Accounting Policies of Dai Ichi Karkaria Ltd. Company
Mar 31, 2018
1A. Significant Accounting Policies
A. Financial instruments
Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.
Cash and cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets to collect contractual cash flows and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Financial assets at fair value through other comprehensive income
Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding and selling financial assets.
Financial assets at fair value through profit or loss
Financial assets are measured at fair value through profit or loss unless they are measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in statement of profit and loss.
The Company has made an irrevocable election to present subsequent changes in the fair value of equity investments as other income in the statement of profit and loss.
Financial liabilities
Financial liabilities are measured at amortised cost using the effective interest method.
Equity instruments
An equity instrument is a contract that evidences residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments recognised by the Company are recognised at the proceeds received net off direct issue cost.
B. Impairment
Financial assets (other than at fair value)
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. In determining the allowances for doubtful trade receivables, the Company has computed the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and rates used in the provision matrix. For all other financial assets, expected credit losses are measured at an amount equal to the 12-months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.
Non-financial assets
Tangible and intangible assets
Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss.
C. Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost, less accumulated depreciation, and accumulated impairment losses, if any.
Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located.
The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labor, and other costs directly attributable to bringing the item to working condition for its intended use, and estimated costs of dismantling and removing the item and restoring the site on which it is located.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted 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.
(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) Expenditure during construction period
Expenditure/Income during construction period (including financing cost related to borrowed funds for construction or acquisition of qualifying PPE) is included under capital work-in-progress, and the same is allocated to the respective PPE on the completion of their construction. Advances given towards acquisition or construction of PPE outstanding at each reporting date are disclosed as capital advances under âother non-current assetsâ.
(iv) Depreciation
Depreciation of property, plant and equipment located at Dahej and Kasarwadi is calculated using written down value method. Property, plant and equipment located at Kurkumbh is calculated using the Straight-line method. Freehold land is not depreciated.
Depreciation for the year has been provided as per the useful life prescribed under Part C of Schedule II of the Act as stated below:
Depreciation method, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. Management believes that its estimates of useful lives as given above best represent the period over which management expects to use these assets.
Depreciation on additions (disposals) is provided on a pro-rata basis i.e. from (upto) the date on which asset is ready for use (disposed of).
D. Intangible assets
(i) Recognition and measurement
Intangible assets including those acquired by the Company are initially measured at cost. Such intangible assets are subsequently measured at cost less accumulated amortisation and any accumulated impairment losses.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures are recognised in profit or loss as incurred.
(iii) Amortisation
Amortisation is calculated to write off the cost of intangible assets less their estimated residual values over the estimated useful lives using the straight-line method, and is included in depreciation and amortisation in statement of profit and loss.
The estimated useful lives are as follows:
Software 6 years
Amortisation method, useful lives and residual values are reviewed at the end of each financial year and adjusted if appropriate.
E. Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of raw materials are computed basis the moving average cost, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their present location and condition. In the case of finished products and work-in progress, costs includes an appropriate share of fixed production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated selling expenses.
The net realizable value of work-in-progress is determined with reference to the selling price of related finished goods. Raw materials, components and other supplies held for use in production of finished goods are not written down below cost except in cases where material prices have declined and it is estimated that the cost of the finished products will exceed their net realizable value.
The comparison of cost and net realisable value is made on an item-by-item basis.
F. Employee benefits
i. Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid e.g., under short-term cash bonus, 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 amount of obligation can be estimated reliably.
ii. Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts.
The Companyâs contributions to provident fund, superannuation fund and employee state insurance scheme are considered as defined contribution plans and is charged to the statement of profit and loss based on the amount of contribution required to be made and when services are rendered by the employee.
iii. Defined benefit plan
For defined benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date. Re measurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income (OCI) in the period in which they occur. Re-measurement recognised in OCI is reflected immediately in retained earnings and will not be reclassified to statement of profit and loss. Past service cost is recognised in the statement of profit and loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
Gratuity
The Companyâs liability towards Gratuity, which is a defined benefit plan, is determined on the basis of valuations, as at Balance Sheet date, carried out by an independent actuary using Projected Unit Credit Method. Remeasurement of the net defined benefit liability which comprise actuarial gains and losses are recognised immediately in Other Comprehensive Income in the period in which they occur.
iv. Other long- term employee benefits - Compensated absences
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation determined based on percentage unit credit method with independent actuarial valuation as at the balance sheet date. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on government securities as at the balance sheet date. Remeasurements gains or losses are recognised in profit or loss in the period in which they arise.
G. Provisions, contingent liabilities and contingent assets
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provision are recognised at the best estimates of the expenditure required to settle the present obligation at the balance sheet date. If the effect of the time value of money is material, provisions are discounted using a pre-tax rate that reflects, when appropriate, the risks specific to the liabilities.
A present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non - occurrence of one or more uncertain future events not wholly within the control of the Company.
Claims against the Company where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities.
Contingent assets are not recognised in financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognised.
H. Government grants
Government grants are recognised in the statement of profit and loss on a systematic basis over the periods in which the Company recognises the related costs for which the grants are intended to compensate.
Government grants that are receivable towards capital investments under state investment promotion scheme are recognised in the statement of profit and loss in the period in which they become receivable.
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received.
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates and is being recognised in the statement of profit and loss.
I. Leases
The Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.
Leases in which a significant portion of the risks and rewards incidental to ownership is not transferred to the Company as lessee are classified as operating leases. Lease rentals in respect of assets taken on operating lease are charged to the statement of profit and loss on a straight line basis over the lease term unless the payments are structured to increase in line with the expected general inflation so as to compensate for the lessorâs expected inflationary cost increase.
J. Revenue
(i) Sale of goods
Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts, volume rebates, sales tax, value added taxes (VAT) and goods and service tax (GST) and includes excise duty. This inter alia involves discounting of the consideration due to the present value if payment extends beyond normal credit terms. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing effective control over, or managerial involvement with, the goods, and the amount of revenue can be measured reliably. The timing of transfer of risks and rewards varies depending the individual terms of sale.
(ii) Rendering of services
Revenue for job work services is recognised as and when services are rendered, in accordance with the terms of the contract. The amount recognised as revenue is exclusive of sales tax, value added taxes (VAT), goods and service tax (GST) and its net of returns and trade discounts.
(iii) Rental income
Rental income from sub-leasing is recognised as part of other income on a straight-line basis over the term of the lease except where the rentals are structured to increase in line with expected general inflation.
(iv) Export benefits
Export benefits available under prevalent schemes are accrued in the year in which the goods are exported and no significant uncertainty exist regarding its ultimate collection.
(v) Dividend
Dividend from investment is recognised as revenue when right to receive the payments is established.
(vi) Interest income
Interest income is recognised using the effective interest rate method.
K. Income tax
Income tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination or to an item recognised directly in equity or in other comprehensive income.
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. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.
Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.
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 corresponding amounts used for taxation purposes. Deferred tax is also recognised in respect of carried forward tax losses and tax credits.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by 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 or liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different taxable entities, but they intend to settle current tax liabilities and assets on net basis or their tax assets and liabilities will be realised simultaneously.
Minimum alternate tax credit entitlement
Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes a deferred tax asset on the MAT credit available only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. The Company reviews the deferred tax asset created on MAT credit entitlement asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
L. Borrowing costs
Borrowing cost are interest and other costs (including exchange differences relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest cost) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of asset which necessarily take a substantial period of time to get ready for their intended use are capitalised as part of cost of asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.
M. Earnings per share
The basic earnings per share (âEPSâ) is computed by dividing the net profit / (loss) after tax for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, net profit/(loss) after tax for the year attributable to the equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
N. Foreign currency transactions
In preparing the financial statements of the Company, transactions in currencies other than the Companyâs functional currency (i.e. foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of initial transactions.
Exchange differences on monetary items are recognised in the statement of profit and loss in the period in which they arise.
O. Investment in subsidiary and joint venture
The Companyâs investment in its subsidiary and joint venture are carried at cost.
P. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with banks that are readily convertible into cash which are subject to insignificant risk of changes in value and are held for the purpose of meeting short-term cash commitments.
Q. Standards issued but not yet effective
Ind AS 115- Revenue from Contract with Customers (âStandardâ)
On 28 March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) Amendment Rules, 2018, notifying Ind AS 115 âRevenue from Contracts with Customersâ.
Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 Revenue, Ind AS 11 Construction Contracts when it becomes effective.
The core principle of Ind AS 115 is that an entity should recognise 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. Specifically, the standard introduces a 5-step approach to revenue recognition:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligation in contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when âcontrolâ of the goods or services underlying the particular performance obligation is transferred to the customer.
The Company is evaluating the impact of this Standard on its financial statements.
Ind AS 21 - The effect of changes in Foreign Exchange rates
The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. The Company is evaluating the impact of this amendment on its financial statements.
Mar 31, 2017
1 CORPORATE INFORMATION
Dai-ichi Karkaria Ltd. (âDIKLâ) / (âthe Companyâ) was incorporated on 13 May, 1960 under the laws of the Republic of India and has its registered office at Mumbai (Maharashtra). DIKL is engaged in manufacturing of Specialty Chemicals. The Company also has a joint venture Company - Nalco Champion Dai-Ichi Private Limited, with CTI Chemicals Asia Pacific Pte. Ltd., Singapore.
The manufacturing activities of the Company are carried out from its plants located at Kasarwadi and Kurkumbh, Pune (Maharashtra).
2 SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of accounting and preparation of financial statements
The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles (GAAP) and applicable Accounting Standards prescribed under Section 133 of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention except for categories of fixed assets at Kasarwadi Plant as on 1 April 1993, that are carried at revalued amounts. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
2.2 Use of estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.
2.3 Inventories
Inventories are valued at lower of cost and net realizable value, on the weighted average basis. Work in progress, Semi finished goods and Finished goods are valued on absorption costing basis. Due allowance is made for slow moving and obsolete stocks.
2.4 Cash and Cash Equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition).
2.5 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
2.6 Depreciation and Amortization
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Asset costing '' 5,000/- or less are fully depreciated in the year of purchase.
Depreciation on fixed assets has been provided on written down value method for assets at Kasarwadi, Pune and HO and on the straight-line method for fixed assets at Kurkumbh, Pune as per the useful life prescribed in Schedule II to the Companies Act, 2013.
Depreciation on certain assets located at Kasarwadi aquired prior to April 1, 1993 which are stated at revalued amounts and for which incremental depreciation which was hitherto adjusted out of revaluation reserve, has pursuant to the enactment of 2013 Act, been depreciated in full without any such adjustment out of revaluation reserve.
Intangible assets are amortized over their estimated useful life on written down value method which is over a period of six years.
Leasehold land is amortized over the duration of the lease which is over a period of 99 years.
2.7 Revenue Recognition
Sale of goods
Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude sales tax and value added tax.
2.8 Other Income
Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive is established.
2.9 Fixed Assets
Tangible Assets - Property, Plant & Equipment
Tangible Assets - Property, Plant & Equipment except Free Hold Land and certain assets of the Company located at Kasarwadi plant, are carried at cost less accumulated depreciation and impairment losses, if any. The cost of Tangible Assets - Property, Plant & Equipment comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying Tangible Assets - Property, Plant & Equipment up to the date the asset is ready for its intended use. Machinery spares which can be used only in connection with an item of Tangible Assets - Property, Plant & Equipment and whose use is expected to be irregular are capitalized and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure on Tangible Assets - Property, Plant & Equipment after its purchase / completion is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.
Tangible Assets - Property, Plant & Equipment acquired in full or part exchange for another asset are recorded at the fair market value or the net book value of the asset given up, adjusted for any balancing cash consideration.
The Company revalued certain assets located at Kasarwadi plant as on 1 April, 1993. The revalued assets are carried at the revalued amounts less accumulated depreciation until March 31, 2014 and impairment losses, if any. Increase in the net book value on such revaluation was credited to âRevaluation reserve accountâ except to the extent such increase is related to and not greater than a decreased arising from a revaluation / impairment that was previously recognized in the statement of Profit & Loss in which case such amount is credited to the statement of Profit & Loss. Decrease in book value on revaluation is charged to statement of Profit & Loss except where such decrease relates to a previously recognized increase that was credited to the revaluation reserve, in which case the decrease is charged to the revaluation reserve to the extent the reserve has not been subsequently reversed or utilized.
Intangible Assets
Intangible Assets are carried at cost less accumulated amortization and impairment losses, if any. The cost of Intangible Assets comprises of its purchase price and any other directly attributable expenditure on making the asset ready for its intended use and net of trade discounts and rebates.
Capital work-in-progress
Projects under which Tangible Assets - Property, Plant & Equipment are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest.
Intangible assets under development
Expenditure on software development eligible for capitalization are carried as Intangible assets under development where such assets are not yet ready for their intended use.
2.10 Foreign currency transactions and translations
Transactions in foreign currency are recorded at exchange rates prevailing on the date of the transaction. Yearend balance of monetary items is restated at closing rates. Exchange difference arising on restatement or settlement is charged to Statement of Profit and Loss. Non-monetary items of the Company are carried at historical cost. Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss.
Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortized over the period of the contracts if such contracts relate to monetary items as at the balance sheet date. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense in the period in which such cancellation or renewal is made.
2.11 Export Incentives
Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
2.12 Investments
Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.
2.13 Employee benefits
Employee benefits include provident fund, employee state insurance scheme, gratuity fund and compensated absences. Defined contribution plans
The Company''s contributions to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employee.
Defined benefit plans
For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.
Long term Compensated absences
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation determined based on Percentage Unit Credit Method with actuarial valuation as at the balance sheet date.
2.14 Segment reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.
2.15 Leases
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis.
2.16 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
2.17 Taxes on income
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability.
2.18 Research and development expenses
All revenue expenditure is charged to Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product''s technical feasibility has been established, in which case such expenditure is capitalized. The amount capitalized comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilized for research and development are capitalized and depreciated in accordance with the policies stated for Fixed Assets.
2.19 Impairment of assets
The carrying amounts of Fixed Assets are reviewed for impairment of events or changes in the circumstances indicate that the carrying value of the asset may not be recoverable. If there are indicators of impairment, an assessment is made to determine whether the asset''s carrying value exceeds its recoverable amount. Whenever the carrying value of an asset exceeds its recoverable amount, impairment is charged to statement of profit and loss.
2.20 Provisions and contingencies
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the financial statements.
2.21 Service tax input credit
Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is reasonable certainty in availing / utilizing the credits.
2.22 Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Mar 31, 2016
1 CORPORATE INFORMATION
Dai-ichi Karkaria Ltd. (âDIKLâ) / (âthe Companyâ) was incorporated on 13th May, 1960 under the laws of the Republic of India and has its registered office at Mumbai (Maharashtra). DIKL is engaged in manufacturing of Specialty Chemicals. The Company has a joint venture with CTI Chemicals Asia Pacific Pte. Ltd., Singapore.
The manufacturing activities of the Company are carried out from its plants located at Kasarwadi and Kurkumbh., Pune (Maharashtra)
2 SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of accounting and preparation of financial statements
The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles (GAAP) and applicable Accounting Standards notified under Accounting Standards specified under Section 133 of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention except for categories of fixed assets at Kasarwadi Plant as on 1 April 1993, that are carried at revalued amounts. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
2.2 Use of estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize.
2.3 Inventories
Inventories are valued at lower of cost and net realizable value, on the weighted average basis. Work in progress, Semi finished goods and Finished goods are valued on absorption costing basis. Due allowance is made for slow moving and obsolete stocks.
2.4 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition).
2.5 Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
2.6 Depreciation and amortization
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Asset costing Rs. 5,000/- or less are fully depreciated in the year of purchase.
Depreciation on fixed assets has been provided on written down value method for assets at Kasarwadi, Pune and HO and on the straight-line method for fixed assets at Kurkumbh, Pune as per the useful life prescribed in Schedule II to the Companies Act, 2013.
Depreciation on certain assets located at Kasarwadi acquired prior to April 1, 1993 which are stated at revalued amounts and for which incremental depreciation which was hitherto adjusted out of revaluation reserve, has with effect from previous financial year, pursuant to the enactment of 2013 Act, been depreciated in full without any such adjustment out of revaluation reserve.
Intangible assets are amortized over their estimated useful life on written down value method.
Lease/hold land is amortized over the duration of the lease.
2.7 Revenue recognition
Sale of goods
Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude sales tax and value added tax.
2.8 Other income
Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive is established.
2.9 Fixed Assets (Tangible / Intangible)
Fixed assets, except Free Hold Land and certain assets located at Kasarwadi plant, are carried at cost less accumulated depreciation / amortization and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalized and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure on fixed assets after its purchase / completion is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.
Fixed assets acquired in full or part exchange for another asset are recorded at the fair market value or the net book value of the asset given up, adjusted for any balancing cash consideration.
The Company revalued certain assets located at Kasarwadi plant as on 1 April, 1993. The revalued assets are carried at the revalued amounts less accumulated depreciation until March 31, 2014 and impairment losses, if any. Increase in the net book value on such revaluation was credited to âRevaluation reserve accountâ except to the extent such increase is related to and not greater than a decreased arising from a revaluation / impairment that was previously recognized in the statement of Profit & Loss in which case such amount is credited to the statement of Profit & Loss. Decrease in book value on revaluation is charged to statement of Profit & Loss except where such decrease relates to a previously recognized increase that was credited to the revaluation reserve, in which case the decrease is charged to the revaluation reserve to the extent the reserve has not been subsequently reversed or utilized.
Capital work-in-progress
Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest.
2.10 Foreign currency transactions and translations
Transactions in foreign currency are recorded at exchange rates prevailing on the date of the transaction. Year end balance of monetary items is restated at closing rates. Exchange difference arising on restatement or settlement is charged to Statement of Profit and Loss. Non-monetary items of the Company are carried at historical cost. Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss.
Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortized over the period of the contracts if such contracts relate to monetary items as at the balance sheet date. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense in the period in which such cancellation or renewal is made.
2.11 Export incentives
Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.
2.12 Investments
Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.
2.13 Employee benefits
Employee benefits include provident fund, employee state insurance scheme, gratuity fund and compensated absences. Defined contribution plans
The Company''s contributions to provident fund and employee state insurance scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employee.
Defined benefit plans
For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognized in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.
Long term Compensated absences
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognized as a liability at the present value of the defined benefit obligation as at the balance sheet date
2.14 Segment reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance. The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.
2.15 Leases
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis.
2.16 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
2.17 Taxes on income
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets.
Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability.
2.18 Research and development expenses
All revenue expenditure is charged to Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product''s technical feasibility has been established, in which case such expenditure is capitalized. The amount capitalized comprises expenditure that can be directly attributed or allocated on a reasonable and consistent basis to creating, producing and making the asset ready for its intended use. Fixed assets utilized for research and development are capitalized and depreciated in accordance with the policies stated for Fixed Assets.
2.19 Impairment of assets
The carrying amounts of tangible fixed assets are reviewed for impairment if events or changes in the circumstances indicate that the carrying value of the asset may not be recoverable. If there are indicators of impairment, an assessment is made to determine whether the asset''s carrying value exceeds its recoverable amount. Whenever the carrying value of an asset exceeds its recoverable amount, impairment is charged to statement of profit and loss.
2.20 Provisions and contingencies
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the financial statements.
2.21 Service tax input credit
Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is reasonable certainty in availing / utilizing the credits.
2.22 Proposed Dividend
Proposed dividend as at the year end (including corporate dividend tax thereon), is provided for if recommended by the Board, and is subject to approval of members.
2.23 Operating Cycle
Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Mar 31, 2014
Basis of accounting:
The financial statements are prepared under the historical cost
convention in accordance with the generally accepted accounting
principles (GAAP) and applicable Accounting Standards notified under
Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which
continue to be applicable in respect of Section 133 of the Companies
Act, 2013 ("the 2013 Act") in terms of General Circular 15/2013 dated
13 September, 2013 of the Ministry of Corporate Affairs) and the
relevant provisions of the 1956 Act, 2013 Act, as applicable.
Estimates:
The preparation of financial statements require estimates and
assumptions to be made that effect the reported amount of assets and
liabilities and other information as at the date of the financial
statement and reported amounts of revenue and expenses during the
recording period. Difference between the actual results and estimates
are recognized in the period in which the results are
known/materialised.
Fixed assets: (including research and development (R&D) assets)
i. Recognition:
Recognized at cost of acquisition/construction (inclusive of expenses
(net) up to attainment of commercial production) except assets at
Kasarwadi, Pune as at April 1, 1993, which is stated at revalued
figures as on that date.
ii. Impairment:
The carrying amounts of tangible fixed assets are reviewed for
impairment if events or changes in the circumstances indicate that the
carrying value of the asset may not be recoverable. If there are
indicators of impairment, an assessment is made to determine whether
the asset''s carrying value exceeds its recoverable amount. Whenever the
carrying value of an asset exceeds its recoverable amount, impairment
is charged to statement of profit and loss.
iii. Depreciation and Amortisation:
Depreciation is provided at the rates prescribed in Schedule XIV to the
Companies Act, 1956 on:
 written down value method for assets at Kasarwadi, Pune (including R
& D assets). Incremental depreciation on revalued assets is adjusted to
revaluation reserve.
 Straight line method for fixed assets at Kurkumbh, Pune.
 Leasehold assets are amortised over the life of the lease.
Capital work-in-progress:
Projects under which tangible fixed assets are not yet ready for their
intended use are carried at cost, comprising direct cost, related
incidental expenses and attributable interest.
Research and development:
Capital expenditure is shown as fixed asset and accordingly
depreciated. All revenue expenditure is charged to Statement of Profit
and Loss.
Investments:
Investments are stated at cost and classified as long term or current.
Provision is made for diminution, other than temporary, if any, in
respect of a long term investments. Current investments are valued at
lower of cost and fair value.
Inventory:
Inventories are valued at lower of cost and net realizable value, on
the weighted average basis. Work in progress, Semi finished goods and
Finished goods are valued on absorption costing basis. Due allowance is
made for slow moving and obsolete stocks.
Notes forming part of the Financial Statements
Sundry Trade Receivables/loans and advances:
Sundry Trade Receivables and loans and advances are stated after making
adequate provision for doubtful debts/ advances, if any.
Revenue recognition:
Sale of goods
Sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers. Sales
include excise duty but exclude sales tax and value added tax.
Other income:
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
Excise:
Excise duty is recognized on goods manufactured.
Employee benefits:
Employee benefits include provident fund, employee state insurance
scheme, gratuity fund and compensated absences.
The Company''s contributions to provident fund and employee state
insurance scheme are considered as defined contribution plans and are
charged as an expense based on the amount of contribution required to
be made.
For defined benefit plans in the form of gratuity fund the cost of
providing benefits is determined using the Projected Unit Credit
method, with actuarial valuations being carried out at each balance
sheet date. Actuarial gains and losses are recognised in the Statement
of Profit and Loss in the period in which they occur. Past service cost
is recognised immediately to the extent that the benefits are already
vested and otherwise is amortised on a straight-line basis over the
average period until the benefits become vested.
Provision for compensated absences is made on the basis of actuarial
valuation carried out as at the Balance Sheet date. Foreign currency
transactions:
Transactions in foreign currency are recorded at exchange rates
prevailing on the date of the transaction. Year end balance of monetary
items is restated at closing rates. Exchange difference arising on
restatement or settlement is charged to Statement of Profit and Loss.
Premium/discount in respect of forward cover contract is amortized over
period of contract.
Leases:
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis.
Taxation:
Provision for current tax is made after taking into account rebate and
relief available under Income Tax Act, 1961.
Deferred tax is recognized subject to consideration of prudence, on
timing differences between taxable and accounting income that
originated in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets are recognized only if there is
a virtual/reasonable certainty of realization.
Dividend:
Provision is made for proposed dividend, including corporate dividend
tax thereon, subject to approval of members. Contingent Liabilities:
Contingent liabilities are disclosed after careful evaluation of the
facts and legal aspects of the issues involved.
(F) The Company has one class of equity shares having par value of
Rs.10/- per share. Each equity share holder is eligible for one vote per
share held. Each equity share holder is entitled to dividend as and
when the Company declares and pays dividend after obtaining share
holders approval.
Mar 31, 2013
Basis of accounting:
The financial statements are prepared under the historical cost
convention in accordance with the generally accepted accounting
principles (GAAP) and applicable Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and
provisions of the Companies Act, 1956.
Estimates:
The preparation of financial statements require estimates and
assumptions to be made that effect the reported amount of assets and
liabilities and other information as at the date of the financial
statement and reported amounts of revenue and expenses during the
recording period. Difference between the actual results and estimates
are recognized in the period in which the results are
known/materialised.
Fixed assets: (including research and development (R&D) assets)
i. Recognition:
Recognized at cost of acquisition/construction (inclusive of expenses
(net) up to attainment of commercial production) except assets at
Kasarwadi, Pune as at April 1, 1993, which is stated at revalued
figures as on that date.
ii. Impairment:
The carrying amounts of tangible fixed assets are reviewed for
impairment if events or changes in the circumstances indicate that the
carrying value of the asset may not be recoverable. If there are
indicators of impairment, an assessment is made to determine whether
the asset''s carrying value exceeds its recoverable amount. Whenever the
carrying value of an asset exceeds its recoverable amount, impairment
is charged to profit and loss account.
iii. Depreciation:
Depreciation is provided at the rates prescribed in Schedule XIV to the
Companies Act, 1956 on:
 written down value method for assets at Kasarwadi, Pune (including R
& D assets). Incremental depreciation on revalued assets is adjusted to
revaluation reserve.
 Straight line method for fixed assets at Kurkumbh, Pune.
 Leasehold assets are amortised over the life of the lease.
Capital work-in-progress:
Projects under which tangible fixed assets are not yet ready for their
intended use are carried at cost, comprising direct cost, related
incidental expenses and attributable interest.
Research and development:
Capital expenditure is shown as fixed asset and accordingly
depreciated. All revenue expenditure is charged to Statement of Profit
and Loss.
Investments:
Investments are stated at cost and classified as long term or current.
Provision is made for diminution, other than temporary, if any, in
respect of a long term investments. Current investments are valued at
lower of cost and fair value.
Inventory:
Inventories are valued at lower of cost and net realizable value, on
the weighted average basis. Work in progress, Semi finished goods and
Finished goods are valued on absorption costing basis. Due allowance is
made for slow moving and obsolete stocks.
Sundry Trade Receivables/loans and advances:
Sundry Trade Receivables and loans and advances are stated after making
adequate provision for doubtful debts/ advances, if any.
Revenue recognition:
Sale of goods
Sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers. Sales
include excise duty but exclude sales tax and value added tax.
Other income:
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established
Excise:
Excise duty is recognized on goods manufactured.
Employee benefits:
Employee benefits include provident fund, employee state insurance
scheme, gratuity fund and compensated absences.
The Company''s contributions to provident fund and employee state
insurance scheme are considered as defined contribution plans and are
charged as an expense based on the amount of contribution required to
be made.
For defined benefit plans in the form of gratuity fund the cost of
providing benefits is determined using the Projected Unit Credit
method, with actuarial valuations being carried out at each balance
sheet date. Actuarial gains and losses are recognised in the Statement
of Profit and Loss in the period in which they occur. Past service cost
is recognised immediately to the extent that the benefits are already
vested and otherwise is amortised on a straight-line basis over the
average period until the benefits become vested.
Provision for compensated absences is made on the basis of actuarial
valuation carried out as at the Balance Sheet date.
Foreign currency transactions:
Transactions in foreign currency are recorded at exchange rates
prevailing on the date of the transaction. Year end balance of monetary
items is restated at closing rates. Exchange difference arising on
restatement or settlement is charged to Statement of Profit and Loss.
Premium/discount in respect of forward cover contract is amortized over
period of contract.
Leases:
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis.
Taxation:
Provision for current tax is made after taking into account rebate and
relief available under Income Tax Act, 1961.
Deferred tax is recognized subject to consideration of prudence, on
timing differences between taxable and accounting income that
originated in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets are recognized only if there is
a virtual/reasonable certainty of realization.
Dividend:
Provision is made for proposed dividend, including corporate dividend
tax thereon, subject to approval of members.
Contingent Liabilities:
Contingent liabilities are disclosed after careful evaluation of the
facts and legal aspects of the issues involved.
Mar 31, 2012
Basis of accounting:
The financial statements are prepared under the historical cost
convention in accordance with the generally accepted accounting
principles (GAAP) and applicable accounting standards issued by the
Institute of Chartered Accountants of India and provisions of the
Companies Act, 1956.
Estimates:
The preparation of financial statements require estimates and
assumptions to be made that effect the reported amount of assets and
liabilities and other information as at the date of the financial
statement and reported amounts of revenue and expenses during the
recording period. Difference between the actual results and estimates
are recognized in the period in which the results are
known/materialized.
Fixed assets: (including research and development (R&D) assets)
i. Recognition:
Recognized at cost of acquisition/construction (inclusive of expenses
(net) up to attainment of commercial production) except assets at
Kasarwadi, Pune as at April 1, 1993, which is stated at revalued
figures as on that date.
ii. Impairment:
The carrying amounts of tangible fixed assets are reviewed for
impairment if events or changes in the circumstances indicate that the
carrying value of the asset may not be recoverable. If there are
indicators of impairment, an assessment is made to determine whether
the asset's carrying value exceeds its recoverable amount. Whenever
the carrying value of an asset exceeds its recoverable amount,
impairment is charged to statement of profit and loss.
iii. Depreciation:
Depreciation is provided at the rates prescribed in schedule XIV to the
Companies Act, 1956 on:
- written down value method for assets at Kasarwadi, Pune (including
R&D assets). Incremental depreciation on revalued assets is adjusted to
revaluation reserve.
- Straight line method for fixed assets at Kurkumbh, Pune.
Borrowing cost:
Interest on specific borrowing related to qualifying assets is included
in the cost of asset. All other borrowing costs are charged to profit
and loss account in the period in which they are incurred.
Research and development:
Capital expenditure is shown as fixed asset and accordingly
depreciated. All revenue expenditure is charged to profit and loss
account.
Investments:
Investments are stated at cost and classified as long term or current.
Provision is made for diminution, other than temporary, if any, in
respect of a long term investments..Current investments are valued at
lower of cost and fair value.
Inventory:
Inventories are valued at lower of cost and net realizable value, on
the weighted average basis. Work in progress, Semi finished goods and
Finished goods are valued on absorption costing basis. Due allowance is
made for slow moving and obsolete stocks.
Sundry debtors/loans and advances:
Sundry debtors and loans and advances are stated after making adequate
provision for doubtful debts/advances, if any.
Sales:
Revenue is recognized on delivery of product and/or on passage of title
to the buyer.
Excise:
Excjse duty is recognized on goods manufactured.
Employee benefits:
The company has gratuity scheme funded with Life Insurance Corporation
of India. Payments, determined as per actuarial valuation, under the
scheme are charged to profit and loss account. Under this arrangement,
in the event of an employee resigning in between/before superannuation,
the company has to bear a part of the actual liability which is
accounted as and when the event occurs since the differential gratuity
may not be material.
Provision for leave encashment has been actuarially determined at the
balance sheet date. Actuarial gain and losses are recognized in of
profit and loss account.
Foreign currency transactions:
Transactions in foreign currency are recorded at exchange rates
prevailing on the date of the transaction. Yearend balance of monetary
items is restated at closing rates. Exchange difference arising on
restatement or settlement is charged to profit and loss account.
Premium/discount in respect of forward cover contract is amortized over
period of contract.
Taxation:
Provision for current tax is made after taking into account rebate and
relief available under Income Tax Act, 1961.
Deferred tax is recognized subject to consideration of prudence, on
timing differences between taxable and accounting income that
originated in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets are recognized only if there is
a virtual/reasonable certainty of realization.
Dividend:
Provision is made for proposed dividend, including corporate dividend
tax thereon, subject to approval of members. Contingent Liabilities:
Contingent liabilities are disclosed after careful evaluation of the
facts and legal aspects of the issues involved.
Mar 31, 2011
Basis of accounting:
The financial statements are prepared under the historical cost
convention in accordance with the generally accepted accounting
principles (GAAP) and applicable accounting standards issued by the
Institute of Chartered Accountants of India and provisions of the
Companies Act, 1956.
Estimates:
The preparation of financial statements require estimates and
assumptions to be made that effect the reported amount of assets and
liabilities and other information as at the date of the financial
statement and reported amounts of revenue and expenses during the
recording period. Difference between the actual results and estimates
are recognized in the period in which the results are
known/materialised.
Fixed assets: (including research and development (R&D) assets)
(i) Recognition:
Recognized at cost of acquisition/construction (inclusive of expenses
(net) up to attainment of commercial production) except assets at
Kasarwadi, Pune as at April 1, 1993, which is stated at revalued
figures as on that date.
(ii) Impairment:
The carrying amounts of tangible fixed assets are reviewed for
impairment if events or changes in the circu mstances indicate that the
carrying value of the asset may not be recoverable. If there are
indicators of impairment, an assessment is made to determine whether
the assets carrying value exceeds its recoverable amount. Whenever the
carrying value of an asset exceeds its recoverable amount, impairment
is charged to profit and loss account.
(iii) Depreciation:
Depreciation is provided at the rates prescribed in schedule XIV to the
Companies Act, 1956 on:
- written down value method for assets at Kasarwadi, Pune (including
R&D assets). Incremental depreciation on revalued assets is adjusted to
revaluation reserve.
- Straight line method for fixed assets at Kurkumbh, Pune.
Borrowing cost:
Interest on specific borrowing related to qualifying assets is included
in the cost of asset. All other borrowing costs are charged to profit
and loss account in the period in which they are incurred.
Research and development:
Capital expenditure is shown as fixed asset and accordingly
depreciated. All revenue expenditure is charged to profit and loss
account.
Investments:
Investments are stated at cost and classified as long term or current.
Provision is made for diminution, other than temporary, if any, in
respect of a long term investments. Current investments are valued at
lower of cost and fair value.
Inventory:
Inventories are valued at lower of cost and net realizable value, on
the weighted average basis. Work in progress, Semi finished goods and
Finished goods are valued on absorption costing basis. Due allowance is
made for slow moving and obsolete stocks.
Sundry debtors/loans and advances:
Sundry debtors and loans and advances are stated after making adequate
provision for doubtful debts/advances, if any.
Sales:
Revenue is recognized on delivery of product and/or on passage of title
to the buyer.
Excise:
Excise duty is recognized on goods manufactured.
Employee benefits:
The company has gratuity scheme funded with Life Insurance Corporation
of India. Payments, determined as per actuarial valuation, under the
scheme are charged to profit and loss account. Under this arrangement,
in the event of an employee resigning in between/before superannuation,
the company has to bear a part of the actual liability which is
accounted as and when the event occurs since the differential gratuity
may not be material.
Provision for leave encashment has been actuarially determined at the
balance sheet date. Actuarial gain and losses are recognized in profit
and loss account.
Foreign currency transactions:
Transactions in foreign currency are recorded at exchange rates
prevailing on the date of the transaction. Year end balance of monetary
items is restated at closing rates. Exchange difference arising on
restatement or settlement is charged to profit and loss account.
Premium/discount in respect of forward cover contract is amortized over
period of contract.
Taxation:
Provision for current tax is made after taking into account rebate and
relief available under Income Tax Act, 1961.
Deferred tax is recognized subject to consideration of prudence, on
timing differences between taxable and accounting income that
originated in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets are recognized only if there is
a virtual/reasonable certainty of realization.
Dividend:
Provision is made for proposed dividend, including corporate dividend
tax thereon, subject to approval of members.
Contingent Liabilities:
Contingent liabilities are disclosed after careful evaluation of the
facts and legal aspects of the issues involved.
Mar 31, 2010
Basis of accounting:
The financial statements are prepared under the historical cost
convention in accordance with the generally accepted accounting
principles (GAAP) and applicable accounting standards issued by the
Institute of Chartered Accountants of India and provisions of the
Companies Act, 1956.
Estimates:
The preparation of financial statements require estimates and
assumptions to be made that effect the reported amount of assets and
liabilities and other information as at the date of the financial
statement and reported amounts of revenue and expenses during the
recording period. Difference between the actual results and estimates
are recognized in the period in which the results are
known/materialized.
Fixed assets (including research and development (R&D) assets):
(i) Recognition:
Recognized at cost of acquisition/construction (inclusive of expenses
(net) upto attainment of commercial production) except assets at
Kasarwadi, Pune as at April 1, 1993, which is stated at revalued
figures as on that date.
(ii) Impairment:
The carrying amounts of tangible fixed assets are reviewed for
impairment if events or changes in the circumstances indicate that the
carrying value of the asset may not be recoverable. If there are
indicators of impairment, an assessment is made to determine whether
the assets carrying value exceeds its recoverable amount. Whenever the
carrying value of an asset exceeds its recoverable amount, impairment
is charged to profit and loss account.
(iii) Depreciation:
Depreciation is provided at the rates prescribed in schedule XIV to the
Companies Act, 1956 on:
à written down value method for assets at Kasarwadi, Pune (including
R&D assets). Incremental depreciation on revalued assets is adjusted to
revaluation reserve.
à Straight line method for fixed assets at Kurkumbh, Pune.
Borrowing cost:
Interest on specific borrowing related to qualifying assets is included
in the cost of asset. All other borrowing costs are charged to profit
and loss account in the period in which they are incurred.
Research and development:
Capital expenditure is shown as fixed asset and accordingly
depreciated. All revenue expenditure is charged to profit and loss
account.
Investments:
Investments are stated at cost and classified as long term or current.
Provision is made for diminution, other than temporary, if any, in
respect of a long term investments. Current investments are valued at
lower of cost and fair value.
Inventory:
Inventories are valued at lower of cost and net realizable value, on
the weighted average basis. Work in progress and Finished goods are
valued on absorption costing basis. Due allowance is made for slow
moving and obsolete stocks.
Sundry debtors/loans and advances:
Sundry debtors and loans and advances are stated after making adequate
provision for doubtful debts/advances, if any.
Sales:
Revenue is recognized on delivery of product and/or on passage of title
to the buyer.
Excise:
Excise duty is recognized on goods manufactured.
Employee benefits:
The company has gratuity scheme funded with Life Insurance Corporation
of India. Payments, determined as per actuarial valuation, under the
scheme are charged to profit and loss account. Under this arrangement,
in the event of an employee resigning in between/before superannuation,
the company has to bear a part of the actual liability which is
accounted as and when the event occurs since the differential gratuity
may not be material.
Provision for leave encashment has been actuarially determined at the
balance sheet date. Actuarial gain and losses are recognized in profit
and loss account.
Foreign currency transactions:
Transactions in foreign currency are recorded at exchange rates
prevailing on the date of the transaction. Year end balance of monetary
items is restated at closing rates. Exchange difference arising on
restatement or settlement is charged to profit and loss account.
Premium/discount in respect of forward cover contract is amortized over
period of contract.
Taxation:
Provision for current tax is made after taking into account rebate and
relief available under Income Tax Act, 1961.
Deferred tax is recognized subject to consideration of prudence, on
timing differences between taxable and accounting income that
originated in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets are recognized only if there is
a virtual/reasonable certainty of realization.
Dividend:
Provision is made for proposed dividend, including corporate dividend
tax thereon, subject to approval of members.
Contingent Liabilities:
Contingent liabilities are disclosed after careful evaluation of the
facts and legal aspects of the issues involved.
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