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Accounting Policies of Uniroyal Industries Ltd. Company
Mar 31, 2024
2 Significant accounting policies
2.A Basis of preparation
The Statement of Assets and Liabilities of the Company as at March 31, 2024 and the Statement of Profit and Loss, the
Statement of Changes in Equity and the Statement of Cash flows for the year ended March 31,2024 and Other Financial
Information (together referred as âFinancial Information'') has been prepared under Indian Accounting Standards (âInd ASâ)
notified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015 (as
amended).
The financial information are presented in Indian Rupees (INR).
2.B Significant accounting policies
a. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is
treated as current when it is:
(i) Expected to be realized or intended to be sold or consumed in normal operating cycle.
(ii) Held primarily for the purpose of trading.
(iii) Expected to be realized within twelve months after the reporting period, or
(iv) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months
after the reporting period.
All other assets are classified as non-current.
A liability is current when:
(i) It is expected to be settled in normal operating cycle.
(ii) It is held primarily for the purpose of trading.
(iii) It is due to settled within twelve months after the reporting period, or
(iv) There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The
Company has identified twelve months as its operating cycle.
b. Property, Plant and Equipment
Under the previous GAAP (Indian GAAP), all assets were carried in the balance sheet at cost, less accumulated depreciation
and accumulated impairment losses, if any. On the date of transition to Ind AS, the Company has applied exemptions of Ind AS
101 to continue the carrying value of all property, plant and equipment as at the date of transition as its deemed cost.
Property, Plant and equipment including capital work in progress are stated at cost, less accumulated depreciation and
accumulated impairment losses, if any. The cost comprises of purchase price, taxes, duties, freight and other incidental
expenses directly attributable and related to acquisition and installation of the concerned assets and are further adjusted by the
amount of CENVAT\GST credit and VAT credit availed wherever applicable. Cost includes borrowing cost for long term
construction projects if recognition criteria are met. When significant parts of plant and equipment are required to be replaced at
intervals, the Company depreciates them separately based on their respective useful lives. Likewise, when a major inspection is
performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria
are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no
future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement
when the asset is derecognized.
The company identifies and determines cost of each component/ part of the asset separately, if the component/ part has a cost
which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset.
Capital work- in- progress includes cost of property, plant and equipment under installation / under development as at the
balance sheet date.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial
year end and adjusted prospectively, if The residual values, useful lives and methods of depreciation of property, plant and
equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
In respect of other assets, depreciation is calculated on a straight-line basis using the rates arrived at based on the useful lives
estimated by the management and in the manner prescribed in Schedule II of the Companies Act 2013. The useful life is as
follows:
Assets Useful lives estimated by the management
Computers & Data Processing Units 3
c. Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated impairment losses, if any. Internally generated intangibles,
excluding capitalized development cost, are not capitalized and the related expenditure is reflected in statement of Profit and
Loss in the period in which the expenditure is incurred. Cost comprises the purchase price and any attributable cost of bringing
the asset to its working condition for its intended use.
The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized
over their useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be
impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least
at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future
economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate and
are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in
the statement of profit and loss in the expense category consistent with the function of the intangible assets.
Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the
cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life
continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from disposal of the intangible assets are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognized in the statement of profit and loss when the assets are disposed off.
d. Impairment of non financial assets
"The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs, recoverable amount.
Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or changes in
circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the
recoverable amount (i.e. the higher of the fair value less cost to sell and the value in- use) is determined on an individual asset
basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the CGU to which the asset belongs. If such assets are considered to be impaired, the
impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the
After impairment, depreciation is provide on the revised carrying amount of the asset over its remaining economic life.
e. Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of
another entity.
(i) Financial Assets
All financial assets are recognized initially at fair value. Transaction costs that are directly attributable to the acquisition of
financial assets (other than financial assets at fair value through profit or loss) are added to the fair value measured on initial
recognition of financial asset. Purchase and sale of financial assets are accounted for at trade date.
Financial instruments at amortized cost
"A financial instrument is measured at the amortized cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest
(SPPI) on the principal amount outstanding."
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate
method.
Financial instrument at Fair Value through Other Comprehensive Income (OCI)
"A financial instrument is classified and measured at fair value through OCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial
assets, and
b) The asset''s contractual cash flows represent solely payments of principal and interest."
Financial instruments included within the OCI category are measured initially as well as at each reporting date at fair value. Fair
value movements are recognized in OCI. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is
reclassified from OCI to statement of profit and loss.
Financial instrument at Fair Value through Profit and Loss
Any financial instrument, which does not meet the criteria for categorization at amortized cost or at fair value through other
comprehensive income, is classified at fair value through profit and loss. Financial instruments included in the fair value through
profit and loss category are measured at fair value with all changes recognized in the statement of profit and loss.
Equity investments
Equity investments in subsidiaries are measured at cost.
Derecognition of financial assets
A financial asset is primarily derecognized when the rights to receive cash flows from the asset have expired, or the Company
has transferred its rights to receive cash flows from the asset.
Impairment of financial assets
The Company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair
valued through profit and loss. For all other financial assets, expected credit losses are measured at an amount equal to the 12-
month ECL, unless there has been a significant increase in credit risk from initial recognition in which case they are measured at
lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date
is recognized in the statement of profit and loss.
(ii) Financial liabilities
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly
attributable transaction costs.
The Company''s financial liabilities include trade payables, borrowings including bank overdrafts and other payables.
After initial recognition, financial liabilities are subsequently measured at amortized cost using the effective interest rate (EIR)
method. Gains and losses are recognized in the statement of profit and loss when the liabilities are derecognized as well as
through the EIR amortization process.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
f. Investment in Subsidiaries
The investment in subsidiaries are carried at cost as per Ind AS 27. Investment accounted for at cost is accounted for in
accordance with Ind AS 105 when they are classified as held for sale. Investment carried at cost is tested for impairment as per
Ind AS 36 . An investor, regardless of the nature of its involvement with an entity (the investee), shall determine whether it is a
parent by assessing whether it controls the investee. An investor controls an investee when it is exposed, or has rights, to
variable returns from its involvement with the investee and has the ability to affect those returns through its power over the
investee. Thus, an investor controls an investee if and only if the investor has all the following:
(a) power over the investee;
(b) exposure, or rights, to variable returns from its involvement with the investee and
(c) the ability to use its power over the investee to affect the amount of the investor''s returns.
On disposal of investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
g. Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can
be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the
consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties
collected on behalf of the government.
The specific recognition criteria described below must also be met before revenue is recognized.
Sale of goods
Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to
the buyer, usually on delivery of the goods and is measured at fair value of consideration received/receivable, net of returns and
allowances, trade discounts and volume rebates.
Job work income
Revenue from job work is recognised by reference to stage of completion of job work as per terms of agreement. Revenue from
job work is measured at the fair value of the consideration received or receivable, net of allowances, trade discounts and volume
rebates, if any.
Export benefits
Export benefits constituting duty draw back and others are accounted for on accrual basis and are considered as other operating
income.
h. Inventories
Inventories are valued at the lower of cost and net realisable value after providing for obsolescence and other losses, where
considered necessary. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies,
transit insurance and receiving charges. Work-in -progress and finished goods include appropriate proportion of overhead ,
where applicable.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the
estimated costs necessary to make the sale.
i. Government Grants
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached
conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis
over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset,
by deducting the grant from the carrying amount of the asset in which case the grant is recognised in profit or loss as a reduction
of depreciation charged.
j. Taxes: Taxes comprises current income tax and deferred tax
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities in accordance with the Income Tax Act, 1961 and the income computation and disclosure standards (ICDS) enacted
in India by using tax rates and tax laws that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other
comprehensive income or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or
directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realized. Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been
enacted or substantively enacted by the balance sheet date and are expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the year
that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is
probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be
utilized.
GST (Goods and Service tax )/ Sales/ value added taxes paid on acquisition of assets or on incurring expenses
Expenses and assets are recognised net of the amount of sales/ value added taxes paid, except:
"? When the tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case,
the tax paid is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable
? When receivables and payables are stated with the amount of tax included
The net amount of tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
balance sheet.
k. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are
expensed in the period in which they occur.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing
costs also include exchange differences to the extent regarded as an adjustment to the borrowing costs.
l. Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the
inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a
specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified
in an arrangement.
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks
and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalized at the commencement of the lease at the inception date at fair value of the leased property or, if
lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and
reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance
charges are recognized in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying
assets, in which case they are capitalized in accordance with the Companyâs general policy on the borrowing costs.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will
obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset
and the lease term.
Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the
lease term unless the payment are structured to increase in line with expected general inflation to compensate for the losses in
expected inflationary cost increase.
Mar 31, 2015
System of Accounting
These financial statements have been prepared to comply with the
Generally Accepted Accounting principles in India (Indian GAAP),
including the Accounting Standards notified under the relevant
provisions of the Companies Act, 2013.The financial statements have
been prepared on going concern and on and on accrual basis under the
historical cost convention. The accounting policies adopted in the
preparation of the financial statements are consistent with those
followed in the previous year.
Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires judgements, estimates and assumptions to be made that affect
the reported amount of assets and liabilities, disclosure of contingent
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognised in the period
in which the results are known/materialised.
AS-2 Inventories
Inventories are valued at the lower of cost (on FIFO basis) and the net
realisable value after providing for obsolescence and other losses,
where considered necessary. Cost includes all charges in bringing the
goods to the point of sale, including octroi and other levies, transit
insurance and receiving charges. Work-in-progress and finished goods
include appropriate proportion of overheads and, where applicable,
excise duty.
AS-3 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances , highly liquid investments that
are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
AS-6 Depreciation and amortisation
Depreciation on Fixed Assets is provided to the extent of depreciable
amount on the Straight Line Method (SLM). Depreciation is provided
based on useful life of the assets as prescribed in Schedule II to the
Companies Act, 2013 except otherwise mentioned. Depreciation has been
provided in respect of addition to / deletions from fixed assets on
prorata basis with reference to the date of addition /deletion of
assets. Intangible assets are amortised 'over their estimated useful
life. The estimated useful life of the intangible assets and the
amortization period are reviewed at the end of each financial year and
the amortization method is revised to reflect the changed pattern.
AS-7,9 Revenue recognition Sale of goods
Sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers.
Other income
Interest and commission income is accounted on accrual basis. Dividend
income is accounted for when the right to receive it is established.
Interest subsidy under Tufs is accounted on receipt basis.
AS-10 Tangible fixed assets
Tangible Assets are stated at cost net of recoverable taxes, trade
discounts and rebates and include amounts added on revaluation, less
accumulated depreciation and impairment loss, if any. The cost of fixed
assets includes interest on borrowings attributable to acquisition of
qualifying fixed assets up to the date, the asset is ready for its
intended use and other incidental expenses incurred up to that date.
Exchange differences arising on restatement /settlement of long-term
foreign currency borrowings relating to acquisition of depreciable
fixed assets are adjusted to the cost of the respective assets and
depreciated overthe remaining useful life of such assets.
Fixed assets retired from active use and held for sale are stated at
the lower to their net book value and net realizable value and
disclosed separately in the Balance Sheet.
Capital Work-In-Progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
AS-11 Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date
Foreign currency monetary items (other than derivative contracts) of
the Company and its net investment in non-integral foreign operations
outstanding at the Balance Sheet date are restated at the year-end
rates. ln the case of integral operations, assets and liabilities
(other than non-monetary items), are translated at the exchange rate
prevailing on the Balance Sheet date. Non-monetary items are carried at
historical cost. Revenue and expenses are translated at the average
exchange rates prevailing during the year.
Treatment of exchange differences
Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company and its
integral foreign operations are recognised as income or expense in the
Statement of Profit and Loss. The exchange differences on restatement /
settlement of loans to non-integral foreign operations that are
considered as net investment in such operations are accumulated in a
""Foreign currency translation reserve"" until disposal / recovery of
the net investment. The exchange differences arising on restatement /
settlement of long-term foreign currency monetary items are capitalised
as part of the depreciable fixed assets to which the monetary item
relates and depreciated over the remaining useful life of such assets
or amortised on settlement / over the maturity period of such items if
such items do not relate to acquisition of depreciable fixed assets.
The unamortised balance is carried in the Balance Sheet as "Foreign
currency monetary item translation difference account" net of the tax
effect thereon.
Accounting of forward contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortised over the
period of the contracts if such contracts relate to monetary items as
at the Balance Sheet date.
AS-12 Government grants, subsidies and export incentives
Government grants and subsidies (except mentioned otherwise) are
recognized when there is reasonable assurance that the Company will
comply with the conditions attached to them and the grants/subsidy will
be received. Government grants whose primary condition is that the
Company should purchase, construct or otherwise acquire capital assets
are presented by deducting them from the carrying value of the assets.
The grants are recognized as income over the life of a depreciable
asset by way of reduced depreciation charge.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
"Government grants in the nature of promoters' contribution like
investment subsidy, where no repayment is ordinarily expected in respect
thereof, are treated as capital reserve. Government grants In the form
of non-monetary asset Is given free of cost, the grant is recorded at a
nominal value, other government grants and subsidies are recognized as
income over the periods necessary to match them with the costs for which
they are intended to compensate, on a systematic basis."
AS-13 Investments
Cost of investment includes acquisition charges such as brokerage, fees
and duties. Current investments are carried at lower of cost and
quoted/fair value, computed category-wise. "Long -term investments/ Non
current investments (excluding investment properties) are stated at
cost. Provision for diminution in the value of Non Current investments
is made only if such a decline is other than temporary. Investment
properties are carried individually at cost less accumulated
depreciation and impairment, if any. Investment properties are
capitalized and depreciated (where applicable) in accordance with the
policy stated for Tangible Fixed Assets. Impairment of investment
property is determined in accordance with the policy stated for
Impairment of Assets. "
AS-15 Employee benefits
Short Term Employee Benefits
The undiscounted amount of short term employee benefits expected to be
paid in exchange for the services rendered by employees are recognised
as an expense during the period when the employees render the services.
These benefits include performance incentive and compensated absences.
Post-Employment Benefits
Employee benefits include provident fund, superannuation fund, gratuity
fund, earned leave, long service awards and post-employment medical
benefits. Provident fund contribution in respect of employees are made
to Government as per the Provident Fund Act. Retirement benefit as to
Gratuity to its employees is accounted in accordance with Accounting
Standard (AS15) on the basis of actuarial valuation. Gratuity payment
scheme is funded with an insurance company. The actuarial gains or
losses are recognized immediately in the profit and loss account.
Contributions towards the defined contribution plans are recognized in
the profit and loss account on accrual basis.
AS-16 Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
AS-17 Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
AS-20 Earnings per share
Basic earnings per share is computed by dividing the profit/ (loss)
after Tax (including the post tax effect of extraordinary item, if any)
by the weighted average number of equity shares outstanding during the
year. Diluted earnings per share is computed by dividing the
profit/(Loss) after tax (including the post tax effect of extraordinary
item, if any )as adjusted for dividend, interest and other charges to
expense or income relating to the dilutive potential equity shares, by
the weighted average number of equity shares considered for deriving
basic earnings per share and the weighted average number of equity
shares which could have been issued on the conversion of all dilutive
only if their conversion to equity shares would decrease the net profit
per share from continuing ordinary operations. Potential dilutive
equity shares are deemed to be converted as at beginning of the period,
unless they have been issued at a later date. The dilutive potential
equity shares are adjusted for the proceeds receivable had the shares
been actually issued at fair value (i.e. average market value of the
outstanding shares). Dilutive potential equity shares are determined
independently for each period presented. The number of equity shares
and potentially dilutive equity shares are adjusted for share
splits/reverse splits and bonus shares, as appropriate.
AS-22 Taxes on income
Tax expense comprises of current tax and deferred tax. Current tax is
measured at the amount expected to be paid to the tax authorities,
using the applicable tax rates and laws for the year as determined in
accordance with the provisions of the Income Tax act, 1961.. Deferred
income tax reflect the current period timing differences between
taxable income and accounting income for the period and reversal of
timing differences of earlier years/period. Deferred tax assets are
recognised only to the extent that there is a reasonable certainty that
sufficient future income will be available except that deferred tax
assets, in case there are unabsorbed depreciation or losses, are
recognised if there is virtual certainty that sufficient future taxable
income will be available to realize the same.
Deferred tax assets and liabilities are measured using the tax rates
and tax law that have been enacted or substantively enacted by the
Balance Sheet date. Minimum Alternate Tax (MAT) paid in accordance with
the tax laws, which gives future economic benefits in the form of
adjustment to the future income tax liability, is considered as an
asset if there is convincing evidence that the Company will pay normal
income tax. Accordingly, MAT is recognized as an asset in the Balance
Sheet when it is probable that future economic benefit associated with
it flow to the Company. Current and deferred tax relating to item
directly recognized in equity are recognized in equity and not in the
Statement of Profit and Loss.
AS-26 Intangible assets
Intangible assets are carried at cost less accumulated amortisation and
impairment losses, if any. The cost of an intangible asset comprises
its purchase price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing authorities), and
any directly attributable expenditure on making the asset ready for its
intended use and net of any trade discounts and rebates. Subsequent
expenditure on an intangible asset after its purchase / completion is
recognised as an expense when incurred unless it is probable that such
expenditure will enable the asset to generate future economic benefits
in excess of its originally assessed standards of performance and such
expenditure can be measured and attributed to the asset reliably, in
which case such expenditure is added to the cost of the asset.
AS-27 Joint venture operations
The accounts of the Company reflect its share of the Assets,
Liabilities, Income and Expenditure of the Joint Venture Operations
which are accounted on the basis of the audited accounts of the Joint
Ventures on line-by-line basis with similar items in the Company's
accounts to the extent of the participating interest of the Company as
per the Joint Venture Agreements.
AS-28 Impairment of assets
An asset is treated as impaired when the carrying cost of asset exceeds
its recoverable value. An impairment loss is charged to the Profit and
Loss Statement in the year in which an asset is identified as impaired.
The impairment loss recognised in prior accounting period is reversed
if there has been a change in the estimate of recoverable amount.
The recoverable amount is the greater of the net selling price and
their value in use. Value in use is arrived at by discounting the
future cash flows to their present value based on an appropriate
discount factor. When there is indication that an impairment loss
recognized for an assets in earlier accounting periods no longer exists
or may have decreased, such reversal of impairment loss is recognized
in the Statement of Profit and Loss, except in case of revalued assets.
AS-29 Provisions and contingencies
Provision is recognised in the accounts when there is a present
obligation as a result of past event(s) and it is probable that an
outflow of resources will be required to settle the obligation and a
reliable estimate can be made. Provisions are not discounted to their
present value and are determined based on the best estimate required to
settle the obligation at the reporting date. These estimates are
reviewed at each reporting date and adjusted to reflect the current
best estimates. Contingent liabilities are disclosed in the Notes
unless the possibility of outflow of resources is remote. Contingent
assets are neither recognised nor disclosed in the financial
statements.
Mar 31, 2014
1 CORPORATE INFORMATION
The company is carrying on the business of manufacture and trading of
garment accessories such as labels narrow fabric woven labels, printed
labels, hang tags, plastic seals etc. Company has its manufacturing
facility at Panchkula, Haryana AS-1 SIGNIFICANT ACCOUNTING POLICIES
System of Accounting
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on going concern and on accrual basis
under the historical cost convention . The accounting policies adopted
in the preparation of the financial statements are consistent with
those followed in the previous year.
Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
AS-2 Inventories
Inventories are valued at the lower of cost (on FIFO basis) and the net
realisable value after providing for obsolescence and other losses,
where considered necessary. Cost includes all charges in bringing the
goods to the point of sale, including octroi and other levies, transit
insurance and receiving charges. Work-in-progress and finished goods
include appropriate proportion of overheads and, where applicable,
excise duty.
AS-3 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances , highly liquid investments that
are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
AS-6 Depreciation and amortisation
Depreciation has been provided on the straight-line method as per the
rates prescribed in Schedule XIV to the Companies Act, 1956.
Depreciation has been provided in respect of addition to/deletions from
fixed assets on prorata basis with reference to the date of
addition/deletion of assets.
Intangible assets are amortised ''over their estimated useful life, The
estimated useful life of the intangible assets and the amortisation
period are reviewed at the end of each financial year and the
amortisation method is revised to reflect the changed pattern.
AS-7,9 Revenue recognition Sale of goods
Sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers.
Other income
Interest and commission income is accounted on accrual basis. Dividend
income is accounted for when the right to receive it is established.
Interest subsidy under Tufs is accounted on receipt basis.
AS-10 Tangible fixed assets
"Fixed assets are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets up
to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
adjusted to the cost of the respective assets and depreciated over the
remaining useful life of such assets. "
Fixed assets retired from active use and held for sale are stated at
the lower of their net book value and net realisable value and are
disclosed separately in the Balance Sheet.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
AS-11 Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date
Foreign currency monetary items (other than derivative contracts) of
the Company and its net investment in non-integral foreign operations
outstanding at the Balance Sheet date are restated at the year-end
rates.In the case of integral operations, assets and liabilities (other
than non-monetary items), are translated at the exchange rate
prevailing on the Balance Sheet date. Non-monetary items are carried at
historical cost. Revenue and expenses are translated at the average
exchange rates prevailing during the year. Exchange differences arising
out of these translations are charged to the Statement of Profit and
Loss.
Treatment of exchange differences
Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company and its
integral foreign operations are recognised as income or expense in the
Statement of Profit and Loss. The exchange differences on restatement /
settlement of loans to non- integral foreign operations that are
considered as net investment in such operations are accumulated in a
""Foreign currency translation reserve"" until disposal / recovery of
the net investment.The exchange differences arising on restatement /
settlement of long-term foreign currency monetary items are capitalised
as part of the depreciable fixed assets to which the monetary item
relates and depreciated over the remaining useful life of such assets
or amortised on settlement / over the maturity period of such items if
such items do not relate to acquisition of depreciable fixed assets.
The unamortised balance is carried in the Balance Sheet as "Foreign
currency monetary item translation difference account" net of the tax
effect thereon.
Accounting of forward contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortised over the
period of the contracts if such contracts relate to monetary items as
at the Balance Sheet date.
AS-12 Government grants, subsidies and export incentives
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 / subsidy will be received. Government grants
whose primary condition is that the Company should purchase, construct
or otherwise acquire capital assets are presented by deducting them
from the carrying value of the assets. The grant is recognised as
income over the life of a depreciable asset by way of a reduced
depreciation charge.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
"Government grants in the nature of promoters'' contribution like
investment subsidy, where no repayment
is ordinarily expected in respect thereof, are treated as capital
reserve. Government grants in the form of non-monetary assets, given at
a concessional rate, are recorded on the basis of their acquisition
cost. In case the non-monetary asset is given free of cost, the grant
is recorded at a nominal value.Other government grants and subsidies
are recognised as income over the periods necessary to match them with
the costs for which they are intended to compensate, on a systematic
basis. "
AS-13 Investments
"Long-term investments (excluding investment properties), are carried
individually at cost less provision for diminution, other than
temporary, in the value of such investments. Current investments are
carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and
duties. Investment properties are carried individually at cost less
accumulated depreciation and impairment, if any. Investment properties
are capitalised and depreciated (where applicable) in accordance with
the policy stated for Tangible Fixed Assets. Impairment of investment
property is determined in accordance with the policy stated for
Impairment of Assets."
AS-15 Employee benefits
Employee benefits include provident fund, superannuation fund, gratuity
fund, compensated absences, long service awards and post-employment
medical benefits.
Provident Fund contribution in respect of employees are made to
Government as per the Provident Fund Act.
Retirement benefits as to Gratuity to its employees is accounted in
accordance with Accouning Standard (AS 15) on the basis of acturial
valuation . Gratuity payment scheme is funded with an insurance
company.
The actuarial gains or losses are recognised immediately in the profit
and loss account. Contributions towards the defined contribution plans
are recognised in the profit and loss account on accrual basis. AS-16
Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
AS-17 Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
AS-20 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the
profit / (loss) after tax (including the post tax effect of
extraordinary items, if any) as adjusted for dividend, interest and
other charges to expense or income relating to the dilutive potential
equity shares, by the weighted average number of equity shares
considered for deriving basic earnings per share and the weighted
average number of equity shares which could have been issued on the
conversion of all dilutive potential equity shares. Potential equity
shares are deemed to be dilutive only if their conversion to equity
shares would decrease the net profit per share from continuing ordinary
operations. Potential dilutive equity shares are deemed to be converted
as at the beginning of the period, unless they have been issued at a
later date. The dilutive potential equity shares are adjusted for the
proceeds receivable had the shares been actually issued at fair value
(i.e. average market value of the outstanding shares). Dilutive
potential equity shares are determined
independently for each period presented. The number of equity shares
and potentially dilutive equity shares are adjusted for share splits /
reverse share splits and bonus shares, as appropriate.
AS-22 Taxes on income
"Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets and liabilities are offset if
such items relate to taxes on income levied by the same governing tax
laws and the Company has a legally enforceable right for such set off.
Deferred tax assets are reviewed at each Balance Sheet date for their
realisability. "
Current and deferred tax relating to items directly recognised in
equity are recognised in equity and not in the Statement of Profit and
Loss.
AS-26 Intangible assets
Intangible assets are carried at cost less accumulated amortisation and
impairment losses, if any. The cost of an intangible asset comprises
its purchase price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing authorities), and
any directly attributable expenditure on making the asset ready for its
intended use and net of any trade discounts and rebates. Subsequent
expenditure on an intangible asset after its purchase / completion is
recognised as an expense when incurred unless it is probable that such
expenditure will enable the asset to generate future economic benefits
in excess of its originally assessed standards of performance and such
expenditure can be measured and attributed to the asset reliably, in
which case such expenditure is added to the cost of the asset.
AS-27 Joint venture operations
The accounts of the Company reflect its share of the Assets,
Liabilities, Income and Expenditure of the Joint Venture Operations
which are accounted on the basis of the audited accounts of the Joint
Ventures on line-by-line basis with similar items in the Company''s
accounts to the extent of the participating interest of the Company as
per the Joint Venture Agreements.
AS-28 Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the
greater of the net selling price and their value in use. Value in use
is arrived at by discounting the future cash flows to their present
value based on an appropriate discount factor. When there is
indication that an impairment loss recognised for an asset in earlier
accounting periods no longer exists or may have decreased, such
reversal of impairment loss is recognised in the Statement of Profit
and Loss, except in case of revalued assets.
AS-29 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 can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
Mar 31, 2013
AS-1 System of Accounting
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on going concern and on accrual basis
under the historical cost convention . The accounting policies adopted
in the preparation of the financial statements are consistent with
those followed in the previous year.
Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise.
AS-2 Inventories
Inventories are valued at the lower of cost (on FIFO basis) and the net
realisable value after providing for obsolescence and other losses,
where considered necessary. Cost includes all charges in bringing the
goods to the point of sale, including octroi and other levies, transit
insurance and receiving charges. Work-in-progress and finished goods
include appropriate proportion of overheads and, where applicable,
excise duty. AS-3 Cash and cash equivalents (for purposes of Cash Flow
Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances , highly liquid investments that
are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value. Cash flow statement
Cash flows are reported using the indirect method, whereby profit/
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
AS-6 Depreciation and amortization
Depreciation has been provided on the straight-line method as per the
rates prescribed in Schedule XIV to the Companies Act, 1956.
Depreciation has been provided in respect of addition to/deletions from
fixed assets on prorata basis with reference to the date of
addition/deletion of assets. Intangible assets are amortized ''over
their estimated useful life, The estimated useful life of the
intangible assets and the amortization period are reviewed at the end
of each financial year and the amortisation method is revised to
reflect the changed pattern. AS-7,9 Revenue recognition Sale of goods
Sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers. Other
income
Interest and commission income is accounted on accrual basis. Dividend
income is accounted for when the right to receive it is established.
AS-10 Tangible fixed assets
"Fixed assets are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets up
to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
adjusted to the cost of the respective assets and depreciated over the
remaining useful life of such assets. "
Fixed assets retired from active use and held for sale are stated at
the lower of their net book value and net realisable value and are
disclosed separately in the Balance Sheet.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
AS-11 Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date
"Foreign currency monetary items (other than derivative contracts) of
the Company and its net investment in non-integral foreign operations
outstanding at the Balance Sheet date are restated at the year-end
rates.In the case of integral operations, assets and liabilities (other
than non-monetary items), are translated at the exchange rate
prevailing on the Balance Sheet date. Non-monetary items are carried at
historical cost. Revenue and expenses are translated at the average
exchange rates prevailing during the year. Exchange differences arising
out of these translations are charged to the Statement of Profit and
Loss."
Treatment of exchange differences
"Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company and its
integral foreign operations are recognised as income or expense in the
Statement of Profit and Loss. The exchange differences on restatement /
settlement of loans to non-integral foreign operations that are
considered as net investment in such operations are accumulated in a
""Foreign currency translation reserve"" until disposal / recovery of
the net investment.The exchange differences arising on restatement /
settlement of long-term foreign currency monetary items are capitalised
as part of the depreciable fixed assets to which the monetary item
relates and depreciated over the remaining useful life of such assets
or amortised on settlement / over the maturity period of such items if
such items do not relate to acquisition of depreciable fixed assets.
The unamortised balance is carried in the Balance Sheet as "Foreign
currency monetary item translation difference account" net of the tax
effect thereon."
Accounting of forward contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortised over the
period of the contracts if such contracts relate to monetary items as
at the Balance Sheet date.
AS-12 Government grants, subsidies and export incentives
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 / subsidy will be received.
Government grants whose primary condition is that the Company should
purchase, construct or otherwise acquire capital assets are presented
by deducting them from the carrying value of the assets.
The grant is recognised as income over the life of a depreciable asset
by way of a reduced depreciation charge.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
"Government grants in the nature of promoters'' contribution like
investment subsidy, where no repayment is ordinarily expected in
respect thereof, are treated as capital reserve. Government grants in
the form of non-monetary assets, given at a concessional rate, are
recorded on the basis of their acquisition cost. In case the
non-monetary asset is given free of cost, the grant is recorded at a
nominal value.Other government grants and subsidies are recognised as
income over the periods necessary to match them with the costs for
which they are intended to compensate, on a systematic basis."
AS-13 Investments
"Long-term investments (excluding investment properties), are carried
individually at cost less provision for diminution, other than
temporary, in the value of such investments. Current investments are
carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and
duties. Investment properties are carried individually at cost less
accumulated depreciation and impairment, if any. Investment properties
are capitalised and depreciated (where applicable) in accordance with
the policy stated for Tangible Fixed Assets. Impairment of investment
property is determined in accordance with the policy stated for
Impairment of Assets."
AS-15 Employee benefits
Employee benefits include provident fund, superannuation fund, gratuity
fund, compensated absences, long service awards and post-employment
medical benefits.
Provident Fund contribution in respect of employees are made to
Government as per the Provident Fund Act.
Retirement benefits as to Gratuity to its employees is accounted in
accordance with Accounting Standard (AS 15) on the basis of actual
valuation . Gratuity payment scheme is funded with an insurance
company.
The actuarial gains or losses are recognized immediately in the profit
and loss account. Contributions towards the defined contribution plans
are recognized in the profit and loss account on accrual basis.
AS-16 Borrowing costs
Borrowing costs include interest, amortization of ancillary costs
incurred and exchange differences arising from foreign currency
borrowing to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilizes for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalization of such asset is added to the cost of the assets.
Capitalization of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
AS-17 Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organization and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
AS-20 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the
profit / (loss) after tax (including the post tax effect of
extraordinary items, if any) as adjusted for dividend, interest and
other charges to expense or income relating to the dilutive potential
equity shares, by the weighted average number of equity shares
considered for deriving basic earnings per share and the weighted
average number of equity shares which could have been issued on the
conversion of all dilutive potential equity shares. Potential equity
shares are deemed to be dilutive only if their conversion to equity
shares would decrease the net profit per share from continuing ordinary
operations. Potential dilutive equity shares are deemed to be converted
as at the beginning of the period, unless they have been issued at a
later date. The dilutive potential equity shares are adjusted for the
proceeds receivable had the shares been actually issued at fair value
(i.e. average market value of the outstanding shares). Dilutive
potential equity shares are determined independently for each period
presented. The number of equity shares and potentially dilutive equity
shares are adjusted for share splits / reverse share splits and bonus
shares, as appropriate.
AS-22 Taxes on income
"Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961 .Minimum Alternate Tax (MAT) paid in accordance with the tax
laws, which gives future economic benefits in the form of adjustment to
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax.
Accordingly, MAT is recognised as an asset in the Balance Sheet when it
is probable that future economic benefit associated with it will flow
to the Company.Deferred tax is recognised on timing differences, being
the differences between the taxable income and the accounting income
that originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax is measured using the tax rates and
the tax laws enacted or substantially enacted as at the reporting date.
Deferred tax liabilities are recognised for all timing differences.
Deferred tax assets in respect of unabsorbed depreciation and carry
forward of losses are recognised only if there is virtual certainty
that there will be sufficient future taxable income available to
realise such assets. Deferred tax assets are recognised for timing
differences of other items only to the extent that reasonable certainty
exists that sufficient future taxable income will be available against
which these can be realised. Deferred tax assets and liabilities are
offset if such items relate to taxes on income levied by the same
governing tax laws and the Company has a legally enforceable right for
such set off. Deferred tax assets are reviewed at each Balance Sheet
date for their realisability."
Current and deferred tax rel-''ing to items directly recognised in
equity are recognised in equity and not in the Statement of Profit and!
-s.
AS-26 Intangible assets
"Intangible assets are carried at cost less accumulated amortisation
and impairment fosses, if any. The cost of an intangible asset
comprises its purchase price, including any import duties and other
taxes (other than those subsequently recoverable from the taxing
authorities), and any directly attributable expenditure on making the
asset ready for its intended use and net of any trade discounts and
rebates. Subsequent expenditure on an intangible asset after its
purchase / completion is recognised as an expense when incurred unless
it is probable that such expenditure will enable the asset to generate
future economic benefits in excess of its originally assessed standards
of performance and such expenditure can be measured and attributed to
the asset reliably, in which case such expenditure is added to the cost
of the asset. " AS-27 Joint venture operations
The accounts of the Company reflect its share of the Assets,
Liabilities, Income and Expenditure of the Joint Venture Operations
which are accounted on the basis of the audited accounts of the Joint
Ventures on line-by-line basis with similar items in the Company''s
accounts to the extent of the participating interest of the Company as
per the Joint Venture Agreements.
AS-28 Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the
greater of the net selling price and their value in use. Value in use
is arrived at by discounting the future cash flows to their present
value based on an appropriate discount factor. When there is
indication that an impairment loss recognised for an asset in earlier
accounting periods no longer exists or may have decreased, such
reversal of impairment loss is recognised in the Statement of Profit
and Loss, except in case of revalued assets. AS-29 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 can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
Mar 31, 2012
System of Accounting
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on going concern and on accrual basis
under the historical cost convention . The accounting policies adopted
in the preparation of the financial statements are consistent with
those followed in the previous year.
Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known/materialise.
AS-1 Inventories
Inventories are valued at the lower of cost (on FIFO basis) and the net
realisable value after providing for obsolescence and other losses,
where considered necessary. Cost includes all charges in bringing the
goods to the point of sale, including octroi and other levies, transit
insurance and receiving charges. Work-in-progress and finished goods
include appropriate proportion of overheads and, where applicable,
excise duty.
AS-2 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances , highly liquid investments that
are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
Cash flow statement
Cash flows are reported using the indirect method, whereby
profit/(loss) before extraordinary items and tax is adjusted for the
effects of transactions of non-cash nature and any deferrals or
accruals of past or future cash receipts or payments. The cash flows
from operating, investing and financing activities of the Company are
segregated based on the available information.
AS-3 Depreciation and amortization
Depreciation has been provided on the straight-line method as per the
rates prescribed in Schedule XIV to the Companies Act, 1956.
Depreciation has been provided in respect of addition to/deletions from
fixed assets or prorata basis with reference to the date of
addition/deletion of assets.
Intangible assets are amortized 'over their estimated useful life, The
estimated useful life of the intangible assets and the amortization
period are reviewed at the end of each financial year and the
amortisation method is revised to reflect the changed pattern.
AS-4, 9 Revenue recognition
Sale of goods
Sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers.
Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
AS-5 Tangible fixed assets
"Fixed assets are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets up
to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date. Exchange differences
arising on restatement/settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
adjusted to the cost of the respective assets and depreciated over the
remaining useful life of such assets. "
Fixed assets retired from active use and held for sale are stated at
the lower of their net book value and net realisable value and are
disclosed separately in the Balance Sheet.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
AS-6 Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date
"Foreign currency monetary items (other than derivative contracts) of
the Company and its net investment in non- integral foreign operations
outstanding at the Balance Sheet date are restated at the year-end
rates. In the case of integral operations, assets and liabilities
(other than non-monetary items), are translated at the exchange rate
prevailing on the Balance Sheet date. Non-monetary items are carried at
historical cost. Revenue and expenses are translated at the average
exchange rates prevailing during the year. Exchange differences arising
out of these translations are charged to the Statement of Profit and
Loss."
Treatment of exchange differences
"Exchange differences arising on settlement/restatement of short-term
foreign currency monetary assets and liabilities of the Company and its
integral foreign operations are recognised as income or expense in the
Statement of Profit and Loss. The exchange differences on
restatement/settlement of loans to non-integral foreign operations that
are considered as net investment in such operations are accumulated in
a ""Foreign currency translation reserve"" until disposal/recovery of
the net investment. The exchange differences arising on
restatement/settlement of long-term foreign currency monetary items are
capitalised as part of the depreciable fixed assets to which the
monetary item relates and depreciated over the remaining useful life of
such assets or amortised on settlement/over the maturity period of such
items if such items do not relate to acquisition of depreciable fixed
assets. The unamortised balance is carried in the Balance Sheet as
"Foreign currency monetary item translation difference account" net of
the tax effect thereon."
Accounting of forward contracts
"Premium/discount on forward exchange contracts, which are not intended
for trading or speculation purposes, are amortised over the period of
the contracts if such contracts relate to monetary items as at the
Balance Sheet date. Refer Notes 2.26 and 2.27 for accounting for
forward exchange contracts relating to firm commitments and highly
probable forecast transactions."
AS-7 Government grants, subsidies and export incentives
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/subsidy will be received. Government grants whose
primary condition is that the Company should purchase, construct or
otherwise acquire capital assets are presented by deducting them from
the carrying value of the assets. The grant is recognised as income
over the life of a depreciable asset by way of a reduced depreciation
charge.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
"Government grants in the nature of promoters' contribution like
investment subsidy, where no repayment is ordinarily expected in
respect thereof, are treated as capital reserve. Government grants in
the form of non- monetary assets, given at a concessional rate, are
recorded on the basis of their acquisition cost. In case the non-
monetary asset is given free of cost, the grant is recorded at a
nominal value.
Other government grants and subsidies are recognised as income over the
periods necessary to match them with the costs for which they are
intended to compensate, on a systematic basis."
AS-8 Investments
"Long-term investments (excluding investment properties), are carried
individually at cost less provision for diminution, other than
temporary, in the value of such investments. Current investments are
carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and
duties. Investment properties are carried individually at cost less
accumulated depreciation and impairment, if any.
Investment properties are capitalised and depreciated (where
applicable) in accordance with the policy stated for Tangible Fixed
Assets. Impairment of investment property is determined in accordance
with the policy stated for Impairment of Assets."
AS-9 Employee benefits
Employee benefits include provident fund, superannuation fund, gratuity
fund, compensated absences, long service awards and post-employment
medical benefits.
Provident Fund contribution in respect of employees are made to
Government as per the Provident Fund Act.
Retirement benefits as to Gratuity to its employees is accounted in
accordance with Accounting Standard (AS 15) on the basis of acturial
valuation. Gratuity payment scheme is funded with an insurance company.
The actuarial gains or losses are recognised immediately in the profit
and loss account. Contributions towards the defined contribution plans
are recognised in the profit and loss account on accrual basis.
AS-10 Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction/ development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
AS-11 Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
AS-12 Earnings per share
Basic earnings per share is computed by dividing the profit/(loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the
profit/(loss) after tax (including the post tax effect of extraordinary
items, if any) as adjusted for dividend, interest and other charges to
expense or income relating to the dilutive potential equity shares, by
the weighted average number of equity shares considered for deriving
basic earnings per share and the weighted average number of equity
shares which could have been issued on the conversion of all dilutive
potential equity shares. Potential equity shares are deemed to be
dilutive only if their conversion to equity shares would decrease the
net profit per share from continuing ordinary operations. Potential
dilutive equity shares are deemed to be converted as at the beginning
of the period, unless they have been issued at a later date.
The dilutive potential equity shares are adjusted for the
proceeds receivable had the shares been actually issued at fair value
(i.e. average market value of the outstanding shares). Dilutive
potential equity shares are determined independently for each period
presented. The number of equity shares and potentially dilutive equity
shares are adjusted for share splits/reverse share splits and bonus
shares, as appropriate.
AS-13 Taxes on income
"Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income
Tax Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods.
Deferred tax is measured using the tax rates and the tax laws enacted
or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets and liabilities are offset if such
items relate to taxes on income levied by the same governing tax laws
and the Company has a legally enforceable right for such set off.
Deferred tax assets are reviewed at each Balance Sheet date for their
realisability."
Current and deferred tax relating to items directly recognised in
equity are recognised in equity and not in the Statement of Profit and
Loss.
AS-14 Intangible assets
"Intangible assets are carried at cost less accumulated amortisation
and impairment losses, if any. The cost of an intangible asset
comprises its purchase price, including any import duties and other
taxes (other than those subsequently recoverable from the taxing
authorities), and any directly attributable expenditure on making the
asset ready for its intended use and net of any trade discounts and
rebates. Subsequent expenditure on an intangible asset after its
purchase/completion is recognised as an expense when incurred unless it
is probable that such expenditure will enable the asset to generate
future economic benefits in excess of its originally assessed standards
of performance and such expenditure can be measured and attributed to
the asset reliably, in which case such expenditure is added to the cost
of the asset."
AS-15 Joint venture operations
The accounts of the Company reflect its share of the Assets,
Liabilities, Income and Expenditure of the Joint Venture Operations
which are accounted on the basis of the audited accounts of the Joint
Ventures on line-by-line basis with similar items in the Company's
accounts to the extent of the participating interest of the Company as
per the Joint Venture Agreements.
AS-16 Impairment of assets
The carrying values of assets/cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss,
except in case of revalued assets.
AS-17 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 can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
Mar 31, 2010
A) System of Accounting
i) Financial statements are prepared under the historical cost
convention, in accordance with Accounting Standards applicable in India
on a going concern basis.
ii) The Company follows the mercantile system of accounting and recognises
income and expenditure on accrual basis.
b) Inventories
i) Raw Materials, Stores and Spares and Packing Materials are valued at
cost.
ii) Finished goods, Traded Goods and Semi-finished goods are valued at
lower of cost or market value.
iii) While determining the cost, the direct material cost is assigned
on the basis of weighted average cost and the conversion cost is
determined on the basis of systematic allocation of relatable fixed and
variable production overheads and the element of excise duty, in
accordance with the revised Accounting Standards (AS-2) "Valuation of
inventories "issued by the ICAI.
c) Fixed Assets & Depreciation Fixed Assets
i) Fixed Assets are stated at cost less depreciation/amortisation.
ii) Cost of major civil works required for plant & machinery support,
is capitalised as Plant & Machinery.
iii) In case of new projects including major expansion, the related
identifiable expenses like interest on borrowings for specific project,
employees related expenses, travelling expenses, trial run costs and
other preoperative expenses etc. up to its commissioning are
capitalised. iv) Capital Assets under erection/installation are
reflected in the Balance Sheet as "Capital Work in Progress".
Depreciation
v) The Company has provided depreciation on the straight line method as
per the provisions of Schedule XIV of the Companies Act 1956.
vi) Depreciation has been provided in respect of addition to/deletions
from Fixed Assets, on prorata basis with reference to the date of
addition / deletion of the assets.
d) Accounting for effects of changes in foreign exchange rates.
a. Transaction denominated in foreign currencies are normally recorded
at the exchange rate prevailing at the time of the transaction.
b. Year end foreign currency denominated liabilities and receivable
are translated at year end market exchange rates the difference being
charged/credited to revenue account.
e) Accounting for Government Grants
i) Grant related to Depreciable assets are treated as Deferred Income
which is recognised in the Profit and Loss Statement on a systematic
and rational basis over the useful life of the Asset.
ii) Grants relating to revenue items are recognised in the Profit and
Loss Account after matching them with the related costs which they are
intended to compensate.
f) Accounting for investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of the investments.
g) Accounting for Retirement benefits
a. Provident Fund contribution in respect of employees are made to
Government as per the Provident Fund Act.
b. Retirement benefits as to Gratuity to its employees are accounted
in accordance with Accounting Standard (AS15) issued by the Institute
of Chartered Accountants of India on the basis of actuarial valuation.
The actuarial gains or losses are recognised immediately in the profit
and loss account. Contributions towards the defined contribution plans
are recognised in the profit and loss account on accrual basis.
h)Borrowing cost
All borrowing costs are charged to revenue except to the extent they
are attributable to qualifying assets which are capitalized.
i) Segment reporting Company operates in one segment.
j) Accounting for taxes on income Provision for current tax is made
after taking into consideration benefits admissible under the
provisions of Income Tax Act1961.
Deferred tax resulting from timing differences between book and taxable
profit is accounted for using the tax rates in force as on the balance
sheet date. The deferred tax liability/asset is recognized and carried
forward only to the extent that there is reasonable certainty that the
asset will be realized in future.
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