Mar 31, 2023
Note 1 â Significant Accounting Policies
1. Company Overview
APAR Industries Limited ("the Company"), founded by Late Shri. Dharmsinh D. Desai in the year 1958 is one among the best-established companies in India, operating in the diverse fields of electrical and metallurgical engineering offering value added products and services in Power Transmission Conductors, Petroleum Specialty Oils, Power & Telecom Cables and House wires. The Company is incorporated in India. The registered office of the Company is situated at 301, Panorama Complex, R. C. Dutt Road, Vadodara, Gujarat â 390 007. The Company has manufacturing plants in the state of Maharashra, Gujarat, Orissa and Union territory of Dadra & Nagar Haveli.
2. Basis of preparation and basis of measurement of Financial Statements
These Financial Statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) to comply with Section 133 of the Companies Act, 2013 ("the 2013 Act"), and the relevant provisions of the 2013 Act (to the extent notified) read with the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.
Accounting policies have been consistently applied except where a newly issued Ind AS is initially adopted or a revision to an existing Ind AS requires a change in accounting policy hitherto in use.
These Financial Statements are presented in Indian Rupees (H), which is the Company''s functional currency. All amounts have been rounded off to two decimal places to the nearest crore, unless otherwise indicated.
These Financial Statements are approved for issue by the Board of Directors on May 08, 2023.
The Financial Statements have been prepared on a going concern basis using historical cost convention basis except for the following items:
⢠certain financial assets and liabilities (including mutual fund investments and derivatives) that are measured at fair value;
⢠defined benefit plans â plan assets measured at fair value; and
⢠share-based payments.
The preparation of Financial Statements in accordance with Ind AS requires use of estimates, assumptions and judgements, which might have an effect on their recognition and measurement in the (i) balance sheet and (ii) statement of profit and loss and other comprehensive incomes. The actual amounts may differ from these estimates.
Estimates and assumptions are required in particular for:
Useful lives of assets are based on the life prescribed in Schedule II of the Companies Act, 2013. In cases, where the useful lives are different from that prescribed in Schedule II, they are based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers'' warranties and maintenance support.
The obligation arising from a defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds corresponds to the probable maturity of the postemployment benefit obligations.
⢠Recognition of deferred tax assets
Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilized business loss and unabsorbed depreciation and tax credits. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, unabsorbed depreciation and unused tax credits could be utilized.
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and
circumstances known at the balance sheet date. The actual outflow of resources at a future date may therefore vary from the amount included in other provisions.
⢠Discounting of long-term financial assets/liabilities
Long term financial assets/liabilities are required to be measured at fair value on initial recognition. In the case of financial liabilities which are required to subsequently measure at amortised cost, interest is accrued using the effective interest method.
⢠Fair value of financial instruments
Derivatives and investments in mutual funds are carried at fair value. Derivatives include Foreign Currency Forward Contracts, Commodity Futures Contracts and Interest Rate Swaps. Fair value of Foreign Currency Forward Contracts and Commodity Futures Contracts are determined using the fair value reports provided by merchant bankers and London Metal Exchange (LME) brokers respectively. Fair values of Interest Rate Swaps are determined with respect to the current market rate of interest.
⢠Sales incentives and Customer Loyalty Programs
Rebates are generally provided to distributors or dealers as an incentive to sell the Company''s products. Rebates are based on purchases made during the period by distributor / customer. The Company determines the estimate of benefits accruing to the distributors/ dealers based on the schemes introduced by the Company.
The amount allocated to the loyalty program/ incentive is deferred and is recognised as revenue when the Company has fulfilled its obligations to supply the discounted products under the terms of the program or when it is no longer probable that the points under the program will be redeemed.
The cash incentives offered under various schemes are in the nature of sales promotion and provisions are made for such incentives.
3 Measurement of fair values
The Company''s accounting policies and disclosures require the measurement of fair values for financial instruments.
The Company has an established control framework with respect to the measurement of fair values. The management regularly reviews significant observable inputs and valuation adjustments. If third party information, such as
broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
⢠Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
⢠Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
⢠Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Significant accounting policies followed bythecompany
A. Foreign currency
i. Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency of the Company at the exchange rate prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Foreign currency differences are generally recognised in profit or loss. Non-monetary items that are measured based on historical cost in a foreign currency are not translated.
Any income or expense on account of exchange difference either on settlement or on translation is recognised in the statement of profit and loss in the year in which they arise.
The company has adopted Appendix B to Ind AS 21, Foreign currency transactions and advance considerations notified in the Companies (Indian Accounting Standards) Rules, 2018. Accordingly, the exchange rate for translation of foreign currency transaction; in cases when Company receives or pays advance consideration is earlier of: -
⢠the date of initial recognition of non-monetary prepayment asset or deferred income liability or
⢠the date that the related item is recognized in the Financial Statements.
If the transaction is recognized in stages; then a transaction date will be established for each stage.
B. Revenue Recognition
i. Revenue from contract with customers for sale of goods and provision of services
The Company recognizes revenue from contracts with the customers based on five step model defined in Ind AS 115. The Company satisfies a performance obligation and recognizes revenue over time, if any of the conditions given in Ind AS 115 are satisfied; else revenue is recognized at the point in time at which the performance obligation is satisfied.
When the Company satisfies a performance obligation by delivering the promised goods or services it creates a contract-based asset on the amount of consideration earned by the performance. Where the amount of consideration received from a customer exceeds the amount of revenue recognized, this gives rise to a contract liability.
Revenue towards satisfaction of performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of returns, allowance, trade discounts, volume rebates and schemes offered by the Company as a part of the contract Revenues are recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue & costs, if applicable, can be measured reliably.
a. Performance Obligation
The Company derives its revenue from the sale of products in Conductors, Transformers, Speciality Oils , Power and Telecom Cables and House Wires It also derives its revenue from rendering of services in Power Transmission Conductors.
The Company is required to assess each of its contracts with customers to determine whether performance obligation is satisfied over time or at a point in time in order to determine the appropriate method for recognizing revenue. The Company recognizes the revenue over time only if it satisfies the criteria given in Ind AS 115. Where the criteria as per Ind AS 115 are not met, revenue is recognized at a point in time.
The Company satisfies its performance obligation when the control over the goods is transferred to the customer or the benefits of the services being provided is received by the customer.
In cases where the Company determines that performance obligation is satisfied at a point in time, revenue is recognized when the control over the goods is transferred to the customer or benefits of the services being provided is received by the customer. The Company considers that the customer has obtained the control of promised goods or services; when the goods have been dispatched/delivered to the destination as per terms of the contract or services has been provided to the customer as per agreed terms and the Company has unconditional right to consideration.
In cases where the Company determines that performance obligation is satisfied over time, then revenue is recognised when the outcome of a transaction can be estimated reliably by reference to the stage of completion of the transaction (Input Method). The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:
1. The amount of revenue can be measured reliably;
2. It is probable that the economic benefits associated with the transaction will flow to the Company;
3. The stage of completion of the transaction at the end of the reporting period can be measured reliably; and
4. The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Stage of completion is determined by the proportion of actual costs incurred to-date, to the estimated total costs of the transaction.
The Company considers that the use of the input method, which requires revenue recognition on the basis of the company''s efforts to the satisfaction of performance obligation, provides the best reference of revenue actually earned. In applying the input method, the Company estimates the efforts or inputs to the satisfaction of a performance obligation. In addition to the cost of meeting contractual obligation to the customers, these estimates mainly include;
⢠For service contracts, the time elapsed
b. Transaction Price
The Company is required to determine the transaction price in respect of each of its contracts with customers.
Contract with customers for sale of goods or services are either on a fixed price or on variable price basis.
For allocating the transaction price, the Company measures the revenue in respect of each performance obligation of contract at its relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In making judgment about the standalone selling price, the Company also assesses the impact of any variable consideration in the contract, due to discounts or penalties, the existence of any significant financing component and any noncash consideration in the contract.
In determining the impact of variable consideration, if any, the Company uses the "most likely amount" method as per Ind AS 115 whereby the transaction price is determined by reference to the single most likely amount in a range of possible consideration amounts.
c. Discounts, Rebates & Incentive to Customers
The Company accounts for volume discounts, rebates and pricing incentives to customers based on the ratable allocation of the discounts / rebates to each of the underlying performance obligation that corresponds to the progress made by the customer towards earning that discount, rebate or incentive. The Company also recognises liability based on the past performance of the customers fulfilling the criteria to get the discounts, rebates or incentives and the future outflow of the same is probable. If it is probable that the criteria
for the discounts will not be met or if the amounts thereof cannot be estimated reliably, then the discount is not recognised until the payment is probable and the amount can be estimated reliably. The Company accounts for discounts, rebates and pricing incentives in the year of payment where customer qualifies for the same and wherein provision was not made due to company''s inability to make reliable estimates based on the available data at reporting date.
ii. Lease income:
The Company has determined that the payments by the lessee are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. Accordingly rental income arising from operating leases is accounted for on an accrual basis as per the terms of the lease contract.
iii. Interest income is accrued on a time basis, by reference to the principal outstanding and using effective interest rate.
iv. Dividend income is recognised when the right to receive the payment is established.
C. Employee benefits
i. Short term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
ii. Defined contribution plans
⢠Provident Fund Scheme
The Company makes specified monthly contributions towards employee provident fund directly to the Government under the Employees Provident Fund Act, 1952.
⢠Superannuation Scheme
The Company makes specified contributions to the superannuation fund administered by the Company and the return on investments is adequate to cover the commitments under the scheme. The Company''s contribution paid/payable under the scheme is recognised as expense in the statement of profit and loss during the period in which the employee renders the related service.
iii. Defined benefit plans
The following post â employment benefit plans are covered under the defined benefit plans:
⢠Gratuity Fund
The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the Projected Unit Credit Method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.
Re-measurement of the net defined benefit/liability, which comprises actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling, if any (excluding interest), are recognised immediately in OCI. Net interest expense/(income) on the net defined liability/(assets) is computed by applying the discount rate, used to measure the net defined liability/(asset), to the net defined liability/ (asset) at the start of the financial year after taking into account any changes as a result of contribution and benefit payments during the year. Net interest expense and other expenses related to defined benefit plans are recognised in statement of profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in statement of profit or loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
iv. Other long-term employee benefits
Long-term Compensated Absences are provided for on the basis of an actuarial valuation, using the Projected Unit Credit Method, as at the date of the Balance Sheet. Actuarial gains / losses comprising of experience adjustments and the effects of changes in actuarial assumptions are immediately recognised in the statement of profit and loss.
D. Grants/ Subsidies
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
Where the grant relates to an asset, the cost of the asset is shown at gross value and grant thereon is treated as capital grant. The capital grant will be recognised as income in the statement of profit and loss over the period and in proportion in which depreciation is charged.
Revenue grants are recognised in the statement of profit and loss in the same period as the related cost, which they are intended to compensate, are accounted for.
E. Income Tax
Income tax expense comprises current and deferred tax. It is recognised in statement of profit or loss except;
a. to the extent that it relates to a business combination, or
b. items recognised directly in equity or in OCI. Such as, re-measurement of the defined benefit plans and the effective portion of gain and loss on hedging instrument in a cash flow hedge.
i. Current tax
Current tax comprises the expected tax payable on taxable income or tax receivable on the taxable loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date.
Current tax assets and liabilities are offset only if, the Company:
a) has a legally enforceable right to set off the recognised amounts; and
b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
ii. Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted, if appropriate.
Capital expenditure in respect of which ownership does not vest with the Company is amortized over a period of five years. Leasehold land is amortised over the period of lease.
Estimated useful life as per technical estimates of the Company in plant & equipment''s are as below:
Particulars |
Conductor Division |
Oil Division |
Cable Division |
Head Office |
Leasehold Land |
SLM |
SLM |
SLM |
SLM |
Buildings |
SLM |
SLM |
SLM |
SLM |
Plant and Equipment |
SLM |
SLM |
SLM |
SLM |
Furniture and Fixtures |
SLM |
WDV |
SLM |
WDV |
Office Equipment |
SLM |
WDV |
SLM |
WDV |
Motor Vehicles |
SLM |
WDV |
SLM |
WDV |
Description of Assets |
Useful Life in Schedule II |
Useful Life as per technical estimates |
Plant and equipment''s âOil division (other than filling lines) |
15 Years |
20 Years |
Plant and equipment''s - Conductor division |
15 Years |
20 Years |
Plant and equipment''s - Cable division |
15 Years |
25 Years |
⢠temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;
⢠temporary differences related to investments in subsidiaries and associates to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
⢠taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.
Unrecognized deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if:
a) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.
Deferred tax assets / liabilities in respect of temporary differences which originate and reverse during the tax holiday period are not recognised. Deferred tax assets / liabilities in respect of temporary differences
that originate during the tax holiday period but reverse after the tax holiday period are recognised.
F. Inventories
Inventories and work in progresses are measured at the lower of cost and net realizable value. Inventory of scrap is valued at estimated realizable value. The cost of inventories is determined using the weighted average cost method. Cost includes direct materials, labour, other direct cost and manufacturing overheads. Inventories also include applicable taxes, other than those which are subsequently recoverable from tax authorities.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.
G. Property, plant and equipment
i. Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.
The cost of an item of property, plant and equipment comprises:
a) i ts purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates.
b) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
c) t he initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.
Income and expenses related to the incidental operations, not necessary to bring the item to the location and condition necessary for it to be capable of operating in the manner intended by management, are recognised in the statement of profit or loss.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted and depreciated for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in statement of profit and loss.
The cost of the property, plant and equipment at 1st April 2015, the Company''s date of transition to Ind AS, was determined with reference to its carrying value at that date.
ii. Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits
H. Intangible Assets
Intangible assets which are acquired by the Company and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.
All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in Statement of Profit or Loss as incurred.
associated with the expenditure will flow to the Company and the cost of the item can be measured reliably.
iii. Depreciation
Depreciation is provided, pro rata to the period of use, based on useful lives specified in Schedule II to the Companies Act, 2013 after taking into account estimated residual value except in the case where the estimated useful life based on management experience and technical evaluation differs.
Depreciation is charged on the Straight-Line method (SLM) or the Written Down Value method (WDV) based on the method consistently followed by the respective divisions in the Company. The depreciation method followed by each division is as below:
Amortisation
Amortisation is calculated to write off the cost of intangible assets using the straight-line method over their estimated useful lives and is generally recognised in the Statement of Profit or Loss.
Enterprise Resource Planning Software cost: Cost of implementation of ERP Software including all related direct expenditure is amortized over a period of 5 years on successful implementation.
The cost of the intangible assets at 1st April 2015, the Company''s date of transition to Ind AS, was determined with reference to its carrying value at that date.
I. Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of that asset till the date it is ready for its intended use or sale. Other borrowing costs are recognised as an expense in the period in which they are incurred.
J. Share-based payments:
a. Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).
b. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.
c. That cost is recognised, together with a corresponding increase in share-based payment (SBP) reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest.
d. When the terms of an equity-settled award are modified, the minimum expense recognised is the expense had the terms not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through statement of profit or loss.
e. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
f. For cash settled share-based payments, a liability is recognised for the services availed. At the end
of the reporting period, until liability is settled, the fair value of liability is remeasured with any changes in fair value recognised in statement of profit or loss.
K. Treasury Shares
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in the statement of profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in securities premium.
L. Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments also include derivative contracts such as Foreign Exchange Forward Contracts, Commodity Future Contracts, Interest Rate Swaps, Currency Options and embedded derivatives in the host contract.
Financial instruments also cover contracts to buy or sell a non-financial item that can be settled net in cash or another financial instrument or by exchanging financial instruments, as if the contracts were financial instruments, with the exception of contracts that were entered into and continue to be held for the purpose of receipt or delivery of a non-financial item in accordance with the entity''s expected purchase, sale or usage requirements.
i. Financial assets
Classification
The financial assets are classified as subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss on the basis of its business model for management of the financial assets and the contractual cash flow characteristics of the financial asset.
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. However,
trade receivables that do not contain a significant financing component are measured at transaction price. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Debt instruments at amortised cost
⢠A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows; and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
⢠After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit or loss. The losses arising from impairment are recognised in the statement of profit or loss. This category generally applies to trade and other receivables.
Debt instruments at Fair Value Through Profit And Loss (FVTPL)
⢠Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as Fair Value through Other Comprehensive Income (FVOCI), is classified as at FVTPL.
⢠In addition, the Company may elect to classify a debt instrument, which otherwise meets amortized cost or FVOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch'').
⢠Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.
Investments into Equity instruments and Mutual Funds
⢠All investments in the scope of Ind-AS 109 are measured at fair value. Equity instruments and mutual funds which are held for trading are classified as at FVTPL. For all other equity instruments and mutual funds, the Company decides to classify the same either as at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
⢠Equity instruments and mutual funds included within the FVTPL category are measured at fair value with all changes recognized in the the statement of profit or loss.
Derecognition
⢠A financial asset (or, where applicable, a part of a financial asset) is primarily derecognised (i.e., removed from the Company''s balance sheet) when:
⢠The rights to receive cash flows from the asset have expired; or
⢠The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset;
⢠When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
⢠Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, and bank balance.
b) Trade receivables - The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. Trade receivables are tested for impairment on a specific basis after considering the sanctioned credit limits, security like letters of credit, security deposit collected etc. and expectations about future cash flows.
The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial liabilities measured at fair value through profit or loss.
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable and incremental transaction cost.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognised less cumulative amortisation.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in the statement of profit or loss.
The Company designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in foreign exchange rates and interest rates.
At inception of designated hedging relationships, the Company documents the risk management objective and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
Cash Flow Hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in OCI and accumulated in the other equity under the "effective portion of cash flow hedges". The effective portion of changes in the fair value of the derivative that is recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on the present value basis, from the inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in the statement of profit or loss
When the hedged forecast transaction subsequently results in the recognition of a nonfinancial item such as inventory, the amount accumulated in the other equity is included directly in the initial cost of the non-financial item when it is recognised. For all other hedged forecast transactions, the amount accumulated in other equity is reclassified to the statement of profit or loss in the same period or periods during which the hedged expected future cash flows affect the statement of profit or loss.
If a hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in other equity remains there until, for a hedge of a transaction resulting in the recognition of a non-financial item, it is included in the non-financial items cost of initial recognition or for other cash flow hedges, it is reclassified to the statement of profit or loss in the same period as the hedged future cash flows affect the statement of profit and loss.
If the hedged cash flows are no longer expected to occur, then the amounts that have been accumulated in the other equity are immediately reclassified to the statement of profit and loss.
The Company formally designates foreign currency denominated financial liabilities relating to imported raw materials, in one of the division, in a cash flow hedge relationship for hedging of foreign exchange risk associated with highly probable future sales transactions. The effective portion of gains or losses arising on restatement of the foreign currency denominated financial liabilities is initially recognized in other comprehensive income and is reclassified to profit or loss in the period of settlement when the sales are affected. Ineffective portions, if any, is be charged to statement profit or loss.
Effective from the second quarter of financial year 2022 - 2023, the Company has adopted hedge accounting under Ind AS 109 by formally designating, foreign currency denominated financial liabilities relating to procurement of imported raw material in a cash-flow hedge relationship for hedge of foreign exchange risk associated with highly probable future sales transactions. Consequent to this change, through demonstration of hedge effectiveness as per requirements of Ind AS 109, the effective portion of gain / loss arising on restatement of the foreign currency denominated financial liabilities relating to procurement of imported raw material is being recognised initially in cash flow hedge reserve account and reclassified to the statement of profit and loss in the period of settlement when the sales are effected and ineffective portion, if any charged to the statement of profit or loss. As of quarter/
year ended 31 March, 2023, the effective portion loss of H 1,09 Crores on revaluation of financial liabilities designated hedge relationship has been deferred to cash flow hedge reserve..
Provisions and contingent liabilities
Provisions represent liabilities for which the amount or timing is uncertain. Provisions are recognised when the Company has a present obligation (legal or constructive), as a result of past events, and it is probable that an outflow of resources, that can be reliably estimated, will be required to settle such an obligation.
Provisions are determined by discounting the expected future cash flows specific to the liability using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The unwinding of the discount is recognised in the statement of profit and loss as a finance cost. A provision for onerous contracts is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate.
A disclosure for a contingent liability is made when there is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that may, but will probably not, require an outflow of resources.
A contingent asset is not recognised but disclosed in the Financial Statements where an inflow of economic benefit is probable.
M. Leases
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract and allocates the consideration
in the contract to each lease component on the basis of the relative standalone price of the lease component and the aggregate standalone price of the non-lease components.
The Company recognises right-to-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-to-use asset measured at inception is comprising of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received. The right-to-use assets are subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any re-measurement of the lease liability. The right-to-use assets are depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-to-use asset. The estimated useful lives of right-to-use assets are determined on the same basis as those of property, plant and equipment. Right-to-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the Company''s incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease-by-lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised insubstance fixed lease payments. The Company recognises the amount of the re-measurement of lease liability due to modification as an adjustment to the right-to-use asset and the statement of profit and loss depending upon the nature of modification. Where the carrying amount of the right-to-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in the statement of profit and loss. The Company has elected not to apply the requirements of INDAS 116 leases to: a)
short term leases of all assets that have a lease term of 12 months or less; and b) leases for which underlying assets is of low value. The lease payment associated with the above two types of leases are recognized as an expense on a straight-line basis over the lease term.
Company as a lessor
At the inception of the lease, the Company classifies each of its leases as either an operating lease or a finance lease. The Company recognises lease payments received under operating leases as income on a straight-line basis over the lease term. In case of a finance lease, finance income is recognised over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor''s net investment in the lease. When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-to -use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.
N. Impairment of non-financial assets
The carrying values of assets/cash generating units at each balance sheet date are reviewed for impairment if any indication of impairment exists. If the carrying amount of the assets exceeds the estimated recoverable amount, impairment is recognised for such excess amount.
The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor.
When there is indication that an impairment loss recognised for an asset (other than a revalued asset) in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the statement of profit or loss, to the extent the amount was previously charged to the statement of profit or loss. In case of revalued assets, such reversal is not recognised.
O. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
P. Segment Reporting
The Chief Operating Decision Maker (CODM) monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on the statement of profit and loss and is measured consistently with the statement of profit or loss in the financial statements. Operating segments have been identified on the basis of nature of products / services.
Segment assets include all operating assets used by the business segments and consist principally of fixed assets, trade receivables and inventories. Segment liabilities include the operating liabilities that result from the operating activities of the business. Segment assets and liabilities that cannot be allocated between the segments are shown as part of unallocated corporate assets and liabilities respectively. Income / Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated corporate income / expenses.
The Segment disclosure is given in the Consolidated Fina
Mar 31, 2022
Note 1 â Significant Accounting Policies1. General information
APAR industries Limited ("the Company"), founded by Late Shri. Dharmsinh D. Desai in the year 1958 is one among the best-established companies in India, operating in the diverse fields of electrical and metallurgical engineering offering value added products and services in Power Transmission Conductors, Petroleum Specialty Oils and Power & Telecom Cables. The Company is incorporated in India. The registered office of the Company is situated at 301, Panorama Complex, R. C. Dutt Road, Vadodara, Gujarat â 390 007. The Company has manufacturing plants in state of Maharashra, Gujarat, Orissa and Union territory of Dadra & Nagar Haveli.
These financial statements are approved for issue by the Board of Directors on May 27, 2022.
These financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) to comply with Section 133 of the Companies Act, 2013 ("the 2013 Act"), and the relevant provisions of the 2013 Act (to the extent notified) read with the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.
Accounting policies have been consistently applied except where a newly issued Ind AS is initially adopted or a revision to an existing Ind AS requires a change in accounting policy hitherto in use.
3. Functional and presentation currency
These financial statements are presented in Indian Rupees (''), which is the Company''s functional currency. All amounts have been rounded off to two decimal places to the nearest crore, unless otherwise indicated.
The financial statements have been prepared on a going concern basis using historical cost convention basis except for the following items:
¦ certain financial assets and liabilities (including mutual fund investments and derivatives) that are measured at fair value;
¦ defined benefit plans â plan assets measured at fair value; and
¦ share-based payments.
5. Key estimates and assumptions
The preparation of financial statements in accordance with Ind AS requires use of estimates and assumptions, which might have an effect on their recognition and measurement in the (i) balance sheet and (ii) statement of profit and loss. The actual amounts may differ from these estimates.
Estimates and assumptions are required in particular for:
¦ Determination of the estimated useful lives of tangible assets and intangible assets
Useful lives of assets are based on the life prescribed in Schedule II of the Companies Act, 2013. In cases, where the useful lives are different from that prescribed in Schedule
II, they are based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers'' warranties and maintenance support.
¦ Recognition and measurement of defined benefit obligations
The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds corresponds to the probable maturity of the post-employment benefit obligations.
¦ Recognition of deferred tax assets
Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilized business loss and unabsorbed depreciation and tax credits. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, unabsorbed depreciation and unused tax credits could be utilized.
¦ Recognition and measurement of other provisions
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the balance sheet date. The actual outflow of resources at a future date may therefore vary from the amount included in other provisions.
¦ Discounting of long-term financial assets/liabilities
All financial assets/liabilities are required to be measured at fair value on initial recognition. In case of financial liabilities which are required to subsequently measure at amortised cost, interest is accrued using the effective interest method.
¦ Fair value of financial instruments
Derivatives and investments in mutual funds are carried at fair value. Derivatives include Foreign Currency Forward Contracts, Commodity Futures Contracts and Interest Rate Swaps. Fair value of Foreign Currency Forward Contracts and Commodity Futures Contracts are determined using the fair value reports provided by merchant bankers and London Metal Exchange (LME) brokers respectively. Fair values of Interest Rate Swaps are determined with respect to current market rate of interest.
¦ Sales incentives and Customer Loyalty Programs
Rebates are generally provided to distributors or dealers as an incentive to sell the Company''s products. Rebates are based on purchases made during the period by distributor / customer. The Company determines the estimate of benefits accruing to the distributors/ dealers based on the schemes introduced by the Company.
The amount allocated to the loyalty program/ incentive is deferred and is recognised as revenue when the Company has fulfilled its obligations to supply the discounted products under the terms of the program or when it is no longer probable that the points under the program will be redeemed.
The cash incentives offered under various schemes are in the nature of sales promotion and provisions is made for such incentives.
The Company''s accounting policies and disclosures require the measurement of fair values for financial instruments.
The Company has an established control framework with respect to the measurement of fair values. The management regularly reviews significant observable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
¦ Level V. quoted prices (unadjusted) in active markets for identical assets or liabilities.
¦ Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
¦ Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
7. Significant accounting policies followed by the company
A. Foreign currency
i. Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency of the Company at the exchange rate prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined.
Foreign currency differences are generally recognised in profit or loss. Non-monetary items that are measured based on historical cost in a foreign currency are not translated.
Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of profit and loss in the year in which they arise.
The company has adopted Appendix B to Ind AS 21, Foreign Currency transactions and advance considerations notified in the Companies (Indian Accounting Standards) Rules, 2018. Accordingly, the exchange rate for translation of foreign currency transaction; in cases when Company receives or pays advance consideration is earlier of:-
¦ the date of initial recognition of non-monetary prepayment asset or deferred income liability or
¦ the date that the related item is recognized in the financial statements.
If the transaction is recognized in stages; then a transaction date will be established for each stage.
B. Revenue Recognition
i. revenue from contract with customers for sale of goods and provision of services
The Company recognizes revenue from contracts with the customers based on five step model defined in Ind AS 115. The Company satisfies a performance obligation and recognizes revenue over time, if any of the conditions given in Ind AS 115 are satisfied; else revenue is recognized at point in time at which the performance obligation is satisfied.
When the Company satisfies a performance obligation by delivering the promised goods or services it creates a contract-based asset on the amount of consideration earned by the performance. Where the amount of consideration received from a customer exceeds the amount of revenue recognized, this gives rise to a contract liability.
Revenue is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenues are recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue & costs, if applicable, can be measured reliably.
a. performance obligation
The Company derives its revenue from selling products and services in Power Transmission Conductors, Transformer & Speciality Oils and Cables.
The Company is required to assess each of its contracts with customers to determine whether performance obligation is satisfied over time or at a point in time in order to determine the appropriate method for recognizing of revenue. The Company recognizes the revenue over time only if it satisfies the criteria given in Ind AS 115. Where the criteria as
per Ind AS 115 are not met, revenue is recognized at a point in time.
The Company satisfies its performance obligation when the control over the goods is transferred to the customer or benefits of the services being provided is received by the customer.
In cases where the Company determines that performance obligation is satisfied at a point in time, revenue is recognized when the control over the goods is transferred to the customer or benefits of the services being provided is received by the customer. The Company considers that the customer has obtained the control of promised goods or services; when the goods have been dispatched/delivered to the destination as per terms of the contract or services has been provided to the customer as per agreed terms and the Company has unconditional right to consideration.
In cases where the Company determines that performance obligation is satisfied over time, then revenue is recognised when the outcome of a transaction can be estimated reliably by reference to the stage of completion of the transaction (Input Method). The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:
1. The amount of revenue can be measured reliably;
2. It is probable that the economic benefits associated with the transaction will flow to the Company;
3. The stage of completion of the transaction at the end of the reporting period can be measured reliably; and
4. The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Stage of completion is determined by the proportion of actual costs incurred to-date, to the estimated total costs of the transaction.
The Company considers that the use of the input method, which requires revenue recognition on the basis of the company''s efforts to the satisfaction of performance obligation, provides the best reference of revenue actually earned. In applying the input method, the Company estimates the efforts or inputs to the satisfaction of a performance obligation. In addition to the cost of meeting contractual obligation to the customers, these estimates mainly include;
¦ For service contracts, the time elapsed
The Company is required to determine the transaction price in respect of each of its contracts with customers.
Contract with customers for sale of goods or services
are either on a fixed price or on variable price basis.
For allocating the transaction price, the Company measures the revenue in respect of each performance obligation of contract at its relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone selling price. In making judgment about the standalone selling price, the Company also assesses the impact of any variable consideration in the contract, due to discounts or penalties, the existence of any significant financing component and any non-cash consideration in the contract.
In determining the impact of variable consideration, if any, the Company uses the "most likely amount" method as per Ind AS 115 whereby the transaction price is determined by reference to the single most likely amount in a range of possible consideration amounts.
c. Discounts, Rebates & incentive to Customers
The Company accounts for volume discounts, rebates and pricing incentives to customers based on the ratable allocation of the discounts / rebates to each of the underlying performance obligation that corresponds to the progress made by the customer towards earning that discount, rebate or incentive. The Company also recognises the liability based on the past performance of the customers fulfilling the criteria to get the discounts, rebates or incentives and the future outflow of the same is probable. If it is probable that the criteria for the discounts will not be met or if the amounts thereof cannot be estimated reliably, then the discount is not recognised until the payment is probable and the amount can be estimated reliably. The Company accounts for discounts, rebates and pricing incentives in the year of payment where customer qualifies for the same and wherein provision was not made due to company''s inability to make reliable estimates based on the available data at reporting date.
The Company has determined that the payments by the lessee are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. Accordingly rental income arising from operating leases is accounted for on an accrual basis as per the terms of the lease contract.
iii. Interest income is accrued on a time basis, by reference to the principal outstanding and effective interest rate applicable.
iv. Dividend income is recognised when the right to receive the payment is established.
C. Employee benefits
i. Short term employee benefits
Short-term employee benefits are expensed as the related
service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
ii. Defined contribution plans
The Company makes specified monthly contributions towards employee provident fund directly to the Government under the Employees Provident Fund Act, 1952.
¦ Superannuation Scheme
The Company makes specified contributions to the superannuation fund administered by the Company and the return on investments is adequate to cover the commitments under the scheme. The Company''s contribution paid/payable under the scheme is recognised as expense in the statement of profit and loss during the period in which the employee renders the related service.
iii. Defined benefit plans
The following post â employment benefit plans are covered under the defined benefit plans:
¦ Gratuity Fund
The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the Projected Unit Credit Method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.
Re-measurement of the net defined benefit/liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling, if any (excluding interest), are recognised immediately in OCI. Net interest expense/(income) on the net defined liability/(assets) is computed by applying the discount rate, used to measure the net defined liability/(asset), to the net defined liability/(asset) at the start of the financial year after taking into account any changes as a result of contribution and benefit payments during the year. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
iv. other long-term employee benefits
Long-term Compensated Absences are provided for on the basis of an actuarial valuation, using the Projected Unit Credit Method, as at the date of the Balance Sheet. Actuarial gains / losses comprising of experience adjustments and the effects of changes in actuarial assumptions are immediately recognised in the Statement of Profit and Loss.
D. Finance income and finance costs
The Company''s finance income and finance costs include:
¦ interest income;
¦ interest expense;
¦ the net gain or loss on financial assets at FVTPL
¦ exchange differences arising from monetary assets and liabilities
Interest income or expense is recognised using the effective interest rate method.
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
Where the grant relates to an asset, the cost of the asset is shown at gross value and grant thereon is treated as capital grant. The capital grant will be recognised as income in the statement of profit and loss over the period and in proportion in which depreciation is charged.
Revenue grants are recognised in the statement of profit and loss in the same period as the related cost, which they are intended to compensate, are accounted for.
Income tax expense comprises current and deferred tax. It is recognised in profit or loss except;
a. to the extent that it relates to a business combination, or
b. items recognised directly in equity or in OCI. Such as;
i. Items that will not be reclassified to profit or loss and their related income tax effects
1. Re-measurements of the defined benefit plans
ii. Items that will be reclassified to profit or loss and its related income tax effects;
1. The effective portion of gain and loss on hedging instruments in a cash flow hedge
Current tax comprises the expected tax payable on taxable income or tax receivable on the taxable loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date.
Current tax assets and liabilities are offset only if, the Company:
a) has a legally enforceable right to set off the recognised amounts; and
b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
¦ temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;
¦ temporary differences related to investments in subsidiaries and associates to the extent that the Company''s is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
¦ taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.
Unrecognized deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if:
a) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.
Deferred tax assets / liabilities in respect of temporary differences which originate and reverse during the tax holiday period are not recognised. Deferred tax assets / liabilities in respect of temporary differences that originate during the tax holiday period but reverse after the tax holiday period are recognised.
Inventories are measured at the lower of cost and net realizable value. Inventory of scrap is valued at estimated realizable value. The cost of inventories is determined using the weighted average cost method. Cost includes direct materials, labour, other direct cost and manufacturing overheads. Inventories of finished goods also includes applicable taxes.
Net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.
H. Property, plant and equipment
i. Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.
The cost of an item of property, plant and equipment comprises:
a) its purchase price, including import duties and nonrefundable purchase taxes, after deducting trade discounts and rebates.
b) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
c) the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.
Income and expenses related to the incidental operations, not necessary to bring the item to the location and condition necessary for it to be capable of operating in the manner intended by management, are recognised in profit or loss.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted and depreciated for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognised in statement of profit and loss.
The cost of the property, plant and equipment''s at 1st April 2015, the Company''s date of transition to Ind AS, was determined with reference to its carrying value at that date.
ii. Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable
that the future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably.
iii. Depreciation
Depreciation is provided, pro rata to the period of use, based on useful lives specified in Schedule II to the Companies Act, 2013 except in the case where the estimated useful life based on management experience and technical evaluation differs.
Depreciation is charged on the Straight-Line method (SLM) or the Written Down Value method (WDV) based on the method consistently followed by the respective divisions in the Company. The depreciation method followed by each division is as below: |
||||||
particulars |
Conductor Division |
oil Division |
Cable Division |
Head office |
||
Leasehold Land |
SLM |
SLM |
SLM |
SLM |
||
Buildings |
SLM |
SLM |
SLM |
SLM |
||
Plant and Equipment''s |
SLM |
SLM |
SLM |
SLM |
||
Furniture and Fixtures |
SLM |
WDV |
SLM |
WDV |
||
Office Equipment''s |
SLM |
WDV |
SLM |
WDV |
||
Motor Vehicles |
SLM |
WDV |
SLM |
WDV |
||
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted, if appropriate. Capital expenditure in respect of which ownership does not vest with the Company is amortized over a period of five years. Leasehold land is amortised over the period of lease. Estimated useful life as per technical estimates of the Company in Plant & Equipment''s are as below: |
||||||
Description of assets |
Useful Life in Schedule ii |
Useful life as per technical estimates |
||||
Plant and Equipment''s âOil division (other than filling lines) |
15 Years |
20 Years |
||||
Plant and Equipment''s - Conductor Division |
15 Years |
20 Years |
||||
Plant and Equipment''s - Cable Division |
15 Years |
25 Years |
Intangible assets which are acquired by the Company and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.
All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straightline method over their estimated useful lives and is generally recognised in profit or loss.
Enterprise Resource planning Software cost: Cost of implementation of ERP Software including all related direct expenditure is amortized over a period of 5 years on successful implementation.
The cost of the intangible assets at 1st April 2015, the Company''s date of transition to Ind AS, was determined with reference to its carrying value at that date.
J. Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of an asset that necessarily takes a substantial
period of time to get ready for its intended use are capitalised as part of the cost of that asset till the date it is ready for its intended use or sale. Other borrowing costs are recognised as an expense in the period in which they are incurred.
K. Share-based payments:
a. Employees of the Company receives remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).
b. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.
c. That cost is recognised, together with a corresponding increase in share-based payment (SBP) reserves in equity, over the period in which the performance and/ or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest.
d. When the terms of an equity-settled award are modified, the minimum expense recognised is the expense had
the terms not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss.
e. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
L. Treasury Shares
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in securities premium.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments also include derivative contracts such as Foreign Exchange Forward Contracts, Commodity Future Contracts, Interest Rate Swaps, Currency Options and embedded derivatives in the host contract.
Financial instruments also cover contracts to buy or sell a non-financial item that can be settled net in cash or another financial instrument or by exchanging financial instruments, as if the contracts were financial instruments, with the exception of contracts that were entered into and continue to be held for the purpose of receipt or delivery of a non-financial item in accordance with the entity''s expected purchase, sale or usage requirements.
i. Financial assetsClassification
The financial assets are classified as subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss on the basis of its business model for management of the financial assets and the contractual cash flow characteristics of the financial asset.
initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Debt instruments at amortised cost
¦ A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
¦ After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. This category generally applies to trade and other receivables.
Debt instruments at Fair value through profit And Loss (FvTpL)
¦ Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as Fair Value through Other Comprehensive Income (FVOCI), is classified as at FVTPL.
¦ In addition, the Company may elect to classify a debt instrument, which otherwise meets amortized cost or FVOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch'').
¦ Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss.
investments into Equity instruments and mutual Funds
¦ All investments in the scope of Ind-AS 109 are measured at fair value. Equity instruments and mutual funds which are held for trading are classified as at FVTPL. For all other equity instruments and mutual funds, the Company decides to classify the same either as at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
¦ Equity instruments and mutual funds included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss.
Derecognition
¦ A financial asset (or, where applicable, a part of a financial asset) is primarily derecognised (i.e.
removed from the Company''s balance sheet) when:
¦ The rights to receive cash flows from the asset have expired, or
¦ The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset
¦ When the Company has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
¦ Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
impairment of financial assets
In accordance with Ind-AS 109, the Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, and bank balance.
b) Trade receivables - The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. Trade receivables are tested for impairment on a specific basis after considering the sanctioned credit limits, security like letters of credit, security deposit collected etc. and expectations about future cash flows.
ii. Financial liabilities Classification
The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial liabilities measured at fair value through profit or loss.
initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable and incremental transaction cost.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss. The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognised less cumulative amortisation.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss. offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
iii. Derivative financial instruments and hedge accounting
The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss.
The Company designates certain derivatives as hedging instruments to hedge the variability in cash flows associated
with highly probable forecast transactions arising from changes in foreign exchange rates and interest rates.
At inception of designated hedging relationships, the Company documents the risk management objective and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
Cash Flow Hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in OCI and accumulated in the other equity under the "effective portion of cash flow hedges". The effective portion of changes in the fair value of the derivative that is recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on the present value basis, from the inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit and loss.
When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as inventory, the amount accumulated in the other equity is included directly in the initial cost of the non-financial item when it is recognised. For all other hedged forecast transactions, the amount accumulated in other equity is reclassified to profit and loss in the same period or periods during which the hedged expected future cash flows affect profit and loss.
If a hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in other equity remains there until, for a hedge of a transaction resulting in the recognition of a non-financial item, it is included in the non-financial items cost of initial recognition or for other cash flow hedges, it is reclassified to profit and loss in the same period as the hedged future cash flows affect the profit and loss.
If the hedged cash flows are no longer expected to occur, then the amounts that have been accumulated in the other equity are immediately reclassified to profit and loss. Provisions and contingent liabilities Provisions are determined by discounting the expected future cash flows specific to the liability. The unwinding of the discount is recognised as finance cost. A provision for onerous contracts is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may,
but will probably not, require an outflow of resources. When there is a possible outflow of a present obligation in respect of which the likelihood of outflow of resources is remote, no provision disclosure is made.
A contingent asset is not recognised but disclosed in the financial statements where an inflow of economic benefit is probable.
The Company has adopted Ind AS 116, effective from annual reporting period beginning April 1, 2019 and applied the standard to its existing leases, with the modified retrospective method. This has resulted into recognition of Right of use assets at an amount equal to Lease liability on date of initial application (April 1, 2019).
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.
The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception is comprising of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any re-measurement of the lease liability. The right-of-use assets are depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss. The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the Company''s incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently remeasured by increasing the carrying
amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. The Company recognises the amount of the re-measurement of lease liability due to modification as an adjustment to the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.
The Company has elected not to apply the requirements of Ind AS 116 Leases to;
1. Short-term leases of all assets that have a lease term of 12 months or less, and
2. Leases for which the underlying asset is of low value.
The lease payments associated with above 2 types of leases are recognized as an expense on a straight-line basis over the lease term.
Company as a lessor
At the inception of the lease, the Company classifies each of its leases as either an operating lease or a finance lease. The Company recognises lease payments received under operating leases as income on a straight-line basis over the lease term. In case of a finance lease, finance income is recognised over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor''s net investment in the lease. When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.
O. impairment of non-financial assets
The carrying values of assets/cash generating units at each balance sheet date are reviewed for impairment if any indication of impairment exists. If the carrying amount of the assets exceeds the estimated recoverable amount, impairment is recognised for such excess amount.
The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor.
When there is indication that an impairment loss recognised for an asset (other than a revalued asset) in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, to the extent the amount was previously charged to the Statement of Profit and Loss. In case of revalued assets, such reversal is not recognised.
P. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise
cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
Q. Segment Reporting
The Chief Operational Decision Maker (CODM) monitors the operating results of its business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit and loss and is measured consistently with profit or loss in the financial statements. Operating segments have been identified on the basis of nature of products / services.
The Accounting Policies adopted for segment reporting are in line with the Accounting Policies of the Company. Segment assets include all operating assets used by the business segments and consist principally of fixed assets, trade receivables and inventories. Segment liabilities include the operating liabilities that result from the operating activities of the business. Segment assets and liabilities that cannot be allocated between the segments are shown as part of unallocated corporate assets and liabilities respectively. Income / Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated corporate income / expenses.
R. Earnings per share
Basic Earnings per share is calculated by dividing the net profit for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit for the period attributable to the equity shareholders and the weighted average number of equity shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
S. Cash flows
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments and item of income or expenses associated with investing or financing cash flow. The cash flows from operating, investing and financing activities of the Company are segregated based on available information.
T. Dividends
Final dividend on shares is recorded as a liability on the date of approval by the shareholders and Interim dividends are recorded as a liability on the date of declaration by the Company''s Board of Directors.
Mar 31, 2018
A. Foreign currency i. Foreign currency transactions Transactions in foreign currencies are translated into the respective functional currencies of companies at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Foreign currency differences are generally recognised in profit or loss. Non-monetary items that are measured based on historical cost in a foreign currency are not translated. Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of profit and loss. Recent Accounting pronouncements - Appendix B to Ind AS 21, Foreign Currency transactions and advance considerations On March 28, 2018, the Ministry of Corporate Affairs (the MCAâ) notified the Companies (Indian Accounting Standards) Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company has evaluated the effect of this on the financial statements and the impact is not material. B. Revenue i. Sale of goods and Services Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when significant risks, rewards and controls of ownership in the goods are transferred to the buyer. Revenues are recognized when collectability of the resulting receivable is reasonably assured. In respect of service activities, income is recognised as and when services are rendered. ii. Rendering of services: Revenue from rendering services is recognised when the outcome of a transaction can be estimated reliably by reference to the stage of completion of the transaction. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied: 1. The amount of revenue can be measured reliably; 2. It is probable that the economic benefits associated with the transaction will flow to the company; 3. The stage of completion of the transaction at the end of the reporting period can be measured reliably; and 4. The costs incurred or to be incurred in respect of the transaction can be measured reliably. Stage of completion is determined by the proportion of actual costs incurred to-date, to the estimated total costs of the transaction. iii. Lease income: The Company has determined that the payments by the lessee are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. Accordingly rental income arising from operating leases is accounted for on an accrual basis as per the terms of the lease contract iv. Dividend income is recognised when the right to receive the payment is established. C. Employee benefits i. Short term employee benefits Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. ii. Defined contribution plans - Provident Fund Scheme The Company makes specified monthly contributions towards employee provident fund directly to the Government under the Employees Provident Fund Act, 1952 and is not obliged to bear the shortfall, if any, between the return on investments made by the Government from the contributions and the notified interest rate. - Superannuation Scheme The Company makes specified contributions to the superannuation fund administered by the Company and the return on investments is adequate to cover the commitments under the scheme. The Companyâs contribution paid/payable under these schemes is recognised as expense in the Statement of profit and loss during the period in which the employee renders the related service. iii. Defined benefit plans The following post - employment benefit plans are covered under the defined benefit plans: - Gratuity Fund The Companyâs net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements. Re-measurement of the net defined benefit/liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in OCI. Net interest expense/(income) on the net defined liability/(assets) is computed by applying the discount rate, used to measure the net defined liability/(asset), to the net defined liability/(asset) at the start of the financial year after taking into account any changes as a result of contribution and benefit payments during the year. Net interest expense and other expenses related to defined benefit plans are recognised in profit or loss. When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.. iv. Other long-term employee benefits Long-term Compensated Absences and Long Wages Schemes are provided for on the basis of an actuarial valuation, using the Projected Unit Credit Method, as at the date of the Balance Sheet. Actuarial gains / losses comprising of experience adjustments and the effects of changes in actuarial assumptions are immediately recognised in the Statement of Profit and Loss. D. Finance income and finance costs The Companyâs finance income and finance costs include: - interest income; - interest expense; - the net gain or loss on financial assets at FVTPL - exchange differences arising from monetary assets and liabilities Interest income or expense is recognised using the effective interest rate method. Share issue expenses are written off against share premium account if any or amortized over a period of 5 years. E. Grants/ Subsidies Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Where the grant relates to an asset the cost of the asset is shown at gross value and grant thereon is treated as capital grant which is recognised as income in the statement of profit and loss over the period and in proportion in which depreciation is charged. Revenue grants are recognised in the statement of profit and loss in the same period as the related cost, which they are intended to compensate, are accounted for. F. Income Tax Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in OCI. i. Current tax Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends. Current tax assets and liabilities are offset only if, the Company: a) has a legally enforceable right to set off the recognised amounts; and b) intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. ii. Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: - temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; - temporary differences related to investments in subsidiaries and associates to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and - taxable temporary differences arising on the initial recognition of goodwill. Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves. Unrecognized deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset only if: a) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity. Deferred tax asset / liabilities in respect of temporary differences which originate and reverse during the tax holiday period are not recognised. Deferred tax assets / liabilities in respect of temporary differences that originate during the tax holiday period but reverse after the tax holiday period are recognised. G. Inventories Inventories are measured at the lower of standard cost and net realizable value. Inventory of scrap is valued at estimated realizable value. The cost of inventories is determined using the weighted average method. Inventories of finished goods include taxes as applicable. H. Property, plant and equipment i. Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. The cost of an item of property, plant and equipment comprises: a) its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates. b) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. c) the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period. Income and expenses related to the incidental operations, not necessary to bring the item to the location and condition necessary for it to be capable of operating in the manner intended by management, are recognised in profit or loss. If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted and depreciated for as separate items (major components) of property, plant and equipment. Any gain or loss on disposal of an item of property, plant and equipment is recognised in profit or loss. The cost of the property, plant and equipmentâs at 1st April 2015, the Companyâs date of transition to Ind AS, was determined with reference to its carrying value at that date. ii. Subsequent expenditure Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company. iii. Depreciation Depreciation is provided, pro rata to the period of use, based on useful lives specified in Schedule II to the Companies Act, 2013 except in the case where the estimated useful life based on management experience and technical evaluation differs. Depreciation is charged on the Straight Line or the Written Down Value based on the method consistently followed by the respective entities in the Company. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Capital expenditure in respect of which ownership does not vest with the Company is amortized over a period of five years. Leasehold land is amortised over the period of lease. I. Intangible Assets Intangible assets which are acquired by the Company and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred. Amortisation Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognised in profit or loss. Enterprise resource planning cost: Cost of implementation of ERP Software including all related direct expenditure is amortized over a period of 5 years on successful implementation. The cost of the intangible assets at 1st April 2015, the Companyâs date of transition to Ind AS, was determined with reference to its carrying value at that date. J. Borrowing costs Borrowing costs that are directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalised as part of the cost of that asset till the date it is ready for its intended use or sale. Other borrowing costs are recognised as an expense in the period in which they are incurred. K. Share-based payments: a. Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions). b. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. c. That cost is recognised, together with a corresponding increase in share-based payment (SBP) reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Companyâs best estimate of the number of equity instruments that will ultimately vest. d. When the terms of an equity-settled award are modified, the minimum expense recognised is the expense had the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss e. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. L. Treasury Shares Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Companyâs own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in capital reserve. M. Financial Instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments also include derivative contracts such as foreign currency foreign exchange forward contracts, Commodity future Contracts, interest rate swaps and currency options; and embedded derivatives in the host contract. Financial instruments also covers contracts to buy or sell a non-financial item that can be settled net in cash or another financial instrument, or by exchanging financial instruments, as if the contracts were financial instruments, with the exception of contracts that were entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in accordance with the entityâs expected purchase, sale or usage requirements i. Financial assets Classification The Company shall classify financial assets as subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset. Initial recognition and measurement All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset. Debt instruments at amortised cost - A debt instrumentâ is measured at the amortised cost if both the following conditions are met: a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. - After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss. This category generally applies to trade and other receivables. Debt instrument at fair value through profit and loss (FVTPL) - Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVOCI, is classified as at FVTPL. - In addition, the Company may elect to classify a debt instrument, which otherwise meets amortized cost or FVOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as accounting mismatchâ). - Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss. Equity investments and Mutual Funds - All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company decides to classify the same either as at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable. - The company has elected to apply the exemption available in respect of the carrying value of the investments held in subsidiaries, joint ventures and associates in accordance with Ind AS 27. - Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss. Derecognition - A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised (i.e. removed from the Companyâs balance sheet) when: - The rights to receive cash flows from the asset have expired, or - The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass-throughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset - When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained. - Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay. Impairment of financial assets In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure: a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, and bank balance. b) Trade receivables - The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. Trade receivables are tested for impairment on a specific basis after considering the sanctioned credit limits, security like letters of credit, security deposit collected etc. and expectations about future cash flows. ii. Financial liabilities Classification The Company classifies all financial liabilities as subsequently measured at amortised cost, except for financial liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, shall be subsequently measured at fair value. Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable and incremental transaction cost. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss. The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments. Financial guarantee contracts Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognised less cumulative amortisation. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss. Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. iii. Derivative financial instruments and hedge accounting The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss. The Company designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in foreign exchange rates and interest rates. At inception of designated hedging relationships, the Company documents the risk management objective and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other. Cash Flow Hedges When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in OCI and accumulated in the other equity under the âeffective portion of cash flow hedgesâ. The effective portion of changes in the fair value of the derivative that is recognised in OCI is limited to the cumulative change in fair value of the hedged item, determined on the present value basis, from the inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit and loss. When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as inventory, the amount accumulated in the other equity is included directly in the initial cost of the non-financial item when it is recognised. For all other hedged forecast transactions, the amount accumulated in other equity is reclassified to profit and loss in the same period or periods during which the hedged expected future cash flows affect profit and loss. If a hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in other equity remains there until, for a hedge of a transaction resulting in the recognition of a non-financial item, it is included in the non-financial items cost of initial recognition or for other cash flow hedges, it is reclassified to profit and loss in the same period as the hedged future cash flows affect the profit and loss. If the hedged cash flows are no longer expected to occur, then the amounts that have been accumulated in the other equity are immediately reclassified to profit and loss. Provisions and contingent liabilities Provisions are determined by discounting the expected future cash flows specific to the liability. The unwinding of the discount is recognised as finance cost. A provision for onerous contracts is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but will probably not, require an outflow of resources. When there is a possible obligation of a present obligation in respect of which the likelihood of outflow of resources is remote, no provision disclosure is made. A contingent asset is not recognised but disclosed in the financial statements where an inflow of economic benefit is probable. N. Leases i. Lease payments Payments made under operating leases are recognised in profit or loss on a straight line basis over the term of the lease unless such payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increase. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. ii. Lease assets Assets held by the Company under leases that transfer to the Companyâs substantially all of the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset. Assets held under other leases are classified as operating leases and are not recognised in the Companyâs statement of financial position. O. Impairment of non-financial assets The carrying values of assets/cash generating units at each balance sheet date are reviewed for impairment if any indication of impairment exists. If the carrying amount of the assets exceeds the estimated recoverable amount, impairment is recognised for such excess amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset (other than a revalued asset) in earlier accounting periods which no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, to the extent the amount was previously charged to the Statement of Profit and Loss. In case of revalued assets, such reversal is not recognised. P. Cash and cash equivalents Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company cash management. Q. Segment Reporting The Chief Operational Decision Maker monitors the operating results of its business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit and loss and is measured consistently with profit or loss in the financial statements. The Accounting Policies adopted for segment reporting are in line with the Accounting Policies of the Company. Segment assets include all operating assets used by the business segments and consist principally of fixed assets, trade receivables and inventories. Segment liabilities include the operating liabilities that result from the operating activities of the business. Segment assets and liabilities that cannot be allocated between the segments are shown as part of unallocated corporate assets and liabilities respectively. Income / Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated corporate income / expenses.. R. Earnings per share Basic Earnings per share is calculated by dividing the net profit for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit for the period attributable to the equity shareholders and the weighted average number of equity shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2017
1. General information
Apar Industries Limited, founded by Late Shri. Dharmsinh D. Desai in the year 1958 is one among the best established companies in India, operating in the diverse fields of electrical and metallurgical engineering. Over the ensuing years it has been offering value added products and services in Power Transmission Conductors, Petroleum Specialties and Power & Telecom Cables.
2. Basis of accounting
These financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) to comply with Section 133 of the Companies Act, 2013 ("the 2013 Act"), and the relevant provisions of the 2013 Act/ Companies Act 1956 ("the 1956 Act"), as applicable. For all periods up to and for the year ended 31 March 2016, the Company''s has prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).
These financial statements are the Company''s first Ind AS financial statements and are covered by Ind AS 101, First-time adoption of Indian Accounting Standards (Ind AS 101). The transition to Ind AS has been carried out from the accounting principles generally accepted in India ("Indian GAAP") which is considered as the "Previous GAAP" for purposes of Ind AS 101. An explanation of how the transition to Ind AS has affected the Company''s equity and its net profit is provided in Note 51
3. Functional and presentation currency
These financial statements are presented in Indian rupees (INR), which is the Company''s functional currency. All amounts have been rounded off to two decimal places to the nearest crore, unless otherwise indicated.
4. Basis of measurement
The financial statements have been prepared on the historical cost basis except for the following items:
- certain financial assets and liabilities (including mutual fund investments and derivatives) that are measured at fair value;
- defined benefit plans - plan assets measured at fair value;
- share-based payments;
5. Key estimates and assumptions
The preparation of financial statements in accordance with Ind AS requires use of estimates and assumptions for some items, which might have an effect on their recognition and measurement in the (i) balance sheet and (ii) statement of profit and loss. The actual amounts realised may differ from these estimates.
Estimates and assumptions are required in particular for:
- Determination of the estimated useful lives of tangible assets
Useful lives of tangible assets are based on the life prescribed in Schedule II of the Companies Act, 2013. In cases, where the useful lives are different from that prescribed in Schedule II, they are based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers'' warranties and maintenance support.
- Recognition and measurement of defined benefit obligations
The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment benefit obligations.
- Recognition of deferred tax assets
Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilized business loss and depreciation carryforwards and tax credits. Deferred tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, depreciation carry-forwards and unused tax credits could be utilized.
- Recognition and measurement of other provisions
The recognition and measurement of other provisions are based on the assessment of the probability of an outflow of resources, and on past experience and circumstances known at the balance sheet date. The actual outflow of resources at a future date may therefore vary from the amount included in other provisions.
- Discounting of long-term financial assets/liabilities
All financial assets/liabilities are required to be measured at fair value on initial recognition. In case of financial liabilities which are required to subsequently measured at amortized cost, interest is accrued using the effective interest method.
- Fair value of financial instruments
Derivatives and investments in mutual funds are carried at fair value. Derivatives includes Foreign Currency Forward Contracts, Commodity futures contracts and Interest Rate Swaps. Fair value of Foreign Currency Forward Contracts and commodity future contracts are determined using the fair value reports provided by merchant bankers and LME brokers respectively. Fair value of Interest Rate Swaps are determined with respect to current market rate of interest.
- Sales incentives and Customer Loyalty Programmes
Rebates are generally provided to distributors or dealers as an incentive to sell the Company''s products. Rebates are based on purchases made during the period by distributor / customer. The company determines the estimates of benefit accruing to the distributors/ dealers based on the schemes introduced by the Company.
The amount allocated to the loyalty programme/ incentive is deferred, and is recognized as revenue when the Company has fulfilled its obligations to supply the discounted products under the terms of the programme or when it is no longer probable that the points under the programme will be redeemed.
The cash incentives offered under various schemes are in the nature of sales promotion and provision for such incentives are provided for.
6. Measurement of fair values
The Company''s accounting policies and disclosures require the measurement of fair values for financial instruments.
The Company has an established control framework with respect to the measurement of fair values. The management regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
7. Standards issued but not yet effective
Ind AS 115 Revenue from Contract with Customers: In February 2015, the Ministry of Corporate Affairs had notified Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers.
The Company''s is in the process of making an assessment of the impact of Ind AS 115 upon initial application. As at the date of this report, the Company''s management does not expect that the impact on the Company''s results of operations and financial position will be material upon adoption of Ind AS 115.
8. Significant accounting policies followed by the company
A. Foreign currency
i. Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies of companies at the exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Foreign currency differences are generally recognized in profit or loss. Non-monetary items that are measured based on historical cost in a foreign currency are not translated.
Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of profit and loss.
B. Revenue
i. Sale of goods and Services
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognized when significant risks, rewards and controls of ownership in the goods are transferred to the buyer. Revenues are recognized when collectability of the resulting receivable is reasonably assured.
In respect of service activities, income is recognized as and when services are rendered.
ii. Lease income:
The Company has determined that the payments by the lessee are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. Accordingly rental income arising from operating leases is accounted for on an accrual basis as per the terms of the lease contract
iii. Dividend income is recognized when the right to receive the payment is established.
C. Employee benefits
i. Short term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company''s has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
ii. Defined contribution plans
- Provident Fund Scheme
The Company makes specified monthly contributions towards employee provident fund directly to the Government under the Employees Provident Fund Act, 1952 and is not obliged to bear the shortfall, if any, between the return on investments made by the Government from the contributions and the notified interest rate.
- Superannuation Scheme
The Company makes specified contributions to the superannuation fund administered by the Company and the return on investments is adequate to cover the commitments under the scheme. The Company''s contribution paid/payable under these schemes is recognized as expense in the Statement of profit and loss during the period in which the employee renders the related service.
iii. Defined benefit plans
The following post - employment benefit plans are covered under the defined benefit plans:
- Gratuity Fund
The Company''s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.
Re-measurement of the net defined benefit/liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in OCI. Net interest expense/(income) on the net defined liability/(assets) is computed by applying the discount rate, used to measure the net defined liability/(asset), to the net defined liability/(asset) at the start of the financial year after taking into account any changes as a result of contribution and benefit payments during the year. Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company''s recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.
iv. Other long-term employee benefits
Long-term Compensated Absences and Long Wages Schemes are provided for on the basis of an actuarial valuation, using the Projected Unit Credit Method, as at the date of the Balance Sheet. Actuarial gains / losses comprising of experience adjustments and the effects of changes in actuarial assumptions are immediately recognized in the Statement of Profit and Loss .
D. Finance income and finance costs
The Company''s finance income and finance costs include:
- interest income;
- interest expense;
- the net gain or loss on financial assets at FVTPL
- exchange differences arising from monetary assets and liabilities Interest income or expense is recognized using the effective interest rate method.
Share issue expenses are written off against share premium account if any or amortized over a period of 5 years.
E. Grants/ Subsidies
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
Where the grant relates to an asset the cost of the asset is shown at gross value and grant thereon is treated as capital grant which is recognized as income in the statement of profit and loss over the period and in proportion in which depreciation is charged.
Revenue grants are recognized in the statement of profit and loss in the same period as the related cost, which they are intended to compensate, are accounted for.
F. Income Tax
Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI.
i. Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if, the Company:
a) has a legally enforceable right to set off the recognized amounts; and
b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
ii. Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for:
- temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;
- temporary differences related to investments in subsidiaries and associates to the extent that the Company''s is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized; such reductions are reversed when the probability of future taxable profits improves.
Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if:
a) the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
b) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.
Deferred tax asset / liabilities in respect of temporary differences which originate and reverse during the tax holiday period are not recognized. Deferred tax assets / liabilities in respect of temporary differences that originate during the tax holiday period but reverse after the tax holiday period are recognized.
G. Inventories
Inventories are measured at the lower of standard cost and net realizable value. Inventory of scrap is valued at estimated realizable value.The cost of inventories is determined using the weighted average method. Inventories of finished goods include excise duty as applicable.
H. Property, plant and equipment
i. Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.
The cost of an item of property, plant and equipment comprises:
a) its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates.
b) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
c) the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.
Income and expenses related to the incidental operations, not necessary to bring the item to the location and condition necessary for it to be capable of operating in the manner intended by management, are recognized in profit or loss.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted and depreciated for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.
The cost of the property, plant and equipment''s at 1st April 2015, the Company''s date of transition to Ind AS, was determined with reference to its carrying value at that date.
ii. Subsequent expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company''s.
iii. Depreciation
Depreciation is provided, pro rata to the period of use, based on useful lives specified in Schedule II to the Companies Act, 2013 except in the case where the estimated useful life based on management experience and technical evaluation differs.
Depreciation is charged on the Straight Line or the Written Down Value based on the method consistently followed by the respective entities in the Company.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Capital expenditure in respect of which ownership does not vest with the Company is amortized over a period of five years. Leasehold land is amortized over the period of lease.
I. Intangible Assets
Intangible assets which are acquired by the Company and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.
All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.
Amortization
Amortization is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognized in profit or loss.
Enterprise resource planning cost: Cost of implementation of ERP Software including all related direct expenditure is amortized over a period of 5 years on successful implementation.
The cost of the intangible assets at 1st April 2015, the Company''s date of transition to Ind AS, was determined with reference to its carrying value at that date.
J. Borrowing costs
Borrowing costs that are directly attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of that asset till the date it is ready for its intended use or sale. Other borrowing costs are recognized as an expense in the period in which they are incurred.
K. Share-based payments:
a. Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).
b. The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model.
c. That cost is recognized, together with a corresponding increase in share-based payment (SBP) reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest.
d. When the terms of an equity-settled award are modified, the minimum expense recognized is the expense had the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the entity or by the counterparty, any remaining element of the fair value of the award is expensed immediately through profit or loss
e. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.
L. Treasury Shares
Own equity instruments that are reacquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company''s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognized in capital reserve.
M. Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments also include derivative contracts such as foreign currency foreign exchange forward contracts, Commodity future Contracts, interest rate swaps and currency options; and embedded derivatives in the host contract.
Financial instruments also covers contracts to buy or sell a non-financial item that can be settled net in cash or another financial instrument, or by exchanging financial instruments, as if the contracts were financial instruments, with the exception of contracts that were entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in accordance with the entity''s expected purchase, sale or usage requirements.
i. Financial assets Classification
The Company shall classify financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
Initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company''s commits to purchase or sell the asset.
Debt instruments at amortized cost
- A debt instrument'' is measured at the amortized cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
- After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the profit or loss. This category generally applies to trade and other receivables.
Debt instrument at fair value through profit and loss (FVTPL)
- Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVOCI, is classified as at FVTPL.
- In addition, the Company may elect to classify a debt instrument, which otherwise meets amortized cost or FVOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as accounting mismatch'').
- Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss.
- All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the Company''s decides to classify the same either as at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
- The company has elected to apply the exemption available in respect of the carrying value of the investments held in subsidiaries, joint ventures and associates in accordance with Ind AS 27.
- Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the profit and loss.
Derecognition
- A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognized (i.e. removed from the Company''s balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset
- When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
- Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind-AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortized cost e.g., loans, debt securities, deposits, and bank balance.
b) Trade receivables - The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. Trade receivables are tested for impairment on a specific basis after considering the sanctioned credit limits, security like letters of credit, security deposit collected etc. and expectations about future cash flows.
ii. Financial liabilities
Classification
The Company classifies all financial liabilities as subsequently measured at amortized cost, except for financial liabilities at fair value through profit or loss. Such liabilities, including derivatives that are liabilities, shall be subsequently measured at fair value.
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable and incremental transaction cost.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts and derivative financial instruments.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind-AS 109 and the amount recognized less cumulative amortization.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
iii. Derivative financial instruments and hedge accounting
The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognized in profit or loss.
The Company designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in foreign exchange rates and interest rates.
At inception of designated hedging relationships, the Company documents the risk management objective and strategy for undertaking the hedge. The Company also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.
Cash Flow Hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in OCI and accumulated in the other equity under the "effective portion of cash flow hedges". The effective portion of changes in the fair value of the derivative that is recognized in OCI is limited to the cumulative change in fair value of the hedged item, determined on the present value basis, from the inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit and loss.
When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as inventory, the amount accumulated in the other equity is included directly in the initial cost of the non-financial item when it is recognized. For all other hedged forecast transactions, the amount accumulated in other equity is reclassified to profit and loss in the same period or periods during which the hedged expected future cash flows affect profit and loss.
If a hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in other equity remains there until, for a hedge of a transaction resulting in the recognition of a non-financial item, it is included in the non-financial items cost of initial recognition or for other cash flow hedges, it is reclassified to profit and loss in the same period as the hedged future cash flows affect the profit and loss.
If the hedged cash flows are no longer expected to occur, then the amounts that have been accumulated in the other equity are immediately reclassified to profit and loss.
Provisions and contingent liabilities
Provisions are determined by discounting the expected future cash flows specific to the liability. The unwinding of the discount is recognized as finance cost. A provision for onerous contracts is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but will probably not, require an outflow of resources. When there is a possible obligation of a present obligation in respect of which the likelihood of outflow of resources is remote, no provision disclosure is made.
A contingent asset is not recognized but disclosed in the financial statements where an inflow of economic benefit is probable.
N. Leases
i. Lease payments
Payments made under operating leases are recognized in profit or loss on a straight line basis over the term of the lease unless such payments are structured to increase in line with expected general inflation to compensate for the less orâs expected inflationary cost increase. Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease.
ii. Lease assets
Assets held by the Company under leases that transfer to the Company''s substantially all of the risks and rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset.
Assets held under other leases are classified as operating leases and are not recognized in the Company''s statement of financial position.
O. Impairment of non-financial assets
The carrying values of assets/cash generating units at each balance sheet date are reviewed for impairment if any indication of impairment exists. If the carrying amount of the assets exceed the estimated recoverable amount, an impairment is recognized for such excess amount.
The recoverable amount is the greater of the net selling price and their value in use.
Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset (other than a revalued asset) in earlier accounting periods which no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, to the extent the amount was previously charged to the Statement of Profit and Loss. In case of revalued assets, such reversal is not recognized.
P. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company cash management.
Q. Segment Reporting
The Chief Operational Decision Maker monitors the operating results of its business Segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit and loss and is measured consistently with profit or loss in the financial statements.
The Accounting Policies adopted for segment reporting are in line with the Accounting Policies of the Company. Segment assets include all operating assets used by the business segments and consist principally of fixed assets, trade receivables and inventories. Segment liabilities include the operating liabilities that result from the operating activities of the business. Segment assets and liabilities that cannot be allocated between the segments are shown as part of unallocated corporate assets and liabilities respectively. Income / Expenses relating to the enterprise as a whole and not allocable on a reasonable basis to business segments are reflected as unallocated corporate income / expenses.
R. Earnings per share
Basic Earnings per share is calculated by dividing the net profit for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit for the period attributable to the equity shareholders and the weighted average number of equity shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
e Terms/rights attached to equity shares
i) The Company has one class of equity shares having a par value of '' 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends 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.
ii) During the year ended 31 March 2017, recommended dividend for the financial year 2016 -17 @ Rs 10/- per share aggregating to Rs 46.06 crore (including dividend tax Rs 7.79 crore) on 38,268,619 Equity shares of Rs 10 each fully paid.
iii) In the event of liquidation of the company, the holders of equity shares will be entitled to receive 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.
h Shares Reserved for issue under options
There are no shares reserved for issue under options and contracts / commitments for the sale of shares / disinvestment.
i Scheme of Amalgamation of Apar Lubricants Limited (ALL)
At the hearing held on 23rd October, 2015, the Honorable High Court of Gujarat at Judicature at Ahmadabad have sanctioned the Scheme of Amalgamation of Apar Lubricants Limited (ALL) (wholly-owned subsidiary of the Company) with Apar Industries Limited (AIL) w.e.f. 1st January, 2015 (being the appointed date). The effective date of the Scheme is 10th November, 2015, being the date on which Certified Copy of the High Court Order and the Scheme filed with Registrar of Companies, Gujarat.
Pursuant to the Scheme :
(i) The Authorized Share Capital of AIL enhanced by Rs 10 crore and now stands at Rs. 1,019,987,500 divided into 101,998,750 Equity Shares of Rs. 10 each;
(ii) The ALL stand dissolved without winding-up; and
(iii) The Scheme has accordingly been given effect to in the financial statements with effect from the Appointed date. All the assets and liabilities excluding fixed assets of ALL have been transferred to the Company at the book value as recorded in books of Transferor Company. Fixed assets have been recorded at its estimated market value. The Company has followed ''Purchase Method'' of accounting as per the Accounting Standard (AS) 14 ''Accounting for Amalgamations''."
(iv) The scheme of amalgamation is followed as per the court order hence goodwill is not tested for impairment, instead amortization of goodwill is carried out as laid down in court scheme
(v) The net loss Rs, 0.00 crore of the Transferor Company from the appointed date i.e. 1st January, 2015 till 31st March, 2015 has been transferred to the surplus in Statement of profit and loss in the books of the company, thereby adjusting opening reserves. This loss has been arrived at after charging amortization of Goodwill of Rs, 0.44 crore (net of tax) for the relevant period.
Nature and purpose of reserves
i. Cash flow hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedges.
ii. Securities premium reserve
The Securities Premium used to record the premium received on the issue of shares. It is utilized in accordance with the provisions of the Companies Act 2013. The reserve also comprises the profit on treasury shares sold 16,35,387.
iii. Capital reserve
The reserve comprises of profits/gains of capital nature earned by the Company and credited directly to such reserve.
iv. Capital redemption reserve
Capital redemption reserve represents amounts set aside by the Company for future redemption of capital.
v. General reserve
General reserve forms part of the retained earnings and is permitted to be distributed to shareholders as part of dividend.
Information about the Company''s exposure to liquidity risk, foreign currency and interest rate are included in Note 37, 38 and 39 respectively Details of security:
a Rupee term loans and foreign currency loan from banks are secured as under:
i The Foreign Currency term loan from Union Bank of India, Hong Kong , is secured by first charge by way of equitable mortgage by deposit of title deeds of Company''s Athola properties and exclusive hypothecation charge on the assets acquired by the Company with the proceeds of the facility situated at other locations.
ii The rupees term loan from ING Vysya Bank Ltd (now Kotak Mahindra Bank) is secured by first charge by way of equitable mortgage by deposit of title deed of Company''s Khatalwad properties and hypothecation of movable plant and machinery at Khatalwad excluding movable machinery hypothecated to ECB Lenders.
b Terms of repayment of term loan :
i In respect of Rupee Term Loan from Bank in 10 quarterly installments till September, 2019, 9 installments of '' 3.33 crore each and last of '' 3.34 crore
ii In respect of Foreign Currency Term Loans from Union Bank of India,Hongkong; in May ,2017 '' 11.67 crore; in May, 2018 '' 14.88 crore.
The Company does not have any continuing default as on the Balance Sheet date in repayment of loans and interest.
The company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.
Significant management judgment is required in determining provision for income tax, deferred income tax assets and liabilities and recoverability of deferred income tax assets. The recoverability of deferred income tax assets is based on estimates of taxable income by each jurisdiction in which the relevant entity operates and the period over which deferred income tax assets will be recovered.
Note :
Working capital loans from banks (secured) are secured by :
(i) hypothecation of specified stocks, specified book debts of the Company.
(ii) first charge by way of equitable mortgage by deposit of title deeds of Company''s specified immovable properties, both present and future.
The Company does not have any continuing default as on the Balance Sheet date in repayment of loans and interest.
There are no Micro, Small and Medium Enterprises, to whom the Group owes dues, which are outstanding for more than 45 days as at the balance sheet date. The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.
Mar 31, 2015
1. Basis of Preparation of financial statements :
The financial statements are prepared in accordance with Indian
Generally Accepted Accounting Principles (''GAAP'') under the historical
cost-convention on the accrual basis. GAAP comprises mandatory
accounting standards as prescribed under Section 133 of the Companies
Act, 2013 (the Act'') read with Rule 7 of the Companies (Accounts)
Rules, 2014, the provisions of the Act (to the extent notified) and
guidelines issued by the Securities and Exchange Board of India (SEBI).
Accounting policies have been consistently applied except, where a
newly issued accounting standard is initially adopted or a revision to
an existing accounting standard required a change in the accounting
policy hitherto in use.
2. Use of estimates :
The preparation of financial statements is in conformity with generally
accepted accounting principles (''GAAP'') which requires the management
of the Company to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of the financial statements. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognised prospectively in current and future periods.
3. Fixed assets, Depreciation and Amortisation :
(I) Fixed assets are stated at cost of acquisition / construction (net
of CENVAT) less accumulated depreciation. Cost includes purchase price
and other costs attributable to acquisition / construction of fixed
assets.
(II) (i) Depreciation on assets is provided over the useful lives of
assets as prescribed under Schedule II of the Companies Act, 2013.
(ii) In respect of following assets, based on management experience and
independent technical evaluation carried out by external technical
consultants, the management has estimated useful lives, which are
different then prescribed in Schedule II.
(iii) Depreciation is provided on written down value method except in
respect of building and plant and machinery purchased after 30.4.1987,
which are depreciated on straight line method.
(iv) Capital Expenditure in respect of which ownership does not vest
with the Company is amortized over a period of five years. Leasehold
land is amortized over the period of lease.
(v) In respect of Cable division all assets are depreciated on straight
line method.
(vi) Borrowing costs attributable to acquisition/construction of
qualifying assets within the meaning of the Accounting Standard (AS) 16
Borrowing Costs'' are capitalised as a part of the cost of fixed assets.
(vii) Pre-operation expenses including trial run expenses (net of
revenue) are capitalised.
4. Impairment of assets :
The Company assesses, at each balance sheet date, whether there is any
indication of impairment of the carrying amount of the Company''s
assets. An impairment loss is recognised in the Statement of profit and
loss, wherever the carrying amount of the assets exceeds its estimated
recoverable amount. The recoverable amount is greater of the net
selling price and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value,
based on an appropriate discounting factor. Impairment losses are
recognised in the Statement of profit and loss. The impairment loss
recognised in prior accounting period is reversed if there has been
change in recoverable amount.
5. Investments :
All long term investments are stated at cost. Provision for diminution
in value of long term investments is made if it is other than temporary
in nature. Current investments are valued at lower of cost and market
value.
6. Inventories :
Inventories are valued at lower of standard cost or net realizable
value. Cost includes material cost, cost of labour and attributable
manufacturing overheads. Cost of materials is arrived at on weighted
average basis. Inventory of scrap is valued at estimated realisable
value. Inventories of finished goods include excise duty as applicable.
7. Government grants :
(i) Government grants are recognised in the financial statements when
they are received and there is reasonable assurance that the Company
will comply with the conditions attached to them.
(ii) Government grants, which are in the nature of refundable interest
free loans received from government/semi-government authorities, are
credited to secured/unsecured loans.
(iii) Government grants which are in the nature of subsidies received
from government/semi-government authorities and which are
non-refundable are credited to reserves.
8. Employee stock options :
In respect of the employee stock options, the excess of fair price on
the date of grant over the exercise price is recognised as deferred
compensation cost amortized over vesting period.
9. Voluntary retirement schemes :
Compensations paid under voluntary retirement schemes are amortized
over a period not exceeding 5 years, up to 31st March, 2010. The
expenses incurred after 31st March, 2010 are charged to Statement of
profit and loss.
10. Enterprise resource planning cost :
Cost of implementation of ERP Software including all related direct
expenditure is amortized over a period of 5 years on successful
implementation.
11. Share issue expenses :
Share issue expenses are written off against share premium account if
any or amortized over a period of 5 years.
12. Revenue recognition :
(i) Sale of goods is recognised on despatch to customers and on date of
shipment in case of exports. Sales exclude amounts recovered towards
sales tax and excise duty and is net of returns.
(ii) Price variation claims are accounted in accordance with the terms
of contract and/or upon admittance by customers.
(iii) Dividend income on investment is recognised when the right to
receive payment is established.
(iv) In respect of service activities, income is recognised as and when
services are rendered.
(v) Lease rental on operating lease is accounted on accrual basis.
13. Post-employment benefits :
Defined Contribution Plans: In respect of the Company''s provident fund
scheme, the Company makes specified monthly contributions towards
employee provident fund directly to the Government under the Employees
Provident Fund Act, 1952 and is not obliged to bear the shortfall, if
any, between the return on investments made by the Government from the
contributions and the notified interest rate. In respect of the
Company''s approved superannuation scheme, the Company makes specified
contributions to the superannuation fund administered by the Company
and the return on investments is adequate to cover the commitments
under the scheme. The Company''s contribution paid/payable under these
schemes is recognised as expense in the Statement of profit and loss
during the period in which the employee renders the related service.
Defined Benefit Plans: In respect of the Company''s gratuity and leave
wages schemes, the present value of the obligation under such scheme is
determined based on actuarial valuation using the Projected Unit Credit
Method. The discount rates used for determining the present value of
the obligation is based on the market yields on Government securities
as at the balance sheet date. Actuarial gains and losses are
recognised immediately in the Statement of profit and loss. Long-term
compensated absences are provided for based on actuarial valuation,
made at the year end, by independent actuaries.
14. Translation of foreign currency :
(i) The Company translates foreign currency transactions during the
year, at the conversion rates prevailing on transaction dates.
(ii) Monetary items remaining unsettled at the year end are translated
/ reported at the year end rate. Exchange differences arising on such
revaluation are recognised in the Statement of profit and loss.
(iii) Non-Monetary items (other than fixed assets) are reported at the
exchange rate at which they are accounted.
(iv) In case of forward contracts, premium on the forward contracts is
recognised as income or expense over the life of the contract.
(v) Any income or expense on account of exchange difference either on
settlement or on translation is recognised in the Statement of profit
and loss except in case of long term liabilities, where they relate to
acquisition of fixed assets, in which case they are adjusted to the
carrying cost of such assets.
15. Derivative Contracts :
Derivative contract entered into, to hedge commodity/forex unexecuted
Firm commitment and highly probable forecast transaction are recognised
in the financial statement at fair value as on Balance sheet date. The
gains or losses arising out of fair valuation of derivative contracts
are recognised in the Statement of profit and loss or Balance sheet as
the case may be after applying the test of hedge effectiveness. The
gain or losses are recognised as Hedge Reserve'' in the Balance sheet
when the hedge is effective and where the hedge is ineffective the same
is recognised in the Statement of profit and loss. The gains and losses
on roll over or cancellation of derivative contract which qualify as
effective hedge are recognised in the Statement of profit and loss in
the same period in which the hedge item is accounted.
16. Export benefits/Incentives :
The Company accounts for excise duty rebate on deemed and physical
exports, duty entitlements and Focus benefits on physical exports on
accrual basis. Premium on special import licence is credited in the
accounts as and when realised. The benefits in the form of entitlements
to Advance Licenses for duty free import of raw materials in respect of
exports made are accounted when such imports are made. The benefits in
the form of entitlements to status holders licenses are accounted when
licenses are utilised.
17. Claims against the Company not acknowledged as debts :
The demands under disputed showcause notices / orders of statutory
authorities are provided in the accounts on the basis of management''s
estimate and the balance, if any, are included in contingent liability.
18. Taxes on income :
(a) Tax on income for the current period is determined on the basis of
estimated taxable income and tax credits computed in accordance with
the provisions of the Income Tax Act, 1961 and based on the expected
outcome of assessments / appeals.
(b) Deferred tax is recognised on timing differences between the
accounted income and the taxable income for the year, and quantified
using the tax rates and laws enacted or substantively enacted as on the
balance sheet date.
(c) Deferred tax assets relating to unabsorbed depreciation / business
losses are recognised and carried forward to the extent there is
virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
(d) Other deferred tax assets are recognised and carried forward to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised.
19. Provision for contingencies :
A provision is recognised when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and in respect of which
reliable estimates can be made. Disclosure of contingent liability is
made when there is a possible obligation or a present obligation that
may but probably will not require an outflow of resources. When
likelihood of such outflow is remote, no provision or disclosure is
made. Provision arising from litigations, assessments by statutory
authorities, etc. is made when the Company based on legal advise
wherever necessary estimates that the liability has been incurred and
the amount can be reasonably estimated.
20. Accounting for interest in joint ventures :
Interest in joint ventures (i.e., jointly controlled entity) are
accounted for as follows :
(a) income on investment in incorporated jointly controlled entity is
recognised when the right to receive the same is established.
(b) investment in such joint venture is carried at cost after providing
for any Permanent diminution in value.
21. Borrowing costs :
(a) Borrowing costs that are attributable to the acquisition,
construction or production of a qualifying asset are capitalized as
part of the cost of such asset till such time as the asset is ready for
its intended use or sale. A qualifying asset is an asset that
necessarily requires a substantial period of time (generally over
twelve months) to get ready for its intended use or sale.
(b) All other borrowing costs are recognised as expense in the period
in which they are incurred.
22. Lease accounting :
Operating lease rentals are expensed with reference to lease terms and
other considerations.
a. Reconciliation of the number of shares outstanding at the beginning
and at the end of the year. Equity Shares
*Issued during the year to the Employees / Director under Apar
Industries Limited Stock Option Plan - 2007 at Rs.207.05 per share. b.
Terms/rights attached to equity shares
i) The Company has one class of equity shares having a par value of Rs.
10 per share. Each holder of equity shares is entitled
to one vote per share. The Company declares and pays dividends 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.
ii) During the year ended 31st March 2015, the amount of per share
dividend recognised as distributions to equity shareholders is Rs. 3.50,
( Previous year Rs. 5.25 ).
iii) In the event of liquidation of the company, the holders of equity
shares will be entitled to receive 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.
As per records of the Company, including its register of
shareholders/members and other declarations received from shareholders
regarding beneficial interest, the above shareholding represents both
legal and beneficial ownerships of shares.
d. Shares reserved for issue under options
The Company provides share-based payment to its employees. During the
year ended 31st March 2015, an Employee Stock Option Plan (ESOP) was in
existence. The relevant details of the scheme and the grant are as
below :
Members'' approval was obtained at the Annual General Meeting held on
9th August, 2007 for introduction of Employee Stock Option Scheme to
issue and grant upto 1,616,802 options, but the Board has granted
175,150 options till date.
During the year, Company has alloted 26072 equity shares of Rs. 10/- each
to employees/Directors of the Company under Employee stock option plan
2007 at an exercise price of Rs. 207.05 per share.
 The Foreign Currency term loan from Credit Agricole CI Bank,
Singapore is secured by exclusive charge on the assets acquired by the
Company with the proceeds of the facility.
 The Foreign Currency term loan from Union Bank of India, Hong Kong
is secured by first charge by way of equitable mortgage by deposit of
title deeds of Company''s Athola properties and exclusive hypothecation
charge on the assets acquired by the Company with the proceeds of the
facility situated at other locations.
 The rupees term loan from ING Vysya Bank Ltd (Now Kotak Mahindra
Bank) is secured by first charge by way of equitable mortgage by
deposit of title deed of Company''s Khatalwada properties and
hypothecation of movable plant & machinery at Khatalwada excluding
movable machinery hypothecated to ECB Lenders.
 Terms of repayment of term loan.
 In respect of Foreign Currency Term Loans from Bank in August,
2015Rs.9.37 crore, in May, 2016 Rs.10.00 crore, in August, 2016 Rs. 12.50
crore, in May, 2017Rs.11.25 crore, in May, 2018Rs.14.37 crore,.
 In respect of Rupee Term Loan from Bank in 15 quarterly
installments commencing from March, 2016 till September, 2019, 14
installments of Rs. 3.33 crore each and last of Rs. 3.34 crore.
Working capital loans from banks (secured) Rs. 162.32 crore are secured
by :
(i) hypothecation of specified stocks, specified book debts of the
Company.
(ii) first charge by way of equitable mortgage by deposit of title
deeds of Company''s specified immovable properties, both present and
future.
(The above information regarding micro and small enterprises has been
determined on the basis of information available with the Company],
Note:
(a] There are no amounts due and outstanding to be credited to the
Investor Education and Protection Fund as on 31st March, 2015,
(b] Other payables includes security deposit, book overdraft and
advance from customers,
1] Registration of Petroleum Specialities FZE in Hamriyah, Sharjah: The
Company''s Wholly-owned Subsidiary, Petroleum Specialities Pte. Ltd,
Singapore, (PSPL] is setting up a manufacturing facility in the
Hamriyah Free Zone Authority, UAE, for the manufacture of a
comprehensive range of Speciality oils and Lubricants. For the purpose,
it has incorporated on 18th November, 2014, a wholly owned subsidiary
Company Viz Petroleum Specialities FZE, in the Free trade Zone,
Sharjah, UAE.
2] During the year, the Company (AIL] has purchased 169,181 Equity
shares representing 2.50% of the Share of Apar Chematek Lubricants
Limited (ACLL] held by Chematek S.p.A. The said shares were transferred
in the name of the Company on 22nd July, 2014. Consequent upon the
transfer of above 169,181 equity shares in the name of AIL, the
shareholding of AIL in ACLL was increased to 100%. The name of the
Company (ACLL] was change from ''Apar Chematek Lubricants Limited'' to
''Apar Lubricants Limited'' with effect from 5th September, 2014.
During the year, the Board of Directors of Apar Lubricants Limited
(ALL] and Apar Industries Limited (AIL] at their respective Board
Meetings held on 5th February, 2015, have decided to amalgamate ALL
with AIL with effect from the Appointed Date of 1st January, 2015,
subject to the approvals of the Hon''able High Court of Gujarat and
other regulatory authorities.
Note :
[i] There are no amounts due and outstanding to be credited to the
Investor Education and Protection Fund as at 31st March, 2015.
[ii] Against letters of credit for Company''s import of raw materials
and working capital loans.
Mar 31, 2013
1. Basis of Preparation of financial statements:- The financial
statements are prepared on accrual basis under the historical cost
convention and comply in all material aspects with the generally
accepted accounting principles in India, the Accounting Standards
prescribed under Section 211(3C) of the Companies Act,1956 and the
applicable provisions thereof.
2. Use of estimates:- The preparation of financial statements is in
conformity with generally accepted accounting principles ("GAAP") which
requires the management of the Company to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent liabilities on the date of the
financial statements. Actual results could differ from those estimates.
Any revision to accounting estimates is recognised prospectively in
current and future periods.
3. Fixed assets, Depreciation and Amortisation:-
(i) Fixed assets are stated at cost of acquisition / construction (net
of CENVAT) less accumulated depreciation. Cost includes purchase price
and other costs attributable to acquisition / construction of fixed
assets.
(ii) Depreciation on assets is provided at the rates and in the manner
prescribed under Schedule XIV of the Companies Act, 1956 (except as
stated in
(iii) below):
(a) On written down value method except in respect of building and
plant and machinery purchased after 30.4.1987, which are depreciated on
straight line method.
(b) Capital Expenditure in respect of which ownership does not vest
with the Company is amortised over a period of five years. Leasehold
land is amortised over the period of lease.
(c) Certain items of plant and machinery which have been considered to
be continuous process plant by the management are depreciated at the
prescribed rates.
(d) In respect of Cable division all assets are depreciated on straight
line method.
(iii) In the cases where the estimated useful life of the asset is less
as compared to useful life estimated in Schedule XIV of the Companies
Act, 1956, such assets are depreciated at rates higher than those
prescribed under Schedule XIV of the Companies Act, 1956.
Asset Rate
Factory building at Nalagarh Over the lease period of 8 years (iv) In
respect of assets costing less than Rs. 5,000 each and temporary
structures, 100% depreciation is provided in the year of addition.
(v) Borrowing costs attributable to acquisition/construction of
qualifying assets within the meaning of the Accounting Standard (AS) 16
on "Borrowing Costs" are capitalised as a part of the cost of fixed
assets.
(vi) Pre-operation expenses including trial run expenses (net of
revenue) are capitalised.
4. Impairment of assets: -
The Company assesses, at each balance sheet date, whether there is any
indication of impairment of the carrying amount of the Company''s
assets. An impairment loss is recognised in the Statement of profit and
loss wherever the carrying amount of the assets exceeds its estimated
recoverable amount. The recoverable amount is greater of the net
selling price and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value,
based on an appropriate discounting factor. Impairment losses are
recognised in the Statement of profit and loss. The impairment loss
recognised in prior accounting period is reversed if there has been
change in recoverable amount.
5. Investments: -
All long term investments are stated at cost. Provision for diminution
in value of long term investments is made if it is other than temporary
in nature. Current investments are valued at lower of cost and market
value.
6. Inventories :- Inventories are valued at lower of standard cost or
net realisable value. Cost includes material cost, cost of labour and
attributable manufacturing overheads. Cost of materials is arrived at
on weighted average basis. Inventory of scrap is valued at estimated
realisable value. Inventories of finished goods include excise duty as
applicable.
7. Government grants: -
(i) Government grants are recognised in the financial statements when
they are received and there is reasonable assurance that the Company
will comply with the conditions attached to them.
(ii) Government grants, which are in the nature of refundable interest
free loans received from government/semi-government authorities, are
credited to secured/unsecured loans.
(iii) Government grants which are in the nature of subsidies received
from government/semi-government authorities and which are
non-refundable are credited to reserves.
8. Employee stock options:- In respect of the employee stock options,
the excess of fair price on the date of grant over the exercise price
is recognised as deferred compensation cost amortised over vesting
period.
9. Voluntary retirement schemes:- Compensations paid under voluntary
retirement schemes are amortised over a period not exceeding 5 years,
up to March 31, 2010. The expenses incurred after March 31, 2010 are
charged to Statement of profit and loss.
10. Enterprise resource planning cost:- Cost of implementation of ERP
Software including all related direct expenditure is amortised over a
period of 5 years on successful implementation.
11. Share issue expenses:- Share issue expenses are written off
against share premium account if any or amortised over a period of 5
years.
12. Revenue recognition:- (i) Sale of goods is recognised on despatch
to customers and on date of shipment in case of exports. Sales exclude
amounts recovered towards sales tax and excise duty and is net of
returns.
(ii) Price variation claims are accounted in accordance with the terms
of contract and/or upon admittance by customers.
(iii) Dividend income on investment is recognised when the right to
receive payment is established.
(iv) In respect of service activities, income is recognised as and when
services are rendered.
(v) Lease rental on operating lease is accounted on accrual basis.
13. Post-employment benefits:- Defined Contribution Plans: In respect
of the Company''s provident fund scheme, the Company makes specified
monthly contributions towards employee provident fund directly to the
Government under the Employees Provident Fund Act, 1952 and is not
obliged to bear the shortfall, if any, between the return on
investments made by the Government from the contributions and the
notified interest rate. In respect of the Company''s approved
superannuation scheme, the Company makes specified contributions to the
superannuation fund administered by the Company and the return on
investments is adequate to cover the commitments under the scheme. The
Company''s contribution paid/payable under these schemes is recognised
as expense in the Statement of profit and loss during the period in
which the employee renders the related service.
Defined Benefit Plans: In respect of the Company''s gratuity and leave
wages schemes, the present value of the obligation under such scheme is
determined based on actuarial valuation using the Projected Unit Credit
Method. The discount rates used for determining the present value of
the obligation is based on the market yields on Government securities
as at the balance sheet date. Actuarial gains and losses are recognised
immediately in the Statement of profit and loss. Long-term compensated
absences are provided for based on actuarial valuation, made at the
year end, by independent actuaries.
14. Translation of foreign currency:- (i) The Company translates
foreign currency transactions during the year, at the conversion rates
prevailing on transaction dates.
(ii) Monetary items remaining unsettled at the year end are translated
/ reported at the year end rate. Exchange differences arising on such
revaluation are recognised in the Statement of profit and loss.
(iii) Non-Monetary items (other than fixed assets) are reported at the
exchange rate at which they are accounted.
(iv) In case of forward contracts, premium on the forward contracts is
recognised as income or expense over the life of the contract.
(v) Any income or expense on account of exchange difference either on
settlement or on translation is recognised in the Statement of profit
and loss except in case of long term liabilities, where they relate to
acquisition of fixed assets, in which case they are adjusted to the
carrying cost of such assets.
15. Derivative Contracts:- Derivative contract entered into, to hedge
commodity/forex unexecuted Firm commitment and highly probable forecast
transaction are recognised in the Financial Statement at fair value as
on Balance sheet date. The gains or losses arising out of fair
valuation of derivative contracts are recognised in the Statement of
profit and loss or Balance sheet as the case may be after applying the
test of hedge effectiveness. The gain or losses are recognised as
''Hedge Reserve'' in the Balance Sheet when the hedge is effective and
where the hedge is ineffective the same is recognised in the Statement
of profit and loss. The gains and losses on roll over or cancellation
of derivative contract which qualify as effective hedge are recognised
in the Statement of profit and loss in the same period in which the
hedge item is accounted.
16. Export benefits/Incentives:- The Company accounts for excise duty
rebate on deemed and physical exports, duty entitlements and Focus
benefits on physical exports on accrual basis. Premium on special
import licence is credited in the accounts as and when realised. The
benefits in the form of entitlements to Advance Licenses for duty free
import of raw materials in respect of exports made are accounted when
such imports are made. The benefits in the form of entitlements to
status holders licenses are accounted when licenses are utilised.
17. Claims against the Company not acknowledged as debts:- The demands
under disputed showcause notices / orders of statutory authorities are
provided in the accounts on the basis of management''s estimate and the
balance, if any are included in contingent liability.
18. Taxes on income:- (a) Tax on income for the current period is
determined on the basis of estimated taxable income and tax credits
computed in accordance with the provisions of the Income Tax Act, 1961
and based on the expected outcome of assessments / appeals.
(b) Deferred tax is recognised on timing differences between the
accounted income and the taxable income for the year, and quantified
using the tax rates and laws enacted or substantively enacted as on the
balance sheet date.
(c) Deferred tax assets relating to unabsorbed depreciation / business
losses are recognised and carried forward to the extent there is
virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
(d) Other deferred tax assets are recognised and carried forward to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised.
19. Provision for contingencies:- A provision is recognised when there
is a present obligation as a result of a past event, it is probable
that an outflow of resources will be required to settle the obligation
and in respect of which reliable estimates can be made. Disclosure of
contingent liability is made when there is a possible obligation or a
present obligation that may but probably will not require an outflow of
resources. When likelihood of such outflow is remote, no provision or
disclosure is made. Provision arising from litigations, assessments by
statutory authorities, etc. is made when the Company based on legal
advise wherever necessary estimates that the liability has been
incurred and the amount can be reasonably estimated.
20. Accounting for interest in joint ventures:- Interest in joint
ventures (i.e., jointly controlled entity) are accounted for as
follows:
(a) income on investment in incorporated jointly controlled entity is
recognised when the right to receive the same is established.
(b) investment in such joint venture is carried at cost after providing
for any Permanent diminution in value.
21. Borrowing costs:- (a) Borrowing costs that are attributable to the
acquisition, construction or production of a qualifying asset are
capitalised as part of the cost of such asset till such time as the
asset is ready for its intended use or sale. A qualifying asset is an
asset that necessarily requires a substantial period of time (generally
over twelve month) to get ready for its intended use or sale.
(b) All other borrowing costs are recognised as expense in the period
in which they are incurred.
22. Lease accounting:- Operating lease rentals are expensed with
reference to lease terms and other considerations.
Mar 31, 2012
1. Basis of Preparation of financial statements:-
The financial statements are prepared on accrual basis under the
historical cost convention and comply in all material aspects with the
generally accepted accounting principles in India, the Accounting
Standards prescribed under Section 211(3C) of the Companies Act, T9-56
and the applicable provisions thereof.
2. Use of estimates:-
The preparation of financial statements is in conformity with generally
accepted accounting principles ("GAAP") which requires the management
of the Company to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of the financial statements. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognised prospectively in current and future periods.
3. Fraed assets, depreciation and amortisation:-
(i). fixed assets are stated at cost of acquisition / construction (net
of CENVAT) less accumulated depreciation. Cost includes purchase price
arid other costs attributable to acquisition / construction of fixed
assets.
(ii) Depreciation on assets is provided at the rates and in the manner
prescribed under Schedule XIV of the Companies Act, 1956 (except as
stated in (iii) below):
(a) On written down value method except in respect of building and
plant and machinery purchased after 30.4.1987, which are depreciated on
straight line method.
(b) Capital expenditure in respect of which ownership does not vest
with the Company is amortised over a period of five years. Leasehold
land is amortised over the period of lease.
(c) Certain items of plant and machinery which have been considered to
be continuous process plant by the management are depreciated at the
prescribed rates.
(d) In respect of Cable division (erstwhile Uniflex Cables Limited) all
assets are depreciated on straight line method.
(iii) In the cases where the estimated useful life of the asset is less
as compared to useful life estimated in Schedule XIV of the Companies
Act, 1956, such assets are depreciated at rates higher than those
prescribed under Schedule XIV of the Companies Act. 1956.
Asset Rate
Factory building at Nalagarh Over the lease period of 8 years
(iv) In respect of assets costing less than Rs. 5,000 each and temporary
structures, 100% depreciation is provided in the year of addition.
(v) Borrowing costs attributable to acquisition/construction of
qualifying assets within the meaning of the Accounting Standard (AS) 16
on "Borrowing Costs" are capitalised as a part of the cost of fixed
assets.
(vi) Pre-operation expenses including trial run expenses (net of
revenue) are capitalised.
4. Iimpaiinnnefit of assets: -
The Company assesses, at each balance sheet date, whether there is any
indication of impairment of the carrying amount of the Company's
assets. An impairment loss is recognised in the Statement of profit and
loss wherever the carrying amount of the assets exceeds its estimated
recoverable amount. The recoverable amount is greater of the net
selling price and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value,
based on an appropriate discounting factor. Impairment losses are
recognised in the Statement of profit and loss. The impairment loss
recognised in prior accounting period is reversed if there has been
change in recoverable amount.
5. Investments: -
All long term investments are stated at cost. Provision for diminution
in value of long term investments is made if it is other than temporary
in nature. Current investments are valued at lower of cost and market
value.
6. Inventories
Inventories are valued at lower of standard cost or net realisable
value. Cost includes material cost, cost of labour and attributable
manufacturing overheads. Cost of materials is arrived at on weighted
average basis except in respect of Cable division (erstwhile Uniflex
Cables Limited) where it is on FIFO basis. Inventory of scrap is valued
at estimated realisable value. Inventories of finished goods include
excise duty as applicable.
7. Government grants: -
(i) Government grants are recognised in the financial statements when
they are received and there is reasonable assurance that the Company
will comply with the conditions attached to them.
(ii) Government grants, which are in the natuie of refundable interest
free loans received from government/semi-government authorities, are
credited to securcd/unsecurcd loans.
(iii) Government grants which are in the nature of subsidies received
from government/semi government authorities and which are non
refundable are credited to reserves.
8. Employee stock options:-
In respect of the employee stock options, the excess of fair price on
the date of grant over the exercise price is recognised as deferred
compensation cost amortised over vestii.g peiiod.
9. Voluntary relit cment schcmcs:-
Compensations paid under voluntary retirement schemes arc amortised
over a period not exceeding 5 years, up to 31st March, 2010. The
expenses incurred after 31st March, 2010 are charged to Statement of
profit and less.
10. Enterprise resouice planning cost.
Cost of implementation of ERP Software includiny all ielated uiied
expenditure is amortised ovei a period of five years on successful
implementation.
11. Share issue expenses:
Share issue expenses are written off against share premium account if
any or amortised over a period of five /ears.
12. Revenue recognition: -
(i) Sale of goods is recognised on despate! i to customers and on date
of shipment in case of exports. Sales exclude amounts recovered towards
sales tax and excise duty and is net of returns.
(ii) Price variation claims are accounted in accordance with the terms
of contract and/or upon admittance by customers.
(iii) Dividend income on investment is recognised when the right to
receive payment is established.
(iv) In respect of service activities, income is recognised as and when
services are rendRs.red
(v) Lease rental on operating lease is accounted on accrual basis
13. Post-employment benefits:
Defined Contribution Plans: In respect of the Company's provident fund
scheme, the Company makes specified monthly contributions towards
employee provident fund directly to the Government under the Employees
Provident Fund Act, 1952 and is not obliged to bear the shortfall, if
any, between the rctui: i on investments made by the Government from
the contributions and the notified interest rate. In respect of the
Company's approved superannuation scheme, the Company makes specified
contributions to the superannuation fund administeied by the Company
and the return on investments is adequate to cover the commitments
under the scheme. The Company's contiibution paid/payable under these
schemes is recognised as expense in the Statement of profit and loss
duiing the period in which the employee renders the related se; vice.
Defined Benefit Plans. In respect of the Company's yiatuity and leave
wages schemes, the present value of the obligation under such scheme is
detennined based on actuarial valuation usiiiy the Projected Unit
Credit Method. The discount rates used for determining the present
value of the obligation is based on the market yields on Government
securities as at the balancc sheet date. Actuarial gains and losses are
recognised immediately in the Statement of profit and loss. Long term
compensated absences are provided for based on actuarial valuation,
made at the year end, by independent actuaries.
14. Translation of foreign currency :-
(i) The Company translates foreign currency transactions during the
year, at the conversion rates prevailing on transaction dates.
(ii) Monetary items remaining unsettled at the year end are translated
/ reported at the year end rate Fxchange differences arising on such
revaluation are recognised in the Statement of profit and loss.
(iii) Non-Monetary items (other than fixed assets) are reported at the
exchange rate at which they are accounted.
(iv) In case of forward contracts, premium on the forward contracts is
recognised as income or expense over the life of the contract.
(v) Any income or expense on account of exchange difference either on
settlement or on translation is recognised in the Statement of profit
and loss except in case of long term liabilities, where they relate to
acquisition of fixed assets, in which case they are adjusted to the
carrying cost of such assets.
15. Derivative contracts:-
Derivative contract entered into, to hedge commodity/forex unexecuted
Firm commitment and highly probable forecast transaction are recognised
in the Financial Statement at fair value as on Balance sheet date. The
gains or losses arising out of fair valuation of derivative contracts
are recognised in the Statement of profit and loss or Balance sheet as
the case may be after applying the test of hedge effectiveness. The
gain or losses are recognised as 'Hedge Reserve' in the Balance Sheet
when the hedge is effective and where the hedge is ineffective the same
is recognised in the Statement of profit and loss. The gains and losses
on roll over or cancellation of derivative contract which qualify as
effective hedge are recognised in the Statement of profit and loss in
the same period in which the hedge item is accounted.
16. Export benefits/incentives: -
The Company accounts for excise duty rebate on deemed and physical
exports, duty entitlements and Focus benefits on physical exports on
accrual basis. Premium on special import licence is credited in the
accounts as and when realised. The benefits in the form of entitlements
to Advance Licenses for duty free import of raw materials in respect of
exports made are accounted when such imports are made.
17. Claims against the Company not acknowledged as debts: -
The demands under disputed showcause notices / orders of statutory
authorities are provided in the accounts on the basis of management's
estimate and the balance, if any are included in contingent liability.
18. Taxes on income:-
(a) Tax on income for the current period is determined on the basis of
estimated taxable income and tax credits computed in accordance with
the provisions of the Income Tax Act, 1961 and based on the expected
outcome of assessments / appeals.
(b) Deferred tax is recognised on timing differences between the
accounted income and the taxable income for the year, and quantified
using the tax rates and laws enacted or substantively enacted as on the
balance sheet date.
(c) Deferred tax assets relating to unabsorbed depreciation / business
losses are recognised and carried forward to the extent there is
virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
(d) Other deferred tax assets are recognised and carried forward to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised.
19. Provision for contingencies:-
A provision is recognised when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and in respect of which
reliable estimates can be made. Disclosure of contingent liability is
made when there is a possible obligation or a present obligation that
may but probably will not require an outflow of resources. When
likelihood of such outflow is remote, no provision or disclosure is
made. Provision arising from litigations, assessments by statutory
authorities, etc. is made when the Company, based on legal advise
wherever necessary, estimates that the liability has been incurred and
the amount can be reasonably estimated.
20. Accounting for interest in joint ventures
Interest in joint ventures (i.e., jointly controlled entity) are
accounted for as follows:
(a) income on investment in incorporated jointly controlled entity is
recognised when the right to receive the same is established.
(b) investment in such joint venture is carried at cost after providing
for any permanent diminution in value.
21. Borrowing costs
(a) Borrowing costs that are attributable to the acquisition,
construction or production of a qualifying asset are capitalised as
part of the cost of such asset till such time as the asset is ready for
its intended use or sale. A qualifying asset is an asset that
necessarily requires a substantial period of time (generally over
twelve month) to get ready for its intended use or sale.
(b) All other borrowing costs are recognised as expense in the period
in which they are incurred.
22. Lease accounting
Operating lease rentals are expensed with reference to lease terms and
other considerations.
b. Disclosure as required by Accounting Standard (AS) 14 Accounting
for Amalgamations :
(i) Uniflex Cables Limited (UCL) was engaged in the business of
manufacturing & sale of insulated Wires and Cables including Optical
fibre and jelly- filled Cables.
(ii) UCL was declared as Sick Industrial Company by Hon'ble Board for
Industrial & Financial Reconstruction (BIFR) on 15th October, 2010.
(iii) Pursuant to the Rehabilitation Scheme of UCL, envisaging
Amalgamation of UCL with the Company by Hon'ble BIFR vide the Order
dated 13th September, 2012 sanctioned Amalgamation retrospectively with
effect from 1 st April, 2010 (the appointed date). The Scheme has
accordingly, been given effect in financial statements. The effective
date of amalgamation is 18th September, 2012.
(iv) The amalgamation has been accounted for under the 'Pooling of
Interest method' as prescribed by Accounting Standard (AS) 14
Accounting for Amalgamations, specified by the Companies (Accounting
Standard) Rules, 2006. Accordingly, the assets, liabilities including
contingent liabilities and reserve of UCL as at 1st April, 2010 have
been taken at their book values as stipulated in the said Scheme.The
reserves of the transferor Company have been transferred to the
respective reserves.
(v) Based on the approved exchange ratio as provided in the Scheme,
2,498,037 number of equity shares will be issued to the equity share
holders of UCL in the ratio of 1 equity share of the face value of Rs. 10
each in the Company for every 10 equity shares held in erstwhile UCL.
In terms of the Scheme, the said equity shares, when issued and
allotted by the Company shall rank, in all respects pari-passu with the
existing equity shares of the Company. Pending allotment of the said
equity shares, the amount has been disclosed under 'Share Capital
Suspense Account' in Note 2.
(vi) The difference between the amount of share capital of the
erstwhile UCL and the amount of fresh share capital issued by the
Company on amalgamation amounting to Rs. 224.82 million is treated as
capital reserve and has been added to the Capital Reserve of the
Company.
(viii) As provided in the Scheme 1,635,388 number of equity shares to
be issued by the Company in lieu of 16,353,875 number of equity shares
held by the Company in the erstwhile UCL will be transferred to 'AIL
Benefit Trust' for the sole benefit of the Company. Accordingly, the
cost (net of provision for dimunition in value) of the aforesaid
investment of the Company Rs. 278.83 million is reflected as "Receivable
from AIL Benefit Trust", under 'Other Current Assets' in "Note 19".
(ix) After giving effect to the scheme net-worth of erstwhile UCL, has
become positive and as such the company will make an application to
Hon'ble BIFR to take discharge from BIFR.
(x) Deferred tax asset ofRs. 263.50 million has been created for carried
forward losses/depreciation and timing differences of erstwhile UCL by
crediting to General Reserve.
(xi) In view of amalgamation, current year figures are not strictly
comparable to those of the previous year.
Mar 31, 2011
1. Basis of preparation of financial statements:- The financial
statements are prepared on accrual basis under the historical cost
convention and comply in all material aspects with the generally
accepted accounting principles in India, the Accounting Standards
prescribed under section 211(3C) of the Companies Act, 1956 and the
applicable provisions thereof.
2. Use of estimates:- The preparation of financial statements is in
conformity with generally accepted accounting principles ("GAAP") which
requires the management of the Company to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent liabilities on the date of the
financial statements. Actual results could differ from those estimates.
Any revision to accounting estimates is recognised prospectively in
current and future periods.
3. Fixed assets, depreciation and amortisation:- (i) Fixed assets are
stated at cost of acquisition/construction (net of CENVAT) less
accumulated depreciation. Cost includes
purchase price and other costs attributable to acquisition/construction
of fixed assets.
(ii) Depreciation on assets is provided at the rates and in the manner
prescribed under Schedule XIV of the Companies Act, 1956 (except as
stated in (iii) below):
(a) On written down value method except in respect of building and
plant and machinery purchased after 30.04.1987, which are depreciated
on straight line method.
(b) Capital expenditure in respect of which ownership does not vest
with the Company is amortised over a period of five years. Leasehold
land is amortised over the period of lease.
(c) Certain items of plant and machinery which have been considered to
be continuous process plant by the management are depreciated at the
prescribed rates.
(iii) In cases where the estimated useful life of the asset is less as
compared to useful life estimated in Schedule XIV of the Companies Act,
1956, such assets are depreciated at rates higher than those prescribed
under Schedule XIV of the Companies Act, 1956.
Asset Rate
Factory building at Nalagarh Over the lease period of 8 years
(iv) In respect of assets costing less than Rs. 5,000 each and
temporary structures, 100% depreciation is provided in the year of
addition.
(v) Borrowing costs attributable to acquisition/construction of
qualifying assets within the meaning of the Accounting Standard 16 on
"borrowing costs" are capitalised as a part of the cost of fixed
assets.
(vi) Pre-operation expenses including trial run expenses (net of
revenue) are capitalised.
4. Impairment of assets: -
The Company assesses, at each balance sheet date, whether there is any
indication of impairment of the carrying amount of the Company's
assets. An impairment loss is recognised in the profit and loss account
wherever the carrying amount of the assets exceeds its estimated
recoverable amount. The recoverable amount is greater of the net
selling price and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value,
based on an appropriate discounting factor. Impairment losses are
recognised in the profit and loss account. The impairment loss
recognised in prior accounting period is reversed if there has been
change in recoverable amount.
5. Investments: -
All long term investments are stated at cost. Provision for diminution
in value of long term investments is made if it is other than temporary
in nature. Current investments are valued at lower of cost and market
value.
6. Inventories :- Inventories are valued at lower of standard cost or
net realisable value. Cost includes material cost, cost of labour and
attributable manufacturing overheads. Cost of materials is arrived at
on weighted average basis. Inventory of scrap is valued at estimated
realisable value. Inventories of finished goods include excise duty as
applicable.
7. Government grants: -
(i) Government grants are recognised in the financial statements when
they are received and there is reasonable assurance that the Company
will comply with the conditions attached to them.
(ii) Government grants, which are in the nature of refundable interest
free loans received from government/semi-government authorities, are
credited to secured/unsecured loans.
(iii) Government grants which are in the nature of subsidies received
from government/semi-government authorities and which are
non-refundable are credited to reserves.
8. Employee stock options:- In respect of the employee stock options,
the excess of fair price on the date of grant over the exercise price
is recognised as deferred compensation cost amortised over vesting
period.
9. Voluntary retirement schemes:- Compensations paid under voluntary
retirement schemes are amortised over a period not exceeding 5 years,
up to March 31, 2010.
10.Enterprise resource planning cost:
Cost of implementation of ERP software, including all related direct
expenditure is amortised over a period of 5 years on successful
implementation.
11.Share issue expenses:
Share issue expenses are written off against share premium account, if
any, or amortised over a period of 5 years.
12.Revenue recognition: -
(i) Sale of goods is recognised on despatch to customers and on date of
shipment in case of exports. Sales exclude amounts recovered towards
sales tax and excise duty and is net of returns.
(ii) Price variation claims are accounted in accordance with the terms
of contract and/or upon admittance by customers.
(iii) Dividend income on investment is recognised when the right to
receive payment is established.
(iv) In respect of service activities, income is recognised as and when
services are rendered.
(v) Lease rental on operating lease is accounted on accrual basis.
13.Post-employment benefits:
Defined contribution plans: In respect of the Company's provident fund
scheme, the Company makes specified monthly contributions towards
employee provident fund directly to the government under the Employees
Provident Fund Act, 1952 and is not obliged to bear the shortfall, if
any, between the return on investments made by the Government from the
contributions and the notified interest rate. In respect of the
Company's approved superannuation scheme, the Company makes specified
contributions to the superannuation fund administered by the Company
and the return on investments is adequate to cover the commitments
under the scheme. The Company's contribution paid/payable under these
schemes is recognised as expense in the profit and loss account during
the period in which the employee renders the related service.
Defined benefit plans: In respect of the Company's gratuity and leave
wages schemes, the present value of the obligation under such scheme is
determined based on actuarial valuation using the Projected Unit Credit
Method. The discount rates used for determining the present value of
the obligation is based on the market yields on government securities
as at the balance sheet date. Actuarial gains and losses are recognised
immediately in the profit and loss account. Long-term compensated
absences are provided for based on actuarial valuation, made at the
year end, by independent actuaries.
14.Translation of foreign currency :- (i) The Company translates
foreign currency transactions during the year, at the conversion rates
prevailing on transaction dates.
(ii) Monetary items remaining unsettled at the year end are
translated/reported at the year end rate. Exchange differences arising
on such revaluation are recognised in the profit and loss account.
(iii) Non-monetary items (other than fixed assets) are reported at the
exchange rate at which they are accounted.
(iv) In case of forward contracts, premium on the forward contracts is
recognised as income or expense over the life of the contract.
15.Hedging transactions (metals):- All gains or losses in respect of
hedging transactions are recognised in the financial statements on
settlement/squaring off. Commission etc. in respect of such
transactions is accounted on accrual basis.
16. Export benefits/incentives: -
The Company accounts for excise duty rebate on deemed and physical
exports, duty entitlements and focus benefits on physical exports on
accrual basis. Premium on special import licence is credited in the
accounts as and when realised. The benefits in the form of entitlements
to advance licenses for duty free import of raw materials in respect of
exports made are accounted when such imports are made.
17. Claims against the Company not acknowledged as debts: -
The demands under disputed showcause notices/orders of statutory
authorities are provided in the accounts on the basis of management's
estimate and the balance, if any, are included in contingent liability.
18. Taxes on income:- (a) Tax on income for the current period is
determined on the basis of estimated taxable income and tax credits
computed in accordance with the provisions of the Income Tax Act,
1961 and based on the expected outcome of assessments/appeals.
(b) Deferred tax is recognised on timing differences between the
accounted income and the taxable income for the year, and quantified
using the tax rates and laws enacted or substantively enacted as on the
balance sheet date.
(c) Deferred tax assets relating to unabsorbed depreciation/business
losses are recognised and carried forward to the extent there is
virtual certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
(d) Other deferred tax assets are recognised and carried forward to the
extent that there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realised.
19. Provision for contingencies:- A provision is recognised when there
is a present obligation as a result of a past event, it is probable
that an outflow of resources will be required to settle the obligation
and in respect of which reliable estimates can be made. Disclosure of
contingent liability is made when there is a possible obligation or a
present obligation that may but probably will not require an outflow of
resources. When likelihood of such outflow is remote, no provision or
disclosure is made. Provision arising from litigations, assessments by
statutory authorities etc., is made when the Company based on legal
advise wherever necessary, estimates that the liability has been
incurred and the amount can be reasonably estimated.
20.Accounting for interest in joint ventures
Interest in joint ventures (i.e., jointly controlled entity) are
accounted for as follows:
(a) Income on investment in incorporated jointly controlled entity is
recognised when the right to receive the same is established.
(b) Investment in such joint venture is carried at cost after providing
for any permanent diminution in value.
Mar 31, 2010
1. Basis of Preparation of financial statements:
The financial statements are prepared on accrual basis under the
historical cost convention and comply in all material aspects with the
generally accepted accounting principles in India, the Accounting
Standards prescribed under section 211(3C) of the Companies Act, 1956
and the applicable provisions thereof.
2. Use of estimates:
The preparation of financial statements is in conformity with generally
accepted accounting principles ("GAAP") which requires the management
of the Company to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of the financial statements. Actual
results could differ from those estimates. Any revision to accounting
estimates is recognized prospectively in current and future periods.
3. Significant accounting policies:
A) Fixed assets. Depreciation and Amortization:
i) Fixed assets are stated at cost of acquisition / construction (net
of CENVAT) less accumulated depreciation. Cost includes purchase price
and other costs attributable to acquisition / construction of fixed
assets.
ii) Depreciation on assets is provided at the rates and in the manner
prescribed under Schedule XIV of the Companies Act, 1956 (except as
stated in (iii) below):
a) On written down value method except in respect of building and plant
and machinery purchased after 30.4.1987, which are depreciated on
straight line method.
b) Capital Expenditure in respect of which ownership does not vest with
the Company is amortized over a period of five years. Leasehold land is
amortized over the period of lease.
c) Certain items of plant and machinery which have been considered to
be continuous process plant by the management are depreciated at the
prescribed rates.
iii) In the cases where the estimated useful life of the asset is less
as compared to useful life estimated in Schedule XIV of
the Companies Act, 1956, such assets are depreciated at rates higher
than those prescribed under Schedule XIV of the
Companies Act, 1956.
Asset Rate
Factory building at Nalagarh Over the lease period of 8 years
iv) In respect of assets costing less than Rs.5,000 each and temporary
structures, 100% depreciation is provided in the year
of addition. v) Borrowing costs attributable to
acquisition/construction of qualifying assets within the meaning of the
accounting
standard 16 on "borrowing costs" are capitalised as a part of the cost
of fixed assets. vi) Pre-operation expenses including trial run
expenses (net of revenue) are capitalized.
B) Impairment of assets:
The Company assesses, at each balance sheet date, whether there is any
indication of impairment of the carrying amount of the Companys
assets. An impairment loss is recognized in the profit and loss account
wherever the carrying amount of the assets exceeds its estimated
recoverable amount. The recoverable amount is greater of the net
selling price and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value,
based on an appropriate discounting factor. Impairment losses are
recognized in the profit and loss account. The impairment loss
recognized in prior accounting period is reversed if there has been
change in recoverable amount.
C) Investments:
All long term investments are stated at cost. Provision for diminution
in value of long term investments is made if it is other than temporary
in nature. Current investments are valued at lower of cost and market
value.
D) Inventories:
Inventories are valued at lower of standard cost or net realizable
value. Cost includes material cost, cost of labour and attributable
manufacturing overheads. Cost of materials is arrived at on weighted
average basis. Inventory of scrap is valued at estimated realisable
value. Inventories of Finished Goods include excise duty as applicable.
E) Government Grants:
i) Government grants are recognised in the financial statements when
they are received and there is reasonable assurance
that the Company will comply with the conditions attached to them. ii)
Government grants, which are in the nature of refundable interest free
loans received from government/semi-government
authorities, are credited to secured/unsecured loans. iii) Government
grants which are in the nature of subsidies received from
government/semi-government authorities and
which are non-refundable are credited to reserves.
F) Employee stock options:
In respect of the employee stock options, the excess of fair price on
the date of grant over the exercise price is recognized
as deferred compensation cost amortized over vesting period. G)
Voluntary Retirement Schemes:
Compensations paid under voluntary retirement schemes are amortized
over a period not exceeding 5 years, up to 31st March,2010.
H) Enterprise Resource Planning Cost:
Cost of implementation of ERP Software including all related direct
expenditure is amortized over a period of 5 years on successful
implementation.
I) Share Issue Expenses:
Share issue expenses are written off against share premium account, if
any, or amortized over a period of 5 years.
i) Revenue recognition:
i) Sale of goods is recognised on despatch to customers and on date of
shipment in case of exports. Sales exclude amounts
recovered towards sales tax and excise duty and is net of returns. ii)
Price variation claims are accounted in accordance with the terms of
contract and/or upon admittance by customers. iii) Dividend income on
investment is recognised when the right to receive payment is
established. iv) In respect of service activities, income is
recognised as and when services are rendered. v) Lease rental on
operating lease is accounted on accrual basis.
K) Post-employment benefits:
Defined Contribution Plans: In respect of the Companys provident fund
scheme, the Company makes specified monthly contributions towards
employee provident fund directly to the Government under the Employees
Provident Fund Act, 1952 and is not obliged to bear the shortfall, if
any, between the return on investments made by the Government from the
contributions and the notified interest rate. In respect of the
Companys approved superannuation scheme, the Company makes specified
contributions to the superannuation fund administered by the Company
and the return on investments is adequate to cover the commitments
under the scheme. The Companys contribution paid/payable under these
schemes is recognized as expense in the profit and loss account during
the period in which the employee renders the related service.
Defined Benefit Plans: In respect of the Companys gratuity and leave
wages schemes, the present value of the obligation under such scheme is
determined based on actuarial valuation using the Projected Unit Credit
Method. The discount rates used for determining the present value of
the obligation is based on the market yields on Government securities
as at the balance sheet date. Actuarial gains and losses are recognized
immediately in the Profit & Loss Account. Long term compensated
absences are provided for based on actuarial valuation, made at the
year end, by independent actuaries.
L) Translation of foreign currency:
i) The Company translates foreign currency transactions during the
year, at the conversion rates prevailing on transaction
dates. ii) Monetary items remaining unsettled at the year end are
translated / reported at the year end rate. Exchange differences
arising on such revaluation are recognised in the Profit and Loss
Account. iii) Non-Monetary items (other than fixed assets) are
reported at the exchange rate at which they are accounted. iv) In case
of forward contracts, premium on the forward contracts is recognized as
income or expense over the life of the
contract.
M) Hedging transactions (Metals):
All gains or losses in respect of hedging transactions are recognised
in the financial statements on settlement/squaring off. Commission
etc. in respect of such transactions is accounted on accrual basis.
N) Export benefits/Incentives:
The Company accounts for excise duty rebate on deemed and physical
exports, duty entitlements and Focus benefits on physical exports on
accrual basis. Premium on special import licence is credited in the
accounts as and when realised. The benefits in the form of entitlements
to Advance Licenses for duty free import of raw materials in respect of
exports made are accounted when such imports are made.
O) Claims against the Company not acknowledged as debts:
The demands under disputed showcause notices / orders of statutory
authorities are provided in the accounts on the basis of managements
estimate and the balance, if any, are included in contingent liability.
P) Taxes on income:
Provision for taxation is made for both current and deferred taxes.
Provision for current tax is made, at current rate of tax, based on
assessable income. Deferred tax resulting from timing differences
between the book profits and the tax profits is accounted for to the
extent that the timing differences are expected to crystallize.
Deferred tax assets are not recognised on unabsorbed depreciation and
carry forward losses unless there is virtual certainty that sufficient
future taxable income will be available against which such deferred tax
assets will be realized.
Q) Provision for contingencies:
A provision is recognized when there is a present obligation as a
result of a past event, it is probable that an outflow of resources
will be required to settle the obligation and in respect of which
reliable estimates can be made. Disclosure of contingent liability is
made when there is a possible obligation or a present obligation that
may but probably will not require an outflow of resources. When
likelihood of such outflow is remote, no provision or disclosure is
made. Provision arising from litigations, assessments by statutory
authorities, etc. is made when the Company, based on legal advise
wherever necessary, estimates that the liability has been incurred and
the amount can be reasonably estimated.
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