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Accounting Policies of Valiant Communications Ltd. Company
Mar 31, 2025
3. Material accounting policies
3.1 Basis of preparation
The financial statements are prepared in accordance with and
in compliance, in all material aspects with Indian Accounting
Standards ("Ind AS") notified under Section 133 of the
Companies Act, 2013 ("the Act") read along with Companies
(Indian Accounting Standards) Rules, as amended and other
relevant provisions of the Act. The presentation of the
Financial Statements is based on Ind AS Schedule III of the
Companies Act, 2013.
3.2 Basis of measurement
The financial statements have been prepared on an accrual
basis and in accordance with the historical cost convention
except for certain financial instruments which are measured
at fair values at the end of each reporting period. Historical
cost is generally based on the fair value of the consideration
given in exchange for goods and services.
All assets and liabilities are classified into current and non¬
current generally based on the nature of product/activities of
the Company and the normal time between acquisition of
assets/liabilities and their realisation/settlement in cash or
cash equivalent.
The Company has determined its operating cycle as 12
months for the purpose of classification of its assets and
liabilities as current and non-current.
Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of
whether that price is directly observable or estimated using
another valuation technique.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when
pricing the asset or liability, assuming that market
participants act in their economic best interest. A fair value
measurement of a non-financial asset takes into account a
market participant''s ability to generate economic benefits by
using the asset in its highest and best use or by selling it to
another market participant that would use the asset in its
highestand bestuse.
The Company uses valuation techniques that are appropriate
in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of
relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within
the fair value hierarchy, described as follows, based on the
lowest level input that is significant to the fair value
measurement as a whole:
⢠Level 1 - Quoted (unadjusted) market prices in active
markets for identical assets or liabilities
⢠Level 2 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
directly or indirectly observable.
⢠Level 3 - Valuation techniques for which the lowest level
input that is significant to the fair value measurement is
unobservable.
3.3 Foreign currency translation
The functional currency of the Company is Indian rupee ('').
On initial recognition, all foreign currency transactions are
translated into the functional currency using the exchange
rates prevailing on the date of the transaction. As at the
reporting date, foreign currency monetary assets and
liabilities are translated at the exchange rate prevailing on the
Balance Sheet date and the exchange gains or losses are
recognised in the Statement of Profit and Loss.
Non-monetary assets and liabilities denominated in a foreign
currency and measured at historical cost are translated at the
exchange rate prevalent at the date of transaction.
3.4 Property, plant and equipment (PPE)
PPE are initially recognised at cost. The initial cost of PPE
comprises its purchase price, including non-refundable
duties and taxes net of any trade discounts and rebates. The
cost of PPE includes interest on borrowings (borrowing cost),
if any, directly attributable to acquisition, construction or
production of qualifying assets subsequent to initial
recognition, PPE are stated at cost less accumulated
depreciation (other than freehold land, which are stated at
cost) and impairment losses, if any.
Subsequent costs are included in the asset''s carrying amount
or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the
item will flow to the Company and the cost of the item can be
measured reliably. The carrying amount of any component
accounted for as a separate asset is derecognised when
replaced. All other repairs and maintenance are charged to
profit or loss during the reporting period in which they are
incurred.
Depreciation is recognised so as to write off the cost of assets
(other than freehold land and capital work in progress, if any)
less their residual values over the useful lives, using the
straight- line method ("SLM") at the rates prescribed in
Schedule II of the Companies Act, 2013.
The carrying values of property, plant and equipment are
reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be
recoverable. The residual values, useful life and depreciation
method are reviewed at each financial year-end to ensure
that the amount, method and period of depreciation are
consistent with previous estimates and the expected pattern
of consumption of the future economic benefits embodied in
the items of property, plant and equipment.
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any
gain or loss arising on disposal or retirement of an item of
property, plant and equipment is determined as the
difference between sales proceeds and the carrying amount
of the asset and is recognised in profit or loss. Fully
depreciated assets still in use are retained in financial
statements.
3.5 Intangible assets
Intangible assets are measured on initial recognition at cost
and subsequently are carried at cost less accumulated
amortisation and accumulated impairment losses, if any.
An intangible asset is derecognised on disposal, or when no
future economic benefits are expected from use or disposal.
Gains or losses on derecognition are determined by
comparing proceeds with carrying amount. These are
included in profit or loss within other gains/(losses).
The Company amortises intangible assets with a finite useful
life using the straight-line method overthe following range of
useful lives:
The estimated useful life is reviewed annually by the
management.
3.6 Capital work-in-progress and intangible assets under
development
Capital work-in-progress/intangible assets under
development are carried at cost, comprising direct cost,
related incidental expenses and attributable borrowing cost.
3.7 Non-derivative financial instruments
Financial assets and liabilities are recognised when the
Company becomes a party to the contractual provisions of
the instrument. Financial assets and liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or
deducted from the fair value measured on initial recognition
of financial asset or financial liability.
Trade Receivables
A trade receivable without a significant financing component
is initially measured at the transaction price (net of variable
consideration) as the same are recorded after decreasing
rebates as per para 51 of Ind AS 115.
Cash and cash equivalents
The Company considers all highly liquid financial instruments,
which are readily convertible into known amounts of cash
that are subject to an insignificant risk of change in value and
having original maturities of three months or less from the
date of purchase, to be cash equivalents. Cash and cash
equivalents consist of balances with banks which are
unrestricted for withdrawal and usage.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised
cost if these financial assets are held within a business whose
objective is to hold these assets in order to collect contractual
cash flows and the contractual terms of the financial asset
give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount
outstanding.
Financial assets at fair value through other comprehensive
income (FVTOCI)
Financial assets are measured at fair value through other
comprehensive income if these financial assets are held
within a business whose objective is achieved by both
collecting contractual cash flows that give rise on specified
dates to solely payments of principal and interest on the
principal amount outstanding and by selling financial assets.
The Company has made an irrevocable election to present
subsequent changes in the fair value of equity investments
not held fortrading in Other Comprehensive Income.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets are measured at fair value through profit or
loss unless it is measured at amortised cost or at fair value
through other comprehensive income on initial recognition.
The transaction costs directly attributable to the acquisition
of financial assets and liabilities at fair value through profit or
loss are immediately recognised in profit or loss.
Financial liabilities
Financial liabilities are measured at amortised cost using the
effective interest method.
Borrowings
Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of the
borrowings using the effective interest method. Fees paid on
the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case,
the fee is deferred until the draw down occurs. To the extent
there is no evidence that it is probable that some or all of the
facility will be drawn down, the fee is capitalised as a
prepayment for liquidity services and amortised over the
period of the facility to which it relates. Borrowings are
removed from the balance sheet when the obligation
specified in the contract is discharged, cancelled or expired.
The difference between the carrying amount of a financial
liability that has been extinguished or transferred to another
party and the consideration paid, including any noncash
assets transferred or liabilities assumed, is recognised in
profit or loss under other income/(expenses).
Equityinstruments
An equity instrument is a contract that evidences residual
interest in the assets of the Company after deducting all of its
liabilities. Equity instruments recognised by the Company are
measured at the proceeds received net off direct issue cost.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net
amount is reported in financial statements if there is a
currently enforceable legal right to offset the recognised
amounts and there is an intention to settle on a net basis, to
realise the assets and settle the liabilities simultaneously.
3.8 Investments in subsidiaries
A subsidiary is an entity that is controlled by the Company.
The Company accounts for each category of investments in
subsidiaries at cost in accordance with Ind AS 27- Separate
Financial Statements.
3.9 Impairment
Financial assets (otherthan at fair value)
The Company assesses on a forward-looking basis the
expected credit loss associated with its assets carried at
amortised cost and FVTOCI debt instruments, if any. The
impairment methodology applied depends on whether there
has been a significant increase in credit risk.
For trade receivables only, the Company applies the
simplified approach permitted by Ind AS 109 Financial
Instruments, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
PPEand intangibles assets
Property, plant and equipment and intangible assets with
finite life are evaluated for recoverability whenever there is
any indication that their carrying amounts may not be
recoverable. If any such indication exists, the recoverable
amount (i.e., higher of the fair value less cost to sell and the
value-in-use) is determined on an individual asset basis
unless the asset does not generate cash flows that are largely
independent of those from other assets. In such cases, the
recoverable amount is determined for the cash generating
unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to
be less than its carrying amount, the carrying amount of the
asset (or CGU) is reduced to its recoverable amount. An
impairment loss is recognised in the Statement of Profit and
Loss.
3.10 Inventories
Inventories are valued at lower of cost (on weighted average
basis) and net realisable value after providing for
obsolescence and other losses, where considered necessary.
Cost includes all charges in bringing the goods to their present
location and condition including all applicable duties, taxes
and other levies. Work-in-progress and finished goods
include appropriate proportion of overheads and, where
applicable, indirect taxes. Net realisable value is the
estimated selling price in the ordinary course of business, less
the estimated costs of completion and the estimated costs
necessary to make the sale.
3.11 Revenue Recognition
Revenue is recognised upon transfer of control of promised
goods or services to customers in an amount that reflects the
consideration which the Company expects to receive in
exchange for those goods.
Revenue from sale of goods and services
Revenue from the sale of goods is recognised at the point in
time when control is transferred to the customer which is
usually on dispatch / delivery. Revenue from services is
recognised as and when the services are performed in
accordance with IND AS 115. Revenue is measured based on
the transaction price, net of variable consideration on
account of volume discounts, rebates, scheme allowances,
price concessions, incentives and returns offered by the
Company as part of the contracts with the customers.
Revenue excludes taxes collected from customers on behalf
of the government. Accruals for discounts/incentives and
returns are estimated (using the most likely method) based
on accumulated experience and underlying schemes and
agreements with customers. Due to the short nature of credit
period given to customers, there is no financing component
in the contract.
Interest Income
Interest income from financial assets is recognized when it is
probable that economic benefits will flow to the Company
and the amount of income can be measured reliably. Interest
income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
assets to that asset''s net carrying amount on initial
recognition.
Dividend
Dividend income from investments is recognised when the
shareholder''s right to receive payment has been established
(provided that it is probable that the economic benefits will
flow to the Company and the amount of income can be
measured reliably).
Insurance claims
Insurance claims are accounted for on the basis of claims
admitted / expected to be admitted and to the extent that
there is no uncertainty in receiving the claims.
3.12 Research and development expenses
Research expenditure and development costs of products are
capitalised on product''s technical feasibility is established.
3.13 Leases
The Company evaluates if an arrangement qualifies to be a
lease as per the requirements of Ind AS 116. Identification of a
lease requires significant judgment. The Company uses
significant judgement in assessing the lease term (including
anticipated renewals) and the applicable discount rate.
The discount rate is generally based on the incremental
borrowing rate specific to the lease being evaluated or for a
portfolio of leases with similar characteristics.
The Company''s lease asset classes primarily consist of leases
for buildings. The Company assesses whether a contract
contains a lease, at inception of a contract. A contract is, or
contains, a lease if the contract conveys the right to control
the use of an identified assetfor a period oftime in exchange
for consideration. To assess whether a contract conveys the
right to control the use of an identified asset, the Company
assesses whether:
(i) the contract involves the use of an identified asset.
(ii) the Company has substantially all of the economic
benefits from use of the asset through the period of the
leaseand
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company
recognizes a right-of-use asset ("ROU") and a corresponding
lease liability for all lease arrangements in which it is a lessee,
except for leases with a term of twelve months or less (short¬
term leases) and low value leases. For these short-term and
low value leases, the Company recognizes the lease payments
as an operating expense on a straight-line basis over the term
of the lease.
Lease liability and ROU asset have been separately presented
in the Balance Sheet and lease payments have been classified
as financing cash flows.
3.14 Non-current assets held for sale
Non-current assets and disposal groups are classified as held
for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing
use. This condition is regarded as met only when the asset (or
disposal group) is available for immediate sale in its present
condition subject only to terms that are usual and customary
for sales of such asset (or disposal group) and its sale is highly
probable. Management must be committed to the sale,
which should be expected to qualify for recognition as a
completed sale within one year from the date of
classification.
When the Company is committed to a sale plan involving
disposal of an investment, the investment that will be
disposed off is classified as held for sale when the criteria
described above are met.
Non-current assets (and disposal groups) classified as held for
sale are measured at the lower of their carrying amount and
fair value less costs to sell.
3.15 Employees benefits
Employee benefits includes contribution to provident fund,
gratuity fund, compensated absences and supplemental pay.
The Company has provided for liability on account of all
following employees benefits available to the employees in
accordance with the applicable rules, regulations, laws and
employees benefits policy of the Company.
i) Provident fund is a defined contribution scheme and the
contributions are charged to the profit & loss account of
the year when the contributions to the government funds
aredue.
ii) Gratuity liability is a defined benefit obligation and
provided for on the basis of an actuarial valuation as per
projected unit credit method, made at the end of each
financial year. The Company has taken a policy with the
Life Insurance Corporation of India (LIC) to cover the
gratuity liability of the employees and premium paid to
the LIC is charged to Profit and Loss Account. The
difference between the actuarial valuation ofthe gratuity
liability of the employees at the year end and the balance
of funds with LIC is provided for as liability in the books.
iii) Employees are entitled to short-term compensated
absences, which are provided for on the basis of
estimates.
iv) Actuarial gains/losses are recognized in Other
Comprehensive Income (OCI).
3.16 Segment reporting
As per Ind AS 108, Operating segments are defined as
components of an enterprise for which discrete financial
information is available that is evaluated regularly by the
chief operating decision maker, in deciding how to allocate
resources and assessing performance. The Company''s chief
operating decision maker is the Managing Director & CEO.
The Company''s operating geographical business segment is
based on the locations of customers. Allocable costs are
allocated to each segment in proportion to the relative sales
of each segment. All the common income, expenses, assets
and liabilities, which are not possible to be allocated to
different segments, are treated as un-allocable items.
3.17 Income tax
Income tax expense comprises current tax expense and the
net change in the deferred tax asset or liability during the
year.
Current and deferred taxes are recognised in Statement of
Profit and Loss, except when they relate to items that are
recognised in other comprehensive income or directly in
equity, in which case, the current and deferred tax are also
recognised in other comprehensive income or directly in
equity, respectively.
Currenttax
Current tax is measured at the amount of tax expected to be
payable on the taxable income for the year as determined in
accordance with the provisions of the Income Tax Act, 1961.
Current tax assets and current tax liabilities are off set when
there is a legally enforceable right to set off the recognized
amounts and there is an intention to settle the asset and the
liability on a net basis.
Deferredtax
Deferred income tax is recognised using the Balance Sheet
approach. Deferred income tax assets and liabilities are
recognised for deductible and taxable temporary differences
arising between the tax base of assets and liabilities and their
carrying amount, except when the deferred income tax arises
from the initial recognition of an asset or liability in a
transaction that is not a business combination and affects
neither accounting nor taxable profit or loss at the time of the
transaction.
Deferred tax assets are recognised only to the extent that it is
probable that either future taxable profits or reversal of
deferred tax liabilities will be available, against which the
deductible temporary differences, and the carry forward of
unused tax credits and unused tax losses can be utilised.
The carrying amount of a deferred tax asset shall be reviewed
at the end of each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will
be available to allow all or part of the deferred income tax
asset to be utilised.
Deferred tax assets and liabilities are measured using the tax
rates and tax laws that have been enacted or substantively
enacted by the end ofthe reporting period and are expected
to apply when the related deferred tax asset is realised or the
deferred tax liability is settled. Deferred tax assets and
liabilities are offset when there is a legally enforceable right
to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority.
Deferred tax assets include Minimum Alternate Tax (MAT)
paid in accordance with the tax laws in India, to the extent it
would be available for set off against future current income
tax liability. Accordingly, MAT is recognised as deferred tax
asset in the balance sheet when the asset can be measured
reliably, and it is probable that the future economic benefit
associated with the asset will be realised.
3.18 Borrowing cost
Borrowing costs are interest and ancillary costs incurred in
connection with the arrangement of borrowings. General
and specific borrowing costs attributable to acquisition and
construction of any qualifying asset (one that takes a
substantial period of time to get ready for its designated use
or sale) are capitalised until such time as the assets are
substantially ready for their intended use or sale and
included as part ofthe cost of that asset. Investment income
earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation. All the
other borrowing costs are recognised in the Statement of
Profit and Loss within finance costs ofthe period in which
theyare incurred.
Mar 31, 2024
1. Corporate Information
Valiant Communications Limited (the ''''Company'''') is a public limited company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. The Company''s shares are listed at Bombay Stock Exchange (BSE). The Company manufactures communication equipment, primarily for power utilities / other utilities and engaged in its allied services. The Company has its manufacturing facilities in India and sells its products in India and across the globe. The Company''s registered office is at 71/1, Shivaji Marg, New Delhi 110 015. The Corporate Identification Number (CIN) is L74899DL1993PLC056652.
The financial statements for the year ended 31 March 2024 were approved by the Board of Directors and authorised for issue on 29 May 2024.
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31 March 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
3. Material accounting policies3.1 Basis of preparation
The financial statements are prepared in accordance with and in compliance, in all material aspects with Indian Accounting Standards ("Ind AS") notified under Section 133 of the Companies Act, 2013 ("the Act") read along with Companies (Indian Accounting Standards) Rules, as amended and other relevant provisions of the Act. The presentation of the Financial Statements is based on Ind AS Schedule III of the Companies Act, 2013.
The financial statements have been prepared on an accrual basis and in accordance with the historical cost convention except for certain financial instruments which are measured at fair values at the end of each reporting period. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
All assets and liabilities are classified into current and noncurrent generally based on the nature of product/activities of the Company and the normal time between acquisition of assets/liabilities and their realisation/settlement in cash or cash equivalent.
The Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using anothervaluation technique.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a nonfinancial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
⢠Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
⢠Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
3.3 Foreign currency translation
The functional currency of the Company is Indian rupee ('').
On initial recognition, all foreign currency transactions are translated into the functional currency using the exchange rates prevailing on the date of the transaction. As at the reporting date, foreign currency monetary assets and liabilities are translated at the exchange rate prevailing on the Balance Sheet date and the exchange gains or losses are recognised in the Statement of Profit and Loss.
Non-monetary assets and liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction.
3.4 Property, plant and equipment (PPE)
PPE are initially recognised at cost. The initial cost of PPE comprises its purchase price, including non-refundable duties and taxes net of any trade discounts and rebates. The cost of PPE includes interest on borrowings (borrowing cost), if any, directly attributable to acquisition, construction or production of qualifying assets subsequent to initial recognition, PPE are stated at cost less accumulated depreciation (other than freehold land, which are stated at cost) and impairment losses, if any.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Depreciation is recognised so as to write off the cost of assets (other than freehold land and capital work in progress, if any) less their residual values over the useful lives, using the straight- line method ("SLM") at the rates prescribed in Schedule II of the Companies Act, 2013.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between sales proceeds and the carrying amount of the asset and is recognised in profit or loss. Fully depreciated assets still in use are retained in financial statements.
Intangible assets are measured on initial recognition at cost and subsequently are carried at cost less accumulated amortisation and accumulated impairment losses, if any.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal.
Gains or losses on derecognition are determined by comparing proceeds with carrying amount. These are included in profit or loss within other gains/(losses).
The Company amortises intangible assets with a finite useful life using the straight-line method over the following range of useful lives:
|
Asset |
Useful life |
|
Technical know-how |
4 years |
|
Computer software |
6 years |
The estimated useful life is reviewed annually by the management.
3.6 Capital work-in-progress and intangible assets under development
Capital work-in-progress/intangible assets under development are carried at cost, comprising direct cost, related incidental expenses and attributable borrowingcost.
3.7 Non-derivative financial instruments
Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition offinancial assetorfinancial liability.
A trade receivable without a significant financing component is initially measured at the transaction price (net of variable consideration) as the same are recorded after decreasing rebates as per para 51 ofInd AS 115.
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through other comprehensive income (FVTOCI)
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows that give rise on specified dates to solely payments of principal and interest on the principal amount outstanding and by selling financial assets.
The Company has made an irrevocable election to present subsequent changes in the fair value of equity investments not heldfortradingin OtherComprehensive Income.
Financialassets at fair value through profit or loss (FVTPL)
Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of
financial assets and liabilities at fair value through profit or loss are immediately recognised in profit or loss.
Financial liabilities are measured at amortised cost using the effective interest method.
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any noncash assets transferred or liabilities assumed, is recognised in profit or loss under other income/(expenses).
An equity instrument is a contract that evidences residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments recognised by the Company are measured at the proceeds received net off direct issue cost.
Off settingof financial instruments
Financial assets and financial liabilities are off set and the net amount is reported in financial statements if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
3.8 Investments in subsidiaries
A subsidiary is an entity that is controlled by the Company.
The Company accounts for each category of investments in subsidiaries at cost in accordance with Ind AS 27- Separate Financial Statements.
Financial assets (otherthan at fair value)
The Company assesses on a forward-looking basis the expected credit loss associated with its assets carried at amortised cost and FVTOCI debt instruments, if any. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition ofthe receivables.
Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e., higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the Statement of Profit and Loss.
Inventories are valued at lower of cost (on weighted average basis) and net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to their present location and condition including all applicable duties, taxes and other levies. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, indirect taxes. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
Revenue is recognised upon transfer of control of promised goods or services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods.
Revenue from sale of goods and services
Revenue from the sale of goods is recognised at the point in time when control is transferred to the customer which is usually on dispatch / delivery. Revenue from services is recognised as and when the services are performed in accordance with IND AS 115. Revenue is measured based on the transaction price, net of variable consideration on account of volume discounts, rebates, scheme allowances, price concessions, incentives and returns offered by the Company as part of the contracts with the customers. Revenue excludes taxes collected from customers on behalf of the government. Accruals for discounts/incentives and returns are estimated (using the most likely method) based on accumulated experience and underlying schemes and agreements with customers. Due to the short nature of credit period given to customers, there is no financing component in the contract.
Interest income from financial assets is recognized when it is probable that economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial assets to that asset''s net carrying amount on initial recognition.
Dividend income from investments is recognised when the shareholder''s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.
3.12 Research and development expenses
Research expenditure and development costs of products are capitalised once the product''s technical feasibility is established.
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate. The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics.
The Company''s lease asset classes primarily consist of leases for buildings. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (shortterm leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
3.14 Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
When the Company is committed to a sale plan involving disposal of an investment, the investment that will be disposed off is classified as held for sale when the criteria described above are met.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell.
Employee benefits include contribution to provident fund, gratuity fund, compensated absences and supplemental pay.
The Company has provided for liability on account of all following employees benefits available to the employees in accordance with the applicable rules, regulations, laws and employees benefits policy of the Company.
i) Provident fund is a defined contribution scheme and the contributions are charged to the profit & loss account of the year when the contributions to the government funds are due.
ii) Gratuity liability is a defined benefit obligation and provided for on the basis of an actuarial valuation as per projected unit credit method, made at the end of each financial year. The Company has taken a policy with the Life Insurance Corporation of India (LIC) to cover the gratuity liability of the employees and premium paid to the LIC is charged to Profit and Loss Account. The difference between the actuarial valuation of the gratuity liability of the employees at the year end and the balance of funds with LIC is provided for as liabilityinthe books.
iii) Employees are entitled to short-term compensated absences, which are provided for on the basis of estimates.
iv) Actuarial gains/losses are recognized in Other ComprehensiveIncome(OCI).
As per Ind AS 108, Operating segments are defined as components of an enterprise for which discrete financial
information is available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources and assessing performance. The Company''s chief operating decision maker is the Managing Director & CEO.
The Company''s operating geographical business segment is based on the locations of customers. Allocable costs are allocated to each segment in proportion to the relative sales of each segment. All the common income, expenses, assets and liabilities, which are not possible to be allocated to different segments, are treated as un-allocable items.
Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year.
Current and deferred taxes are recognised in Statement of Profit and Loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity, respectively.
Current tax is measured at the amount of tax expected to be payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.
Current tax assets and current tax liabilities are off set when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis.
Deferred income tax is recognised using the Balance Sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount, except when the deferred income tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.
Deferred tax assets are recognised only to the extent that it is probable that either future taxable profits or reversal of deferred tax liabilities will be available, against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets and liabilities are off set when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.
Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, to the extent it would be available for set off against future current income tax liability. Accordingly, MAT is recognised as deferred tax asset in the balance sheet when the asset can be measured reliably, and it is probable that the future economic benefit associated with the asset will be realised.
Borrowing costs are interest and ancillary costs incurred in connection with the arrangement of borrowings. General and specific borrowing costs attributable to acquisition and construction of any qualifying asset (one that takes a substantial period of time to get ready for its designated use or sale) are capitalised until such time as the assets are substantially ready for their intended use or sale, and included as part of the cost of that asset. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All the other borrowing costs are recognised in the Statement of Profit and Loss within finance costs of the period in which they are incurred.
3.19 Accounting of provisions, contingent liabilities and contingent assets
Provisions are recognized, when there is a present legal or constructive obligation as a result of past events, where it is probable that there will be outflow of resources to settle the obligation and when a reliable estimate of the amount of the obligation can be made. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. Where the effect is material, the provision is discounted to net present value using an appropriate current market-based pre-tax discount rate and the unwinding of the discount is included in finance costs.
Contingent liabilities are recognised only when there is a possible obligation arising from past events, due to occurrence or nonoccurrence of one or more uncertain future events, not wholly within the control of the Company, or where any present obligation cannot be measured in terms of future outflow of resources, or where a reliable estimate of the obligation cannot be made. Obligations are assessed on an ongoing basis and only those having a largely probable outflow of resources are provided for.
Contingent assets are not disclosed in the financial statements unless an inflow of economic benefits is probable.
3.20 Dividend to equity shareholders
Dividend to equity shareholders is recognised as a liability and deducted from shareholders'' equity, in the period in which the
dividends are approved by the equity shareholders in the general meeting.
Basic EPS is computed by dividing the profit or loss attributable to the equity shareholders of the Company by the weighted average number of Ordinary shares outstanding during the year. Diluted EPS is computed by adjusting the profit or loss attributable to the ordinary equity shareholders and the weighted average number of ordinary equity shares, for the effects of all dilutive potential Ordinary shares.
3.22 Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements in conformity with the Ind AS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities and disclosures as at date of the financial statements and the reported amounts of the revenues and expenses for the years presented. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. The Management has considered the possible effects, if any, that may result from the pandemic relating to COVID-19 on the carrying amounts of its assets. Actual results may differ from these estimates under different assumptions and conditions.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
In the process of applying the Company''s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognized in the financial statements:
Discount rate used to determine the carrying amount of the Company''s defined benefit obligation
In determining the appropriate discount rate for plans assets, the management considers the interest rates of government bonds as provided by LIC, in currencies consistent with the currencies of the post-employment benefit obligation.
In the normal course of business, contingent liabilities may arise from litigations and other claims against the Company.
Where the potential liabilities have a low probability of crystallizing or are very difficult to quantify reliably, we treat them as contingent liabilities. Such liabilities are disclosed in the notes but are not provided for in the financial statements. Although there can be no assurance regarding the final
outcome of the legal proceedings, we do not expect them to have a materially adverse impact on our financial position or profitability.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
Useful lives of property, plant and equipment
As described above, the Company reviews the estimated useful lives and residual values of property, plant and equipment at the end of each reporting period. During the current financial year, the management determined that there were no changes to the useful lives and residual values of the property, plant and equipment.
The Company makes allowances for doubtful debts based on an assessment of the recoverability of trade and other receivables. The identification of doubtful debts requires use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of the trade and other receivables and doubtful debts expenses in the period in which such estimate has been changed.
Management reviews the inventory age listing on a periodic basis. This review involves comparison of the carrying value of the aged inventory items with the respective net realizable value. The purpose is to ascertain whether an allowance is required to be made in the financial statements for any obsolete and slow-moving items. Management is satisfied that adequate allowance for obsolete and slow-moving inventories has been made in the financial statements.
In making judgment for liability for sales return, the management considered the detailed criteria for the recognition of revenue from the sale of goods set out in Ind AS 115 and in particular, whether the Company had transferred to the buyer the significant risk and rewards of ownership of the goods. Following the detailed quantification of the Company''s liability towards sales return, the management is satisfied that significant risk and rewards have been transferred and that recognition of the revenue in the current year is appropriate, in conjunction with the recognition of an appropriate liability for sales return.
Accruals for estimated product returns, which are based on historical experience of actual sales returns and adjustment on account of current market scenario is considered by Company to be reliable estimate of future sales returns.
Mar 31, 2023
a. Corporate Information
Phoenix International Limited (âthe Companyââ) is a Public Company domiciled and incorporated in India and its shares are publicly traded on the Bombay Stock Exchange (BSE) in India. The registered office of Company is situated at 3rd Floor, Gopala Tower, 25 Rajendra Place, New Delhi110008, India. The Company is in the business of leasing out buildings and is a manufacturer and supplier of Shoe Uppers in Chennai, India.
These financial statements were approved and adopted by Board of Directors of the Company in their meeting dated May 30, 2023.
2. SIGNIFICANT ACOUNTING POLICIES
These standalone financial statement are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013(''Act'')(to the extent notified) and guidelines issued by the Securities and Exchange Board of India(SEBI). The Ind AS are prescribed under Section133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules,2016.
The Companyâs financial statements are presented in Indian Rupees, which is also the Companyâs functional currency. All amounts have been rounded off to the nearest Lakhs, except where otherwise indicated.
b. Significant Management judgments, estimates and assumptions
The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
The following are significant management judgments in applying the accounting policies of the Company that have the most significant effect:
i. Recognition of deferred tax assets:
The extent to which deferred tax assets can be recognized is based on the assessment of the probability of the Companyâs future taxable income against which the deferred tax assets can be utilized.
ii. Useful lives of property plant & equipment and intangible assets:
The Company uses its technical expertise along with historical and industry trends for determining the economic life of an asset/component of an asset. The useful lives are reviewed by management periodically and revised, if appropriate. In case of a revision, the unamortized depreciable amount is charged over the remaining useful life of an asset.
iii. Defined benefit obligations:
The defined benefit obligations measured using actuarial valuation techniques. An actuarial valuation involves making key assumption of life expectancies, salary increases and withdrawal rates. Variation in these assumptions may impact the defined benefit obligation.
iv. Impairment assessment of Investment in Subsidiaries, Jointly Controlled Entities and Associates:
The Company testes impairment for investments and provides for impairment where the carrying amount of investments exceeds itâs recoverable amount. The recoverable amount is higher of âvalue in useâ and âfair value less cost of disposalâ. The Company calculates value in use as net present value of forecasted cash flows through investment. Fair value less cost of disposal is calculated through Market Multiple method, for which transaction multiples of comparable companies are taken.
v. Impairment Assessment of Assets:
The Company reviews itâs carrying value of assets annually to assess whether there is any indication for impairment. If any such indication exists, the Company estimates the recoverable amount of such assets based on value in use calculations. These calculations require the use of estimates such as discount rates and growth rates.
vi. Leases:
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. The Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate.
viii. Contingencies:
Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies, claim, litigations etc. against the Company as it is not possible to predict the outcome of pending matters with accuracy.
c. Revenue Recognition
The company recognizes revenue when the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the entity.
(i) Sales of Goods
Revenue from the sale of goods is recognized, when all significant risks and rewards are transferred to the buyer, as per the terms of the contracts and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sales of goods. Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract.
(ii) Lease Income
Lease income from operating leases shall be recognized in income on a straight-line basis over the lease term.
(iii) Interest Income
Interest income is recognized using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
(iv) Investment Income
All equity investments in scope of Ind AS 109 are measured at fair value. For equity instruments, the company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. The company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the company may transfer the cumulative gain or loss within equity.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the P&L.
d. Current and 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
- Expected to be realized or intended to be sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realized within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle;
- It is held primarily for the purpose of trading;
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
e. Employees Benefits
(i) Short Term Employee Benefits
Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the statement of profit and loss of the year in which the related service is rendered.
(ii) Post-Employment Benefits
Defined Contribution Plans
Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service.
Defined Benefit Plans
The Company provides for gratuity, a defined benefit retirement plan (''the Gratuity Plan'') covering eligible employees of the Company. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment with the Company.
Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary, at each balance sheet date using the projected unit credit method.
The Company recognizes the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Remeasurements comprising of actuarial gains and losses, the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability) and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability) are recognized in Other Comprehensive Income which are not reclassified to profit or loss in subsequent periods.
f. Property, Plant and Equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets. Costs directly attributable to acquisition are capitalized until the property, plant and equipment are ready for use, as intended by management. The company depreciates property, plant and equipment using Straight line Method over their estimated useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other ânon-current assets and the cost of assets not put to use before such date are disclosed under âCapital work-in-progressâ. Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in net profit in the Statement of Profit and Loss when incurred. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the Statement of Profit and Loss. Assets to be disposed off are reported at the lower of the carrying value or the fair value less cost to sell.
g. Inventories
Inventories of raw materials, stores and spares, trading goods, work-in-process and finished goods are valued at cost or net realizable value, whichever is lower. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. The cost in respect of the aforesaid items of inventory is computed as under:
- In case of raw materials, at average cost-plus direct expenses.
- In case of stores & spares, at average cost-plus direct expenses.
- In case of work-in-process, at raw material cost plus conversion cost depending upon the stage of completion.
- In case of finished goods, at raw material cost plus conversion cost, packing cost, excise duty and other overheads incurred to bring the goods to their present condition and location.
Basic earnings per equity share are computed by dividing the net profit attributable to the equity shareholders of the company by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e., the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented. The weighted average number of ordinary shares outstanding during the period is the number of ordinary shares outstanding at the beginning of the period, adjusted by the number of ordinary shares bought back or issued during the period multiplied by a time-weighting factor. The time-weighting factor is the number of days that the shares are outstanding as a proportion of the total number of days in the period; a reasonable approximation of the weighted average is adequate in many circumstances.
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of the asset. Other borrowing costs are recognized as an expense in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net profit in the statement of profit and loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in other comprehensive income. Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. 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. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period 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. Deferred income taxes are not provided on the undistributed earnings of subsidiaries and branches where it is expected
that the earnings of the subsidiary or branch will not be distributed in the foreseeable future. The company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. The income tax provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full financial year. Tax benefits of deductions earned on exercise of employee share options in excess of compensation charged to income are credited to share premium.
k. Foreign Currency Transactions(i) Functional and Presentation currency
The functional currency of the company is Indian rupee. These financial statements are presented in Indian Rupee (rounded off to Lacs).
The foreign currency transactions are recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.
The foreign currency monetary items are translated using the closing rate at the end of each reporting period. Nonmonetary items that are measured in terms of historical cost in a foreign currency shall be translated using the exchange rate at the date of the transaction. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements shall be recognized in profit or loss in the period in which they arise.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statements of profit and loss, within finance cost. All other foreign exchange gains and losses are presented in the statement of profit and loss on net basis.
Leases under which the company assumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalized at fair value or present value of the minimum lease payments at the inception of the lease, whichever is lower. Lease under which the risks and rewards incidental to ownership are not transferred to lessee is classified as operating lease. Lease payments under operating leases are recognized as an expense on a straight-line basis in net profit in the statement of profit and loss over the lease term.
The Company, as a lessee, recognizes a right-of-use asset and a lease liability for its leasing arrangements if the contract conveys the right to control the use of an identified asset.
The contract conveys the right to control the use of an identified asset, if it involves the use of an identified asset and the company has substantially all of the economic benefits from use of the asset and has right to direct the use of identified asset. The cost of the right-of-use asset shall comprise of the amount of the initial measurement of lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs incurred. The right-of-use assets are subsequently measured at cost less any accumulated depreciation, accumulated impairment loss, if any and an adjusted for any re-measurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset
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) Initial Recognition and measurement
On initial recognition, all financial assets and liabilities are recognized initially at fair value, plus or minus, in the case of financial assets or financial liability not recorded at fair value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial asset or financial liability. However, trade receivables that do not contain a significant financing component are measured at transaction price.
(ii) Subsequent measurement(a) Non-derivative financial instruments(i) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(ii) Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(iii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories is subsequently measured at fair value through profit or loss.
The financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
(b) Equity Share capital (i) Equity Shares
Equity shares issued by the company are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.
(ii) De-recognition of financial instruments
A financial asset is derecognized when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability is derecognized when the obligation specified in the contract is discharged or cancelled or expired.
(iii) Fair value measurement of financial instruments
The fair value of financial instruments is determined using the valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
Based on the three level fair value hierarchies, the methods used to determine the fair value of financial assets and liabilities include quoted market price, discounted cash flow analysis and valuation certified by the external valuer.
In case of financial instruments where the carrying amount approximates fair value due to the short maturity of those instruments, carrying amount is considered as fair value.
n. Impairment of Assetsa. 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 or loss.
Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. 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 those 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 to the amount that is required to be recognized as an impairment gain or loss in statement of profit or loss.
b. Non-financial assetsIntangible assets and property, plant and equipment
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 assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
The Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with a maturity period of three months or less from the balance sheet date, which are subject to an insignificant risk of changes in value.
The cash flow statement is prepared in accordance with the Indian Accounting Standard (Ind AS) - 7 âStatement of Cash flowsâ using the indirect method for operating activities.
q. Provisions, Contingent liabilities, Contingent assets and Commitments:
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of the provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent liability is disclosed in the case of:
- a present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;
- a present obligation arising from past events, when no reliable estimate is possible;
- a possible obligation arising from past events, unless the probability of outflow of resources is remote.
Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets. Provisions, contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.
Mar 31, 2016
14. SIGNIFICANT ACCOUNTING POLICIES a. Accounting assumption
The financial statements are drawn up in accordance with the historical cost convention on accrual basis and comply with the accounting standards referred to in Section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014.
b. Employees benefits
The Company has adopted Accounting Standard 15 (Revised 2005) issued by the Institute of Chartered Accountants of India (ICAI) on ''Employees Benefits''. Accordingly, the Company has provided for liability on account of all following employees benefits available to the employees in accordance with the applicable rules, regulations, laws and employees benefits policy of the Company.
i) Provident fund is a defined contribution scheme and the contributions are charged to the profit & loss account of the year when the contributions to the government funds are due.
ii) Gratuity liability is a defined benefit obligation and provided for on the basis of an actuarial valuation as per projected unit credit method, made at the end of each financial year. The Company has taken a policy with the Life Insurance Corporation of India (LIC) to cover the gratuity liability of the employees and premium paid to the LIC is charged to profit and loss account. The difference between the actuarial valuation of the gratuity liability of the employees at the year end and the balance of funds with LIC is provided for as liability in the books.
iii) Employees are entitled to short-term compensated absences, which are provided for on the basis of estimates.
iv) Actuarial gains/losses are immediately taken to the profit and loss account and are not deferred.
c. Fixed assets
All fixed assets including intangible assets are stated at cost of acquisition less accumulated depreciation. Cost includes inward freight, duties, taxes and expenses incidental to acquisition and installation.
In accordance with Accounting Standard 28 issued by the Institute of Chartered Accountants of India, consideration is given at the date of balance sheet to determine whether there is any indication of impairment of the carrying amount of the Company''s fixed assets to recognize impairment loss. However, during the financial year under reporting, there is no indication which gives an expression of impairment loss in carrying amount of the Company''s fixed assets.
d. Depreciation and amortization
Depreciation on fixed assets has been provided on straight line method at the rates prescribed in Schedule II of the Companies Act, 2013, except for intangible assets, which are amortized over the respective individual estimated useful lives on a straight line basis, commencing from the date, the asset is put to use by the Company. Depreciation on additions/ deletions is provided on pro-rata basis from/ to the date of additions / deletions. The management estimates the useful lives for intangible assets as follows:
Technical know-how : 4 years Software : 6years
e. Inventories valuation
Inventories include raw material and semi finished goods. Inventories have been valued at cost or net realizable value, whichever is lower. The cost is calculated on first-in-first-out (FIFO) basis.
f. Transactions of foreign currencies
All transactions in foreign currency during the year are recorded at the rates of exchange prevailing on the date when the relevant transaction took place. Loss/Gain arising on settlement of such transactions is accounted for in the year of settlement. Monetary assets and liabilities are converted into functional currency i.e., INR, at the rate of exchange prevailing at balance sheet date and the exchange rate fluctuation is recognized as gain or loss on unrealized exchange rate fluctuation.
g. Investments
As per the Accounting Standard 13 issued by the Institute of Chartered Accountants of India, investments of a long-term nature are stated at cost. Current investments are valued at lower of cost and fair value.
h. Revenue recognition
Sale is recognized, when the significant risks and rewards of the ownership of the goods are transferred to the customer and is stated if applicable, net of trade discounts, duties and taxes. Other income is accounted for on accrual basis.
i. Income tax
Provision for current income tax liability is made on estimated taxable income under Income Tax Act, 1961 after considering permissible tax exemptions, deductions and allowances. The Minimum Alternate Tax (MAT) if payable in accordance with the tax laws, which gives rise to future benefits in the form of adjustment of future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal tax. Deferred assets are recognized only if there is reasonable certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each balance sheet date.
j. Lease
Operating lease payments are recognized as an expense on straight line basis over the term of the lease.
k. Contingent liabilities and provisions
The Company makes a provision when there is a present obligation as a result of a past event where the outflow of economic resources is probable and a reliable estimate of the amount of obligation can be made. A disclosure is made for possible or present obligations that may but probably will not require outflow of resources or where a reliable estimate cannot be made, as a contingent liability in the financial statements.
l. Use of estimates
In preparing the Company''s financial statements in conformity with accounting principles generally accepted in India, the management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Any revision to accounting estimates is recognized prospectively in current and future periods.
m. Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and weighted average number of equity shares outstanding during the period are adjusted for the effect of all dilutive potential equity shares.
n. Segment reporting
The Company''s operating geographical business segment is based on the locations of customers. Allocable costs are allocated to each segment in proportion to the relative sales of each segment. All the common income, expenses, assets and liabilities, which are not possible to be allocated to different segments, are treated as un-allocable items.
The management believes that the claim made is untenable and is contesting before appellate authority. As of the reporting date, the management is unable to determine the ultimate outcome of above matters. In the event, the revenue authorities succeed with enforcement of their assessments, there shall be an adverse effect on the net income, however, it should not make any material impact on the cash-flow of the Company, as the various other undisputed refund dues are substantially sufficient to settle the above claim.
Mar 31, 2015
A. Accounting assumption
The financial statements are drawn up in accordance with the historical
cost convention on accrual basis and comply with the accounting
standards referred to in Section 129 of the Companies Act, 2013 read
with Companies (Accounts) Rules, 2014.
b. Employees benefits
The Company has adopted Accounting Standard 15 (Revised 2005) issued by
the Institute of Chartered Accountants of India (ICAI) on 'Employees
Benefits'. Accordingly, the Company has provided for liability on
account of all following employees benefits available to the employees
in accordance with the applicable rules, regulations, laws and
employees benefits policy of the Company.
i) Provident fund is a defined contribution scheme and the
contributions are charged to the profit &- loss account of the year when
the contributions to the government funds are due.
ii) Gratuity liability is a defined benefit obligation and provided for
on the basis of an actuarial valuation as per projected unit credit
method, made at the end of each financial year. The Company has taken a
policy with the Life Insurance Corporation of India (LIC) to cover the
gratuity liability of the employees and premium paid to the LIC is
charged to Profit and Loss Account. The difference between the
actuarial valuation of the gratuity liability of the employees at the
year end and the balance of funds with LIC is provided for as liability
in the books.
in) Employees are entitled to short-term compensated absences, which
are provided for on the basis of estimates.
iv) Actuarial gains/losses are immediately taken to the profit and loss
account and are not deferred.
c. Fixed assets
All fixed assets including intangible assets are stated at cost of
acquisition less accumulated depreciation. Cost includes inward
freight, duties, taxes and expenses incidental to acquisition and
installation.
In accordance with Accounting Standard 28 issued by the Institute of
Chartered Accountants of India, consideration is given at the date of
balance sheet to determine whether there is any indication of
impairment of the carrying amount of the Company's fixed assets to
recognize impairment loss. However, during the financial year under
reporting, there is no indication which gives an expression of
impairment loss in carrying amount of the Company's fixed assets.
d. Depreciation and amortization
Depreciation on fixed assets has been provided on straight line method
at the rates prescribed in Schedule II of the Companies Act, 2013,
except for intangible assets, which are amortized over the respective
individual estimated useful lives on a straight line basis, commencing
from the date, the asset is put to use by the Company. Depreciation on
additions/ deletions is provided on pro-rata basis from/ to the date of
additions / deletions. The management estimates the useful lives for
intangible assets as follows:
Technical know-how : 4 years Software : 6years
e. Inventories valuation
Inventories include raw material and semi finished goods. Inventories
have been valued at cost or net realizable value, whichever is lower.
The cost is calculated on first-in-first-out (FIFO) basis.
f. Transactions of foreign currencies
All transactions in foreign currency during the year are recorded at
the rates of exchange prevailing on the date when the relevant
transaction took place. Loss/Cain arising on settlement of such
transactions is accounted for in the year of settlement. Monetary
assets and liabilities are converted into functional currency i.e.,
INR, at the rate of exchange prevailing at balance sheet date and the
exchange rate fluctuation is recognized as gain or loss on unrealized
exchange rate fluctuation.
g. Investments
As per the Accounting Standard 13 issued by the Institute of Chartered
Accountants of India, investments of a long-term nature are stated at
cost. Current investments are valued at lower of cost and fair value.
h. Revenue recognition
Sale is recognized, when the significant risks and rewards of the
ownership of the goods are transferred to the customer and is stated if
applicable, net of trade discounts, duties and taxes. Other income is
accounted for on accrual basis.
i. Income tax
Provision for current income tax liability is made on estimated taxable
income under Income Tax Act, 1961 after considering permissible tax
exemptions, deductions and allowances. The Minimum Alternate Tax (MAT)
if payable in accordance with the tax laws, which gives rise to future
benefits in the form of adjustment of future income tax liability is
considered as an asset if there is convincing evidence that the Company
will pay normal tax. Deferred assets are recognized only if there is
reasonable certainty that they will be realized and are reviewed for
the appropriateness of their respective carrying values at each balance
sheet date.
j. Lease
Operating lease payments are recognized as an expense on straight line
basis over the term of the lease.
k. Contingent liabilities and provisions
The Company makes a provision when there is a present obligation as a
result of a past event where the outflow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made. A disclosure is made for possible or present obligations that may
but probably will not require outflow of resources or where a reliable
estimate cannot be made, as a contingent liability in the financial
statements.
I. Use of estimates
In preparing the Company's financial statements in conformity with
accounting principles generally accepted in India, the management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Any
revision to accounting estimates is recognized prospectively in current
and future periods.
m. Earning per share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
weighted average number of equity shares outstanding during the period
are adjusted for the effect of all dilutive potential equity shares.
n. Segment reporting
The Company's operating geographical business segment is based on the
locations of customers. Allocable costs are allocated to each segment
in proportion to the relative sales of each segment. All the common
income, expenses, assets and liabilities, which are not possible to be
allocated to different segments, are treated as un-allocable items.
The Income Tax Department, in all its notices of demand, has challenged
the validity of the approval and registration granted by Software
Technology Park of India (STPI), Ministry of Communications, to the
Company as a 100% Export Oriented Unit (EOU) under the Electronic
Hardware Technology Park (EHTP) Scheme for the purpose of grant of any
relief under the Income Tax Act, 1961.
On appeals filed by the Income Tax Department, the Hon'ble Delhi High
Court has reversed the erstwhile orders of Income Tax Appellate
Tribunal (ITAT), Delhi, and referred back the matters to the ITAT to
examine alternate claims of Company. The ITAT has further restored the
matter to the Assessing Officer to assess the alternate claims of the
Company with its observations.
The Company has also filed special leave petitions before the Hon'ble
Supreme Court against the order of the Hon'ble Delhi High Court, which
is sub-judice as at reporting date.
The other contingent liability represents the demand of Central Excise
Department for charges of Cost Recovery Officer. The Company has filed
an appeal before the Tribunal, as no such of ficer was ever appointed
by the Revenue Department.
Based on the decisions of appellate authorities given in favour of
Company and legal opinion taken by the Company and discussions with the
solicitors, the Company believes that there is fair chance of decisions
in favor of the Company in respect of items listed above, hence, no
provision is considered necessary against the same.
Mar 31, 2014
A. Accounting assumption
The financial statements are drawn up in accordance with the historical
cost convention on accrual basis and comply with the accounting
standards referred to in Section 211 (3C) of the Companies Act, 1956
read with Companies (Accounting Standards) Rules, 2006.
b. Employees benefits
The Company has adopted Accounting Standard 15 (Revised 2005) issued by
the Institute of Chartered Accountants of India (ICAI) on ''Employees
Benefits''. Accordingly, the Company has provided for liability on
account of all following employees benefits available to the employees
in accordance with the applicable rules, regulations, laws and
employees benefits policy of the Company:
i) Provident fund is a defined contribution scheme and the
contributions are charged to the profit & loss account of the year when
the contributions to the government funds are due.
ii) Gratuity liability is a defined benefit obligation and provided for
on the basis of an actuarial valuation as per projected unit credit
method, made at the end of each financial year. The Company has
takenapolicy with the Life Insurance Corporation of India (LIC) to
cover the gratuity liability of the employees and premium paid to the
LIC is charged to Profit and Loss Account. The difference between the
actuarial valuation of the gratuity liability of the employees at the
year end and the balance of funds with LIC is provided for as liability
inthe books.
iii) Employees are entitled to short-term compensated absences, which
are provided for on the basis of estimates.
iv) Actuarial gains / losses are immediately taken to the profit and
loss account and are not deferred.
c. Fixed assets
All fixed assets including intangible assets are stated at cost of
acquisition less accumulated depreciation. Cost includes inward
freight, duties, taxes and expenses incidental to acquisition and
installation.
In accordance with Accounting Standard 28 issued by the Institute of
Chartered Accountants of India, consideration is givenatthe date
ofbalance sheet to determine whether there is any indication of
impairment of the carrying amount of the Company''s fixed assets to
recognize impairment loss. However, during the financial year under
reporting, there is no indication which gives an expression of
impairment loss in carrying amount of the Company''s fixed assets.
d. Depreciation and amortization Depreciation on fixed assets has been
provided on straight line method at the rates prescribed in Schedule
XIV of the Companies Act, 1956, except for intangible assets, which are
amortized over the respective individual estimated useful lives on a
straight line basis, commencing from the date the asset is put to use
by the Company. Depreciation on additions / deletions is provided on
pro-rata basis from / to the date of additions / deletions. The
management estimates the useful lives for intangible assets as follows:
Technical know-how : 4years Software : 6years
e. Inventories valuation
Inventories include raw material and semi-finished goods. Inventories
have been valued at cost or net realizable value, whichever is lower.
The cost is calculated on first-in-first-out (FIFO) basis.
f. Transactions of foreign currencies All transactions in foreign
currency during the year are recorded at the rates of exchange
prevailing onthe date when the relevant transaction took place. Loss /
Gain arising on settlement of such transactions is accounted for in the
year of settlement. Monetary assets and liabilities are converted into
functional currency, i.e., INR, at the rate of exchange prevailing at
balance sheet date and the exchange rate fluctuation is recognized as
gain or loss on unrealized exchange rate fluctuation.
g. Investments
As per the Accounting Standard 13 issued by the Institute of Chartered
Accountants of India, investments of a long-term nature are stated at
cost. Current investments are valued at lower of cost and fair value.
h. Revenue recognition
Sale is recognized, when the significant risks and rewards of the
ownership of the goods are transferred to the customer and is stated if
applicable, net of trade discounts, duties and taxes. Other
income is accounted foronaccrual basis.
i. Income tax
Provision for current income tax liability is made on estimated taxable
income under Income Ta x Act, 1961 after considering permissible tax
exemptions, deductions and allowances. The Minimum Alternate Tax (MAT)
if payable in accordance with the tax laws, which gives rise to future
benefits in the form of adjustment of future income tax liability, is
considered as an asset if there is convincing evidence that the Company
will pay normal tax. Deferred assets are recognized only if there is
reasonable certainty that they willbe realized and are reviewed for the
appropriateness of their respective carrying valuesateach balance sheet
date.
j. Lease
Operating lease payments are recognized as an expense on straight line
basis over the term ofthe lease.
k. Contingent liabilities and provisions The Company makes a provision
when there is a present obligation as a result of a past event where
the outflow of economic resources is probable and a reliable estimate
of the amount of obligation can be made. A disclosure is made for
possible or present obligations that may, but probably will not require
outflow of resources or where a reliable estimate cannot be made, as a
contingent liability in the financial statements.
l. Use of estimates
In preparing the Company''s financial statements in conformity with
accounting principles generally accepted in India, the management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
liabilities at the date of the financial statements and the reported
amounts ofrevenues and expenses during the reporting period. Any
revision to accounting estimates is recognized prospectively incurrent
and future periods.
m. Earning per share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
weighted average number of equity shares outstanding during the period
are adjusted for the effectofall dilutive potential equity shares.
n. Segment reporting
The Company''s operating geographical business segment is based on the
locations of customers. Allocable costs are allocated to each segment
in proportion to the relative sales of each segment. All the common
income, expenses, assets and liabilities, which are not possible to be
allocated to different segments, are treated as un-allocable items.
Mar 31, 2013
A. Accounting assumption
The financial statements are drawn up in accordance with the historical
cost convention on accrual basis and comply with the accounting
standards referred to in Section 211 (3C) of the Companies Act, 1956
read with Companies (AccountingStandards) Rules, 2006.
b. Employees benefits
The Company has adopted Accounting Standard 15 (Revised 2005) issued by
the Institute of Chartered Accountants of India (ICAI) on ''Employees
Benefits''. Accordingly, the Company has provided for liability on
account of all following employees benefits available to the employees
in accordance with the applicable rules, regulations, laws and
employees benefits policy of the Company:
i) Provident fund is a defined contribution scheme and the
contributions are charged to the profit & loss account of the year when
the contributions to the government funds are due.
ii) Gratuity liability is a defined benefit obligation and provided for
on the basis of an actuarial valuation as per projected unit credit
method, made at the end of each financialyear. The Company has taken a
policy with the Life Insurance Corporation of India (LIC) to cover the
gratuity liability of the employees and premium paid to the LIC is
charged to Profit and Loss Account. The difference between the
actuarial valuation of the gratuity liability of the employees at the
year end and the balance of funds with LIC is provided for as liability
inthebooks.
ill) Employees are entitled to short-term compensated absences, which
are provided for on the basis of estimates.
iv) Actuarial gains / losses are immediately taken to the profit
andloss account and are not deferred.
c. Fixed assets
All fixed assets including intangible assets are stated at cost of
acquisition less accumulated depreciation. Cost includes inward
freight, duties, taxes and expenses incidental to acquisition and
installation.
In accordance with Accounting Standard 28 issued by the Institute of
Chartered Accountants of India, consideration is given at the date of
balance sheet to determine whether there is any indication of
impairment of the carrying amount of the Company''s fixed assets to
recognize impairment loss. However, during the financial year under
reporting, there is no indication which gives an expression of
impairment loss in carrying amount of the Company''s fixed assets.
d. Depreciation and amortization
Depreciation on fixed assets has been provided on straight line method
at the rates prescribed in Schedule XIV of the Companies Act, 1956,
except for intangible assets, which are amortized over the respective
individual estimated useful lives on a straight line basis, commencing
from the date the asset is put to use by the Company. Depreciation on
additions / deletions is provided on pro-rata basis from / to the date
of additions / deletions. The management estimates the useful lives for
intangible assets as follows:
Technical know-how : 4 years Software : 6years
e. Inventoriesvaluation
Inventories include raw material and semi-finished goods. Inventories
have been valued at cost or net realizable value, whichever is lower.
The cost is calculated on first in first out (FIFO) basis.
f. Transactions of foreign currencies
All transactions in foreign currency during the year are recorded at
the rates of exchange prevailing on the date when the relevant
transaction took place. Loss / Gain arising on settlement of such
transactions is accounted for in the year of settlement. Monetary
assets and liabilities are converted into functional currency, i.e.,
INR, at the rate of exchange prevailing at balance sheet date and the
exchange rate fluctuation is recognized as gain or loss on unrealized
exchange rate fluctuation.
g. Investments
As per the Accounting Standard 13 issued by the Institute of Chartered
Accountants of India, investments of a long-term nature are stated at
cost. Current investments are valued at lowercostandfairvalue.
h. Revenue recognition
Sale is recognized, when the significant risks and rewards of the
ownership of the goods are transferred to the customer and is stated if
applicable, net of trade discounts, duties and taxes. Other income is
accounted for on accrual basis.
i. Income tax
Provision for current income tax liability is made on estimated taxable
income under Income Tax Act, 1961 after considering permissible tax
exemptions, deductions and allowances. The Minimum Alternate Tax (MAT)
if payable in accordance with the tax laws, which gives rise to future
benefits in the form of adjustment of future income tax liability, is
considered as an asset if there is convincing evidence that the Company
will pay normal tax. Deferred assets that they will be realized and are
reviewed for the appropriateness of their respective carrying values at
each balance sheet date.
j. Lease
Operating lease payments are recognized as an expense on straight line
basis over the term of the lease.
k. Contingent liabilities and provisions
The Company makes a provision when there is a present obligation as a
result of a past event where the outflow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made. A disclosure is made for possible or present obligations that
may, but probably will not require outflow of resources or where a
reliable estimate cannot be made, as a contingent liability in the
financial statements.
I. Use of estimates
In preparing the Companys financial statements in conformity with
accounting principles generally accepted in India, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Any
revision to accounting estimates is recognized prospectively in current
and future periods.
m. Earning per share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
weighted average number of equity shares outstanding during the period
are adj usted for the effect of all dilutivepotentialequityshares.
n. Segment reporting
The Companys operating geographical business segment is based on the
locations of customers. Allocable costs are allocated to each segment
in proportion to the relative sales of each segment. All the common
income, expenses, assets and liabilities, which are not possible to be
allocated to different segments, are treated as un-allocable items.
Mar 31, 2012
A. Accounting assumption
The financial statements are drawn up in accordance with the historical
cost convention on accrual basis and comply with the accounting
standards referred to in Section 211 (3C) of the Companies Act, 1956
read with Companies (Accounting Standards) Rules, 2006.
b. Employees benefits
The Company has adopted Accounting Standard 15 (Revised 2005) issued by
the Institute of Chartered Accountants of India (ICAI) on Employees
Benefits. Accordingly, the Company has provided for liability on
account of all following employees benefits available to the employees
in accordance with the applicable rules, regulations, laws and
employees benefits policy of the Company:
i) Provident fund is a defined contribution scheme and the
contributions are charged to the profit & loss account of the year when
the contributions to the government funds are due.
ii) Gratuity liability is a defined benefit obligation and provided for
on the basis of an actuarial valuation as per projected unit credit
method, made at the end of each financial year. The Company has taken a
policy with the Life Insurance Corporation of India (LIC) to cover the
gratuity liability of the employees and premium paid to the LIC is
charged to Profit and Loss Account. The difference between the
actuarial valuation of the gratuity liability of the employees at the
year end and the balance of funds with LIC is provided for as liability
in the books.
iii) Employees are entitled to short-term compensated absences, which
are provided for on the basis of estimates.
iv) Actuarial gains / losses are immediately taken to the profit and
loss account and are not deferred.
c. Fixed assets
All fixed assets including intangible assets are stated at cost of
acquisition less accumulated depreciation. Cost includes inward
freight, duties, taxes and expenses incidental to acquisition and
installation.
In accordance with Accounting Standard 28 issued by the Institute of
Chartered Accountants of India, consideration is given at the date of
balance sheet to determine whether there is any indication of
impairment of the carrying amount of the Companys fixed assets to
recognize impairment loss. However, during the financial year under
reporting, there is no indication which gives an expression of
impairment loss in carrying amount of the Company's fixed assets.
d. Depreciation and amortization Depreciation on fixed assets has been
provided on straight line method at the rates prescribed in Schedule
XIV of the Companies Act, 1956, except for intangible assets, which are
amortized over the respective individual estimated useful lives on a
straight line basis, commencing from the date the asset is put to use
by the Company. Depreciation on additions / deletions is provided on
pro-rata basis from / to the date of additions / deletions. The
management estimates the useful lives for intangible assets as follows:
Technical know-how : 4 years
Software : 6 years
e. Inventories valuation
Inventories include raw material and semi-finished goods. Inventories
have been valued at cost or net realizable value, whichever is lower.
The cost is calculated on first in first out (FIFO) basis.
f. Transactions of foreign currencies
All transactions in foreign currency during the year are recorded at
the rates of exchange prevailing on the date when the relevant
transaction took place. Loss / Gain arising on settlement of such
transactions is accounted for in the year of settlement. Monetary
assets and liabilities are converted into functional currency, i.e.,
INR, at the rate of exchange prevailing at balance sheet date and the
exchange rate fluctuation is recognized as gain or loss on unrealized
exchange rate fluctuation.
g. Investments
As per the Accounting Standard 13 issued by the Institute of Chartered
Accountants of India, investments of a long-term nature are stated at
cost. Current investments are valued at lower cost and fair value.
h. Revenue recognition
Sale is recognized, when the significant risks and rewards of the
ownership of the goods are transferred to the customer and is stated if
applicable, net of trade discounts, duties and taxes. Other income is
accounted for on accrual basis.
i. Income tax
Provision for current income tax liability is made on estimated
taxable income under Income Tax Act, 1961 after considering permissible
tax exemptions, deductions and allowances. The Minimum Alternate Tax
(MAT) if payable in accordance with the tax laws, which gives rise to
future benefits in the form of adjustment of future income tax
liability, is considered as an asset if there is convincing evidence
that the Company will pay normal tax. Deferred assets are recognized
only if there is reasonable certainty that they will be realized and
are reviewed for the appropriateness of their respective carrying
values at each balance sheet date.
j. Lease
Operating lease payments are recognized as an expense on straight line
basis over the term of the lease.
k. Contingent liabilities and provisions The Company makes a provision
when there is a present obligation as a result of a past event where
the outflow of economic resources is probable and a reliable estimate
of the amount of obligation can be made. A disclosure is made for
possible or present obligations that may, but probably will not require
outflow of resources or where a reliable estimate cannot be made, as a
contingent liability in the financial statements.
Use of estimates In preparing the Company's financial statements in
conformity with accounting principles generally accepted in India,
management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of
contingent liabilities at the date of the financial statements and the
reported amounts of
revenues and expenses during the reporting period. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
m. Earning per share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
weighted average number of equity shares outstanding during the period
are adjusted for the effect of all dilutive potential equity shares.
n. Segment reporting
The Company's operating geographical business segment is based on the
locations of customers. Allocable costs are allocated to each segment
in proportion to the relative sales of each segment. All the common
income, expenses, assets and liabilities, which are not possible to be
allocated to different segments, are treated as un-allocable items.
Mar 31, 2010
The financial statements are drawn up in accordance with the historical
cost convention on accrual basis and comply with the accounting
standards referred to in Sec 211 (3C) of the Companies Act, 1956 read
with Companies (Accounting Standards) Rules, 2006.
The Company has adopted Accounting Standard 15 (Revised 2005) issued by
the Institute of Chartered Accountants of India (ICAI) on Employees
Benefits. Accordingly, the Company has provided for liability on
account of all following employees benefits available to the employees
in accordance with the applicable rules, regulations, laws and
employees benefits policy of the Company:
i) Provident fund is a defined contribution scheme and the
contributions are charged to the profit & loss account of the year when
the contributions to the government funds are due.
ii) Gratuity liability is a defined benefit obligation and provided for
on the basis of an actuarial valuation as per projected unit credit
method, made at the end of each financial year. The Company has taken a
policy with the Life Insurance Corporation of India (LIC) to cover the
gratuity liability of the employees and premium paid to the LIC is
charged to Profit and Loss Account. The difference between the
actuarial valuation of the gratuity liability of the employees at the
year end and the balance of funds with LIC is provided for as liability
in the books.
iii) Employees are entitled to short-term compensated absences, which
are provided for on the basis of estimates.
iv) Actuarial gains / losses are immediately taken to the profit and
loss account and are not deferred.
All fixed assets including intangible assets are stated at cost of
acquisition less accumulated depreciation. Cost includes inward
freight, duties, taxes and expenses incidental to acquisition and
installation.
In accordance with Accounting Standard 28 issued by the Institute of
Chartered Accountants of India, consideration is given at the date of
balance sheet to determine whether there is any indication of impair
-ment of the carrying amount of the Companys fixed assets to recognize
impairment loss. However, during the financial year under reporting,
there is no indication which gives an expression of impairment loss in
carrying amount of the Company fixed assets.
4. Depreciation and amortization
Depreciation on fixed assets has been provided on straight line method
at the rates prescribed in Schedule XIV of the Companies Act, 1956,
except for intangible assets, which are amortized over the respective
individual estimated useful lives on a straight line basis, commencing
from the date the asset is put to use by the Company. Depreciation on
additions / deletions is provided on pro-rata basis from / to the date
of additions / deletions. The management estimates the useful lives for
intangible assets as follows:
Technical know-how : 4 years
Software : 6 years
5. Inventories valuation
Inventories include raw material and semi-finished goods. Inventories
have been valued at cost or net realizable value, whichever is lower.
The cost is calculated on first in first out (FIFO) basis.
6. Transactions of foreign currencies
All transactions in foreign currency during the year are recorded at
the rates of exchange prevailing on the date when the relevant
transaction took place. Loss / Gain arising on settlement of such
transactions is accounted for in the year of settlement. Monetary
assets and liabilities are converted into functional currency i.e. INR,
at the rate of exchange prevailing at balance sheet date and the
exchange rate fluctuation is recognized as gain or loss on unrealized
exchange rate fluctuation.
7. Investments
As per the Accounting Standard 13 issued by the Institute of Chartered
Accountants of India, investments of a long-term nature are stated at
cost. Current investments are valued at lower of cost and fair value.
8. Miscellaneous expenditure
Preliminary expenses are amortized over a period of ten years.
9. Revenue recognition
Sale is recognized, when the significant risks and rewards of the
ownership of the goods are transferred to the customer and is stated if
applicable, net of trade discounts, duties and taxes. Other income is
accounted for on accrual basis.
10. Income tax
Provision for current income tax liability is made on
estimated taxable income under Income Tax Act, 1961 after considering
permissible tax exemptions, deductions and allowances. The Minimum
Alternate Tax (MAT) if payable in accordance with the tax laws, which
gives rise to future benefits in the form of adjustment of future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal tax. Deferred assets are
recognized only if there is reasonable certainty that they will be
realized and are reviewed for the appropriateness of their respective
carrying values at each balance sheet date.
11. Lease
Operating lease payments are recognized as an expense on straight line
basis over the term of the lease.
12. Contingent liabilities and provisions
The Company makes a provision when there is a present obligation as a
result of a past event where the outflow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made. A disclosure is made for possible or present obligations that may
but probably will not require outflow of resources or where a reliable
estimate cannot be made, as a contingent liability in the financial
statements.
13. Use of estimates
In preparing the Companys financial statements in conformity with
accounting principles generally accepted in India, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Any
revision to accounting estimates is recognized prospectively in current
and future periods.
14. Earning per share
Basic earning per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
weighted average number of equity shares outstanding during the period
are adjusted for the effect of all dilutive potential equity shares.
15. Segment reporting
The Companys operating geographical business segment is based on the
locations of customers. Allocable costs are allocated to each segment
in proportion to the relative sales of each segment. All the common
income, expenses, assets and liabilities, which are not possible to be
allocated to different segments, are treated as un-allocable items.
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