as deferred tax asset in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with asset will be realized.
(iii) Current and Deferred Tax Expense for the Year
Current and deferred tax expense is recognized in the Statement of Profit and Loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
(k) Financial Instruments
Financial assets and financial liabilities are recognized when Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in the Statement of Profit and Loss.
(l) Equity Instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
(m) Financial Assets - Classification and Measurement
(i) Cash and Cash Equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
(ii) Financial Assets at Amortized Cost
Financial assets are subsequently measured at amortized cost using the effective interest method if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(iii) Financial Assets at Fair Value through Other Comprehensive Income
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(iv) Financial Assets at Fair Value through Profit and Loss
Financial assets are measured at fair value through profit or loss unless it is measured at amortized cost or at fair value through other comprehensive income on initial recognition.
(v) Impairment of Financial Assets
The Company assesses at each balance sheet date whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognizes lifetime expected losses for trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to 12 month expected credit losses or at an amount equal to lifetime expected losses, if the credit risk on the financial asset has increased significantly since initial recognition.
(vi) Derecognition of Financial Assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. On derecognition of a financial asset in its entirety (except for equity instruments designated as FVTOCI), the difference between the assetâs carrying amount and the sum of the consideration received and receivable is recognized in the Statement of Profit and Loss.
(n) Financial Liabilities - Classification and Measurement
Financial Liabilities are measured at amortized cost or Fair Value through Profit and Loss Account (FVTPL). A financial liability is classified as at FVTPL if it is classified as held for trading, or it is a derivate or it is designated as on initial recognition. Financial Liabilities at FVTPL are measured at fair value and net gains and losses, including interest expense, are recognized in profit and loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest Expense and foreign exchange gains and losses are recognized in profit and loss. Any gain or loss on derecognition is also recognized in the profit and loss. Fees paid on the establishment of Loan facilities are recognized as transaction cost of the loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down.
(i) Financial Guarantee Contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by the Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
â the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
â the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 18. [Note No. 27]
(ii) Derecognition of Financial Liabilities
The company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire. The company also derecognizes a financial liability when its terms are modified and the cash flow under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognized at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognized in the Statement of profit and loss.
(o) Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
(p) Provisions, Contingent Liabilities and Contingent Assets
(i) Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
(ii) Contingent Liabilities and Assets
Contingent Liabilities are disclosed when there is a possible obligation arising from the past events, the existence of which will be confirmed only by the occurrence or non - occurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from the past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
Contingent assets are disclosed in the Financial Statements by way of notes to accounts when an inflow of economic benefits is probable.
5 Critical Accounting Judgments, Assumptions and Key Sources of Estimation Uncertainty
Inherent in the application of many of the accounting policies used in preparing the Financial Statements is the need for Management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual outcomes could differ from the estimates and assumptions used.
(a) Judgements
The following are the critical judgements, apart from those involving estimations (Refer note 5(b)), that the Management have made in the process of applying the Companyâs accounting policies and that have the significant effect on the amounts recognized in the Financial Statements.
(i) Determination of Functional Currency
Currency of the primary economic environment in which the Company operates (âthe functional currencyâ) is Indian Rupee (â) in which the company primarily generates and expends cash. Accordingly, the Management has assessed its functional currency to be Indian Rupee (â).
(ii) Classification of Investment in T&R Jingke Electrical Equipments Pvt. Ltd. as Joint Venture
The Company has 60% participating interest in T&R Jingke Electrical Equipments Pvt. Ltd as a Joint Venture Agreement. The Management has however evaluated the interest in T&R Jingke Electrical Equipments Pvt. Ltd. to be in the nature of joint venture as the Joint Venture Agreement between the parties provides for sharing of control of the decisions of relevant activities that require the unanimous consent of all the parties sharing control.
(iii) Determining whether An Arrangement contains Leases and Classification of Leases
The Company enters into service/ hiring arrangements for various assets/ services.The determination of lease and classification of the service/ hiring 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.
(iv) Evaluation of Indicators for Impairment of Property, Plant and Equipment
The evaluation of applicability of indicators of impairment of assets requires assessment of external factors (significant decline assetâs value, significant changes in the technological, market, economic or legal environment, market interest rates etc.) and internal factors (obsolescence or physical damage of an asset, poor economic performance of the asset etc.) which could result in significant change in recoverable amount of the Property, Plant and Equipment.
(b) Assumptions and Estimation Uncertainties
Information about estimates and assumptions that have the significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may differ from these estimates.
Defined Benefit Obligations
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on publicly available mortality tables for the specific countries. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the respective countries.
Taxes
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.
The Company has Rs. 966.82 lakhs (31st March 2017: Rs. 767.97 lakhs, 1st April 2016: Rs. 3617.14 lakhs) of tax losses carried forward on which deferred tax asset is created, based on probability that future profits will be available against which the deductible temporary difference can be realized.
Provision for warranty
Provision is made for estimated warranty claims in respect of products sold which are still under warranty at the end of the reporting period. These claims are expected to be settled in the next financial year. Management estimates the provision based on historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts.
6 First-Time Adoption â Mandatory Exceptions and Optional Exemptions
(a) Overall Principle
The Company has prepared the opening balance sheet as per Ind AS of 1st April, 2016 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying certain items from Previous GAAP to Ind AS required under the Ind AS, and applying Ind AS in the measurement of recognized assets and liabilities. However, this principle is subject to certain mandatory exceptions and certain optional exemptions availed by the Company as detailed below.
(b) Deemed Cost of Property, Plant and Equipment and Intangible Assets
The Company has elected to continue with the carrying value of all its Property, Plant and Equipment and Intangible Assets recognized as of 1st April 2016 (transition date) measured as per the Previous GAAP and use that carrying value as its deemed cost as of the transition date.
(c) Investments in Subsidiaries and Joint Ventures
The Company has elected to continue with the carrying value of all of its Investments recognized as of 1st April 2016 (transition date) measured as per the Previous GAAP and use that carrying value as its deemed cost as of the transition date.
(d) Classification and Measurement of Financial Assets
The Company has determined the classification and measurement of financial asset in terms of whether they meet the amortized cost criteria or the fair value through other comprehensive income (FVTOCI) criteria based on the facts and circumstances that existed as on the transition date.
(e) Impairment of Financial Assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101.
Mar 31, 2016
For the Year ended on 31st March, 2016
1. SIGNIFICANT ACCOUNTING POLICIES
a) Accounting Convention
The financial statements of the Company have been prepared 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 and the relevant provisions of the Companies Act, 2013 (âthe 2013 Actâ).The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
b) Use of Estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.
c) Fixed Assets
i) Tangible Fixed Assets are stated at cost of acquisition or construction less accumulated depreciation. The cost of fixed assets includes non-refundable taxes and levies, freight and other incidental expenses related to acquisition and installation of the respective assets.
ii) Certain computer software and technical knowhow costs are capitalized and recognized as intangible assets in terms of Accounting Standard 26 on intangible assets based on materiality, accounting prudence and significant economic benefits expected to flow there from for a period longer than 1 year. Capitalized cost include direct cost of implementation and expenses directly attributable to the implementation.
iii) At each Balance Sheet date, whether there is any indication that any asset may be impaired. If such assets are considered to be impaired the impairment loss is then recognized for the amount by which the carrying amount of the assets exceeds its recoverable amount, which is the higher of an assetâs net selling price and value in use. For the purpose of assessing impairment, assets are grouped at the smallest level for which there are separately identifiable cash flows.
d) Depreciation and Amortization Expense
i) Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
ii) Depreciation on tangible fixed assets is provided on the Straight Line Method as per the useful life prescribed in Schedule
II to the Companies Act, 2013 except in respect of the unamortized carrying value of the Plant & machineries as on 1st April 2014 , in whose case the life of the assets has been assessed as 21 years based on taking into account the nature of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc. Pursuant to the transition provisions prescribed in Schedule II of the Act, the Company has fully depreciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be Nil as on 1st April, 2014.
iii) Intangible assets are amortized over their estimated useful life on straight line method as follows, as estimated at the time of acquisition:
a) Computer software costs capitalized and amortized over estimated useful life of 3 to 5 years.
b) Technical Knowhow costs capitalized and amortized over estimated useful life of 10 years.
e) Investments
Non Current investments are stated at cost and provision is made to recognize any diminution in value, other than that of temporary nature.
f) Inventories
i) Raw materials, Process stock and Finished Goods are valued at lower of cost or net realizable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty.
ii) Cost for Raw materials is determined on Weighted Average cost, net of Convert credit availed.
iii) Cost for Finished Goods and Process Stock is determined taking material cost [Net of Convert credit availed] labour and relevant appropriate overheads and Cenvat duty.
g) Revenue Recognition
In appropriate circumstances, Revenue (Income) is recognized when no significant uncertainty as to determination or realization exists.
h) Other Income
Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.
i) Sales, Contract Revenue and Service Income
Sales are accounted on dispatch of goods. Export sales are accounted on the basis of date of Bill of lading. Sales value is inclusive of Cenvat Duty but does not include other recoveries such as insurance charges, transport charges etc. Service income excludes service tax.
Contract revenue is recognized on percentage completion method. The stage of completion is determined as a proportion to the contract cost incurred up to the reporting date to the estimated total contract costs. When it is probable that the total contract cost will exceed total contract revenue, the expected loss is recognized as an expense immediately. Total contract cost is determined based on technical and other assessment of cost to be incurred. j) Cenvat credit
Cenvat credit is accounted for on accrual basis on purchase of eligible inputs, capital goods and services.
k) Foreign Currency Transactions
i) Monetary items denominated in foreign currency are translated at the exchange rate prevailing on the last day of the accounting year. Foreign currency transactions are accounted at the rate prevailing on the date of transaction.
ii) Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of transaction.
iii) Gain or loss arising out of translation/conversion is taken credit for or charged to the profit and loss statement.
l) Accounting for forward contracts
Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortized over the period of the contracts if such contracts relate to monetary items as at the balance sheet date. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense in the period in which such cancellation or renewal is made.
m) Employees Benefits
i) Defined Contribution Plan
The Companyâs contributions paid / payable for the year to Provident Fund are recognized in the profit and loss statement.
ii) Defined Benefit Plan
The Companyâs liabilities towards gratuity, and leave encashment are determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognized on a straight line basis over the average period until the amended benefits become vested. Actuarial gain and losses are recognized immediately in the profit and loss account as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the balance sheet date on Government bonds where the currency and terms of the Government bonds are consistent with the currency and estimated terms of the defined benefit obligation.
n) Borrowing Cost
Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalization of such asset are added to the cost of the assets. Capitalization of borrowing costs is suspended and charged to the statement of profit and loss during extended periods when active development activity on the qualifying assets is interrupted.
o) Taxes on Income
Current Tax is the amount of tax payable on the taxable income for the year as determined in accordance with provision of Income Tax Act, 1961.
Deferred tax resulting from âtiming differenceâ between book and taxable profit is accounted for using the tax rates and laws that have been enacted or subsequently enacted as on the balance sheet date. The Deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future, however where there is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognized only if there is a virtual certainty of realization of such assets supported by convincing evidence that there will be sufficient future taxable income available to realize the assets.
p) Leases
i) Assets acquired under lease where the Company has substantially all risk and rewards incidental to ownership are classified as finance leases. Such assets are capitalized at the inception of lease at the lower of fair value or the present value of minimum lease payment and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability of each period.
ii) Assets acquired on lease where a significant portion of risk and rewards incidental to ownership is retained by the lessor are classified as operating lease. Lease rentals under operating leases are recognized in the statement of profit and loss on a straight-line basis over the lease term.
q) Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
r) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the financial statements
Mar 31, 2015
A) Accounting Convention
The financial statements of the Company have been prepared 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 ("the 2013 Act") / Companies Act, 1956 ("the
1956 Act"), as applicable. The financial statements have been
prepared on accrual basis under the historical cost convention. The
accounting policies adopted in the preparation of the financial
statements are consistent with those followed in the previous year.
b) Use of Estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
c) Fixed Assets
i) Tangible Fixed Assets are stated at cost of acquisition or
construction less accumulated depreciation. The cost of fixed assets
includes non-refundable taxes and levies, freight and other incidental
expenses related to acquisition and installation of the respective
assets.
ii) Certain computer software and technical knowhow costs are
capitalised and recognized as intangible assets in terms of Accounting
Standard 26 on intangible assets based on materiality, accounting
prudence and significant economic benefits expected to flow therefrom
for a period longer than 1 year. Capitalised cost include direct cost
of implementation and expenses directly attributable to the
implementation.
iii) At each Balance Sheet date, whether there is any indication that
any asset may be impaired. If such assets are considered to be impaired
the impairment loss is then recognized for the amount by which the
carrying amount of the assets exceeds its recoverable amount, which is
the higher of an asset's net selling price and value in use. For the
purpose of assessing impairment, assets are grouped at the smallest
level for which there are separately identifiable cash flows.
d) Depreciation and Amortisation Expense
i) Depreciable amount for assets is the cost of an asset, or other
amount substituted for cost, less its estimated residual value.
ii) Depreciation on tangible fixed assets is provided on the Straight
Line Method as per the useful life prescribed in Schedule II to the
Companies Act, 2013 except in respect of the unamortised carrying value
of the Plant & machineries as on 1st April 2014 , in whose case the
life of the assets has been assessed as 21 years based on taking into
account the nature of the asset, the estimated usage of the asset, the
operating conditions of the asset, past history of replacement,
anticipated technological changes, manufacturers warranties and
maintenance support,etc.
Pursuant to the transition provisions prescribed in Schedule II to the
Act, the Company has fully depreciated the carrying value of assets,
net of residual value, where the remaining useful life of the asset was
determined to be Nil as on 1st April, 2014.
iii) Intangible assets are amortised over their estimated useful life
on straight line method as follows, as estimated at the time of
acquisition:
a) Computer software costs capitalized and amortized over estimated
useful life of 3 to 5 years.
b) Technical Knowhow costs capitalized and amortized over estimated
useful life of 10 years.
e) Investments
Long Term investments are stated at cost and provision is made to
recognize any diminution in value, other than that of temporary nature.
f) Inventories
i) Raw materials, Process stock and Finished Goods are valued at lower
of cost or net realisable value after providing for obsolescence and
other losses, where considered necessary. Cost includes all charges in
bringing the goods to the point of sale, including octroi and other
levies, transit insurance and receiving charges. Work-in-progress and
finished goods include appropriate proportion of overheads and, where
applicable, excise duty.
ii) Cost for Raw materials is determined on Weighted Average cost, net
of Cenvat credit availed.
iii) Cost for Finished Goods and Process Stock is determined taking
material cost [Net of Cenvat credit availed] labour and relevant
appropriate overheads and Cenvat duty.
g) Revenue Recognition
In appropriate circumstances, Revenue (Income) is recognized when no
significant uncertainty as to determination or realisation exists.
h) Other Income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
i) Sales, Contract Revenue and Service Income
Sales are accounted on dispatch of goods. Export sales are accounted on
the basis of date of Bill of lading. Sales value is inclusive of Cenvat
Duty but does not include other recoveries such as insurance charges,
transport charges etc. Service income excludes service tax.
Contract revenue is recognised on percentage completion method. The
stage of completion is determined as a proportion to the contract cost
incurred upto the reporting date to the estimated total contract costs.
When it is probable that the total contract cost will exceed total
contract revenue, the expected loss is recognised as an expense
immediately. Total contract cost is determined based on technical and
other assessment of cost to be incurred.
j) Cenvat credit
Cenvat credit is accounted for on accrual basis on purchase of eligible
inputs, capital goods and services.
k) Foreign Currency Transactions
i) Monetary items denominated in foreign currency are translated at the
exchange rate prevailing on the last day of the accounting year.
Foreign currency transactions are accounted at the rate prevailing on
the date of transaction.
ii) Non monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of transaction.
iii) Gain or loss arising out of translation/conversion is taken credit
for or charged to the profit and loss statement.
l) Accounting for forward contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortised over the
period of the contracts if such contracts relate to monetary items as
at the balance sheet date. Any profit or loss arising on cancellation
or renewal of such a forward exchange contract is recognised as income
or as expense in the period in which such cancellation or renewal is
made.
m) Employees Benefits
i) Defined Contribution Plan
The Company's contributions paid / payable for the year to Provident
Fund are recognized in the profit and loss statement.
ii) Defined Benefit Plan
The Company's liabilities towards gratuity, and leave encashment are
determined using the projected unit credit method which considers each
period of service as giving rise to an additional unit of benefit
entitlement and measures each unit separately to build up the final
obligation. Past services are recognized on a straight line basis over
the average period until the amended benefits become vested. Actuarial
gain and losses are recognized immediately in the profit and loss
account as income or expense. Obligation is measured at the present
value of estimated future cash flows using a discounted rate that is
determined by reference to market yields at the balance sheet date on
Government bonds where the currency and terms of the Government bonds
are consistent with the currency and estimated terms of the defined
benefit obligation.
n) Borrowing Cost
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset are added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
statement of profit and loss during extended periods when active
development activity on the qualifying assets is interrupted.
o) Taxes on Income
Current Tax is the amount of tax payable on the taxable income for the
year as determined in accordance with provision of Income Tax Act,
1961.
Deferred tax resulting from "timing difference "between book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or subsequently enacted as on the balance sheet date. The
Deferred tax asset is recognized and carried forward only to the extent
that there is a reasonable certainty that the assets will be realised
in future, however where there is unabsorbed depreciation or carry
forward of losses, deferred tax assets are recognised only if there is
a virtual certainty of realisation of such assets supported by
convincing evidence that there will be sufficient future taxable income
available to realise the assets.
p) Leases
i) Assets acquired under lease where the Company has substantially all
risk and rewards incidental to ownership are classified as finance
leases. Such assets are capitalised at the inception of lease at the
lower of fair value or the present value of minimum lease payment and a
liability is created for an equivalent amount. Each lease rental paid
is allocated between the liability and the interest cost, so as to
obtain a constant periodic rate of interest on the outstanding
liability of each period.
ii) Assets acquired on lease where a significant portion of risk and
rewards incidental to ownership is retained by the lessor are
classified as operating lease. Lease rentals under operating leases are
recognised in the statement of profit and loss on a straight-line basis
over the lease term.
q) Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post-tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the profit
/ (loss) after tax (including the post-tax effect of extraordinary
items, if any) as adjusted for dividend, interest and other charges to
expense or income (net of any attributable taxes) relating to the
dilutive potential equity shares, by the weighted average number of
equity shares considered for deriving basic earnings per share and the
weighted average number of equity shares which could have been issued
on the conversion of all dilutive potential equity shares.
r) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes. Contingent assets are not recognised in the
financial statements.
Mar 31, 2014
A) Accounting Convention
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") [which
continue to be applicable in respect of Section 133 of the Companies
Act, 2013 ("the 2013 Act") in terms of General Circular 15/2013 dated
13 September, 2013 of the Ministry of Corporate Affairs] and the
relevant provisions of the 1956 Act/ 2013 Act, as applicable. Except
where otherwise stated, the accounting policies are consistently
applied.
b) Use of Estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on date of the financial statement and the reported amount
of revenues and expenses during the reporting period. Difference
between the actual result and estimates are recognized in the period in
which the results are known/materialised.
c) Fixed Assets
i) Tangible Fixed Assets are stated at cost of acquisition or
construction less accumulated depreciation. The cost of fixed assets
includes non-refundable taxes and levies, freight and other incidental
expenses related to acquisition and installation of the respective
assets.
ii) Certain computer software costs are capitalised and recognized as
intangible assets in terms of Accounting Standard 26 on intangible
assets based on materiality, accounting prudence and significant
economic benefits expected to flow there from for a period longer than 1
year. Capitalised cost include direct cost of implementation and
expenses directly attributable to the implementation.
iii) At each Balance Sheet date, whether there is any indication that
any asset may be impaired. If such assets are considered to be impaired
the impairment loss is then recognized for the amount by which the
carrying amount of the assets exceeds its recoverable amount, which is
the higher of an asset''s net selling price and value in use. For the
purpose of assessing impairment, assets are grouped at the smallest
level for which there are separately identifiable cash flows.
d) Depreciation and Amortisation Expense
i) Depreciation on fixed assets is provided on Straight Line Method in
accordance with Section 205 (2) (b) of the Companies Act, 1956 at the
rate and in the manner prescribed in schedule XIV of the said Act.
ii) Computer software costs capitaised are amortised using the Straight
Line Method over estimated useful life of 3 to 5 years, as estimated at
the time of capitalisation.
e) Investments
i) Long Term investments are stated at cost and provision is made to
recognize any diminution in value, other than that of temporary nature,
ii) Current investments are carried at lower of cost and fair value.
Diminution in value is charged to the profit and loss statement.
f) Inventories
i) Raw Materials, Process Stock and Finished Goods are valued at lower
of cost or net realisable value, ii) Cost for Raw materials is
determined on Weighted Average/FIFO basis, net of cenvat credit
availed, iii) Cost for Finished Goods and Process Stock is determined
taking material cost [Net of cenvat credit availed] labour and relevant
appropriate overheads and cenvat duty.
g) Revenue Recognition
In appropriate circumstances, Revenue (Income) is recognized when no
significant uncertainty as to determination or realisation exists.
h) Sales, Contract Revenue and Service Income
Sales are accounted on dispatch of goods. Export sales are accounted on
the basis of date of Bill of lading. Sales value is inclusive of Cenvat
Duty but does not include other recoveries such as insurance charges,
transport charges etc. Service income excludes service tax.
Contract revenue is recognised on percentage completion method. The
stage of completion is determined as a proportion to the contract cost
incurred up to the reporting date to the estimated total contract costs.
When it is probable that the total contract cost will exceed total
contract revenue, the expected loss is recognised as an expense
immediately. Total contract cost is determined based on technical and
other assessment of cost to be incurred.
i) Cenvat credit
Cenvat credit is accounted for on accrual basis on purchase of eligible
inputs, capital goods and services.
j) Foreign Currency Transactions
i) Monetary items denominated in foreign currency are translated at the
exchange rate prevailing on the last day of the accounting year.
Foreign currency transactions are accounted at the rate prevailing on
the date of transaction.
(ii) Non monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of transaction.
(iii) Gain or loss arising out of translation/conversion is taken
credit for or charged to the profit and loss statement
k) Prior Period Expenses/Income
Material items of prior period expenses/income are disclosed
separately.
1) Employee Benefits
i) Defined Contribution Plan
The Company''s contributions paid / payable for the year to Provident
Fund are recognized in the profit and loss statement.
ii) Defined Benefit Plan
The Company''s liabilities towards gratuity, and leave encashment are
determined using the projected unit credit method which considers each
period of service as giving rise to an additional unit of benefit
entitlement and measures each unit separately to build up the final
obligation. Past services are recognized on a straight line basis over
the average period until the amended benefits become vested. Actuarial
gain and losses are recognized immediately in the profit and loss
account as income or expense. Obligation is measured at the present
value of estimated future cash flows using a discounted rate that is
determined by reference to market yields at the balance sheet date on
Government bonds where the currency and terms of the Government bonds
are consistent with the currency and estimated terms of the defined
benefit obligation.
m) Borrowing Cost
Interest and other costs in connection with the borrowings of the funds
to the extents related/attributed to the acquisition / construction of
qualifying fixed assets are capitalised up to the date when such assets
are ready for their intended use and other borrowing costs are charged
to profit & loss statement.
n) Miscellaneous Expenditure
Shares issue expenses incurred are amortised over a period of five
years.
o) Taxes on Income
Current Tax is the amount of tax payable on the taxable income for the
year as determined in accordance with provision of Income Tax Act,
1961. Deferred tax resulting from "timing difference "between book and
taxable profit is accounted for using the tax rates and laws that have
been enacted or subsequently enacted as on the balance sheet date. The
Deferred tax asset is recognized and carried forward only to the extent
that there is a reasonable certainty that the assets will be realised
in future, however where there is unabsorbed depreciation or carry
forward of losses, deferred tax assets are recognised only if there is
a virtual certainty of realisation of such assets.
p) Leases
Lease transaction entered into on or after 1st April, 2001:
i) Assets acquired under lease where the Company has substantially all
risk and rewards incidental to ownership are classified as finance
leases. Such assets are capitalised at the inception of lease at the
lower of fair value or the present value of minimum lease payment and a
liability is created for an equivalent amount. Each lease rental paid
is allocated between the liability and the interest cost, so as to
obtain a constant periodic rate of interest on the outstanding
liability of each period.
ii) Assets acquired on lease where a significant portion of risk and
rewards incidental to ownership is retained by the lessor are
classified as operating lease. Lease rental are charged to the profit
and loss Statement on accrual basis.
q) Earnings Per Share
The Company reports basic and diluted Earnings Per Share (EPS) in
accordance with Accounting Standard 20 on "Earnings Per Share." Basic
EPS is computed by dividing the net profit or loss for the year by the
weighted average number of equity shares outstanding during the year.
r) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
Mar 31, 2012
1) Accounting Convention
The accounts are prepared on historical cost basis and based on accrual
method of accounting and applicable Accounting Standards.
2) Use of Estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on date of the financial statement and the reported amount
of revenues and expenses during the reporting period. Difference
between the actual result and estimates are recognized in the period in
which the results are known/ materialized.
3) Fixed Assets
a) Tangible Fixed Assets are stated at cost of acquisition or
construction less accumulated depreciation. The cost of fixed assets
includes non-refundable taxes and levies, freight and other incidental
expenses related to acquisition and installation of the respective
assets.
b) Computer software costs are capitalised and recognised as intangible
assets in terms of Accounting Standard 26 on intangible assets based on
materiality, accounting prudence and significant economic benefits
expected to flow therefrom for a period longer than 1 year. Capitalised
cost include direct cost of implementation and expenses directly
attributable to the implementation.
c) The Company evaluates the impairment losses on the fixed assets
whenever events or changes in circumstances indicate that their
carrying amounts may not be recoverable. If such assets are considered
to be impaired the impairment loss is then recognised for the amount by
which the carrying amount of the assets exceeds its recoverable amount,
which is the higher of an asset's net selling price and value in use.
For the purpose of assessing impairment, assets are grouped at the
smallest level for which there are separately identifiable cash flows.
4) Depreciation and Amortisation Expense
a) Depreciation on fixed assets is provided on Straight Line Method in
accordance with Section 205(2)(b) of the Companies Act, 1956 at the
rate and in the manner prescribed in Schedule XIV of the said Act.
b) Computer software costs capitaised are amortised using the Straight
Line Method over estimated useful life of 3 to 5 years, as estimated at
the time of capitalisation.
5) Investments
a) Long Term investments are stated at cost and provision is made to
recognise any dimunision in value, other than that of temporary nature.
b) Current investments are carried at lower of cost and fair value.
Diminution in value is charged to the profit and loss statement.
6) Inventories
a) Raw Materials, Process Stock and Finished Goods are valued at lower
of cost or net realisable value.
b) Cost for Raw materials is determined on Weighted Average/FIFO basis,
net of cenvat credit availed.
c) Cost for Finished Goods and Process Stock is determined taking
material cost [net of cenvat credit availed] labour and relevant
appropriate overheads and cenvat duty.
7) Revenue Recognition
In appropriate circumstances, Revenue (income) is recognised when no
significant uncertainty as to determination or realisation exists.
8) Sales/Service Income
Sales of product are recognised when risk and rewards of ownership of
the products are passed on to the customers, which is generally on
despatch of goods. Export sales are accounted on the basis of date of
Bill of lading. Sales value is inclusive of Cenvat Duty and but does
not include other recoveries such as insurance charges, transport
charges etc. Service income excludes service tax.
9) Cenvat credit
Cenvat credit is accounted for on accrual basis on purchase of eligible
inputs, capital goods and services.
10) Foreign currency Transactions
a) Monetary items denominated in foreign currency are translated at the
exchange rate prevailing on the last day of the accounting year.
Foreign currency transactions are accounted at the rate prevailing on
the date of transaction.
b) Non monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of transaction.
c) Gain or loss arising out of translation/conversion is taken credit
for or charged to the profit and loss statement.
11) Prior Period Expenses/Income
Material items of prior period expenses/income are disclosed
separately.
12) Employees Benefits Expense
a) Defined Contribution Plan
The Company's contributions paid/payable for the year to Provident
Fund are recognised in the profit and loss statement.
b) Defined Benefit Plan
The Company's liabilities towards gratuity, and leave encashment are
determined using the projected unit credit method which considers each
period of service as giving rise to an additional unit of benefit
entitlement and measures each unit separately to build up the final
obligation. Past services are recognised on a straight line basis over
the average period until the amended benefits become vested. Actuarial
gain and losses are recognised immediately in the profit and loss
account as income or expense. Obligation is measured at the present
value of estimated future cash flows using a discounted rate that is
determined by reference to market yields at the balance sheet date on
Government bonds where the currency and terms of the Government bonds
are consistent with the currency and estimated terms of the defined
benefit obligation.
13) Borrowing cost
Interest and other costs in connection with the borrowings of the funds
to the extents related/attributed to the acquisition / construction of
qualifying fixed assets are capitalised upto the date when such assets
are ready for their intended use and other borrowing costs are charged
to profit and loss statement.
14) Miscellaneous Expenditure
Shares issue expenses incurred are amortised over a period of five
years.
15) Taxes on Income
Current Tax is the amount of tax payable on the taxable income for the
year as determined in accordance with provision of Income Tax Act,
1961. Deferred tax resulting from "timing difference "between book
and taxable profit is accounted for using the tax rates and laws that
have been enacted or subsequently enacted as on the balance sheet date.
The deferred tax asset is recognised and carried forward only to the
extent that there is a reasonable certainty that the assets will be
realised in future.
16) Leases
Lease transaction entered into on or after April 1, 2001:
a) Assets acquired under lease where the Company has substantially all
risk and rewards incidental to ownership are classified as finance
leases. Such assets are capitalised at the inception of lease at the
lower of fair value or the present value of minimum lease payment and a
liability is created for an equivalent amount. Each lease rental paid
is allocated between the liability and the interest cost, so as to
obtain a constant periodic rate of interest on the outstanding
liability of each period.
b) Assets acquired on lease where a significant portion of risk and
rewards incidental to ownership is retained by the lessor are
classified as operating lease. Lease rental are charged to the profit
and loss statement on accrual basis.
17) Earnings Per Share
The Company reports basic and diluted Earnings Per Share (EPS) in
accordance with Accounting Standard 20 on Earnings Per Share. Basic EPS
is computed by dividing the net profit or loss for the year by the
weighted average number of equity shares outstanding during the year.
18) Provisions, contingent Liabilities and contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognised but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
(iv) Rights of Equity shares
The Company has one class of equity shares having a par value of Rs 10
per share. Each shareholder is eligible for one vote per share held.
The dividend proposed by the Board of Directors is subject to approval
of the shareholders in ensuing Annual General Meeting, except in case
of interim dividend. In the event of of liquidation, the equity share
holders are eligible to receive the remaining assets of the Company
after distribution of all preferential amounts, in proportion to their
shareholding.
Mar 31, 2010
1) Accounting Convention
The consolidated financial statements are prepared on historical cost
basis and based on accrual method of accounting and applicable
Accounting Standards by consolidating the accounts of Parent Company
with its subsidiaries in accordance with generally accepted accounting
principles and in consonance with Accounting Standard 21 (Consolidated
financial State- ments) issued by the Institute of Chartered
Accountants of India.
2) Principles of Consolidation
a) The financial statements of the Parent Company and its Subsidiaries
have been consolidated on a line-by-line basis by adding together the
book values of the like items of assets, liabilities, income and
expenses, after eliminating intra-group balances and the unrealised
profits/losses on intra-group transactions. The amounts shown in
respect of reserves comprise the amount of the relevant reserves as per
the Balance Sheet of the parent company and its share in the
post-acquisition increase in the relevant reserves of the consolidated
entities. The consolidated financial statements are presented, to the
extent possible, in the same format as that adopted by the parent
company for its separate financial statements.
b) The difference between the cost of investment in the Subsidiaries,
over the net assets at the time of acquisition of shares in the
Subsidiaries is recognised in the financial statements as Goodwill or
Capital Reserve as the case may be.
3) Use of Estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on date of the financial statement and the reported amount
of revenues and expenses during the reporting period. Difference
between the actual result and estimates are recognised in the period in
which the results are known/ materialized.
4) Fixed Assets
a) Tangible Fixed Assets are stated at cost of acquisition or
construction less accumulated depreciation. The cost of fixed assets
includes non-refundable taxes and levies, freight and other incidental
expenses related to acquisition and installa- tion of the respective
assets.
b) Certain computer software costs are capitalised and recognised as
intangible assets in terms of Accounting Standard 26 on intangible
assets based on materiality, accounting prudence and significant
economic benefits expected to flow therefrom for a period longer than 1
year. Capitalised cost include direct cost of implementation and
expenses directly attributable to the implementation.
c) The Company evaluates the impairment losses on the fixed assets
whenever events or changes in circumstances indicate that their
carrying amounts may not be recoverable. If such assets are considered
to be impaired the impairment loss is then recognised for the amount by
which the carrying amount of the assets exceeds its recoverable amount,
which is the higher of an assetÃs net selling price and value in use.
For the purpose of assessing impairment, assets are grouped at the
smallest level for which there are separately identifiable cash flows.
5) Depreciation and Amortisation
a) Depreciation on fixed assets is provided on Straight Line Method in
accordance with Section 205(2)(b) of the Companies Act, 1956 at the
rate and in the manner prescribed in Schedule XIV of the said Act.
b) Computer software costs capitalised are amortised using the Straight
Line Method over estimated useful life of 3 to 5 years, as estimated at
the time of capitalisation.
6) Investments
a) Long term investments are stated at cost and provision is made to
recognise any diminution in value, other than that of temporary nature.
b) Current investments are carried at lower of cost and market value.
Diminution in value is charged to the profit and loss account.
7) Inventories
a) Raw materials, Process stock and Finished Goods are valued at lower
of cost or net realisable value.
b) Cost for Raw materials is determined on Weighted Average/FIFO basis,
net of cenvat credit availed.
c) Cost for Finished Goods and Process Stock is determined taking
material cost [net of cenvat credit availed labour and relevant
appropriate overheads and cenvat duty.
8) Revenue Recognition
In appropriate circumstances, Revenue (income) is recognised when no
significant uncertainty as to determination or realisation exists.
9) Sales/Service Income
Sales of products are recognised when risk and rewards of ownership of
the products are passed on to the customers, which is generally on
despatch of goods. Export sales are accounted on the basis of date of
Bill of lading. Sales value is inclusive of Cenvat Duty but does not
include other recoveries such as insurance charges, transport charges
etc. Service income includes service tax.
10) Cenvat credit
Cenvat credit is accounted for on accrual basis on purchase of eligible
inputs, capital goods and services.
11) Foreign Currency Transactions
a) Monetary items denominated in foreign currency are translated at the
exchange rate prevailing on the last day of the accounting year.
Foreign currency transactions are accounted at the rate prevailing on
the date of transaction.
b) Non monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
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