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Accounting Policies of Alkyl Amines Chemicals Ltd. Company

Mar 31, 2023

Corporate Information

Alkyl Amines Chemicals Limited (the ‘Company’) is a public limited company, domiciled in India. Its shares are listed on two stock exchanges in India, viz. the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange Limited (NSE). The Company is engaged in the manufacturing and selling of specialty chemicals.

1. Significant Accounting Policies

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. The policies have been consistently applied to all the years presented, unless otherwise stated.

a. (i) Statement of Compliance

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (“the Act”) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

(ii) Basis of Preparation

All assets and liabilities have been classified as current or non-current, as per the Company’s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013 and as per Ind AS-1.

Based on the nature of products and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/ non-current classification of assets and liabilities.

(iii) Historical cost convention

The financial statements have been prepared on a historical cost basis using the accrual method of accounting, except for the following:

- Certain financial assets and liabilities (including derivative instruments) that are measured at fair value;

- Defined Benefit Plans — Plan Assets measured at fair value;

- Share Based payments - measured at fair value

b. Segment Reporting

Ind AS 108 - Operating Segments, requires Management to determine reportable segments for the purpose of disclosure in financial statements, based on internal reporting reviewed by the Chief Operating Decision Maker (CODM) to assess performance and allocate resources. The standard also requires Management to make judgments with respect to aggregation of certain operating segments into one or more reportable segments.

The Company has determined that the Chief Operating Decision Maker (CODM) is the Board of Directors (BOD), based on its internal reporting structure and functions of BOD. The Operating Segment used to present segment information identified based on the internal reports used and reviewed by the BOD to assess performance and allocate resources. The Management has determined that some of the segments exhibit similar economic characteristics and meet other aggregation criteria and accordingly aggregated into reportable primary operating segment i.e. “Specialty Chemicals”.

c. Foreign Currency Translation

(i) Functional and presentation currency: Items included in the financial statements are measured by using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements are presented in Indian Rupees (INR), which is the Company’s functional and presentation currency.

(ii) Transactions and balances: Foreign currency transactions are translated into the functional currency by using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary Assets and Liabilities denominated in foreign currencies at year end exchange rates are generally recognized in the Statement of Profit and Loss.

(iii) Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of Profit and Loss, as part of finance costs. All other foreign exchange gains and losses are presented in the Statement of Profit and Loss on a net basis as part of other gains/ (losses).

d. Revenue Recognition

(i) Sales of Manufactured Goods: Revenue is measured at fair value of consideration received or receivable for goods supplied or services rendered. Revenue from the sale of goods and services is recognized when the company discharges its obligation to its customer and when the amount of revenue can be measured reliably and the recovery of consideration is probable. ‘Sales’ ( including packing charges) which are net of returns, excluding amounts collected on behalf of third parties such as Goods and Services Tax. The Company derives its revenues primarily from the sale of manufactured goods and related services.

Revenue from the sale of goods is recognized when the control over the goods is transferred to the customer, which is mainly upon the delivery of the goods, and in the case of services, in the period in which such services are rendered, and there are no unfulfilled obligations.

The Company does not adjust transaction prices for the time value of money, as it does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year.

(ii) Recognition of Export Benefits: Export Benefit Entitlements are recognized in the year in which the export sales are accounted for, only to the extent there is a reasonable certainty of its ultimate collection.

e. Income Tax

Income Tax expense comprises of current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred tax are recognized in the Statement of Profit and Loss, except when they relate to items that are recognized in Other Comprehensive Income (OCI) or directly in equity, in which case, the current and deferred tax are also recognized in OCI, or directly in equity, respectively.

Current Tax: Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year. The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction. The Company periodically evaluates positions taken in tax returns with respect to situations in which the applicable tax regulation is subject to interpretation. It makes provisions wherever appropriate on the basis of amounts expected to be paid to the tax authorities.

f. Deferred Tax

Deferred income tax assets and liabilities are recognized 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 recognized 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 utilized.

The carrying amount of a Deferred Tax Asset is 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 utilized.

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 to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Deferred Tax Assets and Liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when it relates to income taxes levied by the same taxation authority and the entity intends to settle its current tax assets and liabilities simultaneously.

g. Leases

The Company applied a single recognition and measurement approach for all leases for which it is the lessee, except for short-term leases and leases of low value assets. The Company recognised lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Land (Leasehold) is carried at cost less amortization;

Leasehold land is amortized on the straight line method over the period of lease.

The Company elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option (short-term leases), and lease contracts for which the underlying asset is of low value (low-value assets).

Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

h. Impairment of Assets

If internal / external indications suggest that an asset of the Company may be impaired, the recoverable amount of the asset/ cash generating unit is determined on the date of Balance Sheet and if it is less than its carrying amount, the carrying amount of asset/ cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognized, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognized for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such assets/ cash generating unit, which is determined by the present value of the estimated future cash flows.

An impairment of Intangible Assets is conducted annually, or more often, if there is an indication of any decrease in value. The impairment loss, if any, is charged to the Statement of Profit and Loss.

Non-financial Assets that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

i. Cash and Cash Equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments, with original maturities of three months or less, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown as a part of borrowings in Current Liabilities in the Balance Sheet.

j. Trade Receivables

Trade receivables are recognized and measured at amortized cost less provision for expected credit losses, if any.

k. Investments

(i) Investments are carried at cost, less accumulated impairment, if any.

(ii) Profit or loss on sale of investments, if any, is calculated by considering the weighted average amount of the total holding of the investment.

(iii) Normal purchases and sales are recognised on trade-dates, being the date on which the Company commits to purchase or sale the Investment.

l. Inventories

(i) Raw materials, packing materials, stores and spares, furnace oil and fuel are valued at cost or net realizable value, whichever is lower. Cost comprises of basic cost (net of GST, if any) and other costs incurred in bringing them to their respective present location and condition. Cost is determined on a weighted average basis.

(ii) Work-in-Progress and finished goods are valued at cost or net realizable value, whichever is lower. Cost includes all direct costs and a proportion of other fixed manufacturing overheads, based on normal operating capacity. Cost is determined on a weighted average basis. Net realizable 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.

However, materials and other items held for use in production of finished goods are not written down below the cost if the finished goods in which they will be incorporated are expected to be sold above cost.

(iii) Catalysts which have a life of less than one year are treated as inventory and are valued at cost or net realizable value, whichever is lower. Cost comprises of basic cost (net of GST, if any) and other costs incurred in bringing them to their respective present location and condition. Cost is determined on a weighted average basis.

m. Financial Assets

(i) Classification: The Company classifies its financial Assets under the following measurement categories:

- Those to be measured subsequently at fair value (through Statement of Profit and Loss); and

- Those to be measured subsequently at fair value (through OCI).

- Those to be measured at amortised cost

The classification depends on the Company’s business model for managing the Financial Assets and the contractual terms of the cash flows.

For Assets/ Liabilities measured at fair value, gains and losses are recorded in Statement of Profit and Loss or Other Equity.

(ii) Measurement: Financial Assets include Investments, Trade Receivables, Advances, Security Deposits and Cash and Cash Equivalents. These are initially recognised at transaction price, when the Company becomes a party to a contractual obligation. The transaction price includes transaction costs, unless the asset is being fair valued through the Statement of Profit and Loss.

Debt instruments:-

Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories under which the Company classifies its debt instruments:

(a) Amortized cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost is recognized as profit or loss, when the asset is derecognized or impaired. Interest income from these financial assets is included in other income.

(b) Fair value through OCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at fair value through OCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in Statement of Profit and Loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to Statement of Profit and Loss and recognized in other gains/ (losses). Interest income from these financials assets is included in Other Income.

(c) Fair value through Statement of Profit and Loss: Assets that do not meet the criteria for amortized cost or Fair Value through Other Comprehensive Income (FVOCI), are measured at fair value through Statement of Profit and Loss. A gain or loss on a debt investment that is subsequently measured at fair value through Statement of Profit and Loss and is not part of a hedging relationship, is recognized as profit or loss and presented net in the Statement of Profit and Loss, within other gains/(losses), in the period in which it arises. Interest income from these financial assets is included in Other Income.

Equity Instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company, after deducting all of its liabilities. Equity Instruments are recorded at the proceeds received, net of direct issue cost.

(iii) Impairment of Financial Assets: The Company assesses, on a forward looking basis, the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in the 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 recognized from initial recognition of the receivables.

(iv) De-recognition of Financial Assets : A Financial Asset is derecognized only when :

- the Company has transferred the rights to receive cash flows from the Financial Asset; or

- retains the contractual rights to receive the cash flows of the Financial Asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

(v) Income recognition: Interest income from debt instruments is recognized by using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts, through the expected life of the Financial Asset to the gross carrying amount of a 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 (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.

n. Financial Liabilities

Borrowings, Trade Payables and other Financial Liabilities are initially recognized at their respective contractual obligations. They are subsequently measured at amortized cost. Any discount or premium on redemption/settlement, recognized in the Statement of Profit and Loss as finance cost, over the life of the liability, using the effective interest method, is adjusted to the liability figure disclosed in the Balance Sheet.

Financial Liabilities are derecognized when the liability is extinguished, i.e. when the contractual obligation is discharged or cancelled on expiry.

o. Derivative Financial Instruments and Hedge Accounting

In order to manage its exposure to foreign currency risks for highly probable forecast transactions for exports and imports, the Company enters into forward contracts. Further, to hedge interest rate and foreign currency risks from External Commercial Borrowings, the Company enters into Cross Currency Interest Rate Swap. The Company does not use derivatives for trading or speculation purposes.

The Company designates a hedge as a cash flow hedge if the hedge relationship between the hedging instrument and hedged item is established and is effective at the inception of the derivative contract.

At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions.

All derivative contracts are initially recognized at fair value, on the date the derivative contract is entered into, and are subsequently re-measured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged and the type of hedge relationship designated.

The effective portion of changes in the fair value of derivatives, that are designated and qualified as cash flow hedges, is recognized in OCI in the Cash Flow Hedge Reserve under Other Equity. In such cases, gains or losses are reclassified to Statement of Profit and Loss when the impact from hedged item is recognized in the Statement of Profit and Loss. The gain or loss on the ineffective portion is recognized immediately in the Statement of Profit and Loss.

Derivatives are carried as Financial Assets when the fair value is positive and Financial Liabilities when the fair value is negative.

p. Property, Plant and Equipment and Others

(i) The Company has adopted the cost model as its accounting policy for all its Property, Plant and Equipment and, accordingly, the same are reflected as under:

Land (Freehold) is carried at cost;

Other items of Assets are carried at cost less accumulated depreciation/amortization and impairment losses, if any.

(ii) Items of Property, Plant and Equipment are recognized as an asset, if 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. Items such as spare parts, stand-by equipment and servicing equipment are recognized under property, plant and equipment, if those meet the definition thereof; else, such spare parts, etc. are classified as inventory.

(iii) The cost comprises of purchase price (net of goods and service tax), including import duties and non-refundable taxes, after deducting trade discounts and rebates, any cost incurred which is directly attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and interest on borrowings if any, attributable to the acquisition of qualifying assets up to the date on which the asset is ready for its intended use. It also includes exchange difference capitalized, if any, in terms of Ind AS 21 on “Effects of Changes in Foreign Exchange Rates”.

(iv) Items of Property, Plant and Equipment which are not yet ready to be capable of operating in the manner intended by management are carried at cost, comprising direct cost, related incidental expenses and attributable interest, and are disclosed as “Capital Work-in-progress”. Advances paid towards the acquisition of Property, Plant & Equipment, outstanding as at the Balance Sheet date, are classified as “Capital Advances” under “Other Non-current Assets.

(v) Items of Property, Plant and Equipment which are retired from active use and held for disposal, and where the sale is highly probable, are classified as ‘Assets held for disposal” under “Other Current Assets”. The same are carried at the lower of their carrying amount and net realizable value.

(vi) Intangible Assets which are not ready for the intended use on the date of the Balance Sheet are disclosed as “Intangible Assets under Development”.

Depreciation methods, estimated useful lives and residual value

(i) The charge of depreciation on Property, Plant and Equipment is commenced when the relevant asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

(a) Where the cost of a part of the asset which is significant to the total cost of the asset and useful life of the part is different from the useful life of the remaining asset, the Company has determined the useful life of the significant part separately (“Component Accounting”) and, accordingly, provided depreciation on such parts.

(b) Depreciation on Plant and Machinery (including those identified under the Component Accounting), other than those not specifically covered under the classification as per Shedule II of the comanies Act, 2013, is provided on the straight line method over the useful lives, as determined by the internal technical evaluation done by the management’s expert, which are as follows:

Spare parts, stand-by equipment and servicing equipment: 10 years.

Catalyst: 2 to 5 years.

Special Plant & Machinery: 12 to 25 years.

Roads : 10 to 25 years Buildings : 3 to 30 years

The Management believes that the useful lives, as determined, best represent the period over which it expects to use these assets. Hence, the useful lives for such Plant and Machinery and Roads are different from the useful lives as prescribed under Part C of Schedule II of Companies Act, 2013.

Depreciation method, useful life and residual values are reviewed at each balance sheet date and changes, if any, are accounted prospectively.

(ii) Intangible Assets are amortized on the straight line method over their estimated useful life as follows:

Development of R & D Products/Processes (Internally generated): 5 years.

Patents: 10 years.

REACH Registration: 5 years.

Computer Software: 10 years.

(iii) Depreciation on assets purchased/sold during the period is proportionately charged from / up to the month, on which it is available for use/ disposed off, as the case may be.

(iv) The residual values are not more than 5% of the original cost of the assets. The residual values and useful lives of the assets are reviewed and adjusted if found appropriate.

q. Government Grant

The Company recognizes government grants only when there is reasonable assurance that the conditions attached to the grants would be complied with and the grants will be received. Government grants related to assets are treated as deferred income and are recognized in the Statement of Profit and Loss, on a systematic and rational basis, over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis in the Statement of Profit and Loss, over the periods necessary to match them with the related costs, which they are intended to compensate.

Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within other income.

r. Trade and Other Payables

These amounts represent liabilities for goods and services provided to the Company, prior to the end of the financial year, which are unpaid. Trade and other payables are presented as Current Liabilities, if payment is due within 12 months from the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost, using the effective interest method.

s. Borrowings

Borrowings are initially valued at their contractual obligations, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the amount due for repayment is recognized in statment of profit or loss over the period of the borrowings, using the effective interest method.

Borrowings are derecognised from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.

Borrowings are classified as Current Liabilities, unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the Company does not classify the liability as current, if the lender has not demanded payment after the reporting period and before the approval of the financial statements, as a consequence of the breach.

t. Borrowing Costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying Assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings, pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other borrowing costs are expensed in the period in which they are incurred. Borrowing costs comprise of interest and other costs incurred in connection with borrowing of funds.

u. Employee Benefits

(i) Short-term obligations: Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service, are recognized in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the Balance Sheet.

(ii) Long-term employee benefit obligations: The liability with regard to Leave Encashment Plan is accrued based on actuarial valuation at the Balance Sheet date, carried out by an independent actuary. The liabilities for privilege leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are, therefore, measured as the present value of expected future payments, to be made in respect of services provided by employees, up to the end of the reporting period, using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognized as profit or loss.

(iii) Post-employment obligations: The Company operates the following post-employment schemes:

(a) Defined benefit plans such as gratuity: In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (‘Gratuity Plan’) covering all employees. The Gratuity Plan provides

by way of a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued based on actuarial valuation at the Balance Sheet date, carried out by an independent actuary. Actuarial gain or loss is recognized immediately in the Othe Comprehensive income or expense. The Company has an employee gratuity fund managed by Life Insurance Corporation of India (‘LIC’), to the exclusion of the Managing Director, for whom, also, necessary provision is made based on an actuarial valuation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss.

Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in OCI. They are included in “Retained Earnings” in the “Statement of Changes in Equity” and in the Balance Sheet.

Changes in the present value of the defined benefit obligation, resulting from plan amendments or curtailments, are recognized immediately in the Statement of Profit and Loss, as past service cost.

(b) Defined contribution plans such as provident fund: The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.

(iv) Share based payment transactions:

Employee Stock Option Plans (“ESOPs”):

The fair value of options determined at the grant date is recognized as an employee expense on a straight line basis (on the basis of multiple vesting of options granted), with a corresponding increase in “Other Equity” under “Employee Stock Options Outstanding account”, over the vesting period of the grant, where the employee becomes unconditionally entitled to the options. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in the Statement of Profit and Loss, such that the cumulative expenses reflects the revised estimate, with a corresponding adjustment to the “Employee Stock Options Outstanding account”.

Stock Options are granted to eligible employees in accordance with “Alkyl Amines Employees Stock Option Plan” (ESOPs 2018), as approved by the Shareholders and the Nomination and Remuneration Committee of the Board of Directors (the Committee) in accordance with the SEBI (Share based employee benefits) Regulations, 2014.

Eligible employees for this purpose includes employees falling under the following schemes:

Plan A : Rewards ESOPs (based on past performance)

Plan B : Retention ESOPs (based on future performance)

Under Ind AS 102 on Share based Payment, the cost of stock options is recognised based on the fair value of stock options as on the grant date (refer note 37B).

v. Research and Development Costs

(i) Revenue expenditure on research, if any, is charged in the Statement of Profit and Loss of the year in which it is incurred.

(ii) Development Expenditure:

a) Incurred on development of new processes for products which, as per the Management, are completed and are expected to generate future economic benefits, are shown as internally generated Intangible Assets and are amortized in accordance with policies stated for amortization under the head “Depreciation methods, estimated useful lives and residual value” (refer note no. l.p.ii.)

b) Incurred on development of new processes for products which, as per the Management, are yet to be completed, are reflected as Intangibles Under Development.

c) Other development expenses are charged to the Statement of Profit and Loss in the year in which they are incurred.

w. Contributed Equity

Equity shares are classified as Equity. Incremental costs directly attributable to the issue of new shares or options are shown

in equity as a deduction, net of tax, from the proceeds.

x. Earnings Per Share

(i) Basic earnings per share: It is calculated by dividing the profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year.

(ii) Diluted earnings per share: Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account:

(a) The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

(b) The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares, except where the results would be anti-dilutive.

y. Provisions, Contingent Liabilities and Contingent Assets

The Company recognizes a provision, when there is a present legal or constructive obligation obligation as a result of past events, the settlement of which is probable to result in an outflow of resources and a reliable estimate can be made of the amount of obligation.

Contingent Liabilities are disclosed by way of a note to the financial statements after careful evaluation by the Company of the facts and legal aspects of the matters involved.

2. Critical Judgments, Estimates and Assumptions

The preparation of financial statements requires the Company to make estimates, assumptions and judgments that affect the reported balances of assets and liabilities and disclosures as at the date of the financial statements and the reported amounts of income and expenses for the period presented.

The estimates and the associated assumptions are based on historical experience and the other factors that are considered to be relevant. Actual results may differ from the estimates under different assumptions and conditions.

Estimates and the underlying assumptions are reviewed on an ongoing basis. Impact on account of revisions to accounting estimates are recognized in the period in which the estimates are revised and future periods are affected.

The estimates and assumptions that have significant risk of causing a material adjustment to the carrying value of assets and liabilities within the next financial year are discussed below.

(i) Judgments:

In the process of applying the Company’s accounting policies, the Company has made the following judgments, which have the most significant effect on the amounts recognized in the financial statements:

a. Segment Reporting

Ind AS 108 - Operating Segments, requires the Company to determine the reportable segments for the purpose of disclosure in financial statements, based on the internal reporting reviewed by the Board of Directors, to assess the performance and allocate resources. The standard also requires the Company to make judgments with respect to aggregation of certain operating segments into one or more reportable segments. Operating segments, used to present segment information, are identified based on the internal reports used and reviewed to assess performance and allocate resources. The Company has determined that some of the segments exhibit similar economic characteristics and meet other aggregation criteria and are accordingly aggregated into one primary reportable segment i.e. ‘Speciality Chemicals’.

b. Stores and Spares Inventories

The Company’s manufacturing process is continuous and highly technical, with a wide range of different types of plants and machineries. The Company keeps stores and spares as a standby, to run the operations without any disruption. Considering the wide range of stores and spares and long lead times for their procurement, and based on criticality of the spares, the Company believes that their net realizable value would be more than their cost.

c. Income Taxes

The Company in making judgement for the resolution of the uncertainty over income tax treatments as per Appendix C to Ind AS 12 ‘Income Taxes’, The Company has considered; (a) how it prepares its income tax filings and supports tax treatments; or (b) how the entity expects the taxation authority to make its examination and resolve issues that might arise from that examination. The Company determined, based on its tax compliance, that it is probable that its tax treatments will be accepted by the taxation authorities. Thus, the said Appendix does not have a material impact on the financial statements of the Company.

d. Contingent Liability Judgment

Note-35A describes claims against the Company not acknowledged as debt. It includes certain penalties and charges payable to a Government agency, although as per the contracts, the Company, based on past experience, believes that the penalties and charges are not certain, and, accordingly, are not considered as an obligation as at the Balance Sheet date and are disclosed as Contingent Liabilities.

(ii) Estimates and Assumptions:

The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or

circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

a. Defined Benefit Plans (Gratuity Benefits)

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds. The mortality rate is based on Indian Assured Lives Mortality 2012-14 (Urban). Those mortality tables tend to change only at intervals in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about gratuity obligations are given in Note 37A.

b. Fair Value Measurement of Financial Instruments

When the fair values of Financial Assets and Financial Liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques, including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible; but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer Note 48 for further disclosures.

c. Useful Life of Property, Plant and Equipment and Others

The Company reviews the estimated useful lives and residual values of Property, Plant and Equipment (PPE) and Intangible Assets as at the end of each reporting year. The Factors, such as changes in the expected level of usage,technological developments, units of production and product life cycle, could significantly impact the economic useful lives and the residual values of Assets. Consequently, future depreciation and amortization charge could be revised and thereby could have an impact on the profit of the future years.

The useful life of a Catalyst is estimated from the date of its activation, which is considered as the date of from which its is available for use as per IND AS 16 - Property Plant and Equipment.

d. Litigations

From time to time, the Company is subjected to legal proceedings, the ultimate outcome of each being always subject to many uncertainties inherent in litigations. A provision is made when it is considered probable that payment will be made and the amount of the loss can be reasonably estimated. Significant judgment is made when evaluating, among other factors, the probability of unfavourable outcome and the ability to make a reasonable estimate of the amount of potential loss. Litigation provisions are reviewed at each accounting year and revisions made for changes in facts and circumstances.

e. Cash Flow Hedge Reserve

The Cash Flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. It will be reclassified to the Statement of Profit and Loss only when the hedged transaction affects the profit or loss or included as a basis adjustment to the non-financial hedged item.

f. Provision for Expected Credit Losses (ECL) of trade receivables

The Company uses a provision matrix to calculate ECL for trade receivables. The provision matrix is based on the Company’s historical observed default rates which are negligible over the years. The Company will calibrates the matrix to adjust the historical credit loss experience with forward-looking information. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. The assessment of the correlation between historical observed default rates, forecast economic conditions and ECL is a significant estimate. The amount of ECL is sensitive to changes in circumstances and of forecast economic conditions. The Company’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. However, based on the information about the historical data, the ECL on the Company’s trade receivables is considered as Nil.

g. Government Grant

In assessing the recognition of Government Grants, the Company is dependent upon the generation of future revenue as per the condition specified in the Export Promotion Capital Goods (EPCG) license. Management considers projected future income planning strategies in making this assessment. Based on the level of historical revenue and projections for future revenue over the periods, in which the conditions are satisfied, the Management believes that the Company will able to fulfil the conditions. The amount of Government Grant considered realizable could, however, be reduced in the near term, if estimates of future export revenue during the subsequent period are reduced.


Mar 31, 2022

Corporate Information

Alkyl Amines Chemicals Limited (the ‘Company’) is a public limited company, domiciled in India. Its shares are listed on two stock exchanges in India, viz. the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange Limited (NSE). The Company is engaged in manufacturing and selling of specialty chemicals.

1. SIGNIFICANT ACCOUNTING POLICIES

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. The policies have been consistently applied to all the years presented, unless otherwise stated.

a. Basis of Preparation

(i) Compliance with Ind AS

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (“the Act”) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

All assets and liabilities have been classified as current or non-current, as per the Company’s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013 and as per Ind AS-1.

Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/ non-current classification of assets and liabilities.

(ii) Historical cost convention

The financial statements have been prepared on a historical cost basis using accrual method of accounting, except for the following:

- Certain financial assets and liabilities (including derivative instruments) that are measured at fair value;

- Defined Benefit Plans — Plan Assets measured at fair value;

b. Segment Reporting

Ind AS 108 - Operating Segments, requires Management to determine reportable segments for the purpose of disclosure in financial statements, based on internal reporting reviewed by the Chief Operating Decision Maker (CODM) to assess performance and allocate resources. The standard also requires Management to make judgments with respect to aggregation of certain operating segments into one or more reportable segments.The Company has determined that the Chief Operating Decision Maker (CODM) is the Board of Directors (BOD), based on its internal reporting structure and functions of BOD. The Operating Segment used to present segment information identified based on the internal reports used and reviewed by the BOD to assess performance and allocate resources. The Management has determined that some of the segments exhibit similar economic characteristics and meet other aggregation criteria and accordingly aggregated into reportable primary operating segment i.e. “Specialty Chemicals”.

c. Foreign Currency Translation

(i) Functional and presentation currency: Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements are presented in Indian rupees (INR), which is the Company’s functional and presentation currency.

(ii) Transactions and balances: Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary Assets and Liabilities denominated in foreign currencies at year end exchange rates are generally recognized in the Statement of Profit and Loss.

(iii) Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of Profit and Loss, as part of finance costs. All other foreign exchange gains and losses are presented in the Statement of Profit and Loss on a net basis as part of other gains/ (losses).

d. Revenue Recognition

(i) Sales of Manufactured Goods: Revenue is measured at fair value of consideration received or receivable for goods supplied or services rendered. Revenue from the sale of goods and services is recognized when the company performs its obligation to its customer and amount of revenue can be measured reliably and the recovery of consideration is probable. ‘Sales’ which are net of returns includes packing charges which are net of returns, excluding amounts collected on behalf of third parties such as Goods and Services Tax. The Company derives revenues primarily from sale of manufactured goods, traded goods and related services.

Revenue from the sale of goods is recognized when the control over the goods is transferred to the customer, which is mainly upon the delivery of the goods, and in the case of services, in the period in which such services are rendered, and there are no unfulfilled obligations.

The Company does not adjust transaction prices for the time value of money as it does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year.

(ii) Recognition of Export Benefits: Export Benefit Entitlements are recognized in the year in which the export sales are accounted for, only to the extent there is a reasonable certainty of its ultimate collection.

e. Income Tax

Income Tax expense comprises of current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred tax are recognized in the Statement of Profit and Loss, except when they relate to items that are recognized in Other Comprehensive Income (OCI) or directly in equity, in which case, the current and deferred tax are also recognized in OCI, or directly in equity, respectively.

Current Tax: Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year. The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction. The Company periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions wherever appropriate on the basis of amounts expected to be paid to the tax authorities.

f. Deferred Tax

Deferred income tax assets and liabilities are recognized 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 recognized 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 utilized.

The carrying amount of a Deferred Tax Asset is 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 utilized.

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 to taxable income in the years in which those temporary differences are expected to recovered or settled.

Deferred Tax Assets and Liabilities are offset when there is a legally enforceable right to offset current tax Assets and Liabilities and when it relates to income taxes levied by the same taxation authority and the entity intends to settle its current tax Assets and Liabilities simultaneously.

g. Leases

The Company applied a single recognition and measurement approach for all leases for which it is the lessee, except for short-term leases and leases of low value assets. The Company recognised lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Land (Leasehold) is carried at cost less amortization;

Leasehold land is being amortized on the straight line method over the period of lease.

The Company elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option (short-term leases), and lease contracts for which the underlying asset is of low value (low-value assets).

Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

h. Impairment of Assets

If internal / external indications suggest that an asset of the Company may be impaired, the recoverable amount of the asset/ cash generating unit is determined on the date of Balance Sheet and if it is less than its carrying amount, the carrying amount of asset/ cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognized, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognized for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such assets/ cash generating unit, which is determined by the present value of the estimated future cash flows.

An impairment of Intangible Assets is conducted annually or more often if there is an indication of any decrease in value. The impairment loss, if any, is charged to the Statement of Profit and Loss.

Non-financial Assets that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

i. Cash and Cash Equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments, with original maturities of three months or less, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown as apart of borrowings in Current Liabilities in the Balance Sheet.

j. Trade Receivables

Trade receivables are recognized and measured at amortized cost less provision for expected credit losses, if any.

k. Investments

(i) Investments are carried at cost less accumulated impairment, if any.

(ii) Profit or loss on sale of investments, if any, is calculated by considering the weighted average amount of the total holding of the investment.

l. Inventories

(i) Raw materials, packing materials, stores and spares, furnace oil and fuel are valued at cost or net realizable value, whichever is lower. Cost comprises of basic cost (net of GST, if any) and other costs incurred in bringing them to their respective present location and condition. Cost is determined on a Weighted Average basis.

(ii) Work-in-Progress and finished goods are valued at cost or net realizable value, whichever is lower. Cost includes all direct costs and a proportion of other fixed manufacturing overheads based on normal operating capacity. Cost is determined on a Weighted Average basis. Net realizable 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.

However, materials and other items held for use in production of finished goods are not written down below the cost if the finished goods in which they will be incorporated are expected to be sold above cost.

(iii) Catalysts which have a life of less than one year are treated as inventory and are valued at cost or net realizable value, whichever is lower. Cost comprises of basic cost (net of GST, if any) and other costs incurred in bringing them to their respective present location and condition. Cost is determined on a weighted average basis.

m. Financial Assets

(i) Classification: The Company classifies its financial Assets under the following measurement categories:

- Those measured at amortized cost.

- Those to be measured subsequently at fair value (through Statement of Profit and Loss), and

- Those to be measured subsequently at fair value (through OCI).

The classification depends on the Company’s business model for managing the Financial Assets and the contractual terms of the cash flows.

For Assets/ Liabilities measured at fair value, gains and losses are recorded in Statement of Profit and Loss or Other Equity.

(ii) Measurement: Financial Asset include Investment, Trade Receivable, Advances, Security Deposits, Cash and Cash Equivalents. These are initially recognised at transaction price, when the company becomes party to contractual obligation. The transaction price includes transaction costs unless the asset is being fair valued through the Statement of Profit and Loss.

Debt instruments:-

Subsequent measurement of debt instruments depends on the Company’s business model for managing the Asset and the cash flow characteristics of the Asset. There are three measurement categories under which the Company classifies its debt instruments:

(a) Amortized cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost is recognized as profit or loss, when the asset is derecognized or impaired. Interest income from these financial assets is included in finance income.

(b Fair value through OCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at fair value through OCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in Statement of Profit and Loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to Statement of Profit and Loss and recognized in other gains/ (losses). Interest income from these financials assets is included in Other Income.

(c) Fair value through Statement of Profit and Loss: Assets that do not meet the criteria for amortized cost or Fair Value through Other Comprehensive Income (FVOCI), are measured at fair value through Statement of Profit and Loss. A gain or loss on a debt investment that is subsequently measured at fair value through Statement of Profit and Loss and is not part of a hedging relationship, is recognized as profit or loss and presented net in the Statement of Profit and Loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in Other Income.

Equity Instruments

An equity instrument is any contract that evidences a residual interest in the Assets of the Company, after deducting all of its liabilities. Equity Instruments are recorded at the proceeds received, net of direct issue cost.

(iii) Impairment of Financial Assets: The Company assesses, on a forward looking basis, the expected credit losses associated with its Assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in the 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 recognized from initial recognition of the receivables.

(iv) De-recognition of Financial Assets : A Financial Asset is derecognized only when :

- the Company has transferred the rights to receive cash flows from the Financial Asset, or

- retains the contractual rights to receive the cash flows of the Financial Asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

(v) Income recognition: Interest income from debt instruments is recognized using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the Financial Asset to the gross carrying amount of a 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 (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.

n. Financial Liabilities

Borrowings, Trade Payables and other Financial Liabilities are initially recognized at their respective contractual obligations. They are subsequently measured at amortized cost. Any discount or premium on redemption/settlement is recognized in the Statement of Profit and Loss as finance cost, over the life of the liability, using the effective interest method, is adjusted to the liability figure disclosed in the Balance Sheet.

Financial Liabilities are derecognized when the liability is extinguished i.e. when the contractual obligation is discharged or cancelled on expiry.

o. Derivative Financial Instruments and Hedge Accounting

In order to manage its exposure to foreign currency risks for highly probable forecast transactions for exports and imports, the Company enters into forward contracts. Further, to hedge interest rate and foreign currency risks from External Commercial Borrowings, the Company enters into Cross Currency Interest Rate Swap. The Company does not use derivatives for trading or speculation purposes.

The Company designates a hedge as a cash flow hedge if the hedge relationship between the hedging instrument and hedged item is established and is effective at the inception of the derivative contract.

At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions.

“All derivative contracts are initially recognized at fair value on the date of the derivative contract isentered into and are subsequently re-measured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged and the type of hedge relationship designated. The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges is recognized in OCI in the Cash Flow Hedge Reserve under Other Equity. In such cases, gains or losses are reclassified to Statement of Profit and Loss when, the impact from hedged item is recognized in the Statement of Profit and Loss. The gain or loss on the ineffective portion is recognized immediately in Statement of Profit and Loss. Derivatives are carried as Financial Assets when the fair value is positive and Financial Liabilities when the fair value is negative.

p. Property, Plant and Equipment and Others

(i) The Company has adopted the cost model as its accounting policy for all its Property, Plant and Equipment and accordingly, the same are reflected as under:

Land (Freehold) is carried at cost;

Other items of Assets are carried at cost less accumulated depreciation/amortization and impairment losses, if any.

(ii) An item of Property, Plant and Equipment is recognized as an Asset, if 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. Items such as

spare parts, stand-by equipment and servicing equipment are recognized under property, plant and equipment, if those meet the definition thereof; else, such spare parts, etc. are classified as inventory.

(iii) The cost comprises of - purchase price (net of goods and service tax), including import duties and non-refundable taxes, after deducting trade discounts and rebates, any cost incurred which is directly attributable to bring the Asset to the location and condition necessary for it to be capable of operating in the manner intended by management and interest on borrowings attributable to the acquisition of qualifying Assets up to the date on which the Asset is ready for its intended use, if any. It also includes exchange difference capitalized, if any, in terms of Ind AS 21 on “Effects of Changes in Foreign Exchange Rates”.

(iv) Items of Property, Plant and Equipment which are not yet ready to be capable of operating in the manner intended by management are carried at cost, comprising direct cost, related incidental expenses and attributable interest, and are disclosed as “Capital Work-in-progress”. Advances paid towards the acquisition of Property, Plant & Equipment outstanding as at the Balance Sheet date is classified as “capital advances” under other non-current assets.

(v) Items of Property, Plant and Equipment which are retired from active use and held for disposal, and where the sale is highly probable, are classified as “Assets held for disposal” under “Other Current Assets” the same are carried at the lower of their carrying amount and net realizable value.

(vi) Intangible Assets not ready for the intended use on the date of the Balance Sheet are disclosed as “Intangible Assets under Development”.

Depreciation methods, estimated useful lives and residual value

(i) The charge of depreciation on Property, Plant and Equipment is commenced when the relevant asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

(a) Where the cost of a part of the Asset which is significant to the total cost of the Asset and useful life of the part is different from the useful life of the remaining Asset, the Company has determined the useful life of the significant part separately (“Component Accounting”) and accordingly, provided depreciation on such parts.

(b) Depreciation on Plant and Machinery (including those identified under the Component Accounting) other than those not specifically covered under the classification ‘Special Plant and Machinery used in manufacturing of Chemicals’ and Roads is provided on the straight line method over the useful lives as determined by the internal technical evaluation done by the management’s expert, which are as follows:

Spare parts, stand-by equipment and servicing equipment: 10 years.

Catalyst: 2 to 5 years.

Other Property, Plant and Equipment: 12 to 25 years.

Roads : 10 to 25 years Buildings : 3 to 30 years

The Management believes that the useful lives, as determined, best represent the period over which it expects to use these Assets. Hence, the useful lives for such Plant and Machinery and Roads are different from the useful lives as prescribed under Part C of Schedule II of Companies Act, 2013.

Depreciation method, useful life and residual values are reviewed at each balance sheet date and changes if any are accounted prospectively.

(ii) Intangible Assets are amortized on the straight line method over their estimated useful life as follows:

Development of R & D Products/Processes (Internally generated): 5 years.

Patents: 10 years.

REACH Registration: 5 years.

Computer Software: 10 years.

(iii) Depreciation on Assets purchased/sold during the period is proportionately charged from /up to the date on which it is available for use/ disposed off.

(iv) The residual values are not more than 5% of the original cost of the assets. The asset’s residual values and useful lives are reviewed, and adjusted if appropriate.

q. Government Grant

The Company recognizes government grants only when there is reasonable assurance that the conditions attached to the grants shall be complied with, and the grants will be received. Government grants related to assets are treated as deferred income and are recognized in net profit in the Statement of Profit and Loss on a systematic and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis in net profit in the Statement of Profit and Loss over the periods necessary to match them with the related costs which they are intended to compensate.

r. Trade and Other Payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as Current Liabilities, if payment is due within 12 months from the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.

s. Borrowings

Borrowings are initially valued at their contractual obligations, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized as profit or loss over the period of the borrowings using the effective interest method.

Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.

Borrowings are classified as Current Liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender has not demanded payment, after the reporting period and before the approval of the financial statements for issue, as a consequence of the breach.

t. Borrowing Costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying Asset are capitalized during the period of time that is required to complete and prepare the Asset for its intended use or sale. Qualifying Assets are Assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying Assets is deducted from the borrowing costs eligible for capitalization.

Other borrowing costs are expensed in the period in which they are incurred. Borrowing costs comprise of interest and other cost incurred in connection with borrowing of funds

u. Employee Benefits

(i) Short-term obligations: Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The Liabilities are presented as current employee benefit obligations in the Balance Sheet.

(ii) Other long-term employee benefit obligations: The liabilities for privilege leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are, therefore, measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period, using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognized as profit or loss. The obligations are presented as Current Liabilities in the Balance Sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

(iii) Post-employment obligations: The Company operates the following post-employment schemes:

(a) Defined benefit plans such as gratuity: In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (‘Gratuity Plan’) covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued based on actuarial valuation at the Balance Sheet date carried out by an independent actuary. Actuarial gain or loss is recognized immediately in the Statement of Profit and Loss as income or expense. The Company has an employee gratuity fund managed by Life Insurance Corporation of India (‘LIC’), except for the Managing Director, for which also the necessary provision is made based on an actuarial valuation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss.

Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in OCI. They are included in retained earnings in the statement of changes in equity and in the Balance Sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in the Statement of Profit and Loss as past service cost.

(b) Defined contribution plans such as provident fund: The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an Asset to the extent that a cash refund or a reduction in the future payments is available.

(iv) Share based payment transactions:

Employee Stock Option Plans (“ESOPs”):

The fair value of options determined at the grant date is recognized as an employee expense on a straight line basis (on the basis of multiple vesting of options granted), with a corresponding increase in other equity under “Employee Stock Options Outstanding account”, over the vesting period of the grant, where the employee becomes unconditionally entitled to the options. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in the Statement of Profit and Loss such that the cumulative expenses reflects the revised estimate, with a corresponding adjustment to the “Employee Stock Options Outstanding account”.

Stock Options are granted to eligible employees in accordance with “Alkyl Amines Employees Stock Option Plan” (ESOPs 2018), as approved by the Shareholders and the Nomination and Remuneration Committee of the Board of Directors (the Committee) in accordance with the SEBI (Share based employee benefits) Regulations, 2014.

Eligible employees for this purpose includes employees falling under below schemes:

Plan A : Rewards ESOPs (based on past performance)

Plan B : Retention ESOPs (based on future performance)

Under Ind AS 102 on Share based Payment, the cost of stock options is recognised based on the fair value of stock options as on the grant date (refer note 32B).

v. Research and Development Costs

(i) Revenue expenditure on research, if any, is charged in the Statement of Profit and Loss of the year in which it is incurred.

(ii) Development Expenditure:

a) Incurred on development of new processes for products which, as per the Management, are completed and are expected to generate future economic benefits, are shown as internally generated Intangible Assets and are amortized in accordance with policies stated for amortization under the head “Depreciation methods, estimated useful lives and residual value” (refer note no. 1.p.ii.)

b) Incurred on development of new processes for products which, as per the Management, are yet to be completed, are reflected as Intangibles Under Development.

c) Other development expenses are charged to the Statement of Profit and Loss in the year in which they are incurred.

w. Contributed Equity

Equity shares are classified as Equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

x. Earnings Per Share

(i) Basic earnings per share: It is calculated by dividing the profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year.

(ii) Diluted earnings per share: Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account:

(a) The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

(b) The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares, except where the results would be anti-diluted.

y. Provisions, Contingent Liabilities and Contingent Assets

The Company recognizes a provision, when there is a present obligation as a result of past events, the settlement of which is probable to result in an outflow of resources and a reliable estimate can be made of the amount of obligation.

Contingent Liabilities are disclosed by way of a note to the financial statements after careful evaluation by the Company of the facts and legal aspects of the matters involved.

2. CRITICAL JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of financial statements requires the Company to make estimates, assumptions and judgments that affect the reported balances of Assets and Liabilities and disclosures as at the date of the financial statements and the reported amounts of income and expenses for the period presented.

The estimates and the associated assumptions are based on historical experience and the other factors that are considered to be relevant. Actual results may differ from the estimates under different assumptions and conditions.

Estimates and the underlying assumptions are reviewed on an ongoing basis. Impact on account of revisions to accounting estimates are recognized in the period in which the estimates are revised and future periods are affected.

The estimates and assumptions that have significant risk of causing a material adjustment to the carrying value of Assets and Liabilities within the next financial year are discussed below.

(i) Judgments:

In the process of applying the Company’s accounting policies, Company has made the following judgments, which have the most significant effect on the amounts recognized in the financial statements:

a. Arrangements in the nature of lease

“The Company has entered into sub-contracting arrangements with its service providers wherein the Company supplies all the raw materials required for the manufacture and/ or processing along with specifications to manufacture the products to the service provider, thereby retaining the title to all products. The Company has also entered into a sub-contracting arrangement as a service provider wherein the Company processes the goods based on all the raw materials supplied to it for the manufacture and/ or processing along with specifications to manufacture the products, the title to which remains with the customer.”

The Company has determined, based on the evaluation of terms and conditions of the arrangement that it qualifies as an arrangement in the nature of operating lease with a variable rate contract.

b. Segment Reporting

“Ind AS 108- Operating Segments requires the Company to determine the reportable segments for the purpose of disclosure in financial statements based on the internal reporting reviewed by the Board of Directors to assess the performance and allocate resources. The standard also requires the Company to make judgments with respect to aggregation of certain operating segments into one or more reportable segment. Operating segments used to present segment information are identified based on the internal reports used and reviewed to assess performance and allocate resources. The Company has determined that some of the segments exhibit similar economic characteristics and meet other aggregation criteria and are accordingly aggregated into one primary reportable segment i.e. ‘Speciality Chemicals’.”

c. Stores and Spares Inventories

“The Company’s manufacturing process is continuous and highly technical with wide range of different types of plants and machineries. The Company keeps stores and spares as a standby to run the operations without any disruption. Considering the wide range of stores and spares and long lead times for their procurement, and based on criticality of spares, the Company believes that their net realizable value would be more than cost.”

d. Income Taxes

The Company in making judgement for the resolution of the uncertainty over income tax treatments as per Appendix C to Ind AS 12, The Company has considered; (a) how it prepares its income tax filings and supports tax treatments; or (b) how the entity expects the taxation authority to make its examination and resolve issues that might arise from that examination. The Company determined, based on its tax compliance, that it is probable that its tax treatments will be accepted by the taxation authorities. The Appendix does not apply to taxes or levies outside the scope of Ind AS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. Thus, the said Appendix did not have a material impact on the financial statements of the Company.

e. Contingent Liability Judgment

Note-28A describes claims against the Company not acknowledged as debt. It includes certain penalties and charges payable to a Government agency although as per the contracts, the Company, based on past experience, believes that the penalties and charges are negotiable and not certain, and accordingly, are not considered as an obligation as at the Balance Sheet date and are disclosed as Contingent Liabilities.

(ii) Estimates and Assumptions:

The key assumptions concerning the future and other key sources of estimation, uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of Assets and Liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

a. Defined Benefit Plans (Gratuity Benefits)

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds. The mortality rate is based on Indian Assured Lives Mortality (2006-08). Those mortality tables tend to change only at intervals in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about gratuity obligations are given in Note 31A.”

b. Fair Value Measurement of Financial Instruments

When the fair values of Financial Assets and Financial Liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques, including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible; but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer Note 41 for further disclosures.

c. Useful Life of Property, Plant and Equipment and Others

The Company reviews the estimated useful lives and residual values of Property, Plant and Equipment (PPE) and Intangible Assets as at the end of each reporting year. The factors, such as changes in the expected level of usage, number of shifts of production, technological developments, units of production and product life cycle, could significantly impact the economic useful lives and the residual values of Assets. Consequently, the future depreciation and amortization charge could be revised and thereby could have impact on the profit of the future years.

d. Litigations

From time to time, the Company is subjected to legal proceedings, the ultimate outcome of each being always subject to many uncertainties inherent in litigations. A provision is made when it is considered probable that payment will be made and the amount of the loss can be reasonably estimated. Significant judgment is made when evaluating, among other factors, the probability of unfavourable outcome and the ability to make a reasonable estimate of the amount of potential loss. Litigation provisions are reviewed at each accounting year and revisions made for the changes in facts and circumstances.

e. Cash Flow Hedge Reserve

The Cash Flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. It will be reclassified to the Statement of Profit and Loss only when the hedged transaction affects the profit or loss or included as a basis adjustment to the non-financial hedged item.

f. Provision for expected credit losses (ECL) of trade receivables

“The Company uses a provision matrix to calculate ECLs for trade receivables. The provision matrix is based on the Company’s historical observed default rates which are negligible over the years. The Company will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Company’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. However based on the information about the historical data the ECLs on the Company’s trade receivables considered as Nil.”

g . Government Grant

In assessing the recognition of Government Grants, the Company is dependent upon the generation of future revenue as per the condition specified in the Export Promotion Capital Goods (EPCG) license. Management considers that projected future income planning strategies in making this assessment. Based on the level of historical revenue and projections for future revenue over the periods in which the conditions are satisfied, the Management believes that the Company will able to fulfill the conditions. The amount of the Government Grant considered realizable, however it could be reduced in the near term if estimates of future revenue during the subsequent period are reduced.


Mar 31, 2021

Corporate Information

Alkyl Amines Chemicals Limited (the ‘Company’) is a public limited company, domiciled in India. Its shares are listed on two stock exchanges in India, viz. the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE). The Company is engaged in manufacturing and selling of specialty chemicals.

1. Significant Accounting Policies

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. The policies have been consistently applied to all the years presented, unless otherwise stated.

a. Basis of Preparation

(i) Compliance with Ind AS

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (“the Act”) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

All assets and liabilities have been classified as current or non-current, as per the Company’s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013 and as per Ind AS-1.

Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/ non-current classification of assets and liabilities.

(ii) Historical cost convention

The financial statements have been prepared on a historical cost basis using accrual method of accounting, except for the following:

- Certain financial assets and liabilities (including derivative instruments) that are measured at fair value;

- Defined Benefit Plans — Plan Assets measured at fair value;

b. Segment Reporting

Ind AS 108 - Operating Segments, requires Management to determine reportable segments for the purpose of disclosure in financial statements, based on internal reporting reviewed by the Chief Operating Decision Maker (CODM) to assess performance and allocate resources. The standard also requires Management to make judgements with respect to aggregation of certain operating segments into one or more reportable segments.

The Company has determined that the Chief Operating Decision Maker (CODM) is the Board of Directors (BOD), based on its internal reporting structure and functions of BOD. The Operating Segment used to present segment information identified based on the internal reports used and reviewed by the BOD to assess performance and allocate resources. The Management has determined that some of the segments exhibit similar economic characteristics and meet other aggregation criteria and accordingly aggregated into reportable primary operating segment i.e. “Specialty Chemicals” and two reportable geographical segments based on location of its customers i.e. “Domestic” and “Exports”.

c. Foreign Currency Translation

(i) Functional and presentation currency: Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (''the functional currency’). The financial statements are presented in Indian rupees (INR), which is the Company’s functional and presentation currency.

(ii) Transactions and balances: Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary Assets and Liabilities denominated in foreign currencies at year end exchange rates are generally recognized in the Statement of Profit and Loss.

(iii) Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of Profit and Loss, as part of finance costs. All other foreign exchange gains and losses are presented in the Statement of Profit and Loss on a net basis as part of other gains/ (losses).

d. Revenue Recognition

(i) Sales of Manufactured Goods: Revenue is measured at fair value of consideration received or receivable for goods supplied or services rendered. Revenue from the sale of goods and services is recognized when the company performs its obligation to its customer and amount of revenue can be measured reliably and the recovery of consideration is probable. ‘Sales’ which are net of returns includes packing charges which are net of returns, excluding amounts collected on behalf of third parties such as Goods and Services Tax. The Company derives revenues primarily from sale of manufactured goods, traded goods and related services.

Revenue from the sale of goods is recognized when the control over the goods is transferred to the customer, which is mainly upon the delivery of the goods, and in the case of services, in the period in which such services are rendered, and there are no unfulfilled obligations.

The Company does not adjust transaction prices for the time value of money as it does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year.

(ii) Recognition of Export Benefits: Export Benefit Entitlements are recognized in the year in which the export sales are accounted for, only to the extent there is a reasonable certainty of its ultimate collection.

e. Income Tax

Income Tax expense comprises of current tax expense and the net change in the deferred tax asset or liability during the year. Current and deferred tax are recognized in the Statement of Profit and Loss, except when they relate to items that are recognized in Other Comprehensive Income (OCI) or directly in equity, in which case, the current and deferred tax are also recognized in OCI, or directly in equity, respectively.

Tax: Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year. The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction. The Company periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions wherever appropriate on the basis of amounts expected to be paid to the tax authorities.

f. Deferred Tax

Deferred income tax assets and liabilities are recognized 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 recognized 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 utilized.

The carrying amount of a Deferred Tax Asset is 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 utilized.

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 to taxable income in the years in which those temporary differences are expected to recovered or settled.

Deferred Tax Assets and Liabilities are offset when there is a legally enforceable right to offset current tax Assets and Liabilities and when it relates to income taxes levied by the same taxation authority and the entity intends to settle its current tax Assets and Liabilities simultaneously.

g. Leases

The Company applied a single recognition and measurement approach for all leases for which it is the lessee, except for shortterm leases and leases of low value assets. The Company recognised lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Land (Leasehold) is carried at cost less amortization;

Leasehold land and Leasehold improvements are being amortized on the straight line method over the period of lease.

The Company elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option (short-term leases), and lease contracts for which the underlying asset is of low value (low-value assets).

Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

h. Impairment of Assets

If internal / external indications suggest that an asset of the Company may be impaired, the recoverable amount of the asset/ cash generating unit is determined on the date of Balance Sheet and if it is less than its carrying amount, the carrying amount of asset/ cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognized, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognized for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net

selling price and value in use of such assets/ cash generating unit, which is determined by the present value of the estimated future cash flows.

An impairment of Intangible Assets is conducted annually or more often if there is an indication of any decrease in value. The impairment loss, if any, is charged to the Statement of Profit and Loss.

Non-financial Assets that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

i. Cash and Cash Equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments, with original maturities of three months or less, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown as apart of borrowings in Current Liabilities in the Balance Sheet.

j. Trade Receivables

Trade receivables are recognized and measured at amortized cost less provision for expected credit losses, if any.

k. Investments

(i) Investments are carried at cost less accumulated impairment, if any.

(ii) Profit or loss on sale of investments, if any, is calculated by considering the weighted average amount of the total holding of the investment.

l. Inventories

(i) Raw materials, packing materials, stores and spares, furnace oil and fuel are valued at cost or net realizable value, whichever is lower. Cost comprises of basic cost (net of GST, if any) and other costs incurred in bringing them to their respective present location and condition. Cost is determined on a Weighted Average basis.

(ii) Work-in-Progress and finished goods are valued at cost or net realizable value, whichever is lower. Cost includes all direct costs and a proportion of other fixed manufacturing overheads based on normal operating capacity. Cost is determined on a Weighted Average basis. Net realizable 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.

However, materials and other items held for use in production of finished goods are not written down below the cost if the finished goods in which they will be incorporated are expected to be sold above cost.

(iii) Catalysts which have a life of less than one year are treated as inventory and are valued at cost or net realizable value, whichever is lower. Cost comprises of basic cost (net of GST, if any) and other costs incurred in bringing them to their respective present location and condition. Cost is determined on a weighted average basis.

m. Financial Assets

(i) Classification: The Company classifies its financial Assets under the following measurement categories:

- Those measured at amortized cost.

- Those to be measured subsequently at fair value (through Statement of Profit and Loss), and

- Those to be measured subsequently at fair value (through OCI).

The classification depends on the Company’s business model for managing the Financial Assets and the contractual terms of the cash flows.

For Assets/ Liabilities measured at fair value, gains and losses are recorded in Statement of Profit and Loss or Other Equity.

(ii) Measurement: Financial Asset include Investment, Trade Receivable, Advances, Security Deposits, Cash and Cash Equivalents. These are initially recognised at transaction price, when the company becomes party to contractual obligation. The transaction price includes transaction costs unless the asset is being fair valued through the Statement of Profit and Loss.

Debt instruments :-

Subsequent measurement of debt instruments depends on the Company’s business model for managing the Asset and the cash flow characteristics of the Asset. There are three measurement categories under which the Company classifies its debt instruments:

(a) Amortized cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost is recognized as profit or loss, when the asset is derecognized or impaired. Interest income from these financial assets is included in finance income.

(b) Fair value through OCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at fair value through OCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in Statement of Profit and Loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to Statement of Profit and Loss and recognized in other gains/ (losses). Interest income from these financials assets is included in Other Income.

(c) Fair value through Statement of Profit and Loss: Assets that do not meet the criteria for amortized cost or Fair Value through Other Comprehensive Income (FVOCI), are measured at fair value through Statement of Profit and Loss. A gain or loss on a debt investment that is subsequently measured at fair value through Statement of Profit and Loss and is not part of a hedging relationship, is recognized as profit or loss and presented net in the Statement of Profit and Loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in Other Income.

Equity Instruments

An equity instrument is any contract that evidences a residual interest in the Assets of the Company, after deducting all of its liabilities. Equity Instruments are recorded at the proceeds received, net of direct issue cost.

(iii) Impairment of Financial Assets: The Company assesses, on a forward looking basis, the expected credit losses associated with its Assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in the 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 recognized from initial recognition of the receivables.

(iv) De-recognition of Financial Assets : A Financial Asset is derecognized only when :

- the Company has transferred the rights to receive cash flows from the Financial Asset, or

- retains the contractual rights to receive the cash flows of the Financial Asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

(v) Income recognition: Interest income from debt instruments is recognized using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the Financial Asset to the gross carrying amount of a 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 (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.

n. Financial Liabilities

Borrowings, Trade Payables and other Financial Liabilities are initially recognized at their respective contractual obligations. They are subsequently measured at amortized cost. Any discount or premium on redemption/settlement is recognized in the Statement of Profit and Loss as finance cost, over the life of the liability, using the effective interest method, is adjusted to the liability figure disclosed in the Balance Sheet.

Financial Liabilities are derecognized when the liability is extinguished i.e. when the contractual obligation is discharged or cancelled on expiry.

o. Derivative Financial Instruments and Hedge Accounting

In order to manage its exposure to foreign currency risks for highly probable forecast transactions for exports and imports, the Company enters into forward contracts. Further, to hedge interest rate and foreign currency risks from External Commercial Borrowings, the Company enters into Cross Currency Interest Rate Swap. The Company does not use derivatives for trading or speculation purposes.

The Company designates a hedge as a cash flow hedge if the hedge relationship between the hedging instrument and hedged item is established and is effective at the inception of the derivative contract.

At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions.

‘All derivative contracts are initially recognized at fair value on the date of the derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged and the type of hedge relationship designated. The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges is recognized in OCI in the Cash Flow Hedge Reserve under Other Equity. In such cases, gains or losses are reclassified to Statement of Profit and Loss when, the impact from hedged item is recognized in the Statement of Profit and Loss.

The gain or loss on the ineffective portion is recognized immediately in Statement of Profit and Loss. Derivatives are carried as Financial Assets when the fair value is positive and Financial Liabilities when the fair value is negative."

p. Property, Plant and Equipment and Others

(i) The Company has adopted the cost model as its accounting policy for all its Property, Plant and Equipment and accordingly, the same are reflected as under:

Land (Freehold) is carried at cost;

Other items of Assets are carried at cost less accumulated depreciation/amortization and impairment losses, if any.

(ii) An item of Property, Plant and Equipment is recognized as an Asset, if 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. Items such as spare parts, standby equipment and servicing equipment are recognized under property, plant and equipment, if those meet the definition thereof; else, such spare parts, etc. are classified as inventory.

(iii) The cost comprises of - purchase price (net of goods and service tax), including import duties and non-refundable taxes, after deducting trade discounts and rebates, any cost incurred which is directly attributable to bring the Asset to the location and condition necessary for it to be capable of operating in the manner intended by management and interest on borrowings attributable to the acquisition of qualifying Assets up to the date on which the Asset is ready for its intended use, if any. It also includes exchange difference capitalized, if any, in terms of Ind AS 21 on “Effects of Changes in Foreign Exchange Rates”.

(iv) Items of Property, Plant and Equipment which are not yet ready to be capable of operating in the manner intended by management are carried at cost, comprising direct cost, related incidental expenses and attributable interest, and are disclosed as “Capital Work-in-progress”. Advances paid towards the acqusition of Property, Plant & Equipment outstanding as at the Balance Sheet date is classified as “capital advances” under other non-current assets.

(v) Items of Property, Plant and Equipment which are retired from active use and held for disposal, and where the sale is highly probable, are classified as “Assets held for disposal” under “Other Current Assets” the same are carried at the lower of their carrying amount and net realizable value.

(vi) Intangible Assets not ready for the intended use on the date of the Balance Sheet are disclosed as “Intangible Assets under Development”.

Depreciation methods, estimated useful lives and residual value

(i) The charge of depreciation on Property, Plant and Equipment is commenced when the relevant asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

(a) Where the cost of a part of the Asset which is significant to the total cost of the Asset and useful life of the part is different from the useful life of the remaining Asset, the Company has determined the useful life of the significant part separately (“Component Accounting”) and accordingly, provided depreciation on such parts.

b) Depreciation on Plant and Machinery (including those identified under the Component Accounting) other than those not specifically covered under the classification ‘Special Plant and Machinery used in manufacturing of Chemicals’ and Roads is provided on the straight line method over the useful lives as determined by the internal technical evaluation done by the management’s expert, which are as follows:

Spare parts, stand-by equipment and servicing equipment: 10 years.

Catalyst: 5 years.

Other Property, Plant and Equipment: 12 to 25 years.

Roads : 10 to 25 years

The Management believes that the useful lives, as determined, best represent the period over which it expects to use these Assets. Hence, the useful lives for such Plant and Machinery and Roads are different from the useful lives as prescribed under Part C of Schedule II of Companies Act, 2013.

Depreciation method, useful life and residual values are reviewed at each balance sheet date and changes if any are accounted prospectively.

(ii) Intangible Assets are amortized on the straight line method over their estimated useful life as follows:

Development of R & D Products/Processes (Internally generated): 5 years.

Patents: 10 years.

REACH Registration: 5 years.

Computer Software: 10 years.

(iii) Depreciation on Assets purchased/sold during the period is proportionately charged from /up to the date on which it is available for use/ disposed off.

(iv) The residual values are not more than 5% of the original cost of the assets. The asset’s residual values and useful lives are reviewed, and adjusted if appropriate.

q. Trade and Other Payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as Current Liabilities, if payment is due within 12 months from the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.

r. Borrowings

Borrowings are initially valued at their contractual obligations, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized as profit or loss over the period of the borrowings using the effective interest method.

Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.

Borrowings are classified as Current Liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender has not demanded payment, after the reporting period and before the approval of the financial statements for issue, as a consequence of the breach.

s. Borrowing Costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying Asset are capitalized during the period of time that is required to complete and prepare the Asset for its intended use or sale. Qualifying Assets are Assets that necessarily take a substantial period of time to get ready for their intended use or sale.

income earned on the temporary investment of specific borrowings pending their expenditure on qualifying Assets is deducted from the borrowing costs eligible for capitalization.

Other borrowing costs are expensed in the period in which they are incurred. Borrowing costs comprise of interest and other cost incurred in connection with borrowing of funds.

t. Employee Benefits

(i) Short-term obligations: Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The Liabilities are presented as current employee benefit obligations in the Balance Sheet.

(ii) Other long-term employee benefit obligations: The liabilities for privilege leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are, therefore, measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period, using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognized as profit or loss. The obligations are presented as Current Liabilities in the Balance Sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

(iii) Post-employment obligations: The Company operates the following post-employment schemes:

(a) Defined benefit plans such as gratuity: In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (‘Gratuity Plan’) covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued based on actuarial valuation at the Balance Sheet date carried out by an independent actuary. Actuarial gain or loss is recognized immediately in the Statement of Profit and Loss as income or expense. The Company has an employee gratuity fund managed by Life Insurance Corporation of India (‘LIC’), except for the Managing Director, for which also the necessary provision is made based on an actuarial valuation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss.

Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in OCI. They are included in retained earnings in the statement of changes in equity and in the Balance Sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in the Statement of Profit and Loss as past service cost.(b) Defined contribution plans such as provident fund: The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an Asset to the extent that a cash refund or a reduction in the future payments is available.

(iv) Share based payment transactions:

Employee Stock Option Plans (“ESOPs”):

The fair value of options determined at the grant date is recognized as an employee expense on a straight line basis (on the basis of multiple vesting of options granted), with a corresponding increase in other equity under “Employee Stock Options Outstanding account”, over the vesting period of the grant,where the employee becomes unconditionally entitled to the options. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest.The impact of the revision of the original estimates, if any, is recognised in the Statement of Profit and Loss such that the cumulative expenses reflects the revised estimate, with a corresponding adjustment to the “Employee Stock Options Outstanding account”.

Stock Options are granted to eligible employees in accordance with “Alkyl Amines Employees Stock Option Plan” (ESOPs 2018), as approved by the Shareholders and the Nomination and Remuneration Committee of the Board of Directors (the Committee) in accordance with the SEBI (Share based employee benefits) Regulations, 2014.

Eligible employees for this purpose includes employees falling under below schemes:

Plan A : Rewards ESOPs (based on past performance)

Plan B : Retention ESOPs (based on future performance)

Under Ind AS 102 on Share based Payment, the cost of stock options is recognised based on the fair value of stock options as on the grant date (refer note 30B).

u. Research and Development Costs

(i) Revenue expenditure on research, if any, is charged in the Statement of Profit and Loss of the year in which it is incurred.

(ii) Development Expenditure:

a) Incurred on development of new processes for products which, as per the Management, are completed and are expected to generate future economic benefits, are shown as internally generated Intangible Assets and are amortized in accordance with policies stated for amortization under the head “Depreciation methods, estimated useful lives and residual value” (refer note no. 1.p.ii.)

b) Incurred on development of new processes for products which, as per the Management, are yet to be completed, are reflected as Intangibles Under Development.

c) Other development expenses are charged to the Statement of Profit and Loss in the year in which they are incurred.

v. Contributed Equity

Equity shares are classified as Equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

w. Earnings Per Share

(i) Basic earnings per share: It is calculated by dividing the profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year.

(ii) Diluted earnings per share: Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account

(a) The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

(b) The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares, except where the results would be anti-dilluted.

x. Provisions, Contingent Liabilities and Contingent Assets

The Company recognizes a provision, when there is a present obligation as a result of past events, the settlement of which is probable to result in an outflow of resources and a reliable estimate can be made of the amount of obligation.

Contingent Liabilities are disclosed by way of a note to the financial statements after careful evaluation by the Company of the facts and legal aspects of the matters involved. ntb

y. Government Grant

Government Grants are recognized at their fair value when there is reasonable assurance that the grant will be received and all the attached conditions will be complied with.

“When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. Government grant related to the non-monetary asset are recognised at nominal value and presented by deducting the same from carrying amount of related asset and the grant is then recognised in profit or loss over the useful life of the depreciable asset by way of a reduced depreciation charge.”

2. Critical Judgments, Estimates and Assumptions

The preparation of financial statements requires the Company to make estimates, assumptions and judgments that affect the reported balances of Assets and Liabilities and disclosures as at the date of the financial statements and the reported amounts of income and expenses for the period presented.

The estimates and the associated assumptions are based on historical experience and the other factors that are considered to be relevant. Actual results may differ from the estimates under different assumptions and conditions.

Estimates and the underlying assumptions are reviewed on an ongoing basis. Impact on account of revisions to accounting estimates are recognized in the period in which the estimates are revised and future periods are affected.

The estimates and assumptions that have significant risk of causing a material adjustment to the carrying value of Assets and Liabilities within the next financial year are discussed below.

(i) Judgments:

In the process of applying the Company’s accounting policies, Company has made the following judgments, which have the most significant effect on the amounts recognized in the financial statements:

a. Arrangements in the nature of lease

The Company has entered into sub-contracting arrangements with its service providers wherein the Company supplies all the raw materials required for the manufacture and/ or processing along with specifications to manufacture the products to the service provider, thereby retaining the title to all products.

The Company has also entered into a sub-contracting arrangement as a service provider wherein the Company processes the goods based on all the raw materials supplied to it for the manufacture and/ or processing along with specifications to manufacture the products, the title to which remains with the customer.”

The Company has determined, based on the evaluation of terms and conditions of the arrangement that it qualifies as an arrangement in the nature of operating lease with a variable rate contract.

b. Segment Reporting

“Ind AS 108- Operating Segments requires the Company to determine the reportable segments for the purpose of disclosure in financial statements based on the internal reporting reviewed by the Board of Directors to assess the performance and allocate resources. The standard also requires the Company to make judgments with respect to aggregation of certain operating segments into one or more reportable segment.

Operating segments used to present segment information are identified based on the internal reports used and reviewed to assess performance and allocate resources. The Company has determined that some of the segments exhibit similar economic characteristics and meet other aggregation criteria and are accordingly aggregated into one primary reportable segment i.e. ‘Speciality Chemicals’ and two geographical reportable segments i.e. domestic and exports."

c. Stores and Spares Inventories

“The Company’s manufacturing process is continuous and highly technical with wide range of different types of plants and machineries. The Company keeps stores and spares as a standby to run the operations without any disruption. Considering the wide range of stores and spares and long lead times for their procurement, and based on criticality of spares, the Company believes that their net realizable value would be more than cost.“

d. Income Taxes

The Company in making judgement for the resolution of the uncertainty over income tax treatments as per Appendix C to Ind AS 12, The Company has considered; (a) how it prepares its income tax filings and supports tax treatments; or (b) how the entity expects the taxation authority to make its examination and resolve issues that might arise from that examination. The Company determined, based on its tax compliance, that it is probable that its tax treatments will be accepted by the taxation authorities. The Appendix does not apply to taxes or levies outside the scope of Ind AS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. Thus, the said Appendix did not have a material impact on the financial statements of the Company.

e. Contingent Liability Judgment

Note-27 describes claims against the Company not acknowledged as debt. It includes certain penalties and charges payable to a Government agency although as per the contracts, the Company, based on past experience, believes that the penalties and charges are negotiable and not certain, and accordingly, are not considered as an obligation as at the Balance Sheet date and are disclosed as Contingent Liabilities.

(ii) Estimates and Assumptions:

The key assumptions concerning the future and other key sources of estimation, uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of Assets and Liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

a. Defined Benefit Plans (Gratuity Benefits)

“The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds. The mortality rate is based on Indian Assured Lives Mortality (2006-08). Those mortality tables tend to change only at intervals in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about gratuity obligations are given in Note 30A.“

b. Fair Value Measurement of Financial Instruments

When the fair values of Financial Assets and Financial Liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques, including the Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible; but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer Note 42 for further disclosures.

c. Impairment of Non-Financial Assets

The Company has assessed certain Assets that do not have a future economic benefit. Such assessment involves estimates of availability of future cash flows and other alternative uses of the respective Assets. The Company reviews its carrying value of Assets carried at amortized cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for.

d. Useful Life of Property, Plant and Equipment and Others

The Company reviews the estimated useful lives and residual values of Property, Plant and Equipment (PPE) and Intangible Assets as at the end of each reporting year. The factors, such as changes in the expected level of usage, number of shifts of production, technological developments, units of production and product life cycle, could significantly impact the economic useful lives and the residual values of Assets. Consequently, the future depreciation and amortization charge could be revised and thereby could have impact on the profit of the future years.

e. Litigations

From time to time, the Company is subjected to legal proceedings, the ultimate outcome of each being always subject to many uncertainties inherent in litigations. A provision is made when it is considered probable that payment will be made and the amount of the loss can be reasonably estimated. Significant judgment is made when evaluating, among other factors, the probability of unfavourable outcome and the ability to make a reasonable estimate of the amount of potential loss. Litigation provisions are reviewed at each accounting year and revisions made for the changes in facts and circumstances.

f. Cash Flow Hedge Reserve

The Cash Flow hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. It will be reclassified to the Statement of Profit and Loss only when the hedged transaction affects the profit or loss or included as a basis adjustment to the non-financial hedged item.

g. Provision for expected credit losses (ECL) of trade receivables

“The Company uses a provision matrix to calculate ECLs for trade receivables. The provision matrix is based on the Company’s historical observed default rates which are negligible over the years. The Company will calibrate the matrix to adjust the historical credit loss experience with forward-looking information. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Company’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. However based on the information about the historical data the ECLs on the Company’s trade receivables considered as Nil.”


Mar 31, 2018

1. SIGNIFICANT ACCOUNTING POLICIES

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. The policies have been consistently applied to all the years presented, unless otherwise stated.

a) Basis of Preparation

(i) Compliance with Ind AS

The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

The financial statements up to year ended March 31, 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.

These financial statements are the first financial statements of the Company under Ind AS. Refer note 44 for an explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows.

All Assets and Liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013 and as per Ind AS-1.

Based on the nature of products and the time between acquisition of Assets for processing and their realization in Cash and Cash Equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of Assets and Liabilities.

(ii) Historical cost convention

The financial statements have been prepared on a historical cost basis using accrual method of accounting, except for the following:

- Certain Financial Assets and Liabilities (including derivative instruments) that are measured at fair value;

- Defined Benefit Plans — Plan Assets measured at fair value;

b) Segment Reporting

Ind AS 108 Operating Segments requires Management to determine reportable segments for the purpose of disclosure in financial statements based on internal reporting reviewed by Chief Operating Decision Maker (CODM) to assess performance and allocate resources. The standard also requires Management to make judgments with respect to aggregation of certain operating segments into one or more reportable segments.

The Company has determined that the Chief Operating Decision Maker (CODM) is the Board of Directors (BOD), based on its internal reporting structure and functions of BOD. Operating Segment used to present segment information identified based on the internal reports used and reviewed by the BOD to assess performance and allocate resources. The Management has determined some of segments exhibit similar economic characteristics and meets other aggregation criteria and accordingly aggregated into reportable primary operating segment i.e. “Specialty Chemicals” and two reportable geographical segments based on location of its customers i.e. ‘Domestic” and ‘Exports”.

Segment Policies: The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

c) Foreign Currency Translation

(i) Functional and presentation currency: Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (''the functional currency’). The financial statements are presented in Indian rupee (INR), which is Alkyl Amines Chemicals Limited’s functional and presentation currency.

(ii) Transactions and balances: Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary Assets and Liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss. A monetary item for which settlement is neither planned nor likely to occur in the foreseeable future is considered as a part of the entity’s net investment in that foreign operation.

(iii) Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of Profit and Loss, as part of finance costs. All other foreign exchange gains and losses are presented in the Statement of Profit and Loss on a net basis as part of other gains / (losses).

d) Revenue Recognition

(i) Sales of Manufactured Goods: Revenue is measured at fair value of consideration received or receivable. Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.’Sales’ include packing charges, excise duty and are net of returns, excluding amounts collected on behalf of third parties such as Value Added Tax and Goods and Services Tax.

Revenue from sales is recognized when the significant risks and rewards of ownership are transferred to the customers which is based upon the terms of contract and the Company retains no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exists regarding the determination of the amount of consideration or its associated costs, that will be derived from the sale of goods.

(ii) Recognition of Export Benefits: Export Benefit Entitlements are recognized only to the extent there is a reasonable certainty of its ultimate collection in the year in which the Export Sales are accounted for.

e) Income Tax

Income Tax expense comprises of current tax expense and the net change in the Deferred Tax Asset or Liability during the year. Current and deferred tax are recognized in the Statement of Profit & Loss, except when they relate to items that are recognized in Other Comprehensive Income (OCI) or directly in equity, in which case, the current and deferred tax are also recognized in OCI or directly in equity, respectively.

Current Tax: Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year. The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction. The Company periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions wherever appropriate on the basis of amounts expected to be paid to the tax authorities.

f) Deferred Tax

Deferred income tax Assets and Liabilities are recognized 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 recognized 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 utilized.

The carrying amount of a Deferred Tax Asset is 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 utilized.

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 there lasted Deferred Tax Asset is realized 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 it relates to income taxes levied by the same taxation authority and the entity intends to settle its current tax Assets and Liabilities simultaneously.

g) Leases

Leases of Property, Plant and Equipment by the Company, where the Company as a lessee, wherein all the risks and rewards of ownership are transferred substantially to the Company, are classified as finance leases. Finance leases are capitalized at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other Financial Liabilities, as appropriate. Each lease payment is allocated between the Liability and finance cost. The finance cost is charged to the Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the Liability for each period.

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Statement of Profit and Loss, on a straight-line basis (except sub contracting arrangements), over the period of the lease, unless the payments are structured to increase in line with expected general inflation to compensate for the lessor’s expected inflationary cost increases.

h) Impairment of Assets

If internal/external indications suggest that an Asset of the Company may be impaired, the recoverable amount of Asset/Cash Generating Unit is determined on the date of Balance Sheet and if it is less than its carrying amount, the carrying amount of

Asset/Cash Generating Unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognized, so that recoverable amount of an Asset exceeds its carrying amount, an impairment recognized for an Asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such Assets/Cash Generating Unit, which is determined by the present value of the estimated future cash flows.

An impairment of Intangible Assets is conducted annually or more often if there is an indication of any decrease in value. The impairment loss, if any, is charged to the Statement of Profit and Loss.

Non-financial Assets that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

i) Cash and Cash Equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown as a part of borrowings in Current Liabilities in the Balance Sheet.

j) Trade Receivables

Trade receivables are recognized and measured at amortized cost less provision for impairment, if any.

k) Investments

(i) Investments are carried at cost less accumulated impairment, if any.

(ii) Profit or loss on sale of investments, if any, is calculated by considering the weighted average amount of the total holding of the investment.

l) Inventories

(i) Raw materials, packing materials, stores and spares, furnace oil and fuel are valued at cost or net realizable value, whichever is lower. Cost comprises of basic cost (net of GST, CENVAT and VAT, if any) and other costs incurred in bringing them to their respective present location and condition. Cost is determined on a Weighted Average basis.

(ii) Work-in-Progress and finished goods are valued at cost or net realizable value, whichever is lower. Cost includes all direct costs and a proportion of other fixed manufacturing overheads based on normal operating capacity. Cost is determined on a Weighted Average basis. Net realizable 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.

m) Financial Assets

(i) Classification: The Company classifies its financial Assets in the following measurement categories:

- Those measured at amortized cost.

- - Those to be measured subsequently at fair value (through Statement of Profit and Loss), and

- Those to be measured subsequently at fair value (through OCI).

The classification depends on the Company’s business model for managing the Financial Assets and the contractual terms of the cash flows.

For Assets/Liabilities measured at fair value, gains and losses are recorded in Statement of Profit and Loss or Other Equity.

(ii) Measurement: At initial recognition, the Company measures a Financial Asset at its fair value plus, in the case of a Financial Asset not at Fair value through Statement of Profit and Loss, transaction costs that are directly attributable to the acquisition of the Financial Asset. Transaction costs of Financial Assets carried at fair value through Statement of Profit and Loss are expensed in Statement of Profit and Loss.

Debt instruments

Subsequent measurement of debt instruments depends on the Company’s business model for managing the Asset and the cash flow characteristics of the Asset. There are three measurement categories under which the Company classifies its debt instruments:

- Amortized cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost is recognized as profit or loss, when the Asset is derecognized or impaired. Interest income from these Financial Assets is included in finance income.

- Fair value through OCI: Assets that are held for collection of contractual cash flows and for selling the Financial Assets, where the Assets’ cash flows represent solely payments of principal and interest are measured at fair value through OCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in statement of profit or loss. When the Financial Asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to statement of profit or loss and recognized in other gains / (losses). Interest income from these Financials Assets is included in other income.

- Fair value through statement of profit or loss: Assets that do not meet the criteria for amortized cost or Fair Value thrugh Other Comprehensive Income (FVOCI), are measured at Fair value through statement of profit or loss. A gain or loss on a debt investment that is subsequently measured at Fair value through statement of profit or loss and is not part of a hedging relationship is recognized in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these Financial Assets is included in Other income.

Equity Instruments

An equity instrument is any contract that evidences a residual interest in the Assets of the Company after deducting all of its liabilities. Equity Instruments are recorded at the proceeds received, net of direct issue costs.

(iii) Impairment of Financial Assets: The Company assesses on a forward looking basis the expected credit losses associated with its Assets carried at amortized cost. 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 recognized from initial recognition of the receivables.

(iv) De-recognition of Financial Assets : A Financial Asset is derecognized only when

- the Company has transferred the rights to receive cash flows from the Financial Asset or

- retains the contractual rights to receive the cash flows of the Financial Asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

(v) Income recognition: Interest income from debt instruments is recognized using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the Financial Asset to the gross carrying amount of a 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 (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.

n) Financial Liabilities

Borrowings, Trade Payables and other Financial Liabilities are initially recognized at their respective contractual obligations. They are subsequently measured at amortized cost. Any discount or premium on redemption/settlement is recognized in the Statement of Profit and Loss as finance cost over the life of the liability using the effective interest method and adjusted to the liability figure disclosed in the Balance Sheet.

Financial Liabilities are derecognized when the liability is extinguished that is, when the contractual obligation is discharged, cancelled on expiry.

o) Derivative Financial Instruments and Hedge Accounting

In order to manage its exposure to foreign currency risks for highly probable forecast transactions for exports and imports, the Company enters into forward contracts. Further, to hedge interest rate and foreign currency risks from External Commercial Borrowings, the Company enters into Cross Currency Interest Rate Swap. The Company does not use derivatives for trading or speculation purposes.

The Company designates a hedge as a cash flow hedge if the hedge relationship between the hedging instrument and hedged item is established and is effective at the inception of the derivative contract.

At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions.

All derivative contracts are initially recognized at fair value on the date of the derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged and the type of hedge relationship designated. The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges is recognized in OCI in the Cash Flow Hedge Reserve under Other Equity. In such cases, gains or losses are reclassified to Statement of Profit and Loss when, the impact from hedged item is recognized in the Statement of Profit and Loss. The gain or loss on the ineffective portion is recognized immediately in Statement of Profit and Loss. Derivatives are carried as Financial Assets when the fair value is positive and Financial Liabilities when the fair value is negative.

p) Property, Plant and Equipment and Others

(i) The Company has adopted the cost model as its accounting policy for all its Property, Plant and Equipment and accordingly, the same are reflected as under:

Land (Freehold) is carried at cost;

Land (Leasehold) is carried at cost less amortization;

Other items of Assets are carried at cost less accumulated depreciation/amortization and impairment losses, if any.

(ii) An item of Property, Plant and Equipment is recognized as an Asset, if 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. Items such as spare parts, stand by equipment and servicing equipment are recognized under property, plant and equipment, if those meet the definition thereof; else, such spare parts, etc. are classified as inventory.

(iii) The cost comprises of - purchase price (net of CENVAT/ value added tax/goods and service tax), including import duties and non-refundable taxes, after deducting trade discounts and rebates, any cost incurred which is directly attributable to bring the Asset to the location and condition necessary for it to be capable of operating in the manner intended by management and interest on borrowings attributable to the acquisition of qualifying Assets up to the date on which the Asset is ready for its intended use, if any. It also includes exchange difference capitalized, if any, in terms of Ind AS 21 on “Effects of Changes in Foreign Exchange Rates”.

(iv) Items of Property, Plant and Equipment which are not yet ready to be capable of operating in the manner intended by management are carried at cost, comprising direct cost, related incidental expenses and attributable interest, and are disclosed as “Capital Work-in-progress”.

(v) Items of Property, Plant and Equipment which are retired from active use and held for disposal, and where the sale is highly probable, are classified as ‘Assets held for disposal” under “Other Current Assets”. The same are carried at the lower of their carrying amount and net realizable value.

(vi) Intangible Assets not ready for the intended use on the date of the Balance Sheet are disclosed as “Intangible Assets under Development”.

Depreciation methods, estimated useful lives and residual value:

(i) The charge of depreciation on Property, Plant and Equipment is commenced when the relevant asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

(a) Where the cost of a part of the Asset which is significant to total cost of the Asset and useful life of the part is different from the useful life of the remaining Asset, the Company has determined the useful life of the significant part separately (“Component Accounting”) and accordingly, provided depreciation on such parts.

(b) Depreciation on Plant and Machinery (including those identified under the Component Accounting) other than those not specifically covered under the classification ‘Special Plant and Machinery used in manufacturing of Chemicals’ is provided on the straight line method over the useful lives as determined by the internal technical evaluation as follows:

- Spare parts, stand-by equipment and servicing equipment: 10 years.

- Catalyst: 5 years.

- Other Property, Plant and Equipment: 15 to 25 years.

The Management believes that the useful lives as determined best represent the period over which it expects to use these Assets which is the same as the useful life of the Special Plant and Machinery. Hence, the useful lives for such Plant and Machinery are different from the useful lives as prescribed under Part C of Schedule II of Companies Act, 2013.

(c) Leasehold land and Leasehold improvements are being amortized on the straightline method over the period of lease.

(ii) Intangible Assets are amortized on the straight line method over their estimated useful life as follows:

- Development of R & D Products/Processes (Internally generated): 5 years.

- Patents: 10 years.

- REACH Registration: 5 years.

- Computer Software: 10 years.

(iii) Depreciation for Assets purchased/sold during the period is proportionately charged.

q) Non-current Asset Held for Sale

Non-current Assets are classified as held for sale if their carrying amount will be recovered, principally through a sale transaction rather than through continuing use and a sale, is considered highly probable. These Assets classified as held for sale are not depreciated or amortized from the date when they are classified as held for sale. They are presented separately from the other Assets and Liabilities in the Balance Sheet.

r) Trade and Other Payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as Current Liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.

s) Borrowings

Borrowings are initially valued at their contractual obligations, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized as profit or loss over the period of the borrowings using the effective interest method.

Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.

Borrowings are classified as Current Liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender has not demanded payment, after the reporting period and before the approval of the financial statements for issue, as a consequence of the breach.

t) Borrowing Costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying Asset are capitalized during the period of time that is required to complete and prepare the Asset for its intended use or sale. Qualifying Assets are Assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying Assets is deducted from the borrowing costs eligible for capitalization.

Other borrowing costs are expensed in the period in which they are incurred. Borrowing costs comprise of interest and other cost incurred in connection with borrowing of funds.

u) Employee Benefits

(i) Short-term obligations: Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The Liabilities are presented as current employee benefit obligations in the Balance Sheet.

(ii) Other long-term employee benefit obligations: The liabilities for privileged leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognized in profit or loss. The obligations are presented as Current Liabilities in the Balance Sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

(iii) Post-employment obligations: The Company operates the following post-employment schemes:

(a) Defined benefit plans such as gratuity: In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (‘Gratuity Plan’) covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued based on actuarial valuation at the Balance Sheet date carried out by an independent actuary. Actuarial gain or loss is recognized immediately in the Statement of Profit and Loss as income or expense. The Company has an employee gratuity fund managed by Life Insurance Corporation of India (‘LIC’), except for the Managing Director, for which also the necessary provision is made based on an actuarial valuation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss.

Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in OCI. They are included in retained earnings in the statement of changes in equity and in the Balance Sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in the Statement of Profit and Loss as past service cost.

(b) Defined contribution plans such as provident fund: The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an Asset to the extent that a cash refund or a reduction in the future payments is available.

v) Research and Development Costs

(i) Revenue expenditure on research, if any, is charged in the Statement of Profit and Loss of the year in which it is incurred.

(ii) Development Expenditure:

a) Incurred on development of new processes for products which, as per the Management, are completed and are expected to generate future economic benefits, are shown as internally generated Intangible Assets and are amortized in accordance with policies stated for amortization under the head ‘Depreciation methods, estimated useful lives and residual value” (refer note no. 1.p.ii.)

b) Incurred on development of new processes for products which, as per the Management, are yet to be completed, are reflected as Intangibles Under Development;

c) Other development expenses are charged to the Statement of Profit and Loss in the year in which it is incurred.

w) Contributed Equity

Equity shares are classified as Equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

x) Earnings Per Share

i) Basic earnings per share: It is calculated by dividing

- The profit attributable to owners of the Company

- By the weighted average number of equity shares outstanding during the financial year

ii) Diluted earnings per share: Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account:

- The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

- The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

y) Provisions, Contingent Liabilities and Contingent Assets

The Company recognizes a provision, when there is a present obligation as a result of past events, the settlement of which is probable to result in an outflow of resources and a reliable estimate can be made of the amount of obligation.

Contingent Liability is disclosed by way of a note to the financial statements after careful evaluation by the Company of the facts and legal aspects of the matters involved.

Contingent Assets are neither recognized nor disclosed.


Mar 31, 2017

1 SIGNIFICANT ACCOUNTING POLICIES 1.1 BASIS OF PREPARATION:

These financial statements are prepared in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention as also on accrual basis. These financial statements have been prepared to comply with the accounting standards prescribed under Section 133 of the Companies Act, 2013 (‘the Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014(‘the Accounting Standards’) and the relevant provisions of the Act (to the extent notified). In the light of Rule 4A of the Companies (Accounts) Rules 2014, the items contained in these financial statements are in accordance with the definitions and other requirements specified in the Accounting Standards.

1.2 USE OF ESTIMATES:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires Management to make estimates and assumptions to be made that affect the reported amounts of revenues and expenses during the reporting period, the reported amounts of assets and liabilities and the disclosures relating to the contingent liabilities on the date of the financial statements. Examples of such estimates include useful lives of Property, Plant and Equipment, provision for doubtful debts/advances, deferred tax etc. Actual results could differ from those estimates. Such difference is recognized in the period/s in which the results are known/materialized.

1.3 PROPERTY, PLANT AND EQUIPMENT AND OTHERS:

i. The Company has adopted the cost model as its accounting policy for all its Property, Plant and Equipment and accordingly, the same are reflected as under:

Land (Freehold) is carried at cost;

Land (Leasehold) is carried at cost less amortization;

Other items of assets are carried at cost less accumulated depreciation/amortization and impairment losses, if any.

ii. An item of Property, Plant and Equipment is recognized as an asset, hitherto referred to as fixed asset, if 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. Items such as spare parts, stand-by equipment and servicing equipment are recognized under property, plant and equipment, if those meet the definition thereof, else, such spare parts, etc. are classified as inventory.

iii. The cost comprises of - purchase price (net of CENVAT/ value added tax), including import duties and non-refundable taxes, after deducting trade discounts and rebates, any cost incurred which is directly attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and interest on borrowings attributable to the acquisition of qualifying assets up to the date on which the asset is ready for its intended use, if any. It also includes exchange difference capitalized, if any, in terms of Para 46/46A of Accounting Standard 11 on “Effects of Changes in Foreign Exchange Rates”.

iv. Items of Property, Plant and Equipment which are not yet ready to be capable of operating in the manner intended by management are carried at cost, comprising direct cost, related incidental expenses and attributable interest, and are disclosed as “Capital Work-in-progress”.

v. Items of Property, Plant and Equipment which are retired from active use and held for disposal, and where the sale is highly probable, are classified as ‘Assets held for disposal” under “Other Current Assets; the same are carried at the lower of their carrying amount and net realizable value.

vi. Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as “Intangible Assets Under Development”.

1.4 DEPRECIATION AND AMORTISATION:

i. Depreciation on Property, Plant and Equipment begins when it is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

a. Where the cost of a part of the asset which is significant to total cost of the asset and useful life of the part is different from the useful life of the remaining asset, the Company has determined the useful life of the significant part separately (“Component Accounting”) and accordingly, provided depreciation on such parts.

b. Depreciation on Plant and Machinery (including those identified under the Component Accounting) other than those not specifically covered under the classification ‘Special Plant and Machinery used in manufacturing of Chemicals’ is provided on the straight line method over the useful lives as determined by the internal technical evaluation as follows:

i. Spare parts, stand-by equipment and servicing equipment : 10 years.

ii. Catalyst : 5 years.

iii. Other Property, Plant and Equipment : 20 years.

The Management believes that the useful lives as determined best represent the period over which it expects to use these assets which is the same as the useful life of the Special Plant and Machinery. Hence, the useful lives for such Plant and Machinery are different from the useful lives as prescribed under Part C of Schedule II of Companies Act, 2013.

Exchange Differences capitalized in terms of Para 46/46A of Accounting Standard 11 on “Effects of Changes in Foreign Exchange Rates” are depreciated over the balance life of the assets from the year in which such differences have been capitalized.

c. Leasehold land and Leasehold improvements are being amortized on the straight line method over the period of lease.

ii. Intangible assets are amortized on the straight line method over their estimated useful life as follows:

a. Development of R & D Products/Processes (Internally generated) : 5 years.

b. Patents : 10 years.

c. REACH Registration : 5 years.

d. Computer Software : 10 years.

iii. Depreciation for assets purchased/sold during the period is proportionately charged.

1.5 INVESTMENTS:

i. Investments, which are long-term, are stated at cost. A provision for diminution, if any, is made to recognize a decline, other than temporary, in the value of investments.

ii. Profit or loss on sale of long-term investments, if any, is calculated by considering the weighted average amount of the total holding of the investment.

1.6 INVENTORIES:

i. Raw materials, packing materials, stores and spares, furnace oil and fuel are valued at cost or net realizable value, whichever is lower. Cost comprises basic cost (net of CENVAT and VAT, if any) and other costs incurred in bringing them to their respective present location and condition.

Cost is determined on a Weighted Average basis.

ii. Work-in-Progress and finished goods are valued at cost or net realizable value, whichever is lower.

Cost includes all direct costs and a proportion of other fixed manufacturing overheads based on normal operating capacity. Excise duty on finished goods awaiting clearance has been provided for and included in cost thereof.

Cost is determined on a Weighted Average basis.

1.7 TAXATION:

i. Current Tax: Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year.

ii. Deferred Tax : Deferred tax is recognized, subject to consideration of prudence, on timing differences between taxable and accounting income which originates in one period and are capable of reversal in one or more subsequent periods. The tax effect is calculated on accumulated timing differences at the yearend based on tax rates and laws enacted or substantially enacted as of the balance sheet date.

In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only to the extent that there is virtual certainty that sufficient future taxable income will be available to realize such deferred tax assets. In other situations, deferred tax assets are recognized only to the extent that there is a reasonable certainty that sufficient future taxable income will be available to realize such deferred tax assets.

The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws.

1.8 REVENUE RECOGNITION:

i. Sales of Manufactured Goods:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. ‘Sales’ include packing charges, excise duty and are net of returns.

Revenue from sales is recognized when the significant risks and rewards of ownership are transferred to the customers which is based upon the terms of contract and the Company retains no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exists regarding the determination of the amount of consideration or its associated costs, that will be derived from the sale of goods.

ii. Recognition of Export Benefits:

Export Benefit Entitlements are recognized only to the extent there is a reasonable certainty of its ultimate collection in the year in which the Export Sales are accounted for.

Advance License Benefits on Exports are accounted in the year of utilization of license.

1.9 EMPLOYEE BENEFITS:

i. Defined Contribution Plan:

Contribution as per the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 towards Provident Fund and Family Pension Fund are provided for as a specific contribution of the Employee costs to fund these benefits as specified under the law. Therefore, any excess payment made will be considered as an advance and shortfall, if any, will be adjusted.

ii. Defined Benefit Plan:

Gratuity - In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (‘Gratuity Plan’) covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued based on actuarial valuation at the Balance Sheet date carried out by an independent actuary. Actuarial gain or loss is recognized immediately in the statement of profit and loss as income or expense. The Company has an employee gratuity fund managed by Life Insurance Corporation of India (‘LIC’), except for the Managing Director, for which also the necessary provision is made based on an actuarial valuation.

Compensated Absences - The Company provides for the encashment of leave with pay based on policy of the Company in this regard. The employees are entitled to accumulate such leave subject to certain limits, for the future encashment. The Company records an obligation for Leave Encashment in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated leave as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.

1.10 RESEARCH AND DEVELOPMENT COSTS:

i. Revenue expenditure on research, if any, is charged in the Statement of Profit and Loss of the year in which it is incurred.

ii. Development Expenditure :

a. incurred on development of new processes for products which, as per the Management, are completed and are expected to generate future economic benefits, are shown as internally generated intangible assets and is amortized in accordance with policies stated for Amortization in Note No. 1.4.ii.

b. incurred on development of new processes for products which, as per the Management, are yet to be completed, are reflected as Intangibles Under Development;

c. other development expenses are charged to the Statement of Profit and Loss in the year in which it is incurred.

1.11 FOREIGN CURRENCY TRANSACTIONS:

i. Transactions in foreign currencies are recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

ii. Monetary items which are denominated in foreign currency are translated at the exchange rates prevailing at the Balance Sheet date and profit/loss on translation thereon is credited/ charged to the Statement of Profit and Loss.

iii. Exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of Assets have been recognized in the Statement of Profit and Loss. However, on the basis of the option available to the Company, exchange differences arising on Long-term Foreign Currency Monetary items at rates different from those at which they were initially recorded in so far as they relate to the acquisition of a depreciable capital asset, has been added or deducted from the cost of such assets (Refer Note 29).

iv. In case of forward contracts with an underlying assets and liabilities, the exchange difference between the forward rate and the exchange rate at the date of transaction is recognized as income or expense over the life of the contract. Exchange differences on such a contract is recognized in the Statement of Profit and Loss in the reporting period in which the exchange rates change.

1.12 DERIVATIVE CONTRACTS:

In order to manage its exposure to foreign currency risks for highly probable forecast transactions for exports and imports, the Company enters into forward contracts. Further, to hedge interest rate and foreign currency risks from External Commercial Borrowings, the Company enters into Cross Currency Interest Rate Swap. The Company does not use derivatives for trading or speculation purposes.

Derivatives contracts which are not covered by Accounting Standard 11 on “The Effects of Changes in Foreign Exchange Rates” are accounted in accordance with the Guidance Note on “Accounting for Derivative Contracts” issued by the Institute of Chartered Accountants of India.

The Company designates a hedge as a cash flow hedge if the hedge relationship between the hedging instrument and hedged item is established and is effective at the inception of the derivative contract.

At the inception of the hedge relationship, the Company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions.

All derivate contracts are recognized on the balance sheet and measured at fair value. Any gain or loss on contracts designated as effective cash flow hedges are recorded in Cash flow Hedge Reserve under Reserves and Surplus. In such cases, gains or losses are reclassified to Statement of Profit and Loss when the impact from hedged item is recognized in the Statement of Profit and Loss. Changes in the fair value relating to the ineffective portion of the hedges and derivate instruments that do not qualify or have not been designated for hedge accounting are recognized in the Statement of Profit and loss.

1.13 SEGMENT REPORTING POLICIES:

i. Identification of segments

Primary Segment is identified based on the nature of products, the different risks and returns and the internal business reporting system. Secondary Segment is identified based on the geographical location of its customers.

ii. Segment Policies

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

1.14 LEASE RENTALS:

Lease rentals are accounted consistent with the payment schedule provided in the lease agreement.

1.15 BORROWING COSTS:

Borrowing costs, attributable to the acquisition/construction of qualifying assets, are capitalized, net of income, if any. Other borrowing costs are charged as an expense in the period in which the same are incurred. Borrowing costs comprise of interest and other cost incurred in connection with borrowing of funds.

1.16 IMPAIRMENT OF ASSETS:

If internal/external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset/cash generating unit is determined on the date of Balance Sheet and if it is less than its carrying amount, the carrying amount of asset/ cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognized, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognized for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such assets/cash generating unit, which is determined by the present value of the estimated future cash flows.

An impairment of intangible assets is conducted annually or more often if there is an indication of any decrease in value. The impairment loss, if any, is charged to the Statement of Profit and Loss.

1.17 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

i. The Company recognizes a Provision, when there is a present obligation as a result of a past event, the settlement of which is probable to result in an outflow of resources and a reliable estimate can be made of the amount of obligation.

ii. Contingent Liability is disclosed by way of a note to the financial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

iii. Contingent Assets are neither recognized nor disclosed.


Mar 31, 2015

1.1 BASIS OF PREPARATION:

These financial statements are prepared in accordance with the generally accepted accounting principles in India (Indian GAAP) under the historical cost convention as also on accrual basis. These financial statements have been prepared to comply with the accounting standards prescribed under Section 133 of the Companies Act, 2013 (''the Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014(''the Accounting Standards'') and the relevant provisions of the Act (to the extent notified). In the light of the first proviso to Section 129 (1) of the Act and Schedule III to the Act, the items and terms contained in these financial statements are in accordance with the Accounting Standards.

1.2 USE OF ESTIMATES:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires Management to make estimates and assumptions to be made that affect the reported amounts of revenues and expenses during the reporting period, the reported amounts of assets and liabilities and the disclosures relating to the contingent liabilities on the date of the financial statements. Examples of such estimates include useful lives of Fixed Assets, provision for doubtful debts/advances, deferred tax etc. Actual results could differ from those estimates. Such difference is recognised in the period/s in which the results are known/materialised.

1.3 FIXED ASSETS (TANGIBLE/INTANGIBLE):

i. Land (Freehold) is carried at cost;

ii. Land (Leasehold) is carried at cost less amortisation;

iii. Other Fixed Assets are carried at cost less accumulated depreciation/amortisation and impairment losses, if any.

iv. Cost for the aforesaid purposes comprises of its purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use, net of recoverable duties and interest on borrowings attributable to the acquisition of qualifying Fixed Assets upto the date on which the Asset is ready for its intended use, if any. It also includes exchange difference capitalised, if any, in terms of Para 46/46A of Accounting Standard 11 on "Effects of Changes in Foreign Exchange Rates".

v. Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest and are disclosed as "Capital Work-in-Progress".

vi. Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as "Intangible Assets Under Development".

1.4 DEPRECIATION AND AMORTISATION:

i. Depreciation on tangible Fixed Assets (other than those indicated below) is provided on the straight line method over the useful lives and residual values of assets as prescribed under Part C of Schedule II of Companies Act, 2013.

a. Depreciation on Plant and Machinery other than those not specifically covered under the classification ''Special Plant and Machinery used in manufacturing of Chemicals'' is provided on the straight line method over the useful lives of 20 years as determined by the internal technical evaluation. The Management believes that the useful lives as determined best represent the period over which it expects to use these assets which is the same as the useful life of the Special Plant and Machinery. Hence, the useful lives for such Plant and Machinery is different from the useful lives as prescribed under Part C of Schedule II of Companies Act, 2013.

Exchange Differences capitalised in terms of Para 46/46A of Accounting Standard 11 on "Effects of Changes in Foreign Exchange Rates" are depreciated over the balance life of the assets from the year in which such differences have been capitalised.

b. Leasehold land is being amortised on the straight line method over the period of lease.

ii. Intangible assets are amortised on the straight line method over their estimated useful life as follows:

a. Development of R & D : 5 years. Products/Processes (Internally generated)

b. Patents : 10 years.

c. REACH Registration : 5 years.

iii. Depreciation for assets purchased/sold during the period is proportionately charged.

1.5 INVESTMENTS:

i. Investments, which are long-term, are stated at cost. A provision for diminution, if any, is made to recognise a decline, other than temporary, in the value of investments.

ii. Profit or loss on sale of long-term investments, if any, is calculated by considering the weighted average amount of the total holding of the investment.

1.6 INVENTORIES:

i. Raw materials, packing materials, stores and spares, furnace oil and fuel are valued at cost or net realisable value, whichever is lower. Cost comprises basic cost (net of CENVAT and VAT, if any) and other costs incurred in bringing them to their respective present location and condition.

Cost is determined on a Weighted Average basis.

ii. Work-in-Progress and finished goods are valued at cost or net realisable value, whichever is lower.

Cost includes all direct costs and a proportion of other fixed manufacturing overheads based on normal operating capacity. Excise duty on finished goods awaiting clearance has been provided for and included in cost thereof.

Cost is determined on a Weighted Average basis.

1.7 TAXATION:

i. Current Tax: Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year.

ii. Deferred Tax : Deferred tax is recognised, subject to consideration of prudence, on timing differences between taxable and accounting income which originates in one period and are capable of reversal in one or more subsequent periods (adjusted for reversals expected during tax holiday period). The tax effect is calculated on accumulated timing differences at the year end based on tax rates and laws enacted or substantially enacted as of the balance sheet date.

In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available to realise such deferred tax assets. In other situations, deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available to realise such deferred tax assets.

The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws.

1.8 REVENUE RECOGNITION:

i. Sales of Manufactured Goods:

Sales of goods in respect of domestic sales are recognised on despatch of goods to the customer. ''Sales'' include packing charges, excise duty and are net of returns.

Sales of goods in respect of export sales are recognised as and when the shipment of goods takes place.

ii. Recognition of Export Benefits:

Export Benefit Entitlements under the Duty Entitlement Pass Book Scheme and Duty drawback Scheme of the Government of India are recognised in the year in which the Export Sales are accounted for.

Advance License Benefits on Exports are accounted in the year of utilisation of license.

iii. Income from Certified Emission Reductions:

Income from Certified Emission Reduction (CERs) in respect of the project registered with Executive Board established under the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCC) is accounted on the basis of CERs generated from such project when the same are duly certified by UNFCC.

1.9 EMPLOYEE BENEFITS:

i. Defined Contribution Plan:

Contribution as per the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 towards Provident Fund and Family Pension Fund are provided for as a specific contribution of the Employee costs to fund these benefits as specified under the law. Therefore, any excess payment made will be considered as an advance and shortfall, if any, will be adjusted.

ii. Defined Benefit Plan:

Gratuity- In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan ("Gratuity Plan") covering all employees. The Gratuity Plan provides a lumpsum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee''s last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued based on actuarial valuation at the Balance Sheet date carried out by an independent actuary. Actuarial gain or loss is recognized immediately in the statement of profit and loss as income or expense. The Company has an employee gratuity fund managed by Life Insurance Corporation of India ("LIC"), except for the Managing Director, for which also the necessary provision is made based on an actuarial valuation.

Compensated Absences- The Company provides for the encashment of leave with pay based on policy of the Company in this regard. The employees are entitled to accumulate such leave subject to certain limits, for the future encashment. The Company records an obligation for Leave Encashment in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated leave as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.

1.10 RESEARCH AND DEVELOPMENT COSTS:

i. Revenue expenditure on research, if any, is charged in the Statement of Profit and Loss of the year in which it is incurred.

ii. Development Expenditure :

a. incurred on development of new processes for products which, as per the Management, are completed and are expected to generate future economic benefits, are shown as internally generated intangible assets and is amortised in accordance with policies stated for Amortisation in Note No. 1.4.ii.

b. incurred on development of new processes for products which, as per the Management, are yet to be completed, are reflected as Intangibles Under Development;

c. other development expenses are charged to the Statement of Profit and Loss in the year in which it is incurred.

1.11 FOREIGN CURRENCY TRANSACTIONS:

i. Transactions in foreign currencies are recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

ii. Monetary items which are denominated in foreign currency are translated at the exchange rates prevailing at the Balance Sheet date and profit/loss on translation thereon is credited/ charged to the Statement of Profit and Loss.

iii. Exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed asset have been recognised in the Statement of Profit and Loss. However, on the basis of the option available to the Company, exchange differences arising on Long-term Foreign Currency Monetary items at rates different from those at which they were initially recorded in so far as they relate to the acquisition of a depreciable capital asset, has been added or deducted from the cost of such assets (Refer Note 28).

iv. In case of forward contracts, the exchange difference between the forward rate and the exchange rate at the date of transaction is recognised as income or expense over the life of the contract.

v. As required by the Announcement of the Institute of Chartered Accountants of India on positions of derivatives, keeping in view the principle of prudence as per Accounting Standard 1 on "Disclosure of Accounting Policies", outstanding forward contracts at the Balance Sheet date are reflected by marking them to market and accordingly, the resulting mark to market losses are provided in the Statement of Profit and Loss.

1.12 SEGMENT REPORTING POLICIES:

i. Identification of segments

Primary Segment is identified based on the nature of products, the different risks and returns and the internal business reporting system. Secondary Segment is identified based on the geographical location of its customers.

ii. Segment Policies

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

1.13 LEASE RENTALS:

Lease rentals are accounted consistent with the payment schedule provided in the lease agreement.

1.14 BORROWING COSTS:

Borrowing costs, attributable to the acquisition/construction of qualifying assets, are capitalised, net of income, if any. Other borrowing costs are charged as an expense in the period in which the same are incurred. Borrowing costs comprise of interest and other cost incurred in connection with borrowing of funds.

1.15 IMPAIRMENT OF ASSETS:

If internaf/external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset/cash generating unit is determined on the date of Balance Sheet and if it is less than its carrying amount, the carrying amount of asset/ cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognised, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognised for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such assets/cash generating unit, which is determined by the present value of the estimated future cash flows.

An impairment of intangible assets is conducted annually or more often if there is an indication of any decrease in value. The impairment loss, if any, is charged to the Statement of Profit and Loss.

1.16 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

i. The Company recognises as Provisions, the liabilities being present obligations arising from past events, the settlement of which is expected to result in an outflow of resources and which can be measured only by using a substantial degree of estimation.

ii. Contingent Liability is disclosed by way of a note to the financial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

iii. Contingent Assets are neither recognised nor disclosed.


Mar 31, 2014

1.1 BASIS OF PREPARATION

The accounts have been prepared on the basis of going concern under historical cost convention as also on accrual basis and in accordance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006, (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the Companies Act, 1956 / Companies Act, 2013 as applicable.

1.2 USE OF ESTIMATES:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires Management to make estimates and assumptions to be made that affect the reported amounts of revenues and expenses during the reporting period, the reported amounts of assets and liabilities and the disclosures relating to the contingent liabilities on the date of the financial statements. Examples of such estimates include useful lives of Fixed Assets, provision for doubtful debts/advances, deferred tax etc. Actual results could differ from those estimates. Such difference is recognised in the period/s in which the results are known/materialised.

1.3 FIXED ASSETS (TANGIBLE/INTANGIBLE):

i. Land (Freehold) is carried at cost;

ii. Land (Leasehold) is carried at cost less amortisation;

iii. Other Fixed Assets are carried at cost less accumulated depreciation/amortisation and impairment losses, if any.

iv. Cost'' for the aforesaid purposes comprises of its purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use, net of recoverable duties and interest on borrowings attributable to the acquisition of qualifying Fixed Assets upto the date on which the Asset is ready for its intended use, if any. It also includes exchange difference capitalised, if any, in terms of Para 46/46 A of Accounting Standard 11 on "Effects of Changes in Foreign Exchange Rates".

v. Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest and are disclosed as "Capital Work-in-Progress".

vi. Intangible assets not ready for the intended use on the date of the Balance Sheet are disclosed as "Intangible Assets Under Development".

1.4 DEPRECIATION AND AMORTISATION:

i. Depreciation on assets installed/acquired after April 2, 1987 is provided pro-rata on straight line method at the rates and on the basis specified in Schedule XIV to the Companies Act, 1956, as revised by Notification No.G.S.R.756 (E) dated December 16, 1993 and further revised by Notification No.101 (E) of the Department of Company Affairs on the following basis:

a. In respect of assets installed/acquired prior to April 1, 1993 at the rates computed by allocating the unamortised value of assets existing as on March 31, 1993 as per the books of account, over the remaining part of the specified period which is recomputed by applying to the original cost, the revised rates prescribed in Schedule XIV to the Companies Act, 1956.

b. In respect of assets installed/acquired on/after April 1, 1993 at the rates prescribed in Schedule XIV to the Companies Act, 1956.

ii. Leasehold land is being amortised over the period of lease.

iii. Intangible assets are amortised over their estimated useful life on the straight line method as follows:

a. Development of R & D Products/Processes (Internally generated) : Five years.

b. Patents : Ten years.

c. REACH Registration : Five years.

iv. Exchange Differences capitalised in terms of Para 46/46A of Accounting Standard 11 on "Effects of Changes in Foreign Exchange Rates" are depreciated over the balance life of the assets from the year in which such differences have been capitalised.

1.5 INVESTMENTS:

i. Investments, which are long-term, are stated at cost. A provision for diminution, if any, is made to recognise a decline, other than temporary, in the value of investments.

ii. Profit or loss on sale of long-term investments, if any, is calculated by considering the weighted average amount of the total holding of the investment.

1.6 INVENTORIES:

i. Raw materials, packing materials, stores and spares, furnace oil and fuel are valued at cost or net realisable value, whichever is lower. Cost comprises basic cost (net of CENVAT and VAT, if any) and other costs incurred in bringing them to their respective present location and condition.

Cost is determined on a Weighted Average basis.

ii. Work-in-Progress and finished goods are valued at cost or net realisable value, whichever is lower.

Cost includes all direct costs and a proportion of other fixed manufacturing overheads based on normal operating capacity. Excise duty on finished goods awaiting clearance has been provided for and included in cost thereof.

Cost is determined on a Weighted Average basis.

1.7 TAXATION:

i. Current Tax: Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year.

ii. Deferred Tax : Deferred tax is recognised, subject to consideration of prudence, on timing differences between taxable and accounting income which originates in one period and are capable of reversal in one or more subsequent periods (adjusted for reversals expected during tax holiday period). The tax effect is calculated on accumulated timing differences at the year end based on tax rates and laws enacted or substantially enacted as of the balance sheet date.

In the event of unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available to realise such deferred tax assets. In other situations, deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future taxable income will be available to realise such deferred tax assets.

The Company offsets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws.

1.8 REVENUE RECOGNITION:

i. Sales of Manufactured Goods:

Sales of goods in respect of domestic sales are recognised on despatch of goods to the customer. ''Sales'' include packing charges, excise duty and are net of returns.

Sales of goods in respect of export sales are recognised as and when the shipment of goods takes place.

ii. Recognition of Export Benefits:

Export Benefit Entitlements under the Duty Entitlement Pass Book Scheme and Duty drawback Scheme of the Government of India are recognised in the year in which the Export Sales are accounted for.

Advance License Benefits on Exports are accounted in the year of utilisation of license.

iii. Income from Certified Emission Reductions:

Income from Certified Emission Reduction (CERs) in respect of the project registered with Executive Board established under the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCC) is accounted on the basis of CERs generated from such project when the same are duly certified by UNFCC. However, at the year end, since no CER is duly certified no amount for the same is recognised.

1.9 EMPLOYEE BENEFITS:

i. Defined Contribution Plan:

Contribution as per the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 towards Provident Fund and Family Pension Fund are provided for as a specific contribution of the Employee costs to fund these benefits as specified under the law. Therefore, any excess payment made will be considered as an advance and shortfall, if any, will be adjusted.

ii. Defined Benefit Plan:

Gratuity- In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan ("Gratuitv Plan") covering all employees. The Gratuity Plan provides a lumpsum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee''s last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued based on actuarial valuation at the Balance Sheet date carried out by an independent actuary. Actuarial gain or loss is recognized immediately in the statement of profit and loss as income or expense. The Company has an employee gratuity fund managed by Life Insurance Corporation of India ("LIC"), except for the Managing Director, for which also the necessary provision is made based on an actuarial valuation.

Compensated Absences- The Company provides for the encashment of leave with pay based on policy of the Company in this regard. The employees are entitled to accumulate such leave subject to certain limits, for the future encashment. The Company records an obligation for Leave Encashment in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated leave as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.

1.10 RESEARCH AND DEVELOPMENT COSTS:

i. Revenue expenditure on research, if any, is charged in the Statement of Profit and Loss of the year in which it is incurred.

ii. Development Expenditure :

a. incurred on development of new processes for products which, as per the Management, are completed and are expected to generate future economic benefits, are shown as internally generated intangible assets and is amortised in accordance with policies stated for Amortisation in Note No. 1.4.iii.

b. incurred on development of new processes for products which, as per the Management, are yet to be completed, are reflected as Intangibles Under Development;

c. other development expenses are charged to the Statement of Profit and Loss in the year in which it is incurred.

1.11 FOREIGN CURRENCY TRANSACTIONS:

i. Transactions in foreign currencies are recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

ii. Monetary items which are denominated in foreign currency are translated at the exchange rates prevailing at the Balance Sheet date and profit/loss on translation thereon is credited/ charged to the Statement of Profit and Loss.

iii. Exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed asset have been recognised in the Statement of Profit and Loss. However, on the basis of the option available to the Company, exchange differences arising on Long-term Foreign Currency Monetary items at rates different from those at which they were initially recorded in so far as they relate to the acquisition of a depreciable capital asset, has been added or deducted from the cost of such assets (Refer Note 28).

iv. In case of forward contracts, the exchange difference between the forward rate and the exchange rate at the date of transaction is recognised as income or expense over the life of the contract.

v. As required by the Announcement of the Institute of Chartered Accountants of India on positions of derivatives, keeping in view the principle of prudence as per Accounting Standard 1 on "Disclosure of Accounting Policies", outstanding forward contracts at the Balance Sheet date are reflected by marking them to market and accordingly, the resulting mark to market losses are provided in the Statement of Profit and Loss.

1.12 SEGMENT REPORTING POLICIES:

i. Identification of segments

Primary Segment is identified based on the nature of products, the different risks and returns and the internal business reporting system. Secondary Segment is identified based on the geographical location of its customers.

ii. Segment Policies

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

1.13 LEASE RENTALS:

Lease rentals are accounted consistent with the payment schedule provided in the lease agreement.

1.14 BORROWING COSTS:

Borrowing costs, attributable to the acquisition/construction of qualifying assets, are capitalised, net of income, if any. Other borrowing costs are charged as an expense in the period in which the same are incurred. Borrowing costs comprise of interest and other cost incurred in connection with borrowing of funds.

1.15 IMPAIRMENT OF ASSETS:

If internal/external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset/cash generating unit is determined on the date of Balance Sheet and if it is less than its carrying amount, the carrying amount of asset/ cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognised, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognised for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such assets/cash generating unit, which is determined by the present value of the estimated future cash flows.

An impairment of intangible assets is conducted annually or more often if there is an indication of any decrease in value. The impairment loss, if any, is charged to the Statement of Profit and Loss.

1.16 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

i. The Company recognises as Provisions, the liabilities being present obligations arising from past events, the settlement of which is expected to result in an outflow of resources and which can be measured only by using a substantial degree of estimation.

ii. Contingent Liability is disclosed by way of a note to the financial statements after careful evaluation bv the management of the facts and legal aspects of the matters involved.

iii. Contingent Assets are neither recognised nor disclosed.

2.2 Rights, preferences and restrictions

i. The Company has only one class of shares referred (o as equity shares having par value of Rs. 10. Each holder of equity shares is entitled to one vote per share.

ii. The Company declares and pays dividend in Indian rupees.The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting. The Board of Directors, in their meeting on May 15, 2014, proposed a final dividend of Rs. 8 per equity share. The proposal is subject to the approval of shareholders at the Annual General Meeting. The total dividend appropriation for the year ended March 31, 2014 amounted to Rs. 954.52 lakhs including corporate dividend tax of Rs. 138.6G lakhs.

During the year ended March 31, 2013, the amount of per share dividend recognised as distribution to equity shareholders was Rs. 5. The Dividend appropriation for the year ended March 31, 2013 amounted to Rs. 596.57 lakhs including corporate dividend tax of Rs. 86.66 lakhs.

iii. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

7.1 Cash Credits including Working Capital Demand Loan are secured by hypothecation of stocks of raw materials, semi-finished goods, finished goods, consumable stores and book debts of the Company, both present and future, as mentioned in the joint deed of hypothecation dated December 29, 1989 as amended from time to time, as well as by the second mortgage of the specified immovable properties of the Company.

11.2. The Lease Deed from MIDC in respect of Plot Nos. D-6/2, R-l and R-2 of the value of Rs. 131.13 lakhs (Previous Year Rs. 131.13 lakhs) and from GIDC in respect of Plot Nos. D-2/CH/149-2 of the value of Rs. 1.135.33 lakhs (Previous Year Rs. NIL) is yet to be executed.

11.3. Plant, Machinery and Equipments include Rs. 382.12 lakhs (Previous Year Rs. 382.12 lakhs) being value of machinery installed at third parly premises of |ob Contractor, duly confirmed by them.

11.4. Transfer from Capital Work-in-Progress andd Intangible Assets Under Development represents capitalisation to Fixed Assets. It also includes write off of Capital Work-in-Progress of Rs. 1.48 lakhs (Previous Year Rs. 27.55 lakhs) and Intangible Assets Under Development of Rs. 73.88 lakhs (Previous Year 54.85 lakhs).

11.5. Other Adjustments represent Borrowings Costs of Rs. 157.93 lakhs (Previous Year Rs. 124.38 lakhs) and Exchange Differences of Rs. 142.78 lakhs (Previous Year Rs. 89.B3 lakhs) capitalised in terms of AS - 11. For related disclosures refer Note 28 to the financial statements

11.6. Depreciation for the vear is shown as reduced bv the write back of excess depreciation of prior period Rs. 138.94 lakhs (Previous Year Rs. NIL).


Mar 31, 2012

1.1 BASIS OF PREPARATION:

a. The accounts are prepared on the basis of going concern under historical cost convention as also accrual basis and in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006, and the relevant provisions of the Companies Act, 1956.

b. The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per the Revised Schedule VI. Accordingly, the previous year's figures have also been reclassified/regrouped to conform to this year's classification. The adoption of Revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements.

1.2 USE OF ESTIMATES:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires Management to make estimates and assumptions to be made that affect the reported amounts of revenues and expenses during the reporting period, the reported amounts of assets and liabilities and the disclosures relating to the contingent liabilities on the date of the financial statements. Examples of such estimates include useful lives of Fixed Assets, provision for doubtful debts/advances, deferred tax etc. Actual results could differ from those estimates. Such difference is recognized in the period/s in which the results are known / materialized.

1.3 FIXED ASSETS:

a. Land (Freehold) is valued at cost;

b. Land (Leasehold) is valued at cost less amortization;

c. Other Fixed Assets are valued at cost less accumulated depreciation. 'Cost' for the aforesaid purposes comprises of its purchase price and any attributable cost of bringing the asset to its working condition for its intended use, net of recoverable duties, if any.

1.4 DEPRECIATION:

Depreciation on assets installed/acquired after April 2, 1987 is provided pro-rata on straight line method at the rates and on the basis specified in Schedule XIV to the Companies Act,1956, as revised by Notification No.G.S.R.756 (E) dated December 16, 1993 and further revised by Notification No.101 (E) of the Department of Company Affairs on the following basis:

i. In respect of assets installed/acquired prior to April 1, 1993 at the rates computed by allocating the unamortized value of assets existing as on March 31, 1993 as per the Books of Account, over the remaining part of the specified period which is recomputed by applying to the original cost, the revised rates prescribed in Schedule XIV to the Companies Act, 1956.

ii. In respect of assets installed/acquired on/after April 1, 1993 at the rates prescribed in Schedule XIV to the Companies Act, 1956.

Leasehold land is being amortized over the period of lease.

1.5 INVESTMENTS:

a. Investments, which are long term, are stated at cost. A provision for diminution, if any, is made to recognize a decline, other than temporary, in the value of investments.

b. Profit or loss on sale of long term investments, if any, is calculated by considering the weighted average amount of the total holding of the investment.

1.6 INVENTORIES:

i. Stores, Spares, Furnace Oil etc.:

At cost or net realizable value, whichever is lower. Cost for this purpose comprises of basic cost (net of CENVAT and VAT, if any) including transportation.

ii. Work-in-process:

At cost or net realizable value, whichever is lower. Cost, for this purpose, includes all direct costs and other related fixed overheads.

iii. Finished Goods:

At cost or net realizable value, whichever is lower. Cost, for this purpose, includes all direct costs, and other related factory overheads. Excise duty on goods awaiting clearance has been provided for.

iv. Raw Materials and Packing Materials:

At cost or net realizable value, whichever is lower on Weighted Average Method basis. Cost, for this purpose, includes basic cost (net of CENVAT and VAT, if any) and all direct expenses.

v. Traded goods:

At landed cost. Cost, for this purpose, includes Direct cost and Incidental expenses or net realizable value, whichever is lower.

vi. Obsolescence of inventory, if any, is determined on material consumption pattern/specific review and is accordingly provided for.

1.7 TAXATION:

i. Current Tax: Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year.

ii. Deferred Tax: In accordance with the Accounting Standard 22 - "Accounting for Taxes on Income', the deferred tax for the timing differences is measured using the tax rates and tax laws that have been enacted or substantially enacted at the Balance Sheet date. Deferred tax assets arising from the timing differences are recognized only on the consideration of prudence.

1.8 REVENUE RECOGNITION:

i. Sales of Manufactured Goods:

Sales of goods in respect of domestic sales are recognized on dispatch of goods to the customer. 'Sales' include packing charges, excise duty and are net of returns.

Sales of goods in respect of export sales are recognized as and when the shipment of goods takes place.

ii. Sales of traded goods:

Sales of traded goods are recognized on dispatch of goods to the customers and are net of returns.

iii. Commission receivable on sales:

Commission on sales is accounted for on receipt of the necessary credit note /confirmation, on completion of transaction, from the principals.

iv. Recognition of Export Benefits:

Export Benefit Entitlements under the Duty Entitlement Pass Book Scheme and Duty drawback Scheme of the Government of India are recognized in the year in which the Export Sales are accounted for.

Advance License Benefits on Exports are accounted in the year of utilization of license.

v. Recognition of Income on Contract manufacturing:

Income on contract manufacturing is accounted on dispatch to and acceptance of the prescribed goods by the Customer during the year; at the year end, income from Contract manufacturing is accounted on stock of goods in respect of which contract processing is completed.

vi. Income from Certified Emission Reductions:

Income from Certified Emission Reduction (CERs) from the Project and certified by the Management in respect of the project registered with Executive Board established under the Kyoto Protocol to the UNFCC is accounted on the basis of CERs generated from such project only when the same are duly certified. CERs generated up to March 31, 2009 was accounted on a conservative basis though not certified.

1.9 EMPLOYEE BENEFITS:

i. Defined Contribution plan:

Contribution as per the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 towards Provident Fund and Family Pension Fund are provided for and payments in respect thereof are made to the relevant authorities on actual basis.

ii. Defined Benefit Plan:

Gratuity- In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan ("Gratuity Plan") covering all employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee's last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued based on actual valuation at the Balance Sheet date carried out by an independent actuary. Actuarial gain or loss is recognized immediately in the statement of profit and loss as income or expense. The Company has an employee gratuity fund managed by Life Insurance Corporation of India ("LIC"), except for the Managing Director, for which also the necessary provision is made based on an actuarial valuation.

Compensated Absences- The Company provides for the encashment of leave with pay based on policy of the Company in this regard. The employees are entitled to accumulate such leave subject to certain limits, for the future encashment. The Company records an obligation for Leave Encashment in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated leave as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.

1.10 RESEARCH AND DEVELOPMENT COSTS:

i. Revenue expenditure on research, if any, is charged against the Profit of the year in which it is incurred.

ii. Development Expenditure :

a. incurred on development of new processes for products which, as per the Management, are completed and are expected to generate future economic benefits, are shown as intangible assets;

The same is amortized on a straight-line basis over a period of five years from the time of capitalization as an intangible asset;

b. incurred on development of new processes for products which, as per the Management, are yet to be completed, are reflected as capital work in progress;

c. other development expenses are charged to the Statement of Profit and Loss in the year in which it is incurred.

An impairment of intangible asset is conducted annually or more often if there is an indication of a decrease in value. The impairment loss, if any, is charged to the Statement of Profit and Loss.

1.11 FOREIGN CURRENCY TRANSACTIONS:

i. Transactions in foreign currencies are recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

ii. Monetary items which are denominated in foreign currency are translated at the exchange rates prevailing at the Balance Sheet date and profit/loss on translation thereon is credited/ charged to the Statement of Profit and Loss.

iii. Pursuant to the adoption of Companies (Accounting Standard) Rules, 2006, with effect from April 1, 2007, exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed asset have been recognized in the Statement of Profit and Loss. However, on the basis of the option available to the Company, the Company has decided to add or deduct exchange differences arising on Long-term Foreign Currency Monetary items at rates different from those at which they were initially recorded so far as they relate to the acquisition of a depreciable capital asset (Refer Note 28.2).

iv. In case of forward contracts, the exchange difference between the forward rate and the exchange rate at the date of transaction is recognized as income or expense over the life of the contract.

v. As required by the recent Announcement of the Institute of Chartered Accountants of India on positions of derivatives, keeping in view the principle of prudence as per Accounting Standard 1 on "Disclosure of Accounting Policies', outstanding forward contracts at the Balance Sheet date are reflected by marking them to market and accordingly, the resulting mark to market losses are provided in the Statement of Profit and Loss.

1.12 LEASE RENTALS:

Lease rentals are accounted consistent with the payment schedule provided in the lease agreement.

1.13 BORROWING COSTS:

Borrowing costs, attributable to the acquisition/construction of qualifying assets, are capitalised, net of income, if any. Other borrowing costs are charged as an expense in the period in which the same are incurred. Borrowing cost comprises of interest and other cost incurred in connection with borrowing of funds.

1.14 PRIOR-PERIOD ITEMS:

Income and expenditure pertaining to prior period, wherever material, are disclosed separately.

1.15 DEFERRED REVENUE EXPENDITURE:

Termination benefits paid to the employees are written off over a period of five years from the date of payment.

1.16 IMPAIRMENT OF ASSETS:

If internal / external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset / cash generating unit is determined on the balance sheet date and if it is less than its carrying amount, the carrying amount of asset / cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognized, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognized for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such assets / cash generating unit, which is determined by the present value of the estimated future cash flows.

1.17 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

i. The Company recognizes as Provisions, the liabilities being present obligations arising from past events, the settlement of which is expected to result in an outflow of resources and which can be measured only by using a substantial degree of estimation.

ii. Contingent Liability is disclosed by way of a note to the financial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

iii. Contingent Assets are neither recognized nor disclosed.


Mar 31, 2011

1. ACCOUNTING CONVENTION:

The accounts are prepared on the basis of going concern under historical cost convention as also on accrual basis and in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006, and the relevant provisions of the Companies Act, 1956.

2. USE OF ESTIMATES:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires Management to make estimates and assumptions to be made that affect the reported amounts of revenues and expenses during the reporting period, the reported amounts of assets and liabilities and the disclosures relating to the contingent liabilities on the date of the financial statements. Examples of such estimates include useful lives of Fixed Assets, provision for doubtful debts/advances, deferred tax etc. Actual results could differ from those estimates. Such difference is recognised in the period/s in which the results are known / materialised.

3. FIXED ASSETS:

a. Land (Freehold) is valued at cost;

b. Land (Leasehold) is valued at cost less amortisation;

c. Other Fixed Assets are valued at cost less accumulated depreciation. ‘Cost for the aforesaid purposes comprises of its purchase price and any attributable cost of bringing the asset to its working condition for its intended use, net of recoverable duties, if any.

4. DEPRECIATION:

Depreciation on assets installed/acquired after April 2, 1987 is provided pro-rata on straight line method at the rates and on the basis specified in Schedule XIV to the Companies Act,1956, as revised by Notification No.G.S.R.756 (E) dated December 16, 1993 and further revised by Notification No.101 (E) of the Department of Company Affairs on the following basis:

a. In respect of assets installed/acquired prior to April 1, 1993 at the rates computed by allocating the unamortized value of assets existing as on March 31, 1993 as per the Books of Account, over the remaining part of the specified period which is recomputed by applying to the original cost, the revised rates prescribed in Schedule XIV to the Companies Act, 1956.

b. In respect of assets installed/acquired on/after April 1, 1993 at the rates prescribed in Schedule XIV to the Companies Act, 1956.

Leasehold land is being amortized over the period of lease.

5. INVESTMENTS:

a. Investments, which are long term, are stated at cost. A provision for diminution, if any, is made to recognise a decline, other than temporary, in the value of investments.

b. Profit or loss on sale of long term investments, if any, is calculated by considering the weighted average amount of the total holding of the investment.

6. INVENTORIES:

a. Stores, Spares, Furnace Oil etc.:

At cost or net realisable value, whichever is lower. Cost for this purpose comprises of basic cost (net of CENVAT and VAT, if any) including transportation.

b. Work-in-process:

At cost or net realisable value, whichever is lower. Cost, for this purpose, includes all direct costs and other related fixed overheads.

c. Finished Goods:

At cost or net realisable value, whichever is lower. Cost, for this purpose, includes all direct costs, and other related factory overheads. Excise duty on goods awaiting clearance has been provided for.

d. Raw Materials and Packing Materials:

At cost or net realisable value, whichever is lower on Weighted Average Method basis. Cost, for this purpose, includes basic cost (net of CENVAT and VAT, if any) and all direct expenses.

e. Traded goods:

At landed cost. Cost, for this purpose, includes Direct cost and Incidental expenses or net realisable value, whichever is lower.

f. Obsolesence of inventory, if any, is determined on material consumption pattern/specific review and is accordingly provided for.

7. TAXATION:

a. Current Tax: Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year.

b. Deferred Tax: In accordance with the Accounting Standard 22 - “Accounting for Taxes on Income”, the deferred tax for the timing differences is measured using the tax rates and tax laws that have been enacted or substantially enacted at the Balance Sheet date. Deferred tax assets arising from the timing differences are recognised only on the consideration of prudence.

c. Fringe Benefit Tax: Provision for Fringe Benefit Tax is made in accordance with the provisions of the Income-tax Act, 1961.

8. REVENUE RECOGNITION:

a. Sales of Manufactured Goods:

Sales of goods in respect of domestic sales are recognised on despatch of goods to the customer. ‘Sales include packing charges, excise duty and are net of returns.

Sales of goods in respect of export sales are recognised as and when the shipment of goods takes place.

b. Sales of traded goods:

Sales of traded goods are recognised on despatch of goods to the customers and are net of returns.

c. Commission receivable on sales:

Commission on sales is accounted for on receipt of the necessary credit note /confirmation, on completion of transaction, from the principals.

d. Recognition of Export Benefits:

Export Benefit Entitlements under the Duty Entitlement Pass Book Scheme of the Government of India are recognised in the year in which the Export Sales are accounted for.

Advance License Benefits on Exports are accounted in the year of utilisation of license.

e. Recognition of Income on Contract manufacturing:

Income on contract manufacturing is accounted on despatch to and acceptance of the prescribed goods by the Customer during the year; at the year end, income from Contract manufacturing is accounted on stock of goods in respect of which contract processing is completed.

f. Income from Certified Emission Reductions:

Income from Certified Emission Reduction (CERs) from the Project and certified by the Management in respect of the project registered with Executive Board established under the Kyoto Protocol to the UNFCC is accounted on the basis of CERs generated from such project only when the same are duly certified. CERs generated up to March 31, 2009 was accounted on a conservative basis though not certified.

9. EMPLOYEE BENEFITS:

a. Defined Contribution Plan:

Contribution as per the Employees Provident Funds and Miscellaneous Provisions Act, 1952 towards Provident Fund and Family Pension Fund are provided for and payments in respect thereof are made to the relevant authorities on actual basis.

b. Defined Benefit Plan:

Gratuity- In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (“Gratuity Plan”) covering all employees. The Gratuity Plan provides a lumpsum payment to vested employees, at retirement or termination of employment, an amount based on the respective employees last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued based on actual valuation at the Balance Sheet date carried out by an independent actuary. Actuarial gain or loss is recognized immediately in the statement of profit and loss as income or expense. The Company has an employee gratuity fund managed by Life Insurance Corporation of India (“LIC”), except for the Managing Director, for which also the necessary provision is made based on an actuarial valuation.

Compensated Absences- The Company provides for the encashment of leave with pay based on policy of the Company in this regard. The employees are entitled to accumulate such leave subject to certain limits, for the future encashment. The Company records an obligation for Leave Encashment in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated leave as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.

10. RESEARCH AND DEVELOPMENT COSTS:

a. Revenue expenditure on research, if any, is charged against the Profit of the year in which it is incurred.

b. Development Expenditure :

i. incurred on development of new processes for products which, as per the Management, are completed and are expected to generate future economic benefits, are shown as intangible assets;

The same is amortised on a straight-line basis over a period of five years from the time of capitalisation as an intangible asset;

ii. incurred on development of new processes for products which, as per the Management, are yet to be completed, are reflected as capital work in progress;

iii. other development expenses are charged to the Profit and Loss Account in the year in which it is incurred.

An impairment of intangible asset is conducted annually or more often if there is an indication of a decrease in value. The impairment loss, if any, is charged to the Profit and Loss Account.

11. FOREIGN CURRENCY TRANSACTIONS:

a. Transactions in foreign currencies are recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

b. Monetary items which are denominated in foreign currency are translated at the exchange rates prevailing at the Balance Sheet date and profit/loss on translation thereon is credited/ charged to the Profit and Loss Account.

c. Pursuant to the adoption of Companies (Accounting Standard) Rules, 2006, with effect from April 1, 2007, exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed asset are recognised in the Profit and Loss Account.

d. In case of forward contracts, the exchange difference between the forward rate and the exchange rate at the date of transaction is recognised as income or expense over the life of the contract.

e. As required by the recent Announcement of the Institute of Chartered Accountants of India on positions of derivatives, keeping in view the principle of prudence as per Accounting Standard 1 on “Disclosure of Accounting Policies”, outstanding forward contracts at the Balance Sheet date are reflected by marking them to market and accordingly, the resulting mark to market losses are provided in the Profit and Loss Account.

12. LEASE RENTALS:

Lease rentals are accounted consistent with the payment schedule provided in the lease agreement.

13. BORROWING COSTS:

Borrowing costs, attributable to the acquisition/construction of qualifying assets, are capitalised, net of income, if any. Other borrowing costs are charged as an expense in the period in which the same are incurred. Borrowing cost comprises of interest and other cost incurred in connection with borrowing of funds.

14. PRIOR-PERIOD ITEMS:

Income and expenditure pertaining to prior period, wherever material, are disclosed separately.

15. DEFERRED REVENUE EXPENDITURE:

Termination benefits paid to the employees are written off over a period of five years from the date of payment.

16. IMPAIRMENT OF ASSETS:

If internal / external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset / cash generating unit is determined on the balance sheet date and if it is less than its carrying amount, the carrying amount of asset / cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment was recognized, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognized for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such assets / cash generating unit, which is determined by the present value of the estimated future cash flows.

17. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

a. The Company recognizes as Provisions, the liabilities being present obligations arising from past events, the settlement of which is expected to result in an outflow of resources and which can be measured only by using a substantial degree of estimation.

b. Contingent Liability is disclosed by way of a note to the financial statements after careful evaluation by the management of the facts and legal aspects of the matters involved.

c. Contingent Assets are neither recognized nor disclosed.


Mar 31, 2010

1. ACCOUNTING CONVENTION:

The accounts are prepared on the basis of going concern under historical cost convention as also accrual basis and in accordance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, which have been prescribed by the Companies (Accounting Standards) Rules, 2006, and the relevant provisions of the Companies Act, 1956.

2. USE OF ESTIMATES:

The preparation of the financial statements in conformity with the generally accepted accounting principles requires Management to make estimates and assumptions to be made that affect the reported amounts of revenues and expenses during the reporting period, the reported amounts of assets and liabilities and the disclosures relating to the contingent liabilities on the date of the financial statements. Examples of such estimates include useful lives of Fixed Assets, provision for doubtful debts/advances, deferred tax etc. Actual results could differ from those estimates. Such difference is recognised in the period/s in which the results are known / materialised.

3. FIXED ASSETS:

a. Land (Freehold) is valued at cost;

b. Land (Leasehold) is valued at cost less amortisation;

c. Other Fixed Assets are valued at cost less accumulated depreciation. Cost for the aforesaid purposes comprises of its purchase price and any attributable cost of bringing the asset to its working condition for its intended use, net of recoverable duties, if any.

4. DEPRECIATION:

Depreciation on assets installed/acquired after April 2, 1987 is provided pro-rata on straight line method at the rates and on the basis specified in Schedule XIV to the Companies Act,1956, as revised by Notification No.G.S.R.756 (E) dated December 16, 1993 and further revised by Notification No.101 (E) of the Department of Company Affairs on the following basis:

a. In respect of assets installed/acquired prior to April 1, 1993 at the rates computed by allocating the unamortized value of assets existing as on March 31. 1993 as per the Books of Account, over the remaining part of the specified period which is recomputed by applying to the original cost, the revised rates prescribed in Schedule XIV to the Companies Act, 1956.

b. In respect of assets installed/acquired on/after April 1, 1993 at the rates prescribed in Schedule XIV to the Companies Act, 1956.

Leasehold land is being amortized over the period of lease.

5. INVESTMENTS:

a. Investments, which are long term, are stated at cost. A provision for diminution, if any, is made to recognise a decline, other than temporary, in the value of investments.

b. Profit or loss on sale of long term investments, if any, is calculated by considering the weighted average amount of the total holding of the investment.

6. INVENTORIES:

a. Stores, Spares, Furnace Oil etc.:

As cost on net realisable value, whichever is lower. Cost for this purpose comprises of basic cost (net of CENVAT and VAT, if any) including transportation.

b. Work-in-process:

At cost or net realisable value, whichever is lower. Cost, for this purpose, includes all direct costs and other related fixed overheads.

c. Finished Goods:

At cost or net realisable value, whichever is lower. Cost, for this purpose, includes all direct costs, and other related factory overheads. Excise duty on goods awaiting clearance has been provided for

d. Raw Materials and Packing Materials:

At cost or net realisable value, whichever is lower on Weighted Average Method basis. Cost, for this purpose, includes basic cost (net of CENVAT and VAT, if any) and all direct expenses.

e. Traded goods:

At landed cost. Cost, for this purpose, includes Direct cost and Incidental expenses or net realisable value, whichever is lower.

f. Obsolesence of inventory, if any, is determined on material consumption pattern/specific review and is accordingly provided for.

7. TAXATION:

a. Current Tax: Provision for current tax is made on the estimated taxable income at the rate applicable to the relevant assessment year.

b. Deferred Tax: In accordance with the Accounting Standard 22 - "Accounting for Taxes on Income", the deferred tax for the timing differences is measured using the tax rates and tax laws that have been enacted or substantially enacted at the Balance Sheet date. Deferred tax assets arising from the timing differences are recognised only on the consideration of prudence.

c. Fringe Benefit Tax: Provision for Fringe Benefit Tax is made in accordance with the provisions of the Income-tax Act, 1961.

8. REVENUE RECOGNITION:

a. Sales of Manufactured Goods:

Sales of goods in respect of domestic sales are recognised on despatch of goods to the customer. Sales include packing charges, excise duty and are net of returns.

Sales of goods in respect of export sales are recognised as and when the shipment of goods takes place.

b. Sales of traded Goods:

Sales of traded goods are recognised on despatch of goods to the customers and are net of returns.

c. Commission receivable on sales:

Commission on sales is accounted for on receipt of the necessary credit note /confirmation, on completion of transaction, from the principals.

d. Recognition of Export Benefits:

Export Benefit Entitlements under the Duty Entitlement Pass Book Scheme of the Government of India are recognised in the year in which the Export sales are accounted for.

Advance License Benefits on Exports are accounted in the year of utilisation of license.

e. Recognition of Income on Contract manufacturing:

Income on contract manufacturing is accounted on despatch to and acceptance of the prescribed goods by the Customer during the year; at the year end, income from Contract manufacturing is accounted on stock of goods in respect of which contract processing is completed.

f. Income from Certified Emission Reductions:

Income from Certified Emission Reduction (CERs) from the Project and certified by the Management in respect of the project registered with Executive Board established under the Kyoto Protocol to the UNFCC is accounted in the basis of CERs generated from such project on a conservative estimate.

9. EMPLOYEE BENEFITS:

a. Defined Contribution Plan:

Contribution as per the Employees Provident Funds and Miscellaneous Provisions Act, 1952 towards Provident Fund and Family Pension Fund are provided for and payments in respect thereof are made to the relevant authorities on actual basis.

b. Defined Benefit Plan:

Gratuity- In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan ("Gratuity Plan") covering all employees. The Gratuity Plan provides a lumpsum payment to vested employees, at retirement or termination of employment, an amount based on the respective employees last drawn salary and the years of employment with the Company. Liability with regard to Gratuity Plan is accrued based on actual valuation at the Balance Sheet date carried out by an independent actuary. Actuarial gain or loss is recognized immediately in the statement of profit and loss as income or expense. The Company has an employee gratuity fund managed by Life Insurance Corporation of India ("LIC"), except for the Managing Director, for which also the necessary provision is made based on an actuarial valuation.

Compensated Absences- The Company provides for the encashment of leave with pay based on policy of the Company in this regard. The employees are entitled to accumulate such leave subject to certain limits, for the future encashment. The Company records an obligation for Leave Encashment in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated leave as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the Balance Sheet date on the basis of an independent actuarial valuation.

10. RESEARCH AND DEVELOPMENT COSTS:

a. Revenue expenditure on research, if any, is charged against the Profit of the year In which it is incurred.

b. Development Expenditure :

i. incurred on development of new processes for products which, as per the Management, are completed and are expected to generate future economic benefits, are shown as intangible assets;

The same is amortised on a straight-line basis over a period of five years from the time of capitalisation as an intangible asset;

ii. incurred on development of new processes for products which, as per the Management, are yet to be completed, are reflected as capital work in progress;

iii. other development expenses are charged to the Profit and Loss Account in the year in which it is incurred.

An impairment of intangible asset is conducted annually or more often if there is an indication of a decrease in value. The impairment loss, if any, is charged to the Profit and Loss Account.

11. FOREIGN CURRENCY TRANSACTIONS:

a. Transactions in foreign currencies are recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

b. Monetary items which are denominated in foreign currency are translated at the exchange rates prevailing at the Balance Sheet date and profit/loss on translation thereon is credited/ charged to the Profit and Loss Account.

c. Pursuant to the adoption of Companies (Accounting Standard) Rules, 2006, with effect from April 1, 2007, exchange differences arising on settlement or restatement of foreign currency denominated liabilities relating to the acquisition of fixed asset are recognised in the Profit and Loss Account.

d. In case of forward contracts, the exchange difference between the forward rate and the exchange rate at the date of transaction is recognised as income or expense over the life of the contract.

e. As required by the recent Announcement of the Institute of Chartered Accountants of India on positions of derivatives, keeping in view the principle of prudence as per Accounting Standard 1 on "Disclosure of Accounting Policies", outstanding forward contracts at the Balance Sheet date are reflected by marking them to market and accordingly, the resulting mark to market losses are provided in the Profit and Loss Account.

12. LEASE RENTALS:

Lease rentals are accounted consistent with the payment schedule provided in the lease agreement.

13. BORROWING COSTS:

Borrowing costs, attributable to the acquisition/construction of qualifying assets, are capitalised, net of income, if any. Other borrowing costs are charged as an expense in the period in which the same are incurred. Borrowing cost comprises of interest and other cost incurred in connection with borrowing of funds.

14. PRIOR-PERIOD ITEMS:

Income and expenditure pertaining to prior period, wherever material, are disclosed separately.

15. DEFERRED REVENUE EXPENDITURE:

Termination benefits paid to the employees are written off over a period of five years from the date of payment.

16. IMPAIRMENT OF ASSETS:

If internal / external indications suggest that an asset of the Company may be impaired, the recoverable amount of asset / cash generating unit is determined on the balance sheet date and if it is less than its carrying amount, the carrying amount of asset / cash generating unit is reduced to the said recoverable amount. Subsequently, if there is a change in the indication, since the last impairment-was recognized, so that recoverable amount of an asset exceeds its carrying amount, an impairment recognized for an asset in prior accounting period is reversed. The recoverable amount is measured as the higher of the net selling price and value in use of such assets / cash generating unit, which is determined by the present value of the estimated future cash flows.

17. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:

a. The Company recognizes as Provisions, the liabilities being present obligations arising from past events, the settlement of which is expected to result in an outflow of resources and which can be measured only by using a substantial degree of estimation.

b. Contingent Liability is disclosed by way of a note to the financial statements after careful evaluation by the. management of the facts and legal aspects of the matters involved.

c. Contingent Assets are neither recognized nor disclosed.

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