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Accounting Policies of Ultracab (India) Ltd. Company
Mar 31, 2024
Accounting Policy
Ultracab (India) Limited (the âCompanyâ) is a public limited company domiciled in India. Its shares are listed on the Bombay Stock Exchange (âBSEâ). The Company is mainly engaged in the business of manufacturing and exporting of electric wires and cables.
2. Summary of basis of compliance, basis of preparation and presentation, critical accounting estimates, assumptions and judgements and significant accounting policies2.1 Basis of preparation of financial statements
The financial statements of the company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under companies (Indian accounting standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the company.
2.2 Basis of preparation and presentation
The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except in case of significant uncertainties.
The Standalone Financial Statements have been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. 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.
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Act.
2.3 Critical accounting estimates, assumptions and judgements
The preparation of the Standalone Financial Statements requires management to make estimates, assumptions and judgments that affect the reported balances of assets and liabilities and disclosures as at the date of the Standalone Financial Statements and the reported amounts of income and expense for the periods presented.
The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates considering different assumptions and conditions.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial year are discussed below.
2.3.1 Deferred income tax assets and liabilities Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits
The amount of total deferred tax assets could change if management estimates of projected future taxable income or if tax regulations undergo a change.
2.3.2 Useful lives of property, plant and equipment (âPPEâ) and intangible assets
Management reviews the estimated useful lives and residual value of PPE and Intangibles at the end of each reporting period. Factors such as changes in the expected level of usage, technological developments and product lifecycle, could significantly impact the economic useful lives and the residual values of these assets. Consequently, the future depreciation charge could be revised and may have an impact on the profit of the future years.
2.3.3 Employee benefit obligations
Employee benefit obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments. These include the estimation of the appropriate discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, the employee benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
2.3.4 Provisions and contingencies
From time to time, the Company is subject to legal proceedings, the ultimate outcome of each being subject to uncertainties inherent in litigation. A provision for litigation is made when it is considered probable that a payment will be made and the amount can be reasonably estimated. Significant judgement is required when evaluating the provision including, the probability of an unfavourable outcome and the ability to make a reasonable estimate of the amount of potential loss. Litigation provisions are reviewed at each accounting period and revisions made for the changes in facts and circumstances. Contingent liabilities are disclosed in the notes forming part of the Standalone Financial Statements. Contingent assets are not disclosed in the Standalone Financial Statements unless an inflow of economic benefits is probable.
2.4 Foreign currency translation
The functional currency of the Company (i.e. the currency of the primary economic environment in which the Company operates) is the Indian Rupee in (Rs.). The financial statements have been rounded off to the nearest Rs. Lakh.
On initial recognition, all foreign currency transactions are recorded at exchange rates prevailing on the date of the transaction. Monetary assets and liabilities, denominated in a foreign currency, are translated at the exchange rate prevailing on the balance sheet date and the resultant exchange gains or losses are recognised in the Standalone Statement of Profit and Loss.
2.5 Property, plant and equipment
An item of property, plant and equipment (âPPEâ) is recognised as an asset if it is probable that the future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. These recognition principles are applied to the costs incurred initially to acquire an item of PPE, to the pre-operative and trial run costs incurred (net of sales), if any and
also to the costs incurred subsequently to add to, replace part of, or service it and subsequently carried at cost less accumulated depreciation and accumulated impairment losses, if any.
The cost of PPE includes interest on borrowings directly attributable to the acquisition, construction or production of a qualifying asset. A qualifying asset is an asset that necessarily takes a substantial period of time to be made ready for its intended use or sale. Borrowing costs and other directly attributable cost are added to the cost of those assets until such time as the assets are substantially ready for their intended use, which generally coincides with the commissioning date of those assets
Machinery spares that meet the definition of PPE are capitalised and depreciated over the useful life of the principal item of an asset.
"All other repair and maintenance costs, including regular servicing, are recognised in the Standalone Statement of Profit and Loss as incurred. When a replacement occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items."
PPE acquired and put to use for projects are capitalised and depreciation thereon is included in the project cost till the project is ready for commissioning.
Depreciation methods, estimated useful lives and residual value
Depreciation on PPE (except leasehold improvements) is calculated using the written-down value method to allocate their cost, over their estimated useful lives. Freehold land is not depreciated.
Schedule II to the Act prescribes the useful lives for various class of assets. For certain class of assets, based on technical evaluation and assessment, Management believes that the useful lives adopted by it reflect the periods over which these assets are expected to be used. Accordingly for those assets, the useful lives estimated by the management are different from those prescribed in the Schedule. Managementâs estimates of the useful lives for various class of PPE are as given below:
|
Assets |
Useful life |
|
Buildings |
30-60 Years |
|
Plant and Equipment |
5-25 Years |
|
Furniture and Fixtures |
10 Years |
|
Vehicles |
8 Years |
|
Office Equipment |
3 Years |
Useful lives of assets are reviewed at the end of each reporting period
Losses arising from the retirement of, and gains or losses arising from disposal/adjustments of PPE are recognised in the Standalone Statement of Profit and Loss.
Intangible assets comprise software licenses, product registration fees and rights to use railway wagon.
Intangible assets are measured on initial recognition at cost and subsequently are carried at cost less accumulated amortisation and accumulated impairment losses, if any.
The intangible assets with a finite useful life are amortised using straight line method over their estimated useful lives. The managementâs estimates of the useful lives for various class of Intangibles are as given below:
|
Assets |
Useful life |
|
Trademark |
7 Years |
The estimated useful life is reviewed annually by the management.
Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Standalone Statement of Profit and Loss.
2.7 Capital work-in-progress (âCWIPâ) and intangible assets under development
Projects under commissioning and other CWIP/ intangible assets under development are carried at cost, comprising direct cost, related incidental expenses and attributable borrowing cost
Subsequent expenditures relating to property, plant and equipment are capitalised only when it is probable that future economic benefit associated with these will flow to the Company and the cost of the item can be measured reliably.
Advances given to acquire property, plant and equipment are recorded as non-current assets and subsequently transferred to CWIP on acquisition of related assets.
Investment properties are land and buildings that are held for long term lease rental yields and/ or for capital appreciation. Investment properties are initially recognised at cost including transaction costs. Subsequently investment properties comprising buildings are carried at cost less accumulated depreciation and accumulated impairment losses, if any.
Depreciation on buildings is provided over the estimated useful lives as specified in note 2.5 above. The estimated useful lives and depreciation method of investment properties are reviewed, and adjusted on prospective basis as appropriate, at each reporting date. The effects of any revision are included in the Standalone Statement of Profit and Loss when the changes arise.
An investment property is de-recognised when either the investment property has been disposed of or do not meet the criteria of investment property i.e. when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the Standalone Statement of Profit and Loss in the period of de-recognition.
2.8 Research and development expenses
Research expenses are charged to the Standalone Statement of Profit and Loss as expenses in the year in which they are incurred. Development costs are capitalised as an intangible asset under development when the following criteria are met:
- the project is clearly defined, and the costs are separately identified and reliably measured;
- the technical feasibility of the project is demonstrated;
- the ability to use or sell the products created during the project is demonstrated;
- the intention to complete the project exists and use or sale of output manufactured during the project;
"a potential market for the products created during the project exists or their usefulness, in case of internal use, is demonstrated, such that the project will generate probable future economic benefits; and"
- adequate resources are available to complete the project.
- These development costs are amortised over the estimated useful life of the projects or the products they are incorporated within. The amortisation of capitalised development costs begins as soon as the related product is released to production.
2.9 Non-current assets held for sale and discontinued operations
Non-current assets (including disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable.
Non-current assets classified as held for sale are measured at lower of their carrying amount and fair value less cost to sell
Non-current assets classified as held for sale are not depreciated or amortised from the date when they are classified as held for sale.
A discontinued operation is a component of the entity that has been disposed off or is classified as held for sale and: represents a separate major line of business or geographical area of operations and; is part of a single co-ordinated plan to dispose of such a line of business or area of operations. The results of discontinued operations are presented separately in the Standalone Statement of Profit and Loss.
2.10 Financial instruments2.11.1 Investments and other financial assets:⢠Classification
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through OCI, or through profit or loss), and
- those measured at amortised cost.
- The classification is done depending upon the Companyâs business model for managing the financial assets and the contractual terms of the cash flows. For
assets measured at fair value, gains and losses will be recorded in profit or loss
⢠Debt instruments Measurement
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the Standalone Statement of Profit and Loss.
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. A gain or loss on a debt investment (unhedged) that is subsequently measured at amortised cost is recognised in the Standalone Statement of Profit and Loss when the asset is derecognised or impaired. Interest income from these financial assets is included in other income using the effective interest rate (âEIRâ) method.
Fair value through Other Comprehensive Income (âFVTOCIâ)
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at FVTOCI. Movements in the carrying amount are recorded through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains or losses which are recognised in the Standalone Statement of Profit and Loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to the Standalone Statement of Profit and Loss. Interest income from these financial assets is included in other income using the EIR method
Fair value through profit or loss (âFVTPLâ)
Assets that do not meet the criteria for amortised cost or FVTOCI are measured at FVTPL. A gain or loss on a debt investment (including current investments) that is subsequently measured at FVTPL (unhedged) is recognised net in the Standalone Statement of Profit and Loss in the period in which it arises. Interest income from these financial assets is included in other income.
The Company subsequently measures all equity investments at fair value, except investment in subsidiaries and joint ventures which are measured at cost. Where the Companyâs management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to the Standalone Statement of Profit and Loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified to equity. Dividends from such investments are recognised in the Standalone Statement of Profit and Loss within other income when the Companyâs right to receive payments is established. Impairment losses (and reversal of impairment losses) on equity investments measured at FVTOCI are not reported separately from other changes in fair value.
The Company considers all highly liquid investments, which are readily convertible into known amounts of cash, that are subject to an insignificant risk of change in value with a maturity within 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.
Trade receivables that do not contain a significant financing component are measured at transaction price.
⢠Impairment of financial assets
The Company assesses on a forward-looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk and if so, assess the need to provide for the same in the Statement of Profit and Loss.
⢠Derecognition of financial assets
A financial asset is derecognised only when the Company
- has transferred the rights to receive cash flows from the financial asset; or
- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company transfers an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. Where the Company has transferred substantially all risks and rewards of ownership, the financial asset is derecognised. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised. Where the Company has neither transferred a financial asset nor retained substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
2.11.2 Debt and equity instruments
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
2.11.3 Financial liabilities⢠Classification as debt or Equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definition of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
⢠Initial recognition and measurement
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Companyâs financial liabilities include borrowings, trade payables and other financial liabilities.
The measurement of financial liabilities depends on their classification, as described below:
These amounts represent obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. These payable are classified as ''current liabilities'' if payments are due within one year or less otherwise they are presented as ''non-current liabilities''. Trade payables are subsequently measured at amortised cost using the effective interest method.
Liability is removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other gains/ (losses).
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognised in the statement of
profit or loss.
2.11.4 Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of assessing fair value result in general approximation of value.
Inventories are valued at lower of cost and net realisable value after providing for obsolescence and other losses, where considered necessary on an item-by-item basis. Cost includes all
charges in bringing the goods to their present location and condition, including other levies, transit
insurance and receiving charges. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, taxes and duties. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
2.12 Revenue recognition2.13.1 Sale of goods
Revenue is recognised upon transfer of control of promised goods to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods.
Revenue from the sale of goods is recognised at the point in time when control is transferred to the customer which is usually on dispatch / delivery of goods, based on contracts with the customers.
Revenue towards satisfaction of performance obligation is measured based on the transaction price, which is the consideration, adjusted for volume discounts, price concessions, incentives, and returns, if any, as specified in the contracts with the customers. Revenue excludes taxes collected from customers on behalf of the government. Accruals for discounts/incentives and returns are estimated (using the most likely method) based on accumulated experience and underlying schemes and agreements with customers. Due to the short nature of credit period given to customers, there is no financing component in the contract.
For all debt instruments measured either at amortised cost or at FVTPL, interest income is recorded using the EIR method.
Dividend income is accounted for when Companyâs right to receive the income is established.
Insurance claims are accounted for on the basis of claims admitted and to the extent that there is no uncertainty in receiving the claims
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a define period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified assets, the Company assesses whether: (i) the contact involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
As a lessee, The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right--of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole.
Lease payments included in the measurement of the lease liability comprise the fixed payments, including in-substance fixed payments and lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option;
The lease liability is measured at amortised cost using the effective interest method.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an expense on a straight line basis over the lease term. The Company applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date
2.14 Employee benefits plans2.15.1 Defined Contribution Plan
''The company''s contribution to provident fund is considered as a defined contribution scheme and are charged as expense based on the amount of contribution required to be made and when the services are rendered by the employees.
The company operates a defined benefit plan for its employees, viz., gratuity liability. The costs of providing benefits under this plan are determined on the basis of actuarial valuation at each year-end. Actuarial valuation is carried out for the plan using the projected unit credit method. Remeasurements comprising of actuarial gains and losses, the effect of changes to the return on plan assets (excluding net interest) is reflected immediately in the balance sheet with a charge or credit recognised in OCI in the period in which they occur. Remeasurements recognised in OCI are reflected immediately in retained earnings and is not reclassified to in the statement of profit and loss. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.
2.15.3 Short-term employee benefits
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
2.15.4 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 service are recognised as a liability at the present value of the estimated future cash outflows expected to be made by the Company in respect of services.
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. Capitalisation of borrowing costs is suspended and charged to the Standalone 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 Standalone Statement of Profit and Loss in the period in which they are incurred.
Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants and subsidies will be received. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire noncurrent assets are recognised as deferred revenue in the Standalone Balance Sheet and transferred to the Standalone Statement of Profit and Loss on systematic and rational basis over the useful lives of the related asset.
Tax expense for the year comprises current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Standalone Statement of Profit and Loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Companyâs liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to realise the asset or to settle the liability on a net basis.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the Standalone Financial Statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the Standalone Balance Sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount, except when the deferred income tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
The carrying value 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 asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted or substantially 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 cover or settle the carrying value of its assets and liabilities
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction.
Current and deferred tax are recognised as an expense or income in the Standalone Statement of Profit and Loss, except when they relate to items credited or debited either in Other Comprehensive Income or directly in equity, in which case the tax is also recognised in OCI or directly in equity.
2.18 Provisions and contingencies
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 of the amount can be made. Provisions are determined based on best estimate required to settle the obligation at the balance sheet date. 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 the money is material). The increase in the provisions due to passage of time is recognised as interest expense.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.
Contingent liabilities are disclosed when there is a possible obligation arising from 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 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 not disclosed in the Standalone Financial Statements unless an inflow of economic benefits is probable.
Mar 31, 2023
Accounting Policy
1. Corporate information
Ultracab (India) Limited (the âCompanyâ) is a public limited company domiciled in India. Its shares are listed on the Bombay Stock Exchange (âBSEâ). The Company is mainly engaged in the business of manufacturing and exporting of electric wires and cables.
2. Summary of basis of compliance, basis of preparation and presentation, critical accounting estimates, assumptions and judgements and significant accounting policies
2.1 Basis of preparation of financial statements
The financial statements of the company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under companies (Indian accounting standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the company.
2.2 Basis of preparation and presentation
The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except in case of significant uncertainties.
The Standalone Financial Statements have been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. 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.
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Act.
2.3 Critical accounting estimates, assumptions and judgements
The preparation of the Standalone Financial Statements requires management to make estimates, assumptions and judgments that affect the reported balances of assets and liabilities and disclosures as at the date of the Standalone Financial Statements and the reported amounts of income and expense for the periods presented.
The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates considering different assumptions and conditions.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial year are discussed below.
2.3.1 Deferred income tax assets and liabilities
Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits
The amount of total deferred tax assets could change if management estimates of projected future taxable income or if tax regulations undergo a change.
2.3.2 Useful lives of property, plant and equipment (âPPEâ) and intangible assets
Management reviews the estimated useful lives and residual value of PPE and Intangibles at the end of each reporting period. Factors such as changes in the expected level of usage, technological developments and product lifecycle, could significantly impact the economic useful lives and the residual values of these assets. Consequently, the future depreciation charge could be revised and may have an impact on the profit of the future years.
2.3.3 Employee benefit obligations
Employee benefit obligations are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments. These include the estimation of the appropriate discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, the employee benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
2.3.4 Provisions and contingencies
From time to time, the Company is subject to legal proceedings, the ultimate outcome of each being subject to uncertainties inherent in litigation. A provision for litigation is made when it is considered probable that a payment will be made and the amount can be reasonably estimated. Significant judgement is required when evaluating the provision including, the probability of an unfavourable outcome and the ability to make a reasonable estimate of the amount of potential loss. Litigation provisions are reviewed at each accounting period and revisions made for the changes in facts and circumstances. Contingent liabilities are disclosed in the notes forming part of the Standalone Financial Statements. Contingent assets are not disclosed in the Standalone Financial Statements unless an inflow of economic benefits is probable.
2.4 Foreign currency translation
The functional currency of the Company (i.e. the currency of the primary economic environment in which the Company operates) is the Indian Rupee in (Rs.). The financial statements have been rounded off to the nearest Rs. Lakh.
On initial recognition, all foreign currency transactions are recorded at exchange rates prevailing on the date of the transaction. Monetary assets and liabilities, denominated in a foreign currency, are translated at the exchange rate prevailing on the balance sheet date and the resultant exchange gains or losses are recognised in the Standalone Statement of Profit and Loss.
2.5 Property, plant and equipment
An item of property, plant and equipment (âPPEâ) is recognised as an asset if it is probable that the future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. These recognition principles are applied to the costs incurred initially to acquire an item of PPE, to the pre-operative and trial run costs incurred (net of sales), if any and also to the costs incurred subsequently to add to, replace part of, or service it and subsequently carried at cost less accumulated depreciation and accumulated impairment losses, if any.
The cost of PPE includes interest on borrowings directly attributable to the acquisition, construction or production of a qualifying asset. A qualifying asset is an asset that necessarily takes a substantial period of time to be made ready for its intended use or sale. Borrowing costs and other directly attributable cost are added to the cost of those assets until such time as the assets are substantially ready for their intended use, which generally coincides with the commissioning date of those assets
Machinery spares that meet the definition of PPE are capitalised and depreciated over the useful life of the principal item of an asset.
"All other repair and maintenance costs, including regular servicing, are recognised in the Standalone Statement of Profit and Loss as incurred. When a replacement occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items."
PPE acquired and put to use for projects are capitalised and depreciation thereon is included in the project cost till the project is ready for commissioning.
Depreciation methods, estimated useful lives and residual value
Depreciation on PPE (except leasehold improvements) is calculated using the written-down value method to allocate their cost, over their estimated useful lives. Freehold land is not depreciated.
Schedule II to the Act prescribes the useful lives for various class of assets. For certain class of assets, based on technical evaluation and assessment, Management believes that the useful lives adopted by it reflect the periods over which these assets are expected to be used. Accordingly for those assets, the useful lives estimated by the management are different from those prescribed in the Schedule. Managementâs estimates of the useful lives for various class of PPE are as given below:
Losses arising from the retirement of, and gains or losses arising from disposal/adjustments of PPE are recognised in the Standalone Statement of Profit and Loss.
2.6 Intangible assets
Intangible assets comprise software licenses, product registration fees and rights to use railway wagon.
Intangible assets are measured on initial recognition at cost and subsequently are carried at cost less accumulated amortisation and accumulated impairment losses, if any.
The intangible assets with a finite useful life are amortised using straight line method over their estimated useful lives. The managementâs estimates of the useful lives for various class of Intangibles are as given below:
The estimated useful life is reviewed annually by the management.
Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Standalone Statement of Profit and Loss.
2.7 Capital work-in-progress (âCWIPâ) and intangible assets under development
Projects under commissioning and other CWIP/ intangible assets under development are carried at cost, comprising direct cost, related incidental expenses and attributable borrowing cost
Subsequent expenditures relating to property, plant and equipment are capitalised only when it is probable that future economic benefit associated with these will flow to the Company and the cost of the item can be measured reliably.
Advances given to acquire property, plant and equipment are recorded as noncurrent assets and subsequently transferred to CWIP on acquisition of related assets.
2.8 Investment property
Investment properties are land and buildings that are held for long term lease rental yields and/ or for capital appreciation. Investment properties are initially recognised at cost including transaction costs. Subsequently investment properties comprising buildings are carried at cost less accumulated depreciation and accumulated impairment losses, if any.
Depreciation on buildings is provided over the estimated useful lives as specified in note 2.5 above. The estimated useful lives and depreciation method of investment properties are reviewed, and adjusted on prospective basis as appropriate, at each reporting date. The effects of any revision are included in the Standalone Statement of Profit and Loss when the changes arise.
An investment property is de-recognised when either the investment property has been disposed of or do not meet the criteria of investment property i.e. when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in the Standalone Statement of Profit and Loss in the period of de-recognition.
2.9 Research and development expenses
Research expenses are charged to the Standalone Statement of Profit and Loss as expenses in the year in which they are incurred. Development costs are capitalised as an intangible asset under development when the following criteria are met:
- the project is clearly defined, and the costs are separately identified and reliably measured;
- the technical feasibility of the project is demonstrated;
- the ability to use or sell the products created during the project is demonstrated;
- the intention to complete the project exists and use or sale of output manufactured during the project;
"a potential market for the products created during the project exists or their usefulness, in case of internal use, is demonstrated, such that the project will generate probable future economic benefits; and"
- adequate resources are available to complete the project.
These development costs are amortised over the estimated useful life of the projects or the products they are incorporated within. The amortisation of capitalised development costs begins as soon as the related product is released to production.
2.10 Non-current assets held for sale and discontinued operations
Non-current assets (including disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable.
Non-current assets classified as held for sale are measured at lower of their carrying amount and fair value less cost to sell
Non-current assets classified as held for sale are not depreciated or amortised from the date when they are classified as held for sale.
A discontinued operation is a component of the entity that has been disposed off or is classified as held for sale and: represents a separate major line of business or geographical area of operations and; is part of a single co-ordinated plan to dispose of such a line of business or area of operations. The results of discontinued operations are presented separately in the Standalone Statement of Profit and Loss.
2.11 Financial instruments
2.11.1 Investments and other financial assets:
⢠Classification
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through OCI, or through profit or loss), and
- those measured at amortised cost.
The classification is done depending upon the Companyâs business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will be recorded in profit or loss
⢠Debt instruments Measurement
A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the Standalone Statement of Profit and Loss.
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
Amortised cost
Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. A gain or loss on a debt investment (unhedged) that is subsequently measured at amortised cost is recognised in the Standalone Statement of Profit and Loss when the asset is derecognised or impaired. Interest income from these financial assets is included in other income using the effective interest rate (âEIRâ) method.
Fair value through Other Comprehensive Income (âFVTOCIâ)
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at FVTOCI. Movements in the carrying amount are recorded through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains or losses which are recognised in the Standalone Statement of Profit and Loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to the Standalone Statement of Profit and Loss. Interest income from these financial assets is included in other income using the EIR method
Fair value through profit or loss (âFVTPLâ)
Assets that do not meet the criteria for amortised cost or FVTOCI are measured at FVTPL. A gain or loss on a debt investment (including current investments) that is subsequently measured at FVTPL (unhedged) is recognised net in the Standalone Statement of Profit and
Loss in the period in which it arises. Interest income from these financial assets is included in other income.
⢠Equity instruments
The Company subsequently measures all equity investments at fair value, except investment in subsidiaries and joint ventures which are measured at cost. Where the Companyâs management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to the Standalone Statement of Profit and Loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified to equity. Dividends from such investments are recognised in the Standalone Statement of Profit and Loss within other income when the Companyâs right to receive payments is established. Impairment losses (and reversal of impairment losses) on equity investments measured at FVTOCI are not reported separately from other changes in fair value.
⢠Cash and cash equivalents
The Company considers all highly liquid investments, which are readily convertible into known amounts of cash, that are subject to an insignificant risk of change in value with a maturity within 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.
⢠Trade Receivables
Trade receivables that do not contain a significant financing component are measured at transaction price.
⢠Impairment of financial assets
The Company assesses on a forward-looking basis the expected credit losses associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk and if so, assess the need to provide for the same in the Statement of Profit and Loss.
⢠Derecognition of financial assets
A financial asset is derecognised only when the Company
- has transferred the rights to receive cash flows from the financial asset; or
- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company transfers an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. Where the Company has transferred substantially all risks and rewards of ownership, the financial asset is derecognised. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised. Where the Company has neither transferred a financial asset nor retained substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
⢠Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
2.11.2 Debt and equity instruments
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
2.11.3 Financial liabilities
⢠Classification as debt or Equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definition of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
⢠Initial recognition and measurement
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Companyâs financial liabilities include borrowings, trade payables and other financial liabilities.
⢠Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
a) Trade and other payable
These amounts represent obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. These payable are classified as ''current liabilities'' if payments are due within one year or less otherwise they are presented as ''non-current liabilities''. Trade payables are subsequently measured at amortised cost using the effective interest method.
b) Derecognition
Liability is removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other gains/ (losses).
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
2.11.4 Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis,
available quoted market prices and dealer quotes. All methods of assessing fair value result in general approximation of value.
2.12 Inventories
Inventories are valued at lower of cost and net realisable value after providing for obsolescence and other losses, where considered necessary on an item-byitem basis. Cost includes all charges in bringing the goods to their present location and condition, including other levies, transit insurance and receiving charges. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, taxes and duties. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
2.13 Revenue recognition
2.13.1 Sale of goods
Revenue is recognised upon transfer of control of promised goods to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods.
Revenue from the sale of goods is recognised at the point in time when control is transferred to the customer which is usually on dispatch / delivery of goods, based on contracts with the customers.
Revenue towards satisfaction of performance obligation is measured based on the transaction price, which is the consideration, adjusted for volume discounts, price concessions, incentives, and returns, if any, as specified in the contracts with the customers. Revenue excludes taxes collected from customers on behalf of the government. Accruals for discounts/incentives and returns are estimated (using the most likely method) based on accumulated experience and underlying schemes and agreements with customers. Due to the short nature of credit period given to customers, there is no financing component in the contract.
2.13.2 Interest income
For all debt instruments measured either at amortised cost or at FVTPL, interest income is recorded using the EIR method.
2.13.3 Dividend income
Dividend income is accounted for when Companyâs right to receive the income is established.
2.13.4 Insurance claims
Insurance claims are accounted for on the basis of claims admitted
and to the extent that there is no uncertainty in receiving the claims
2.14 Leases
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a define period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified assets, the Company assesses whether: (i) the contact involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
As a lessee, The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right--of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company''s incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole.
Lease payments included in the measurement of the lease liability comprise the fixed payments, including in-substance fixed payments and lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option;
The lease liability is measured at amortised cost using the effective interest method.
The Company has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an expense on a straight line basis over the lease term. The Company applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date
2.15 Employee benefits plans
2.15.1 Defined Contribution Plan
''The company''s contribution to provident fund is considered as a defined contribution scheme and are charged as expense based on the amount of contribution required to be made and when the services are rendered by the employees.
2.15.2 Defined Benefit Plan
The company operates a defined benefit plan for its employees, viz., gratuity liability. The costs of providing benefits under this plan are determined on the basis of actuarial valuation at each year-end. Actuarial valuation is carried out for the plan using the projected unit credit method. Remeasurements comprising of actuarial gains and losses, the effect of changes to the return on plan assets (excluding net interest) is reflected immediately in the balance sheet with a charge or credit recognised in OCI in the period in which they occur. Remeasurements recognised in OCI are reflected immediately in retained earnings and is not reclassified to in the statement of profit and loss. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.
2.15.3 Short-term employee benefits
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
2.15.4 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 service are recognised as a liability at the present value of the estimated future cash outflows expected to be made by the Company in respect of services.
2.16 Borrowing costs
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. Capitalisation of borrowing costs is suspended and charged to the Standalone 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 Standalone Statement of Profit and Loss in the period in which they are incurred.
2.17 Government grants
Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants and subsidies will be received. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire noncurrent assets are recognised as deferred revenue in the Standalone Balance Sheet and transferred to the Standalone Statement of Profit and Loss on systematic and rational basis over the useful lives of the related asset.
2.18 Income tax
Tax expense for the year comprises current and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Standalone Statement of Profit and Loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Companyâs liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to realise the asset or to settle the liability on a net basis.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the Standalone Financial Statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the Standalone Balance Sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount, except when the deferred income tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time
of the transaction. In contrast, deferred tax assets are only recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
The carrying value 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 asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted or substantially 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 cover or settle the carrying value of its assets and liabilities
Deferred tax assets and liabilities are offset to the extent that they relate to taxes levied by the same tax authority and there are legally enforceable rights to set off current tax assets and current tax liabilities within that jurisdiction.
Current and deferred tax are recognised as an expense or income in the Standalone Statement of Profit and Loss, except when they relate to items credited or debited either in Other Comprehensive Income or directly in equity, in which case the tax is also recognised in OCI or directly in equity.
Mar 31, 2018
SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Preparation of Financial Statements
The financial statements are prepared in accordance with India Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis except for certain financial instruments which area measured at fair values. GAAP comprises mandatory accounting standards as prescribed under section 133 of the Companies Act, 2013 (âActâ) read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing standard requires a change in the accounting policy hitherto in use.
(b) Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Examples of such estimates include computation of percentage of completion which requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended, provisions for doubtful debts, future obligations under employee retirement benefit plans, income taxes, post-sales customer support and the useful lives of fixed tangible assets and intangible assets.
Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the stimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and , if material, their effects are disclosed in the notes to the financial statements.
(c) Revenue Recognition
Revenue on sale of products is recognised when the products are delieveried to customers, all significant contractual obligations have been satisfied and the collection of the resulting receivable is reasonably expected. Sales & Purchases are stated net of trade discount, returns and taxes collected.
(d) Provisions and contingent liabilities
A provision is recognized, if, as a result of a past event, the Company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date.
Contingent Liabilities represents claims against the company not acknowledged as debts includes, a)the appeal lying with DCCT (A), Commercial Tax Department, Gujarat for demand of Rs.2.28 lacs of FY 2010-11 (tax paid of Rs.0.57 lacs), b) the appeal lying with DCCT (A), VAT Department, Gujarat for demand of Rs.10.26 lacs of FY 2011-12 (tax paid of Rs.2.28 lacs) & c) the Appeal lying with The CESTAT, Ahmedabad for demand of Rs.2.16 lacs (tax paid of Rs.0.25 lacs).
(e) Fixed Assets & Depreciation thereon
i) Fixed assets are stated at cost of acquision as reduced by accumulated depreciation. The cost of assets includes other direct/ indirect and incidental cost incurred to bring them into their present location.
ii) Pursuant to the enactment of Companies Act 2013, the company has applied the estimated useful lives as specified in Schedule II, except in respect of plants & machinaries where useful life of some Machineries is technically assessed as 25 years in place of 15 years based on Chartered Engineerâs certificate.
(f) Retirement benefits to employees
- Gratuity
The company provides for gratuity, a defined benefit retirement plan covering eligible employees. The gratuity plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employeeâs salary and tenure of employment with the company.
The provision for gratuity for the FY 2017-18 of Rs.1,32,628/-has been made by the managament of the company on the basis of estimations.
- Provident Fund
Eligible employees receive benefits from a provident fund, which is a defined benefit plan. Both the employee and the company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employeeâs salary.
(g) Foreign currency transactions
Foreign currency denominated monetary assets and liabilities are translated at exchange rates in effect at the Balance sheet date. The gains or losses resulting from such translations are included in the statement of profit & loss.
Revenue, expense and cash-flow items denominated in foreign currencies are translated using the exchange rate in effect on the date of the transaction. Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled.
The net foreign exchance gain of Rs.11,455/- has been debited to the profit & loss account. (previous year net foreign exchange loss Rs.11455/-)
(h) Inventories
Inventories are stated at lower of cost or net realisable value. Cost comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. We have not physically verified the inventories. The value of the inventories is taken as per information & explanation of the management, as certified by the management.
(i) Provision for Cuurent Tax & Deferred Tax
Provision for income tax is made on the basis of estimated taxable income for the year at current rates.Tax expenses comprises of Current Tax, Fringe Benefit Tax and Deferred Tax at applicable enacted or substaintively enacted rates. Current Tax represents the amount of Income Tax payable/recoverable in respect of the taxable income/loss for the reporting period. Deferred Tax represents the effect of timing difference between taxable income and accounting income for the reporting period that originates in one period and are capable of reversal in one or more subsequent periods. The Deferred Tax asset is recognized and carry forward to the extent that there is a reasonable certainity that the assets will be realise in future. However, where there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certinity of realisation of assets.
(j) Earnings per share
Basic earnings per share are calculated by dividing the net profit for the period attributable to equity shareholders (after deducting tax expenses) by the weighted average number of equity shares outstanding during the period.
(k) Current Assets, Loans and Advances & Liabilities
In the opinion of the Board of Directors, the Current Assets, Loans and Advances and Current Liabilities are approximately stated if realized in the ordinary course of business. As no confirmatory letters were submitted from Debtors and Creditors, their balances are reflected in the Balance Sheet as appearing in the books. The provisions for all other liabilities is adequate and not in excess of the amount reasonably necessary.
(l) Foreign Exchange Earning and Outgo
The foreign Exchange Remittances of the company in terms of exports of goods during the year is Rs.45.25 lacs (Previous year - Rs.31.45 lacs). The foreign Exchange Outgo during the year was Rs.4.11 lacs. (Previous year - Nil).
(m) Regrouping of Previous Year figures
The previous yearâs figures have been reworked, regrouped, rearranged and reclassified wherever necessary.Amount and other disclosures for the preceding year are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year.
(n) Rounding off of figures
Figures have been rounded off to the nearest rupee.
(o) Related Party Disclosures
(1) Related parties & their relationship
i) Associates
- Jigar Industries
- Ultracab Tradelink
- Suprime Enterprise
- Fusion Pumps Pvt. Ltd.
- Parmeshwar Trading Co.
- Jigar Cables Ltd.
ii) Key Managerial Personnel
- Niteshbhai P. Vaghasiya, Managing Director
- Pankaj V. Shingala, Whole Time Director
- Diljeet G. Bhatti, Chief Financial Officer
- Mayur P. Gangani, Company Secretary
ii) Relatives of Key Managerial Personnel
- Artiben P. Shingala
- Parshotambhai L. Vaghasiya
- Arvindbhai P. Vaghasiya
- Ramnikbhai P. Vaghasiya
- Manojbhai P. Vaghasiya
- Jayaben P. Vaghasiya
- Kanchanben V. Shingala
- Mehulbhai V. Shingala
- Sangeetaben N. Vaghasiya, Director
- Vasantbhai H. Shingala
Mar 31, 2016
(a) Basis of Preparation of Financial Statements
The financial statements are prepared in accordance with India Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis except for certain financial instruments which area measured at fair values. GAAP comprises mandatory accounting standards as prescribed under section 133 of the Companies Act, 2013 (''Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing standard requires a change in the accounting policy hitherto in use.
(b) Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Examples of such estimates include computation of percentage of completion which requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended, provisions for doubtful debts, future obligations under employee retirement benefit plans, income taxes, post-sales customer support and the useful lives of fixed tangible assets and intangible assets.
Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and , if material, their effects are disclosed in the notes to the
(c) Revenue Recognition
Revenue on sale of products is recognized when the products are delivered to customers, all significant contractual obligations have been satisfied and the collection of the resulting receivable is reasonably expected. Sales are stated net of trade discount, returns and taxes collected.
(d) Provisions and contingent liabilities
A provision is recognized, if, as a result of a past event, the Company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date.
Contingent Liabilities represents claims against the company not acknowledged as debts includes, a)the appeal lying with DCCT (A), Commercial Tax Department, Gujarat for demand of Rs.2.28 lacs of FY 2010-11 (net of tax paid of Rs.0.57 lacs),
b) the appeal lying with DCCT (A), VAT Department, Gujarat for demand of Rs.1.78 lacs of FY 2009-10 (net of tax paid of Rs.0.44 lacs) & b) the Appeal lying with The CESTAT, Ahmedabad for demand of Rs.2.16 lacs (net of tax paid of Rs.0.25 lacs).
(e) Fixed Assets & Depreciation thereon
i) Fixed assets are stated at cost of acquision as reduced by accumulated depreciation. The cost of assets includes other direct/ indirect and incidental cost incurred to bring them into their present location.
ii)Pursuant to the enactment of Companies Act 2013, the company has applied the estimated useful lives as specified in Schedule II, except in respect of plants & machineries where useful life of some Machineries is technically assessed as 25 years in place of 15 years based on Chartered Engineer''s certificate. The written down value of Fixed Assets whose lives
have expired as at 1st April 2015 have been adjusted, in the opening balance of Profit and Loss Account amounting to Rs.8,682/-.
(f) Retirement benefits to employees
- Gratuity
The company provides for gratuity, a defined benefit retirement plan covering eligible employees. The gratuity plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and tenure of employment with the company.
Excess Gratuity provision of Rs.225,191/-, due to retirement of employees before completing their service tenure of 5 years, has been reversed & shown as exceptional items in the profit & loss account.
- Provident Fund
Eligible employees receive benefits from a provident fund, which is a defined benefit plan. Both the employee and the company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employee''s salary.
(g) Foreign currency transactions
Foreign currency denominated monetary assets and liabilities are translated at exchange rates in effect at the Balance sheet date. The gains or losses resulting from such translations are included in the statement of profit & loss.
Revenue, expense and cash-flow items denominated in foreign currencies are translated using the exchange rate in effect on the date of the transaction. Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for the period in which The net foreign exchange gain of Rs.1,17,838/- has been credited to the profit & loss account, (previous year net foreign exchange loss Rs.6,847/-)
(h) Inventories
Inventories are stated at lower of cost or net realizable value. Cost comprises all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. We have not physically verified the inventories. The value of the inventories is taken as per information & explanation given by the management.
(i) Provision for Current Tax & Deferred Tax
Provision for income tax is made on the basis of estimated taxable income for the year at current rates. Tax expenses comprises of Current Tax, Fringe Benefit Tax and Deferred Tax at applicable enacted or substantively enacted rates. Current Tax represents the amount of Income Tax payable/recoverable in respect of the taxable income/loss for the reporting period. Deferred Tax represents the effect of timing difference between taxable income and accounting income for the reporting period that originates in one period and are capable of reversal in one or more subsequent periods. The Deferred Tax asset is recognized and carry forward to the extent that there is a reasonable certainty that the assets will be realize in future. However, where there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognized only if there is a virtual certainty of realization of assets.
(j) Earnings per share
Basic earnings per share are calculated by dividing the net profit for the period attributable to equity shareholders (after deducting tax expenses) by the weighted average number of equity shares outstanding during the period.
(k) Current Assets, Loans and Advances & Liabilities
In the opinion of the Board of Directors, the Current Assets, Loans and Advances and Current Liabilities are approximately stated if realized in the ordinary course of business. As no confirmatory letters were submitted from Debtors and Creditors, their balances are reflected in the Balance Sheet as appearing in the books. The provisions for all other liabilities is adequate and not in excess of the amount reasonably necessary.
(I) Foreign Exchange Earning and Outgo
The foreign Exchange Remittances of the company in terms of exports of goods during the year is Rs.83.74 lacs. (Previous year - Rs.81.15 lacs). The foreign Exchange Outgo during the year was Nil. (Previous year- Nil).
(m) Regrouping of Previous Year figures
The previous year''s figures have been reworked, regrouped, rearranged and reclassified wherever necessary. Amount and other disclosures for the preceding year are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year.
(n) Rounding off of figures
Figures have been rounded off to the nearest rupee.
Mar 31, 2015
Company overview
Ultra cab is a leading player in the manufacturing of all types af
cables & wires since 2007. During the FY 2014- 15, with the view to
expand its horizons in this industry, the company has come out with a
Initial Public Offer (IPO). The Ultra cab (India) Private Limited has
been converted into Ultra cab (India) Limited w.e.f. 30.07.2014.
{a) Bastes of Preparation of fInancial Statements
The financial statements are prepared in accordance with India
Generally Accepted Accounting Principles (GAAP} under the historical
ccst convention on the accrual basis except for certain financial
instruments which area measured at fair values- GAAP comprises
mandatory accounting standards as prescribed under section 133 of the
Companies Act, 2013 ('Act') read with Rule 7 of the Companies
(Accounts) Rules, 2014, the provisions of the Act (to the extent
notified) and guidelines issued by the Securities and Exchange Board af
India (SE6II. Accounting policies have been consistently applied except
where a newly issued accounting standard Is initially adopted or a
revision to an existing; standard requires a change In the accounting
policy hitherto in use.
[b] Use of Estimates
The preparation of the Financial statements In conformity with GAAP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income, and expenses during the period. Examples of
such estimates include computation of percentage of completion which
requires the Company to estimate the efforts or costs expended to date
as a proportion of the total efforts or costs to be expended,
provisions for doubtful debts, future obligations under employee
retirement benefit plans, income taxes, post-sales customer support and
the useful lives Defied tangible assets and tangle assets.
Accounting estimates could change from period to period, Actual results
coy id differ from those estimates, Appropriate changes in estimates
are made as the Management becomes aware of changes in circumstances
surrounding the estimates. Changes in estimates are reflected in the
financial statements in the period in which changes are made and , if
material, their effects are disclosed in the notes to the financial
statements,
(c) Revenue Recognition
Revenue on sale of products: is recognised when the products are
delieveried to customers, all significant contractual obligations have
been satisfied and the collection of the resulting receivable is
reasonably expected. Sales are stated net of trade discount, returns
and taxes collected- Id] Provisions and contingent liabilities
A provision is recognized. If. as a result of a past event, the Company
has a present legal obligation that can be estimated reliably, and it
is probable that an outflow of economic benefits will he required to
settle the obligation. Provisions are determined by the best estimate
of the outflow of economic benefits required to settle the obligation
at the reporting date. Where no reliable estimate can be made, a
disclosure Is made as contingent liability. A disclosure for a
contingent liability Is also made when there is a possible obligation
or a present obligation that may, but probably will not, require an
outflow of resources. Where there Is a possible obligation or a present
obligation In respect of which the likelihood of outflow of resources
is remote, no provision or disclosure Is made.
(e) Fixed Assets & Depreciation thereon
refaxed assets are stated at cost of acquision as reduced by
accumulated depreciation, The cost of assets includes other direct/
indirect and incidental cost incurred to bring them into their present
locati on,
ii) Pursuant to the enactment of Companies Act 2013; the company has
applied the estimated use full lives as specified in Schedule II, except
in respect of plants Si machineries where useful life is technically
assessed as 25 years in place of 15 years. Accordingly the unamortized
carrying value is being depreciated / amortized over the
revised/remaining useful lives- The written down value of Fixed Assets
whose lives have expired as at 1st Aptil, 2014 have been adjusted net of
tax, in the opening balance of Profit and Loss Account amounting to Rs.
105,2 72/-.
(f) Retirement benefits to employees
-Gratuity
The company provides for gratuity, a defined benefit retirement plan
covering eligible employees. The gratuity plan provides a lump-sum
payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective
employee's salary and tenure af employment with the company.
The provision for gratuity for the FV 201445 of Rs.355,388/-has been
made by the management of the company on the basis of estimations.
-Provident Fund
Eligible employees receive benefits from a provident fund, which is a
defined benefit plan. Both the employee and the company make monthly
contributions to the provident fund plan equal to 3 specified
percentage of the covered employee's salary.
(g) Foreign currency transactions
Foreign currency denominated monetary assets and liabilities are
translated at exchange rules In effect at the Balance sheet date. The
gains Of losses resulting from Such translations are included in the
Statement Of profit & loss.
Revenue, expense and cash-flow items denominated in foreign currencies
are translated using the exchange rate in effect on the date of the
transaction. Transaction gains or losses realized upon settlement of
foreign
currency transactions are included in determining net profit for the
period in which the transaction is settled. The net foreign exchance
loss of Rs.6,847/- has been debited to the profit & loss account,
(previous year net foreign exchange gain Rs.51,225/-)
|h) inventories
inventories are stated at lower of cost or net realisable value. Cost
comprises all cost of purchase, cost of conversion and other costs
incurred in bringing the inventories to their present location and
condition. We have not physically verified the inventories. The value
of the inventories is taken as valued & certified by the management.
(j) Provision for Current Tax & Deferred Tax
Provision for Income tax is made on the basis of estimated taxable
income for the year at current rates. Tax expenses comprises of Current
Tax, Fringe Benefit Tax and Deferred Tax at applicable enacted or
substantively enacted rates. Current Tax represents the amount of
Income Tax payable/recoverable in respect ot the taxable income/loss
for the reporting period. Deferred Tax represents the effect of timing
difference between taxable income and accounting income for the
reporting period that originates in one period and are capable of
reversal in one or more subsequent periods. The Deferred Tax asset is
recognized and carry forward to the extent that there is a reasonable
certainty that the assets will be realize in future. However, where
there is un absorbed depreciation Or carry forward loss under taxation
taws, deferred tax assets are recognized only if there is a virtual
certainty of realization of assets.
(J) Expenses related to Initial Public Offer (IPOJ
The company ha-i brought an Initial Public Offer of 22,14,000 equity
shares Do the SME platform of the Bombay Stock Exchange. The total 1PO
expenses 0f Rs.43,49,727/- incurred by the company has been Written off
against Securities premium account.
[k) taming* per share
Basic earnings per there are calculated by dividing the net profit for
the period attributable to equity shareholders (after deducting tan
expenses] by the weighted average number of equity shares outstanding
during the period.
(l) Current Assets, Loans and Advances & Liabilities
In the opinion of the Board of Directors; the. Current Assets, Loans
and Advances and Current Liabilities are approximately stated if
readied in the ordinary course of business. As no confirmatory letters
were obtained from Debtors and Creditors, their balances are reflected
in the Balance Sheet as appearing in the books- The provisions for a II
other lablitles is adequate and not in excess of the amount
reasonably necessary.
(m) Foreign Exchange Earning and Outgo
The foreign Exchange Remittances of the company in terms of exports
of goods during the year is R fll. 1S lacs. (Previous year -
Rs.228.41 lacs). The foreign Exchange Outgo during the year was Nil,
(Previous year - Nil).
(n) Regrouping of Previous Year figures
The previous year's figures have been reworked, regrouped, rearranged
and reclassified wherever necessary. Amount and other disclosures for
the preceding year arc included as an integral part of the current year
financial statements and are to be read In relation to the amounts and
other disclosures relating to the current year.
(o) Rounding off of figures
Figures have been rounded off to the nearest rupee.
(P) Related Party Disclosures
II) Related party & their relationship i] Associates
Jigar Industries
Ultratab Tradelink Supreme Enterprise - Fusion Pumps Pyt, Ltd »
Parmeshwar Trading Co-
ii) Key Managerial Personnel
Niteshbhai P. Vaghaslya, Managing Director
Pankajbhai V. Shingala, Whole Time Director if Relatives of Key
Managerial Personnel
Artiben P. Shingala
Parshotambhai L. Vaghasiya
Bhumiben R. Vaghasiya
Gurudutt industries Jayaben P. Vaghaslya Kanchanben V, Shingata
-MebulbhaiV.Shingala s 5angitaben N. Vaghasiya » Vasantbhai H.
Shingala
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