Accounting Policies of Ashima Ltd. Company
Mar 31, 2018
Note: 1 - Significant Accounting Policies:
The following note provides list of the significant accounting policies adopted in the preparation of these financial statements.
These policies have been consistently applied to all the years presented unless otherwise stated.
1.1 Basis of preparation:
A The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant provisions of the Companies Act, 2013.
B For all periods up to and including the year ended 31st March, 2017, the Company has prepared its financial statements in accordance with the accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (previous GAAP). The Company has adopted Ind AS asper Companies (Indian Accounting Standards) Rules, 2015 as notified under Section 133 ofthe Companies Act, 2013 for these Financial statements beginning 1st April, 2017. As per the principles of Ind AS 101, the transition date to Ind AS is 1st April, 2016 and hence the comparatives for the previous year ended 31st March, 2017 and balances as on 1st April, 2016 have been restated as per the principles of Ind AS. Reconciliations and descriptions of the effect of the transition have been summarized in note 42.
C The financial statements have been prepared on historical cost basis, except for the following assets and liabilities which have been measured at fair value or revalued amount:
i Derivative financial instruments
ii Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)
iii Defined benefit plans
iv Certain items of Property, Plant and Equipment
D The amounts mentioned in the financial statements are rounded off to the nearest Lac. Figures less than Rs.50,000/- appear as zero ("0"). As the quarterly and yearly figures are taken from the sources and rounded to the nearest digits, the figures already reported for all the quarters during the year might not always add up to the year figures reported in this statement.
2 Use of Estimates:
The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of income and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments are provided below.
Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
Critical estimates and judgments
a Income Taxes:
Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/ recovered for uncertain tax positions, and in estimation of deferred tax asset or liability.
b Property, plant and equipment:
Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an assetâs expected useful life and the expected residual value at the end of itslife. Management reviews the residual values, useful lives and methods of depreciation of property, plant and equipment at reasonable intervals and any revision to these is recognised prospectively in current and future periods. The useful lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.
Significant judgment is involved in determining the estimated future cash flows and/or net realisable value from the Property, Plant and Equipment to determine its value in use to assess whether there is any impairment in its carrying amount as reflected in the financials.
c Employee Benefits:
Significant judgments are involved in making estimates about the life expectancy, discounting rate, salary increase, etc. which significantly affect the working of the present value of future liabilities on account of employee benefits by way of defined benefit plans.
d Product quality claims:
Significant judgments are involved in determining estimated value of likely product quality claims.
3 Foreign CurrencyTransactions:
A The Company''s financial statements are presented in Indian Rupees (Rs.), which is the functional and presentation currency.
B The transactions in foreign currencies are translated into functional currency at the rates of exchange prevailing on the dates of transactions.
C Foreign Exchange gains and losses resulting from settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the year end exchange rates are recognised in the Statement of Profit and Loss.
D Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of Profit and Loss as part of finance costs. All the other foreign exchange gains and losses are presented in the Statement of Profit and Loss on a net basis.
4 Revenue Recognition:
A Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government and is shown net of returns, trade allowances, rebates, volume discounts and value added taxes.
B Value Added Tax / GST is not received by the Company on its own account, but is tax collected on value added to the Goods by the Company on behalf of the government. Accordingly, it is excluded from revenue.
C For revenue to be recognised, the following specific recognition criteria for each types of revenue must be satisfied:
a Sale of Goods:
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns, trade allowances, rebates, volume discounts and value added taxes.
The goods are often sold with volume discounts/pricing incentives and customers have a right to return defective products. Revenue from sales is based on the price in the sales contracts, net of discounts. Historical experience is used to estimate and provide for customer claims. No element of financing is deemed present as the sales are made with the normal credit terms as per prevalent trade practice and credit policy followed by the Company.
b Service Income:
Service income is recognised as per the terms of contracts with the customers when the related services are performed and are net of GST, wherever applicable.
c Interest Income:
For all debt instruments measured at amortized cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
d Claims receivable on account of Insurance are accounted for to the extent the Company is reasonably certain of their ultimate collection.
e Other Income:
Other income is recognised when no significant uncertainty as to its determination or realisation exists.
5 Government Grants:
A Government grants are recognised in accordance with the terms of the respective grant on accrual basis considering the status of compliance of prescribed conditions and ascertainment that the grant will be received.
B Government grants related to revenue items are recognised on a systematic and gross basis in the Statement of Profit and Loss over the period during which the related costs intended to be compensated are incurred.
C Government grants related to assets are recognised as income in equal amounts over the expected useful life of the related asset.
6 Taxes on Income:
Tax expenses comprise of current and deferred tax.
A Current Tax:
a Current tax is measured at the amount expected to be paid on the basis of reliefs and deductions available in accordance with the provisions of the Income Tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
b Current tax items are recognised in correlation to the underlying transaction either in Statement of Profit and Loss, Other Comprehensive Income (OCI) or directly in equity.
B Deferred Tax:
a Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
b Deferred tax liabilities are recognised for all taxable temporary differences.
c Deferred tax assets are recognised for all deductible temporary differences and carry forward of unused tax losses.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and carry forward of unused tax losses can be utilized.
d The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
e Deferred tax assets and liabilities are measured at the tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date and are expected to apply in the year when the asset is realised or the liability is settled.
f Deferred tax items are recognised in correlation to the underlying transaction either in Statement of Profit and Loss, Other Comprehensive Income (OCI) or directly in equity.
g Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities.
7 Property, Plant and Equipment:
A Property, Plant, and Equipment including leasehold land existing as on 1st January, 2005 have been carried at revalued figures and subsequent additions thereto are accounted for on actual/historical cost basis. Cost includes related expenditure and pre-operative and project expenses for the period upto completion of construction / upto date of assets being ready for its intended use, if recognition criteria are met and the present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met. Cost is reduced by accumulated depreciation and impairment and amount representing assets disclosed or held for disposal. On transition to Ind AS as on 1st April, 2016, the Company has elected to measure its Property, Plant and Equipment at carrying value as per previous GAAP. Further, as per the requirement of paragraph 11 of Ind AS 101, outstanding amount in the revaluation reserve is transferred to retained earning account, since the Company is no longer applying the revaluation model of Ind AS 16 upon transition and has elected to apply the cost model approach.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss during the reporting period in which they are incurred.
B Where components of an asset are significant in value in relation to the total value of the asset as a whole, and they have substantially different economic lives as compared to principal item of the asset, they are recognised separately as independent items and are depreciated over their estimated economic useful lives.
C Depreciation on tangible assets is provided on "straight line method". Useful life of tangible assets except buildings as per following details are different from that prescribed in Schedule II of the Act, which have been arrived at based on technical evaluation. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used. However, management reviews the residual values, useful lives and methods of depreciation of property, plant and equipment at reasonable intervals. Any revision to these is recognized prospectively in current and future periods.
D Depreciation on impaired assets is calculated on its reduced value, if any, on a systematic basis over its remaining useful life.
E Depreciation on additions/ disposals of the Property, Plant & Equipments during the year is provided on pro-rata basis according to the period during which assets are used.
F Capital work in progress is stated at cost less accumulated impairment loss, if any. All other repair and maintenance costs are recognised in Statement of Profit or Loss as incurred, unless they meet the recognition criteria for capitalisation under Property, Plant and Equipment.
G An item of property, plant and equipment and any significant part thereof initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognised.
8 Intangible Assets:
A Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses.
B Capitalised cost incurred towards purchase/ development of software is amortized using straight line method over its useful life of six years as estimated by the management at the time of capitalisation.
C An item of intangible asset initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognised.
9 Borrowing Costs:
A Borrowing costs consist of interest and other borrowing costs that are incurred in connection with the borrowing of funds. Other borrowing costs include ancillary charges at the time of acquisition of a financial liability, which is recognised as per EIR method. Borrowing costs also include exchange differences to the extent regarded as an adjustment to the borrowing costs.
B Borrowing costs that are directly attributable to the acquisition / construction of a qualifying asset are capitalised as part of the cost of such assets, up to the date the assets are ready for their intended use.
C For capitalization of eligible borrowing costs which are not specifically attributable to the acquisition, construction or production of a particular qualifying asset, a weighted average capitalization rate is applied for all the eligible assets.
The weighted average rate is taken of the borrowing costs applicable to the outstanding borrowings of the company during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset.
10 Impairment of Assets:
The carrying amounts of Property, Plant and Equipmentand intangible assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the Company measures it on the basis of discounted estimated cash flows for the remaining years (remaining useful life). Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
11 Inventories:
A Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
B Costs (net of input credit of VAT/GST) comprises all cost of purchase, cost of conversion and other costs incurred in bringing inventories to their present location ad condition. Cost formulae used are "First In First Out", "weighted Average Cost", or "Specific Identification" as applicable.
C Write down of inventories to net realisable value is recognised as an expense and included in "Changes in Inventories of Finished goods, Work-in-progress and Stock-in-Trade" and "Cost of Material Consumed" in the relevant note in the Statement of Profit and Loss.
12 Cash and Cash Equivalents:
Cash and Cash equivalents for the purpose of Cash Flow Statement comprise cash and cheques in hand, bank balances, demand deposits with banks where the original maturity is three months or less and other short term highly liquid investments.
13 Provisions, Contingent Liabilities, Contingent Assets and Commitments:
A Provisions are recognised when the Company has a present obligation as a result of past events and it is probable that the outflow of resources will be required to settle the obligation and in respect of which reliable estimates can be made.
When the company expects some o rail of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. A disclosure for contingent liability is made when there is a possible obligation, that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision/ disclosure is made. Contingent assets are not recognised but are disclosed separately in the financial statements. Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets. Provisions, contingencies and commitments are reviewed at each balance sheet date and adjusted to reflect the correct management estimates. Contingent assets are not recognised but are disclosed separately in financial statements.
B If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability.
14 Provision for Product Quality Claims:
Provisions for claims raised by customers for products sold by the company are made on management estimates based on claim history and other relevant factors. The initial estimate of the claim is revised annually.
15 Employee Benefits:
A Short term obligations:
Liabilities for wages and salaries, including leave encashments that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured by the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
B Long term employee benefits obligations:
a Defined Benefit Plans:
i Gratuity:
Liability on account of gratuity is provided for on the basis of actuarial valuation carried out by an independent actuary as at the balance sheet date. The contribution towards gratuity liability is funded to an approved gratuity fund and the funds are managed by insurance companies. The Liability or asset recognised in the balance sheet in respect of defined benefit gratuity plan is the present value of the defined benefit plan obligation at the end of the reporting period less the fair value of the plan assets. The Liability with regard to the Gratuity Plan is determined by actuarial valuation, performed by an independent actuary, at each balance sheet date using the projected unit credit method. The present value of the defined benefit obligation denominated in '' is determined by discounting the estimated future cash outflows by reference to the market yields at the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discounting rate to the net balance of the defined benefit obligation and the fair value of plan assets. Such costs are included in employee benefit expenses in the Statement of Profit and Loss. Re-measurements gains or losses arising from experience adjustments and changes in actuarial assumptions are recognised immediately in the period in which they occur directly in "other comprehensive income" and are included in retained earnings in the statement of changes in equity and in the balance sheet.
Re-measurements are not reclassified to profit or loss in subsequent periods.
The Company recognises the following changes in the net defined benefit obligation as an expense in the Statement of Profit and Loss:
i Service costs comprising current service costs and past service costs.
ii Net interest expense or income.
b Defined Contribution Plans - Provident Fund Contribution:
Contribution to provident fund is made to the provident fund administered by the Government as per the provisions of the Provident Fund Act, 1952 and is recognised as employee benefit expenses on accrual basis.
Liability on account of Superannuation is accounted for on accrual basis. The contribution towards Superannuation liability is funded to an approved Superannuation fund and the funds are managed by insurance companies.
C Employee Separation Costs:
The compensation paid to the employees under Voluntary Retirement Scheme is expensed on accrual basis.
16 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.
A Financial assets:
a 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 settlement date, i.e., the date that the Company settles to purchase or sell the asset.
b Subsequent measurement:
For purposes of subsequent measurement, financial assets are classified in following categories:
i Debt instruments at amortized cost:
A âdebt instrumentâ is measured at the amortized cost if both the following conditions are met:
- The asset is held with an objective of collecting contractual cash flows.
- 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 s ubsequently 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 amortisation is included in finance income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit or Loss. This category generally applies to trade and other receivables.
ii Debt instruments at fair value through other comprehensive income (FVTOCI):
A âdebt instrumentâ is classified as at the FVTOCI if both of the following criteria are met:
- The asset is held with objective of both - for collecting contractual cash flows and selling the financial assets.
- The assetâs contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the OCI. However, the Company recognizes interest income, impairment losses and reversals and foreign exchange gain or loss in the Statement of Profit and Loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
iii Debt instruments and derivatives at fair value through profit or loss (FVTPL):
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
Instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.
cDerecognition:
A financial asset (or, where applicable, a part of a financial asset) is primarily derecognised when:
i The right to receive cash flows from the asset has expired, or
ii The Company has transferred its right 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 âpass-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 right 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 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 Companyâs 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. When the Company has transferred the risk and rewards of ownership of the financial asset, the same is derecognised.
d 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.
b Trade receivables or any contractual right to receive cash or another financial asset.
c Financial assets that are debt instruments and are measured as at FVTOCI.
The Company follows âsimplified approachâ for recognition of impairment loss allowance on Point c provided above. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it requires the company to recognise the impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition. For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risksince initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the Statement of Profit and Loss. The balance sheet presentation for various financial instruments is described below:
a Financial assets measured as at amortized cost and contractual revenue receivables: ECL is presented as an allowance , i.e., as an integral part of the measurement of those assets in the balance sheet, which reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
BFinancial guarantee contracts: ECL is presented as a provision in the balance sheet, i.e. as a liability.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics.
B Financial liabilities:
a 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 transaction costs.
b Subsequent measurement:
Subsequently all financial liabilities are measured as amortized cost except for financial guarantee contracts, as described below:
i Loans and borrowings:
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognised in Statement of Profit or Loss when the liabilities are derecognised as well as through the EIR amortisation process. 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 amortisation is included as finance costs in the Statement of Profit and Loss.
cDerecognition:
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.
C Reclassification of financial assets:
The Company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The Companyâs senior management determines change in the business model as a result of external or internal changes which are significant to the Companyâs operations. If the Company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model as per Ind AS 109.
D 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.
17 Derivative Financial Instruments:
Derivatives are recognised initially at fair value and subsequently at fair value through profit and loss.
18 Earnings per Share:
Basic earnings per share are calculated by dividing the net profit or loss (excluding other comprehensive income) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events such as bonus issue, bonus element in a right issue, shares split and reverse share splits (consolidation of shares) that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss (excluding other comprehensive income) for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2017
1. ACCOUNTING POLICIES
a. Basis of Preparation of Financial Statements
The financial statements have been prepared on the historical cost convention basis (except for revaluation of fixed assets and provision for depreciation on revalued amounts) and as a going concern with revenues considered and expenses accounted for wherever possible on their accrual, including provisions/adjustments for committed obligations.
b. Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles (âGAAP'') requires management 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 of accounting estimates is recognized prospectively in current and future periods.
c. Fixed Assets
Fixed assets have been shown at revalued figures as on January 1, 2005. Subsequent additions to fixed assets are accounted for at the cost of acquisition or construction.
In case of new project/expansion of existing projects, expenditure incurred during construction period, including interest and finance cost, prior to commencement of commercial production is capitalized.
d. Capital Work-In-Progress
These are stated at cost relating to items of project incurred during construction/pre-operative period.
e. Depreciation
Depreciation is provided as per provisions of Schedule II of the Companies Act, 2013, which have come into effect from 1st April 2014. Useful life of tangible fixed assets except buildings as per following details are different from that prescribed in Schedule II of the Act, which have been arrived at based on technical evaluation.
f. Insurance
The company has accounted for insurance claims for damage of goods/machinery on the basis of claims filed with the insurance company.
g. Investments
Investments of the company are valued at the cost of acquisition. Dividend on investments is accounted for as and when received.
h. Inventories
Inventories are valued at cost except;
(i) finished goods and trading stock which are valued at lower of cost or net realizable value;
(ii) waste and export incentives, which are valued at net realizable value;
Cost is ascertained on the following basis:
(i) Raw materials : Specific identification
(ii) Dyes, chemicals, stores and spares : First-in, First-out (FIFO)
(iii) Semi-finished and finished goods : Weighted average
(iv) Trading stock : Specific identification
i. Inter-divisional Transactions
Inter-divisional transactions are eliminated as contra items. Any unrealized profit on unsold stock on account of inter-divisional transactions is eliminated while valuing the inventory.
j. Employees Benefits
The company accounts for retirement benefits in compliance with the revised AS-15 as per following details:
(i) Gratuity
Liability on account of gratuity, which is a defined benefit plan, is provided for on the basis of actuarial valuation carried out by an independent actuary as at the balance sheet date. The contribution towards gratuity liability is funded to an approved gratuity fund.
(ii) Provident fund
Contribution to provident fund, which is a defined contribution plan, is made as per the provisions of Provident Fund Act, 1952 and charged to revenue account.
(iii) Superannuation
Liability on account of superannuation, which is a defined contribution plan, is accounted for on accrual basis and funded to an approved superannuation fund.
(iv) Leave encashment
Provision for leave encashment is made on undiscounted basis for accumulated leave that employees can encash in future.
(v) Payment under VRS
Compensation and gratuity paid on account of Voluntary Retirement Scheme (VRS) is treated as revenue expenditure and charged to statement of profit and loss account. Also, the amount of compensation relating to employees who are eligible for and have yet not opted for VRS is treated as contingent liability and disclosed accordingly.
k. Foreign Currency Transactions
(i) Transactions covered under forward contracts are accounted for at the contracted rate.
(ii) All export proceeds have been accounted for at a fixed rate of exchange at the time of raising invoices. Foreign exchange fluctuations as a result of the export sales have been adjusted in the statement of profit and loss account and export proceeds not realized at the balance sheet date are restated at the rate prevailing as at the balance sheet date.
(iii) Balance of foreign currency loans as at the balance sheet date if any is restated at the exchange rate prevailing as at the balance sheet date and difference arising thereon is adjusted in the cost of fixed assets acquired out of the said loans.
l. Sales
The company recognizes sales of goods on transferring property of underlying goods to customers. Sales include all charges and duties collected. However, for waste sales, value added tax collected is credited to VAT collected on sales account. Export sales of âF O R Destination" contracts are recognized on goods having reached the destination or on the basis of the estimated average time taken to reach the destination of the respective customers.
Export benefits in respect of exports made under the duty entitlement passbook scheme as per EXIM policy have been accounted on accrual basis.
m. Excise Duty
Liability for excise duty on finished goods is accounted for on accrual basis as per the provisions of Central Excise Laws.
n. Recognition of Income and Expenditure
Income and expenditure are recognized on accrual basis. o. Taxes on Income
Income tax provision comprises current tax provision and deferred tax provision. Current tax provision is made annually based on the tax liability computed after considering tax allowances and deductions.
Deferred tax is recognized on timing difference between the accounting income and the taxable income for the year that originate in one period and are capable of reversal in one or more subsequent periods. Such deferred tax is quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date.
Deferred tax assets are recognized 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 realized.
p. Borrowing Costs
Borrowing cost includes interest, fees and other charges incurred in connection with the borrowing of funds. It is calculated on the basis of effective interest rate in accordance with Accounting Standard - 30 and considered as revenue expenditure and charged to Statement of Profit and Loss over the period of borrowing, except for borrowing costs either generally or specifically attributed directly to the acquisition or improvement of qualifying assets up to the date when such assets are ready for intended use, which are capitalized as part of cost of such assets.
q. Impairment Loss
Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amounts. Recoverable amount is the higher of an asset''s net selling price and its value. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in the arm''s length transaction between knowledgeable, willing parties, less the costs of disposal.
r. Provisions and Contingencies
Provisions are recognized when the company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. Contingent liabilities are disclosed when the company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. The same are not provided for in the books of accounts and are separately disclosed in the notes forming part of accounts. Contingent assets are neither recognized nor disclosed.
Mar 31, 2016
1ACCOUNTING POLICIES
a. Basis of Preparation of Financial Statements
The financial statements have been prepared on the historical cost convention basis (except for revaluation of fixed assets and provision for depreciation on revalued amounts) and as a going concern with revenues considered and expenses accounted for wherever possible on their accrual, including provisions/adjustments for committed obligations.
b. Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles (âGAAP'') requires management 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 of accounting estimates is recognized prospectively in current and future periods.
c. Fixed Assets
Fixed assets have been shown at revalued figures as on January 1, 2005. Subsequent additions to fixed assets are accounted for at the cost of acquisition or construction.
In case of new project/expansion of existing projects, expenditure incurred during construction period, including interest and finance cost, prior to commencement of commercial production is capitalized.
d. Capital Work-In-Progress
These are stated at cost relating to items of project incurred during construction/pre-operative period.
e. Depreciation
Depreciation is provided as per provisions of Schedule II of the Companies Act, 2013, which have come into effect from 1st April 2014. Useful life of tangible fixed assets except buildings as per following details are different from that prescribed in Schedule II of the Act, which have been arrived at based on technical evaluation.
f. Insurance
The company has accounted for insurance claims for damage of goods/machinery on the basis of claims filed with the insurance company.
g. Investments
Investments of the company are valued at the cost of acquisition. Dividend on investments is accounted for as and when received.
h. Inventories
Inventories are valued at cost except;
(i) Finished goods and trading stock which are valued at lower of cost or net realizable value;
(ii) Waste and export incentives, which are valued at net realizable value;
Cost is ascertained on the following basis:
(i) Raw materials : Specific identification
(ii) Dyes, chemicals, stores and spares: First-in, First-out (FIFO)
(iii) Semi-finished and finished goods: Weighted average
(iv) Trading stock : Specific identification
I. Inter-divisional Transactions
Inter-divisional transactions are eliminated as contra items. Any unrealized profit on unsold stock on account of inter-divisional transactions is eliminated while valuing the inventory.
j. Employees Benefits
The company accounts for retirement benefits in compliance with the revised AS-15 as per following details:
(i) Gratuity
Liability on account of gratuity, which is a defined benefit plan, is provided for on the basis of actuarial valuation carried out by an independent actuary as at the balance sheet date. The contribution towards gratuity liability is funded to an approved gratuity fund.
(ii) Provident fund
Contribution to provident fund, which is a defined contribution plan, is made as per the provisions of Provident Fund Act, 1952 and charged to revenue account.
(iii) Superannuation
Liability on account of superannuation, which is a defined contribution plan, is accounted for on accrual basis and funded to an approved superannuation fund.
(iv). Leave encashment
Provision for leave encashment is made on undiscounted basis for accumulated leave that employees can encase in future.
(v) Payment under VRS
Compensation and gratuity paid on account of Voluntary Retirement Scheme (VRS) is treated as revenue expenditure and charged to statement of profit and loss account. Also, the amount of compensation relating to employees who are eligible for and have yet not opted for VRS is treated as contingent liability and disclosed accordingly.
k. Foreign Currency Transactions
(i) Transactions covered under forward contracts are accounted for at the contracted rate.
(ii) All export proceeds have been accounted for at a fixed rate of exchange at the time of raising invoices. Foreign exchange fluctuations as a result of the export sales have been adjusted in the statement of profit and loss account and export proceeds not realized at the balance sheet date are restated at the rate prevailing as at the balance sheet date.
(iii) Balance of foreign currency loans as at the balance sheet date if any is restated at the exchange rate prevailing as at the balance sheet date and difference arising thereon is adjusted in the cost of fixed assets acquired out of the said loans.
l. Sales
The company recognizes sales of goods on transferring property of underlying goods to customers. Sales include all charges and duties collected. However, for waste sales, value added tax collected is credited to VAT collected on sales account. Export sales of âF O R Destination" contracts are recognized on goods having reached the destination or on the basis of the estimated average time taken to reach the destination of the respective customers.
Export benefits in respect of exports made under the duty entitlement passbook scheme as per EXIM policy have been accounted on accrual basis.
m. Excise Duty; Liability for excise duty on finished goods is accounted for on accrual basis as per the provisions of Central Excise Laws.
n. Deferred Revenue Expenditure
Premium on account of reduction in rate of interest in respect of term loans and non-convertible debentures has been deferred and is written off over a period of ten years.
o. Recognition of Income and Expenditure
Income and expenditure are recognized on accrual basis.
p. Taxes on Income
Income tax provision comprises current tax provision and deferred tax provision. Current tax provision is made annually based on the tax liability computed after considering tax allowances and deductions.
Deferred tax is recognized on timing difference between the accounting income and the taxable income for the year that originates in one period and is capable of reversal in one or more subsequent periods. Such deferred tax is quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date.
Deferred tax assets are recognized 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 realized.
q. Borrowing Costs
Borrowing cost includes interest, fees and other charges incurred in connection with the borrowing of funds. It is calculated on the basis of effective interest rate in accordance with Accounting Standard - 30 and considered as revenue expenditure and charged to Statement of Profit and Loss over the period of borrowing, except for borrowing costs either generally or specifically attributed directly to the acquisition or improvement of qualifying assets up to the date when such assets are ready for intended use, which are capitalized as part of cost of such assets.
r. Impairment Loss
Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amounts. Recoverable amount is the higher of an asset''s net selling price and its value. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in the arm''s length transaction between knowledgeable, willing parties, less the costs of disposal.
s. Provisions and Contingencies
Provisions are recognized when the company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. Contingent liabilities are disclosed when the company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. The same are not provided for in the books of accounts and are separately disclosed in the notes forming part of accounts. Contingent assets are neither recognized nor disclosed.
Mar 31, 2015
A. Basis of Preparation of Financial Statements
The financial statements have been prepared on the historical cost
convention basis (except for revaluation of fixed assets and provision
for depreciation on revalued amounts) and as a going concern with
revenues considered and expenses accounted for wherever possible on
their accrual, including provisions/adjustments for committed
obligations.
b. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles ('GAAP') requires management 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 of accounting estimates is recognized
prospectively in current and future periods.
c. Fixed Assets
Fixed assets have been shown at revalued figures as on January 1,2005.
Subsequent additions to fixed assets are accounted for at the cost of
acquisition or construction.
In case of new project/expansion of existing projects, expenditure
incurred during construction period, including interest and finance
cost, prior to commencement of commercial production is capitalised.
d. Capital Work-In-Progress
These are stated at cost relating to items of project incurred during
construction/pre-operative period.
e. Depreciation
Depreciation is provided as per provisions of Schedule II of the
Companies Act, 2013, which have come into effect from 1st April 2014.
Useful life of tangible fixed assets except buildings as per following
details are different from that prescribed in Schedule II of the Act,
which have been arrived at based on technical evaluation.
Category of Assets Useful life in years
Plant & Machinery (Other than Continuous Process 22.50
Plants)
Continuous Process Plants 45.00
Office Equipment 20.00
Computers & Printer 6.00
Vehicle 10.00
Furniture & Fixture 20.00
f. Insurance
The company has accounted for insurance claims for damage of
goods/machinery on the basis of claims filed with the insurance
company.
g. Investments
Investments of the company, the same are valued at the cost of
acquisition. Dividend on investments is accounted for as and when
received.
h. Inventories
Inventories are valued at cost except;
(i) finished goods and trading stock which are valued at lower of cost
or net realisable value;
(ii) waste and export incentives, which are valued at net realisable
value;
Cost is ascertained on the following basis:
(i) Raw materials : Specific identification
(ii) Dyes, chemicals, stores and spares : First-in, First-out (FIFO)
(iii) Semi-finished and finished goods : Weighted average
(iv) Trading stock : Specific identification
i. Inter-divisional Transactions
Inter-divisional transactions are eliminated as contra items. Any
unrealised profit on unsold stock on account of inter-divisional
transactions is eliminated while valuing the inventory.
j. Employees Benefits
The company accounts for retirement benefits in compliance with the
revised AS-15 as per following details:
(i) Gratuity
Liability on account of gratuity, which is a defined benefit plan, is
provided for on the basis of actuarial valuation carried out by an
independent actuary as at the balance sheet date. The contribution
towards gratuity liability is funded to an approved gratuity fund.
(ii) Provident fund
Contribution to provident fund, which is a defined contribution plan,
is made as per the provisions of Provident Fund Act, 1952 and charged
to revenue account.
(iii) Superannuation
Liability on account of superannuation, which is a defined contribution
plan, is accounted for on accrual basis and funded to an approved
superannuation fund.
(iv) Leave encashment
Provision for leave encashment is made on undiscounted basis for
accumulated leave that employees can encash in future.
(v) Payment under VRS
Compensation and gratuity paid on account of Voluntary Retirement
Scheme (VRS) is treated as revenue expenditure and charges to profit &
loss account. Also, the amount of compensation relating to employees
who are eligible for and have yet not opted for VRS is treated as
contingent liability and disclosed accordingly.
k. Foreign Currency Transactions
(i) Transactions covered under forward contracts are accounted for at
the contracted rate.
(ii) All export proceeds have been accounted for at a fixed rate of
exchange at the time of raising invoices. Foreign exchange fluctuations
as a result of the export sales have been adjusted in the profit and
loss account and export proceeds not realised at the balance sheet date
are restated at the rate prevailing as at the balance sheet date.
(iii) Balance of foreign currency loans as at the balance sheet date if
any is restated at the exchange rate prevailing as at the balance sheet
date and difference arising thereon is adjusted in the cost of fixed
assets acquired out of the said loans.
l. Premium on Redemption of Debentures
Premium payable on redemption of debentures is evenly recognised in
annual accounts.
m. Sales
The company recognises sales of goods on transferring property of
underlying goods to customers. Sales include all charges and duties
collected. However, for waste sales, value added tax collected is
credited to VAT collected on sales account. Export sales of "F O R
Destination" contracts are recognised on goods having reached the
destination or on the basis of the estimated average time taken to
reach the destination of the respective customers.
Export benefits in respect of exports made under the duty entitlement
passbook scheme as per EXIM policy have been accounted on accrual
basis.
n. Excise Duty
Liability for excise duty on finished goods is accounted for on accrual
basis as per the provisions of Central Excise Laws.
o. Deferred Revenue Expenditure
Premium on account of reduction in rate of interest in respect of term
loans and non-convertible debentures has been deferred and is written
off over a period of ten years.
p. Recognition of Income and Expenditure
Income and expenditure are recognised on accrual basis.
q. Taxes on Income
Income tax provision comprises current tax provision and deferred tax
provision. Current tax provision is made annually based on the tax
liability computed after considering tax allowances and deductions.
Deferred tax is recognised on timing difference between the accounting
income and the taxable income for the year that originate in one period
and are capable of reversal in one or more subsequent periods. Such
deferred tax is quantified using the tax rates and laws enacted or
substantively enacted as on the balance sheet date.
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.
r. Borrowing Costs
Borrowing cost includes interest, fees and other charges incurred in
connection with the borrowing of funds. It is calculated on the basis
of effective interest rate in accordance with Accounting Standard - 30
and considered as revenue expenditure and charged to Statement of
Profit and Loss over the period of borrowing, except for borrowing
costs either generally or specifically attributed directly to the
acquisition or improvement of qualifying assets up to the date when
such assets are ready for intended use, which are capitalised as part
of cost of such assets.
s. Impairment Loss
Impairment loss is provided to the extent the carrying amount of assets
exceeds their recoverable amounts. Recoverable amount is the higher of
an asset's net selling price and its value. Value in use is the present
value of estimated future cash flows expected to arise from the
continuing use of the asset and from its disposal at the end of its
useful life. Net selling price is the amount obtainable from sale of
the asset in the arm's length transaction between knowledgeable,
willing parties, less the costs of disposal.
t. Provisions and Contingencies
Provisions are recognised when the company has a legal and constructive
obligation as a result of a past event, for which it is probable that
cash outflow will be required and a reliable estimate can be made of
the amount of the obligation. Contingent liabilities are disclosed when
the company has a possible or present obligation where it is not
probable that an outflow of resources will be required to settle it.
The same are not provided for in the books of accounts and are
separately disclosed in the notes forming part of accounts. Contingent
assets are neither recognised nor disclosed.
Mar 31, 2013
A. The financial statements have been prepared on the historical cost
convention basis (except for revaluation of fixed assets and provision
for depreciation on revalued amounts) and as a going concern with
revenues considered and expenses accounted for wherever possible on
their accrual, including provisions/adjustments for committed
obligations.
b. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles (''GAAP'') requires management 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 of accounting estimates is recognized
prospectively in current and future periods.
c. Fixed Assets
Fixed assets have been shown at revalued figures as on January 1, 2005.
Subsequent additions to fixed assets are accounted for at the cost of
acquisition or construction.
d. Capital Work-In-Progress
These are stated at cost relating to items of project incurred during
construction/pre-operative period.
e. Expenditure During Construction Period
In case of new project/expansion of existing projects, expenditure
incurred during construction period, including interest and finance
cost, prior to commencement of commercial production is capitalised.
f. Depreciation
The company has provided depreciation under straight-line method on all
assets at the rates and in the manner specified in Schedule XIV of the
Companies Act, 1956, as amended by notification no. GSR 756 (E) dated
December 16, 1993 together with circular no. 14 dated December 20,
1993, issued by the Department of Company Affairs.
g. Insurance
The company has accounted for insurance claims for damage of
goods/machinery on the basis of claims filed with the insurance
company.
h. Investments
Investments of the company are long term. The same are valued at the
cost of acquisition. Decline in the value of permanent nature, as per
the requirements of Accounting Standard (AS-13) issued by The Institute
of Chartered Accountants of India, is provided. Dividend on investments
is accounted for as and when received.
i. Inventories
Inventories are valued at cost except;
(i) finished goods and trading stock which are valued at lower of cost
or net realisable value;
(ii) waste and export incentives, which are valued at net realisable
value; Cost is ascertained on the following basis:
(i) Raw materials : Specific identification
(ii) Dyes, chemicals, stores and spares : First-in, First-out (FIFO)
(iii) Semi-finished and finished goods : Weighted average (iv) Trading
stock : Specific identification
j. Inter-divisional Transactions
Inter-divisional transactions are eliminated as contra items. Any
unrealised profit on unsold stock on account of inter-divisional
transactions is eliminated while valuing the inventory.
k. Employees Benefits
The company accounts for retirement benefits in compliance with the
revised AS-15 as per following details:
(i) Gratuity
Liability on account of gratuity, which is a defined benefit plan, is
provided for on the basis of actuarial valuation carried out by an
independent actuary as at the balance sheet date. The contribution
towards gratuity liability is funded to an approved gratuity fund.
(ii) Provident fund
Contribution to provident fund, which is a defined contribution plan,
is made as per the provisions of Provident Fund Act, 1952 and charged
to revenue account.
(iii) Superannuation
Liability on account of superannuation, which is a defined contribution
plan, is accounted for on accrual basis and funded to an approved
superannuation fund.
(iv) Leave encashment
Provision for leave encashment is made on undiscounted basis for
accumulated leave that employees can encash in future.
l. Foreign Currency Transactions
(i) Transactions covered under forward contracts are accounted for at
the contracted rate.
(ii) All export proceeds have been accounted for at a fixed rate of
exchange at the time of raising invoices. Foreign exchange fluctuations
as a result of the export sales have been adjusted in the profit and
loss account and export proceeds not realised at the balance sheet date
are restated at the rate prevailing as at the balance sheet date.
(iii) Balance of foreign currency loans as at the balance sheet date if
any is restated at the exchange rate prevailing as at the balance sheet
date and difference arising thereon is adjusted in the cost of fixed
assets acquired out of the said loans.
m. Premium on Redemption of Debentures
Premium payable on redemption of debentures is evenly recognised in
annual accounts.
n. Sales
The company recognises sales of goods on transferring property of
underlying goods to customers. Sales include all charges and duties
collected. However, for waste sales, value added tax collected is
credited to "VAT collected on sales" account. Export sales of "F O R
Destination" contracts are recognised on goods having reached the
destination or on the basis of the estimated average time taken to
reach the destination of the respective customers.
Export benefits in respect of exports made under the duty entitlement
passbook scheme as per EXIM policy have been accounted on accrual
basis.
o. Excise Duty
Liability for excise duty on finished goods is accounted for on accrual
basis as per the provisions of Central Excise Laws.
p. Deferred Revenue Expenditure
(i) Retrenchment compensation has been treated as deferred revenue
expenditure and is written off over a period of five years.
(ii) Compensation and gratuity paid on account of Voluntary Retirement
Scheme (VRS) is treated as revenue expenditure and charged to profit &
loss account. Also the amount of compensation relating to employees who
have yet not opted for VRS is treated as contingent liability and
disclosed appropriately.
(iii) Premium on account of reduction in rate of interest in respect of
term loans and non-convertible debentures has been deferred and is
written off over a period of ten years.
q. Recognition of Income and Expenditure
Income and expenditure are recognised on accrual basis.
r. Contingent Liabilities
Contingent liabilities are not provided for in the books of accounts.
The same are separately disclosed in the notes forming part of
accounts.
s. Taxes on Income
Income tax provision comprises current tax provision and deferred tax
provision. Current tax provision is made annually based on the tax
liability computed after considering tax allowances and deductions.
Deferred tax is recognised on timing difference between the accounting
income and the taxable income for the year that originate in one period
and are capable of reversal in one or more subsequent periods. Such
deferred tax is quantified using the tax rates and laws enacted or
substantively enacted as on the balance sheet date.
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.
t. Impairment Loss
Impairment loss is provided to the extent the carrying amount of assets
exceeds their recoverable amounts. Recoverable amount is the higher of
an asset''s net selling price and its value. Value in use is the present
value of estimated future cash flows expected to arise from the
continuing use of the asset and from its disposal at the end of its
useful life. Net selling price is the amount obtainable from sale of
the asset in the arm''s length transaction between knowledgeable,
willing parties, less the costs of disposal.
u. Provisions and Contingencies
Provisions are recognised when the company has a legal and constructive
obligation as a result of a past event, for which it is probable that
cash outflow will be required and a reliable estimate can be made of
the amount of the obligation. Contingent liabilities are disclosed when
the company has a possible or present obligation where it is not
probable that an outflow of resources will be required to settle it.
Contingent assets are neither recognised nor disclosed.
Mar 31, 2012
A) The financial statements have been prepared on the historical cost
convention basis (except for revaluation of fixed assets and provision
for depreciation on revalued amounts) and as a going concern with
revenues considered and expenses accounted for wherever possible on
their accrual, including provisions/adjustments for committed
obligations.
b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles ('GAAP') requires management 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 of accounting estimates is recognized
prospectively in current and future periods.
c) Fixed Assets
Fixed assets have been shown at revalued figures as on January 1, 2005.
Subsequent additions to fixed assets are accounted for at the cost of
acquisition or construction.
d) Capital Work-In-Progress
These are stated at cost relating to items of project incurred during
construction/pre-operative period.
e) Expenditure During Construction Period
In case of new project/expansion of existing projects, expenditure
incurred during construction period, including interest and finance
cost, prior to commencement of commercial production is capitalised.
f) Depreciation
The company has provided depreciation under straight-line method on all
assets at the rates and in the manner specified in Schedule XIV of the
Companies Act, 1956, as amended by notification no. GSR 756 (E) dated
December 16, 1993 together with circular no. 14 dated December 20,
1993, issued by the Department of Company Affairs.
g) Insurance
The company has accounted for insurance claims for damage of
goods/machinery on the basis of claims filed with the insurance
company.
h) Investments
Investments of the company are long term. The same are valued at the
cost of acquisition. Decline in the value of permanent nature, as per
the requirements of Accounting Standard (AS-13) issued by The Institute
of Chartered Accountants of India, is provided. Dividend on investments
is accounted for as and when received.
i) Inventories
Inventories are valued at cost except;
(i) finished goods and trading stock which are valued at lower of cost
or net realisable value;
(ii) waste and export incentives, which are valued at net realisable
value;
Cost is ascertained on the following basis:
(i) Raw materials : Specific identification
(ii) Dyes, chemicals, stores and spares : First-in, First-out (FIFO)
(iii) Semi-finished and finished goods : Weighted average
(iv) Trading stock : Specific identification
j) Inter-divisional Transactions
Inter-divisional transactions are eliminated as contra items. Any
unrealised profit on unsold stock on account of inter-divisional
transactions is eliminated while valuing the inventory.
k) Employees Benefits
The company accounts for retirement benefits in compliance with the
revised AS-15 as per following details:
(i) Gratuity
Liability on account of gratuity, which is a defined benefit plan, is
provided for on the basis of actuarial valuation carried out by an
independent actuary as at the balance sheet date. The contribution
towards gratuity liability is funded to an approved gratuity fund.
(ii) Provident fund
Contribution to provident fund, which is a defined contribution plan,
is made as per the provisions of Provident Fund Act, 1952 and charged
to revenue account.
(iii) Superannuation
Liability on account of superannuation, which is a defined contribution
plan, is accounted for on accrual basis and funded to an approved
superannuation fund.
(iv) Leave encashment
Provision for leave encashment is made on undiscounted basis for
accumulated leave that employees can encash in future.
l) Foreign Currency Transactions
(i) Transactions covered under forward contracts are accounted for at
the contracted rate.
(ii) All export proceeds have been accounted for at a fixed rate of
exchange at the time of raising invoices. Foreign exchange fluctuations
as a result of the export sales have been adjusted in the profit and
loss account and export proceeds not realised at the balance sheet date
are restated at the rate prevailing as at the balance sheet date.
(iii) Balance of foreign currency loans as at the balance sheet date if
any is restated at the exchange rate prevailing as at the balance sheet
date and difference arising thereon is adjusted in the cost of fixed
assets acquired out of the said loans.
m) Premium on Redemption of Debentures
Premium payable on redemption of debentures is evenly recognised in
annual accounts. n) Sales
The company recognises sales of goods on transferring property of
underlying goods to customers. Sales include all charges and duties
collected. However, for waste sales, value added tax collected is
credited to vat collected on sales account. Export sales of "F O R
Destination" contracts are recognised on goods having reached the
destination or on the basis of the estimated average time taken to
reach the destination of the respective customers.
Export benefits in respect of exports made under the duty entitlement
passbook scheme as per EXIM policy have been accounted on accrual
basis.
o) Excise Duty
Liability for excise duty on finished goods is accounted for on accrual
basis as per the provisions of Central Excise Laws.
p) Deferred Revenue Expenditure
(i) Fixed deposit expenses have been deferred and are written off over
a period of three years.
(ii) Retrenchment compensation has been treated as deferred revenue
expenditure and is written off over a period of five years.
(iii) Compensation and gratuity paid on account of Voluntary Retirement
Scheme (VRS) is treated as revenue expenditure and charged to profit &
loss account. Also the amount of compensation relating to employees who
have yet not opted for VRS is treated as contingent liability and
disclosed appropriately.
(iv) Transitional obligation arising on the first time adoption of the
revised Accounting Standard 15 on "Employee Benefits" has been
deferred and written off over a period of five years.
(v) Premium on account of reduction in rate of interest in respect of
term loans and non-convertible debentures has been deferred and is
written off over a period of ten years.
q) Recognition of Income and Expenditure
Income and expenditure are recognised on accrual basis.
r) Contingent Liabilities
Contingent liabilities are not provided for in the books of accounts.
The same are separately disclosed in the notes forming part of
accounts.
s) Taxes on Income:
Income tax provision comprises current tax provision and deferred tax
provision. Current tax provision is made annually based on the tax
liability computed after considering tax allowances and deductions.
Deferred tax is recognised on timing difference between the accounting
income and the taxable income for the year that originate in one period
and are capable of reversal in one or more subsequent periods. Such
deferred tax is quantified using the tax rates and laws enacted or
substantively enacted as on the balance sheet date.
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.
t) Impairment Loss
Impairment loss is provided to the extent the carrying amount of assets
exceeds their recoverable amounts. Recoverable amount is the higher of
an asset's net selling price and its value. Value in use is the present
value of estimated future cash flows expected to arise from the
continuing use of the asset and from its disposal at the end of its
useful life. Net selling price is the amount obtainable from sale of
the asset in the arm's length transaction between knowledgeable,
willing parties, less the costs of disposal.
u) Provisions and Contingencies
Provisions are recognised when the company has a legal and constructive
obligation as a result of a past event, for which it is probable that
cash outflow will be required and a reliable estimate can be made of
the amount of the obligation. Contingent liabilities are disclosed when
the company has a possible or present obligation where it is not
probable that an outflow of resources will be required to settle it.
Contingent assets are neither recognised nor disclosed.
Mar 31, 2010
1. The financial statements have been prepared on the historical cost
convention basis (except for revaluation of fixed assets and provision
for depreciation on revalued amounts) and as a going concern with
revenues considered and expenses accounted for wherever possible on
their accrual, including provisions/adjustments for committed
obligations.
2. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires management 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 of accounting estimates is recognized
prospectively in current and future periods.
3. Fixed Assets
Fixed assets have been shown at revalued figures as on January 1, 2005.
Subsequent additions to fixed assets are accounted for at the cost of
acquisition or construction.
4. Capital Work-lryProgress
These are stated at cost relating to items of project incurred during
construction/pre-operative period.
5. Expenditure During Construction Period
In case of new project/expansion of existing projects, expenditure
incurred during construction period, including interest and finance
cost, prior to commencement of commercial production is capitalised.
6. Depreciation
The company has provided depreciation under straight-line method on all
assets at the rates and in the manner specified in Schedule XIV of the
Companies Act, 1956, as amended by notification no. GSR 756 (E) dated
December 16, 1993 together with circular no. 14 dated December 20,
1993, issued by the Department of Company Affairs.
7. Insurance
The company has accounted for insurance claims for damage of
goods/machinery on the basis of claims filed with the insurance
company.
8. Investments
Investments of the company are long term. The same are valued at the
cost of acquisition. Decline in the value of permanent nature, as per
the requirements of Accounting Standard (AS-13) issued by The Institute
of Chartered Accountants of India, is provided. Dividend on investments
is accounted for as and when received.
9. Inventories
Inventories are valued at cost except;
(i) finished goods and trading stock which are valued at lower of cost
or net realisable value;
(ii) waste and export incentives, which are valued at net realisable
value;
Cost is ascertained on the following basis:
(i) Raw materials : Specific identification
(ii) Dyes, chemicals, stores and spares : First-in, First-out (FIFO)
(iii) Semi-finished and finished goods : Weighted average
(iv) Trading stock : Specific identification
10. Inter-divisional Transactions
Inter-divisional transactions are eliminated as contra items. Any
unrealised profit on unsold stock on account of inter-divisional
transactions is eliminated while valuing the inventory.
11. Employee Benefits
The company accounts for employee benefits in compliance with the
revised AS-15 as per following details:
(i) Gratuity
Liability on account of gratuity, which is a defined benefit plan, is
provided for on the basis of actuarial valuation carried out by an
independent actuary as at the balance sheet date. The contribution
towards gratuity liability is funded to an approved gratuity fund.
(ii). Provident fund
Contribution to provident fund, whidh is a defined contribution plan,
is made as per the provisions of Provident Fund Act, 1952 and charged
to revenue account.
(iii) Superannuation
Liability on account of superannuation, which is a defined contribution
plan, is accounted for on accrual basis and funded to an approved
superannuation fund.
(iv) Leave encashment
Provision for leave-encashment is made on undiscounted basis for
accumulated leave that employees can encash in future.
12. Foreign Currency Transactions
(i) Transactions covered under forward contracts are accounted for at
the contracted rate.
(ii) All export proceeds have been accounted for at a fixed rate of
exchange at the time of raising invoices. Foreign exchange fluctuations
as a result of the export sales have been adjusted in the profit and
loss account and export proceeds not realised at the balance sheet date
are restated at the rate prevailing as at the balance sheet date.
(iii) Balance of foreign currency loans as at the balance sheet date if
any is restated at the exchange rate prevailing as at the balance sheet
date and difference arising thereon is adjusted in the cost of fixed
assets acquired out of the said loans.
13. Premium on Redemption of Debentures
Premium payable on redemption of debentures is evenly recognised in
annual accounts.
14. Sales
The company recognises sales of goods on transferring property of
underlying goods to customers. Sales include all charges and duties
collected. However, for waste sales, value added tax collected is
credited to vat collected on sales account. Export sales of "F O R
Destination" contracts are recognised on goods having reached the
destination or on the basis of the estimated average time taken to
reach the destination of the respective customers.
Export benefits in respect of exports made under the duty entitlement
passbook scheme as per EXIM policy have been accounted on accrual
basis.
15. Excise Duty
Liability for excise duty on finished goods is accounted for on accrual
basis as per the provisions of Central Excise Laws.
16. Deferred Revenue Expenditure
(i) Fixed deposit expenses have been deferred and are written off over
a period of three years.
(ii) Retrenchment compensation has been treated as deferred revenue
expenditure and is written off over a period of five years.
(in) As per revised AS-15, "Employee Benefits" issued by The Institute
of Chartered Accountants of India, compensation on account of Voluntary
Retirement Scheme (VRS) is treated as deferred revenue expenditure and
written off over a period of five years but ending on or before March
31, 2010. Also the amount of compensation relating to employees who
have yet not opted for VRS is treated as contingent liability and
disclosed appropriately. Further, the gratuity paid on account of VRS
is treated as revenue and charged to profit arid loss account
(iv) Transitional obligation arising on the first time adoption of the
revised Accounting Standard 15 on "Employee Benefits" has been deferred
and written off over a period of five years.
(v) Premium on account of reduction in rate of interest in respect of
term loans and non-convertible debentures has been deferred and is
written off over a period of ten years.
17. Recognition of fricome and Expenditure
Income and expenditure are recognised on accrual basis.
18. Contingent Liabilities
Contingent liabilities are not provided for in the books of accounts.
The same are separately disclosed in the notes forming part of
accounts.
19. Taxes on Income:
Income tax provision comprises current tax provision and deferred tax
provision.,Current tax provision is made annually based on the tax
liability computed after considering tax allowances and deductions.
Deferred tax is recognised on timing difference between the accounting
income and the taxable income for the year that originate in one period
and are capable of reversal in one or more subsequent periods. Such
deferred tax is quantified using the tax rates and laws enacted or
substantively enacted as on the balance sheet date.
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.
20. Impairment Loss
Impairment loss is provided to the extent the carrying amount of assets
exceeds their recoverable amounts. Recoverable amount is the higher of
an assets net selling price and its value. Value in use is the present
value of estimated future cash flows expected to arise from the
continuing use of the asset and from its disposal at the end of its
useful life. Net selling price is the amount obtainable from sale of
the asset in the arms length transaction between knowledgeable,
willing parties, less the costs of disposal.
21. Provisions and Contingencies
Provisions are recognised when the company has a legal and constructive
obligation as a result of a past event, for which it is probable that
cash outflow will be required and a reliable estimate can be made of
the amount of the obligation. Contingent liabilities are disclosed when
the company has a possible or present obligation where it is not
probable that an outflow of resources will be required to settle it.
Contingent assets are neither recognised nor disclosed.
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