Mar 31, 2023
1. Nature of operations
Ester Industries Limited (âthe Companyâ) is a manufacturer of polyester film and engineering plastics. The Company is domiciled in India and its registered office is situated at Pilibhit Road, Sohan Nagar PO - Charubeta, Khatima District - Udham Singh Nagar, Uttarakhand - 262308.
2. General information and compliance with Ind AS
These financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ) as notified by Ministry of Corporate Affairs (âMCAâ) under section 133 of the Companies Act, 2013 (âActâ) read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other relevant provisions of the Act. The Company has uniformly applied the accounting policies for the periods presented. The Company is listed on the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE).
The financial statements for the year ended 31 March 2023 along with the comparative financial information were authorized and approved for issue by the Board of Directors on 26 May 2023. The revision to the financial statements is permitted by the Board of Directors after obtaining necessary approvals or at the instance of regulatory authorities as per provisions of the Act.
3. Basis of preparation
The financial statements have been prepared on going concern basis in accordance with generally accepted accounting principles in India. Further, the financial statements have been prepared on a historical cost basis except for following items:
Items |
Measurement basis |
Certain financial assets and liabilities |
Fair value as explained in relevant accounting policies. |
Net defined benefits (assets)/liability |
Fair value of plan assets less present value of defined benefits obligations. |
Share based payment |
Fair value as explained in relevant accounting policies. |
4. Summary of significant accounting policies
The financial statements have been prepared using the significant accounting policies and measurement basis summarised below. These were used throughout all periods presented in the financial statements.
4.1 Current versus non-current classification
All assets and liabilities are classified into current and non-current.
An asset is classified as current when it satisfies any of the following criteria: it is expected to be realised in, or is intended for sale or consumption in, the Companyâs normal operating cycle;
⢠it is held primarily for the purpose of being traded;
⢠it is expected to be realised within 12 months after the reporting date; or
⢠it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.
Current assets include the current portion of non-current financial assets. All other assets are classified as non-current. Liabilities
A liability is classified as current when it satisfies any of the following criteria:
⢠it is expected to be settled in the Companyâs normal operating cycle;
⢠it is held primarily for the purpose of being traded;
⢠it is due to be settled within 12 months after the reporting period; or
⢠The Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include the current portion of non current financial liabilities. All other liabilities are classified as noncurrent.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
Operating cycle
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. Based on the nature of operations and the time between the acquisition of assets for processing and their
realisation in cash and cash equivalents, the company has ascertained its operating cycle being a period of 12 months for the purpose of classification of assets and liabilities as current and non- current.
4.2 Property, plant and equipment (PPE) and capital work in progress
Recognition and initial measurement
Property plant and equipment, capital work in progress are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use and initial estimate of decommissioning, restoring and similar liabilities. Any trade discount and rebates are deducted in arriving at the purchase price. Property, plant and equipment purchased on deferred payment basis are recorded at equivalent cash price. The difference between the cash price equivalent and the amount payable is recognised as interest expense over the period until payment.
Subsequent costs are included in the assetâs 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. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Items of stores and spares that meet the definition of property, plant and equipment are capitalized at cost and depreciated over their useful life. Otherwise, such items are classified as inventories
Subsequent measurement (depreciation and useful lives)
Depreciation on property, plant and equipment is calculated on a straight-line basis using the rates arrived at, based on the useful life estimated by the management. The identified components are depreciated separately over their respective useful life; the remaining components are depreciated over the life of the principal asset. The Company has used the following rates to provide depreciation on its property, plant and equipment.
Asset class |
Useful life |
Factory buildings* |
2 to 30 years |
Administrative buildings* |
12 to 61.35 years |
Plant and equipment* |
2 to 40 years |
Furniture and fixtures* |
5 to 15.79 years |
A.C. and Refrigeration |
10 years |
Office equipment* |
2 to 10 years |
Computers* |
3 to 6.16 years |
Vehicles |
8 years |
Batteries under UPS project (Plant and equipment) * |
5 years |
Leasehold improvements |
Over the period of lease |
Depreciation on the amount of additions made to fixed assets due to upgradations / improvements is provided over the remaining useful life of the asset to which it relates. Depreciation on fixed assets added/disposed off during the year is provided on a pro-rata basis to the date, the asset is retired from active use.
The residual values, useful lives and method of depreciation are reviewed at the end of each financial year.
*For these class of assets, based on detailed technical assessment, the management believes that the useful life as given above best represents the period over which management expects to use these assets. Hence, the useful life for these assets is different from the useful life as prescribed under Part C of Schedule II of the Companies Act, 2013.
De-recognition
An item of property, plant and equipment and any significant component 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/significant component (calculated as the difference between the net disposal proceeds and the carrying amount of the asset/significant component) is recognised in statement of profit and loss, when the asset is derecognised.
Recognition and initial measurement
Intangible assets (softwares and patents) are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent measurement (amortisation)
Softwareâs are amortized on a straight-line basis over its useful life, which is considered to be of a period of three years. Patent is amortized on a straight-line basis over its useful life, which is considered to be of a period of 5.26 years.
The residual values, useful lives and method of depreciation are reviewed at the end of each financial year.
The amortisation expense on intangible assets with finite life is recognised in the statement of profit and loss under the head Depreciation and amortisation expense.
De-recognition
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal.
Inventories are valued as follows:
Raw materials, components and stores and spares
Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis. Stores and spares which do not meet the definition of property, plant and equipment are accounted as inventories.
Work-in-progress and finished goods
Work-in-progress and finished goods is measured at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost is determined on moving weighted average basis.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Provision for obsolescence and slow moving inventory is made based on managementâs best estimates of net realisable value of such inventories.
4.5 Revenue recognition 4.5.1 Revenue
Revenue arises mainly from the sale of manufactured goods. To determine whether to recognise revenue, the Company follows a 5-step process:
1) Identifying the contract with a customer
2) Identifying the performance obligations
3) Determining the transaction price
4) Allocating the transaction price to the performance obligations
5) Recognising revenue when/as performance obligation(s) are satisfied.
Revenue is measured at transaction price (net of variable consideration), which is the consideration, net of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government which are levied on sales such as goods and services tax (GST). In case of multi-element revenue arrangements, which involve delivery or performance of multiple products, services, evaluation will be done of all deliverables in an arrangement to determine whether they represent separate units of accounting at the inception of arrangement. Total arrangement consideration related to the bundled contract is allocated among the different elements based on their relative fair values (i.e., ratio of the fair value of each element to the aggregated fair value of the bundled deliverables). In case the relative fair value of different components cannot be determined on a reasonable basis, the total consideration is allocated to the different components based on residual value method. The Company applies the revenue recognition criteria to each separately identifiable component of the revenue transaction as set out below.
Advance from customers (âcontract liabilityâ) is recognised when the Company has received consideration from the customer before it delivers the goods.
Sale of goods
Revenue from sale of goods is recognized when control over ownership of the goods have been passed to the buyer. The performance obligations in our contracts are fulfilled at the time of dispatch, delivery or upon formal customer acceptance depending on customer terms. The Company collects sales taxes, value added taxes (âVATâ) and GST on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue.
Export benefits
Export benefits constituting duty draw back, merchandise export from India scheme and advance license scheme are accounted for on accrual basis when there is reasonable assurance that the Company will comply with the conditions attached to them and the export benefits will be received. Export benefits under duty draw back and merchandise export from India scheme are considered as other operating income.
Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants relating to the purchase of property, plant and equipment are recognised as deferred income and are credited to statement of profit and loss based on the conditions for which the grant was obtained and presented within other income.
Interest
Interest income is recorded on accrual basis using the effective interest rate (EIR) method.
Dividends
Dividend income is recognised at the time when right to receive dividend is established, which is generally when the shareholders approve the dividend.
Insurance claims income
Claims receivable on account of insurance are accounted for to the extent the Company is certain of their ultimate collection.
Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to the statement of profit and loss as incurred.
The Company as a lessee
The Companyâs leased asset classes primarily consist of leases for certain equipments and building, including warehouses and related facilities. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognises a right-of-use asset (âRoUâ) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. RoU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed payments) and variable payments based on an index or rate. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis except where scheduled increase in rent compensate the lessor for expected inflationary costs.
The Company as a lessor
Leases for which the Company is a lessor are classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on a straight-line basis over the term of the relevant lease.
4.8 Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitâs (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Companyâs cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year. Impairment losses are recognized in the statement of profit and loss.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the assetâs or cash-generating unitâs recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the assetâs recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit and loss.
Functional and presentation currency
The financial statements are presented in Indian Rupee (T) which is also the functional and presentation currency of the Company.
Initial recognition
Foreign currency transactions are recorded in the functional currency, by applying to the exchange rate between the functional currency and the foreign currency at the date of the transaction.
Conversion
Foreign currency monetary items are converted to functional currency using the closing rate. Non-monetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transaction.
Exchange difference
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognized in the statement of profit and loss in the year in which they arise.
Initial recognition and measurement
Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument. Financial assets (except for trade receivables) and financial liabilities are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Trade receivables are initially measured at the transaction price. Subsequent measurement of financial assets and financial liabilities is described below.
Non-derivative financial assets
Subsequent measurement
i. Financial assets carried at amortised cost - A âfinancial assetâ is measured at the amortised cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
ii. Investments in equity instruments of subsidiary- Investments in equity instruments of subsidiary are accounted for at cost in accordance with Ind AS 27 Separate Financial Statements.
iii. Investments in other equity instruments - Investments in equity instruments which are held for trading are classified s at fair value through profit or loss (FVTPL). For all other equity instruments, the Company makes an irrevocable choice upon initial recognition, on an instrument by instrument basis, to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL). Amounts presented in other comprehensive income are not subsequently transferred to profit or loss. However, the Company transfers the cumulative gain or loss within equity. Dividends on such investments are recognized in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
iv. Investments in mutual funds - The Company has measured its investment in mutual fund at FVTPL in its financial statements. Profit or loss on fair value of mutual fund is recognised in statement of profit and loss.
De-recognition of financial assets
A financial asset is primarily de-recognised when the contractual rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Non-derivative financial liabilities
Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortised cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognised 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 de-recognition 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 and loss.
The Company has entered into certain forward (derivative) contracts to hedge risks which are not designated as hedges. These derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. Any profit or loss arising on cancellation or renewal of such derivative contract is recognised as income or as expense in statement of profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
4.11 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 for financial assets. The Company assesses on forward looking basis the expected credit losses associated with its assets and impairment methodology applied depends on whether there has been a significant increase in credit risk. An impairment loss is recognised based on the 12 months probability of default or life time probability of default and the expected loss good default estimated for each financial asset.
Trade receivables
In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
Other financial assets
In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.
When making this assessment, the Company uses the change in the risk of a default occurring over the expected life of the financial asset. To make that assessment, the Company compares the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.
Tax expense recognized in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognized in other comprehensive income or directly in equity.
Current tax is determined as the tax payable in respect of taxable income for the year and is computed in accordance with relevant tax regulations. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity).
Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Companyâs forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss. 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.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit and loss (either in other comprehensive income or in equity).
The Company offsets current tax assets and current tax liabilities; deferred tax assets and deferred tax liabilities; where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
4.13 Cash and cash equivalents
Cash and cash equivalents include cash in hand, balance with banks in current in current accounts and other short term highly liquid investments with original maturity of three months and less.
Provident fund
Contribution towards provident fund for certain employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as defined contribution plan as the Company does not carry any further obligations, apart from the contributions made on a monthly basis. In addition, for other employees, the provident fund trust set-up by the Company is treated as a defined benefit plan to the extent the Company has to meet the interest shortfall, if any. Accordingly, the contribution paid or payable and the interest shortfall, if any is recognized as an expense in the period in which services are rendered by the employee.
Gratuity
Gratuity is a post-employment benefit and is in the nature of a defined benefit plan. The liability recognized in the balance sheet in respect of gratuity is the present value of the defined benefit/obligation at the balance sheet date, together with adjustments for unrecognized actuarial gains or losses and past service costs. The defined benefit/obligation is calculated at or near the balance sheet date by an independent actuary using the projected unit credit method. This is based on standard rates of inflation, salary growth rate and mortality. Discount factors are determined close to each year-end by reference to market yields on government bonds that have terms to maturity approximating the terms of the related liability. Service cost on the Companyâs defined benefit plan is included in employee benefits expense. Net interest expense on the net defined benefit liability is included in finance costs. Actuarial gains/losses resulting from remeasurements of the liability are included in other comprehensive income.
Compensated absences
The Company also provides benefit of compensated absences to its employees which are in the nature of long -term employee benefit plan. Liability in respect of compensated absences becoming due and expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method as on the reporting date. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recorded in the statement of profit and loss in the year in which such gains or losses arise.
Superannuation fund
Contribution made towards superannuation fund (funded by payments to Life Insurance Corporation of India) is charged to statement of profit and loss on accrual basis.
Short-term employee benefits
Short-term employee benefits comprise of employee costs such as salaries, bonus etc. is recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee.
Provisions are recognized when the Company has a present obligation as a result of past events, for which it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions required to settle are reviewed regularly and are adjusted where necessary to reflect the current best estimates of the obligation. Provisions are discounted to their present values, where the time value of money is material.
4.16 Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
Contingent assets are neither recognized nor disclosed. However, when realization of income is virtually certain, related asset is recognized.
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue, right issue and share split transaction.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker is considered to be the Board of Directors who makes strategic decisions and is responsible for allocating resources and assessing performance of the operating segments.
The Companyâs operating businesses are organized and managed separately according to the nature of products, with each segment representing a strategic business unit that offers different products and serves different markets. The identified segments are Manufacturing and Sale of Polyester film and Engineering plastics.
Inter segment transfers
Inter segment transfers of goods, as marketable products produced by separate segments of the Company for captive consumption, are not accounted for in the books of account of the Company. For the purpose of segment disclosures, however, inter segment transfers have been taken at cost.
Allocation of common costs
Common allocable costs are allocated to each segment in proportion to the turnover of the segment, except where a more logical allocation is possible.
Unallocated items
Corporate income and expense are considered as a part of un-allocable income and expense, which are not identifiable to any business segment.
4.19 Significant management judgement and estimates
The preparation of the Companyâs financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the related disclosures.
Significant management judgements
Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Companyâs future taxable income against which the deferred tax assets can be utilized.
Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Contingent liabilities - At each balance sheet date basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.
Significant estimates
Government grants - Grants receivables are based on estimates for utilisation of grant as per the regulations as well as analysing actual outcomes on a regular basis and compliance with stipulated conditions. Changes in estimates or noncompliance of stipulated conditions could lead to significant changes in grant income and are accounted prospectively over the balance life of asset.
Defined benefit obligation (DBO) - Managementâs estimate of the DBO is based on a number of underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Useful lives of depreciable/amortisable assets - Management reviews its estimate of the useful lives of depreciable/ amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utilisation of assets.
Allowance for expected credit losses - The allowance for doubtful debts reflects managementâs estimate of losses inherent in its credit portfolio. This allowance is based on Companyâs estimate of the losses to be incurred, which derives from past experience with similar receivables, current and historical past due amounts, write-offs and collections, the careful monitoring of portfolio credit quality and current and projected economic and market conditions. Should the present economic and financial situation persist or even worsen, there could be a further deterioration in the financial situation of the Companyâs debtors compared to that already taken into consideration in calculating the allowances recognised in the financial statements.
Allowance for obsolete and slow-moving inventory - The allowance for obsolete and slow-moving inventory reflects managementâs estimate of the expected loss in value and has been determined on the basis of past experience and historical and expected future trends in the market. A worsening of the economic and financial situation could cause a further deterioration in conditions compared to that taken into consideration in calculating the allowances recognized in the financial statements.
Provisions - At each balance sheet date basis management estimate, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.
4.20 Non-current assets held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. The appropriate level of management must be committed
to a plan to sell, an active programme to locate a buyer and complete the plan has been initiated, the sale is considered highly probable and is expected within one year from the date of classification. Non-current assets (or disposal groups) held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Assets and liabilities classified as held for sale are presented separately from other assets and liabilities in the balance sheet. Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised. A discontinued operation is a component of the Company that either has been disposed of, or is classified as held for sale, and:
a) Represents a separate major line of business or geographical area of operations,
b) Is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, or
c) Is a subsidiary acquired exclusively with a view to resale.
Discontinued operations are excluded from the results of continuing operations and are presented separately in the statement of profit and loss
Employees of the Company receive remuneration in the form of share-based payments in consideration of the services rendered (equity settled transactions).
Under the equity settled share-based payment, the fair value on the grant date of the Options given to employees is recognised as âemployee benefit expenseâ with a corresponding increase in equity over the vesting period. The fair value of the options on the grant date is calculated using an appropriate valuation model.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. An additional expense is recognised for any modification that increases the total fair value of the shares-based payments transactions, or is otherwise beneficial to the employee as measured at the date of modification.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. When the options are exercised, the Company issues fresh equity shares.
5. Recent accounting pronouncements
Ministry of Corporate Affairs (âMCAâ) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. on 31 March 2023, MCA amended the (Indian Accounting Standards) Amendment Rules, 2023, applicable from 01 April 2023, as below:
Ind AS 1 - Presentation of Financial Statements
This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after 01 April 2023. The Company does not expect the amendment to have any significant impact in its financial statements
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
This amendment has introduced a definition of âaccounting estimatesâ and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after 01 April 2023. The Company does not expect the amendment to have any significant impact in its financial statements
Ind AS 12 - Income Taxes
This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after 01 April 2023. The Company does not expect the amendment to have any significant impact in its financial statements.
Mar 31, 2018
1. Summary of significant accounting policies
The financial statements have been prepared using the significant accounting policies and measurement bases summarised below. These were used throughout all periods presented in the financial statements, except where the Company has applied certain exemptions upon transition to Ind AS, as summarised in note 41B to note 41C.
1.1 Current versus non-current classification
All assets and liabilities have been classified as current or non-current as per the Company''s operating cycle and other criteria set out in the Companies Act, 2013.
1.2 Property, plant and equipment (PPE)
Recognition and initial measurement
Property plant and equipment, capital work in progress are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use and initial estimate of decommissioning, restoring and similar liabilities. Any trade discount and rebates are deducted in arriving at the purchase price. Property, plant and equipment purchased on deferred payment basis are recorded at equivalent cash price. The difference between the cash price equivalent and the amount payable is recognised as interest expense over the period until payment.
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. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
Items of stores and spares that meet the definition of property, plant and equipment are capitalised at cost and depreciated over their useful life otherwise, such items are classified as inventories Subsequent measurement (depreciation and useful lives)
Depreciation on property, plant and equipment is calculated on a straight-line basis using the rates arrived at, based on the useful life estimated by the management. The identified components are depreciated separately over their respective useful life; the remaining components are depreciated over the life of the principal asset. The Company has used the following rates to provide depreciation on its property, plant and equipment.
Depreciation on the amount of additions made to fi xed assets due to up gradations / improvements is provided over the remaining useful life of the asset to which it relates.Depreciation on fixed assets added/disposed off during the year is provided on a pro-rata basis to the date, the asset is retired from active use.
The residual values, useful lives and method of depreciation are reviewed at the end of each financial year.
*For these class of assets, based on detailed technical assessment, the management believes that the useful life as given above best represents the period over which management expects to use these assets. Hence, the useful life for these assets is different from the useful life as prescribed under Part C of Schedule II of the Companies Act, 2013.
De-recognition
An item of property, plant and equipment and any significant component 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/significant component (calculated as the difference between the net disposal proceeds and the carrying amount of the asset/significant component) is recognised in statement of profit and loss, when the asset is derecognised.
1.3 Intangible assets
Recognition and initial measurement
Intangible assets (softwares and patents) are stated at their cost of acquisition. The cost comprises purchase price, borrowing cost if capitalisation criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent measurement (amortisation)
Softwares are amortised on a straight-line basis over its useful life, which is considered to be of a period of three years.
Patent is amortised on a straight-line basis over its useful life, which is considered to be of a period of 5.26 years.
The residual values, useful lives and method of depreciation are reviewed at the end of each financial year.
1.4 Inventories
Inventories are valued as follows:
Raw materials, components and stores and spares
Raw materials, components, stores and spares are valued at lower of cost and net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on a weighted average basis. Stores and spares which do not meet the definition of property, plant and equipment are accounted as inventories.
Work-in-progress and finished goods
Work-in-progress and finished goods is measured at lower of cost and net realisable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost is determined on a weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Provision for obsolescence and slow moving inventory is made based on management''s best estimates of net realisable value of such inventories.
1.5 Revenue recognition
Revenue is recognised when it is probable that the economic benefits will flow to the Company and it can be reliably measured. Revenue is measured at the fair value of the consideration received/receivable net of rebate and taxes. The Company applies the revenue recognition criteria to each separately identifiable component of the revenue transaction as set out below.
Sale of goods
Revenue from sale of goods is recognised when all the significant risks and rewards of ownership of the goods have been passed to the buyer. The Company collects sales taxes, Value Added Taxes (âVAT'') and Goods and Service Tax (âGST'') on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue.
Export benefits
Export benefits constituting duty draw back, merchandise export from India scheme and advance license scheme are accounted for on accrual basis when there is reasonable assurance that the Company will comply with the conditions attached to them and the export benefits will be received. Export benefits under duty draw back and merchandise export from India scheme are considered as other operating income. Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants relating to the purchase of property, plant and equipment are recognised as deferred income and are credited to statement of profit and loss based on the conditions for which the grant was obtained and presented within other income.
Interest
Interest income is recorded on accrual basis using the effective interest rate (EIR) method.
Dividends
Dividend income is recognised at the time when right to receive dividend is established, which is generally when the shareholders approve the dividend.
Insurance claims income
Claims receivable on account of insurance are accounted for to the extent the amounts are measured reliably and the Company is reasonably certain of their ultimate collection.
1.6 Borrowing costs
Borrowing cost includes interest, amortisation of ancillary costs incurred in connection with the arrangement of borrowings. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are charged to the statement of profit and loss as incurred.
1.7 Leases Company as a lessee
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis except where scheduled increase in rent compensate the lessor for expected inflationary costs.
1.8 Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.
The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Company''s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year. Impairment losses are recognised in the statement of profit and loss.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset''s or cash-generating unit''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss.
1.9 Foreign currency transactions Functional and presentation currency
The financial statements are presented in Indian Rupee (âRs.'') which is also the functional and presentation currency of the Company.
Initial recognition
Foreign currency transactions are recorded in the functional currency, by applying to the exchange rate between the functional currency and the foreign currency at the date of the transaction.
Conversion
Foreign currency monetary items are converted to functional currency using the closing rate. Non-monetary items denominated in a foreign currency which are carried at historical cost are reported using the exchange rate at the date of the transaction.
Exchange difference
Exchange differences arising on monetary items on settlement, or restatement as at reporting date, at rates different from those at which they were initially recorded, are recognised in the statement of profit and loss in the year in which they arise
1.10 Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below.
Non-derivative financial assets Subsequent measurement
i. Financial assets carried at amortised cost- A âfinancial asset'' is measured at the amortised cost if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
ii. Investments in equity instruments of subsidiary- Investments in equity instruments of subsidiary are accounted for at cost in accordance with the option given under Ind AS 27 Separate Financial Statements.
iii. Investments in other equity instruments - Investments in equity instruments which are held for trading are classified as fair value through profit or loss (FVTPL). For all other equity instruments, the Company makes an irrevocable choice upon initial recognition, on an instrument by instrument basis, to classify the same either as at fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL). Amounts presented in other comprehensive income are not subsequently transferred to profit or loss. However, the Company transfers the cumulative gain or loss within equity. Dividends on such investments are recognised in the statement of profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
De-recognition of financial assets
A financial asset is primarily de-recognised when the contractual rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Non-derivative financial liabilities Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortised cost using the effective interest method. De-recognition of financial liabilities
A financial liability is de-recognised 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 de-recognition 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 and loss.
Forward contracts
The Company has entered into certain forward (derivative) contracts to hedge risks which are not designated as hedges. These derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. Any profit or loss arising on cancellation or renewal of such derivative contract is recognised as income or as expense in statement of profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.11 Impairment of financial assets
In accordance with IndAS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets.The Company assesses on forward looking basis the expected credit losses associated with its assets and impairment methodology applied depends on whether there has been a significant increase in credit risk. An impairment loss is recognised based on the 12 months probability of default or life time probability of default and the expected loss good default estimated for each financial asset.
Trade receivables
In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
Other financial assets
In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.
When making this assessment, the Company uses the change in the risk of a default occurring over the expected life of the financial asset. To make that assessment, the Company compares the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date
1.12 Income taxes
Tax expense recognised in statement of profit and loss comprises the sum of deferred tax and current tax except the ones recognised in other comprehensive income or directly in equity.
Current tax is determined as the tax payable in respect of taxable income for the year and is computed in accordance with relevant tax regulations. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity).
Minimum Alternative Tax (âMAT'') credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.
Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Company''s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss. 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.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit and loss (either in other comprehensive income or in equity).
1.13 Cash and cash equivalents
Cash and cash equivalents include cash in hand, balance with banks in current accounts and other short term highly liquid investments with original maturity of three months and less.
1.14 Employee benefits
Provident fund
Contribution towards provident fund for certain employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as defined contribution plan as the Company does not carry any further obligations, apart from the contributions made on a monthly basis. In addition, for other employees, the provident fund trust set-up by the Company is treated as a defined benefit plan to the extent the Company has to meet the interest shortfall,if any. Accordingly, the contribution paid or payable and the interest shortfall, if any is recognised as an expense in the period in which services are rendered by the employee.
Gratuity
Gratuity is a post-employment benefit and is in the nature of a defined benefit plan. The liability recognised in the balance sheet in respect of gratuity is the present value of the defined benefit/obligation at the balance sheet date, together with adjustments for unrecognised actuarial gains or losses and past service costs. The defined benefit/obligation is calculated at or near the balance sheet date by an independent actuary using the projected unit credit method. This is based on standard rates of inflation, salary growth rate and mortality. Discount factors are determined close to each year-end by reference to market yields on government bonds that have terms to maturity approximating the terms of the related liability. Service cost on the Company''s defined benefit plan is included in employee benefits expense. Net interest expense on the net defined benefit liability is included in finance costs.Actuarial gains/losses resulting from re-measurements of the liability are included in other comprehensive income.
Compensated absences
The Company also provides benefit of compensated absences to its employees which are in the nature of long -term employee benefit plan. Liability in respect of compensated absences becoming due and expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method as on the reporting date. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recorded in the statement of profit and loss in the year in which such gains or losses arise.
Superannuation fund
Contribution made towards superannuation fund (funded by payments to Life Insurance Corporation of India) is charged to statement of profit and loss on accrual basis.
Short-term employee benefits
Short-term employee benefits comprise of employee costs such as salaries, bonus etc. is recognised on the basis of the amount paid or payable for the period during which services are rendered by the employee.
1.15 Provisions
Provisions are recognised when the Company has a present obligation as a result of past events, for which it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions required to settle are reviewed regularly and are adjusted where necessary to reflect the current best estimates of the obligation. Provisions are discounted to their present values, where the time value of money is material.
1.16 Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognise a contingent liability but discloses its existence in the financial statements.
Contingent assets are neither recognised nor disclosed. However, when realisation of income is virtually certain, related asset is recognised.
1.17 Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue, right issue and share split transaction.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
1.18 Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker is considered to be the Chief Executive Officers who makes strategic decisions and is responsible for allocating resources and assessing performance of the operating segments.
The Company''s operating businesses are organised and managed separately according to the nature of products, with each segmentrepresent-ing a strategic business unit that offers different products and serves different markets. The identified segments are Manufacturing and Sale of Polyester film and Engineering plastics.
Inter segment transfers
Inter segment transfers of goods, as marketable products produced by separate segments of the Company for captive consumption, are not accounted for in the books of account of the Company. For the purpose of segment disclosures, however, inter segment transfers have been taken at cost.
Unallocated items
Corporate income and expense are considered as a part of un-allocable income and expense, which are not identifiable to any business segment.
1.19 Significant management judgement and estimates
The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the related disclosures.
Significant management judgements
Recognition of deferred tax assets- The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilised.
Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
Contingent liabilities- At each balance sheet date basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.
Significant estimates
Government grants - Grants receivables are based on estimates for utilisation of grant as per the regulations as well as analysing actual outcomes on a regular basis and compliance with stipulated conditions. Changes in estimates or non-compliance of stipulated conditions could lead to significant changes in grant income and are accounted prospectively over the balance life of asset.
Defined benefit obligation (DBO) - Management''s estimate of the DBO is based on a number of underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.
Useful lives of depreciable/amortisable assets - Management reviews its estimate of the useful lives of depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utilisation of assets.
Mar 31, 2015
1. Nature of operations
Ester Industries Limited (hereinafter referred to as 'the Company') is
a manufacturer of polyester film and engineering plastics
a) Basis of preparation
The financial statements of the company have been prepared in accordance
with generally accepted accounting principles in India (Indian GAAP)
The company has prepared these financial statements to comply in all
material respects with the accounting standards notifed under section
133 of the Companies Act, 2013 read together with paragraph 7 of the
Companies (accounts) rules, 2014 The financial statements have been
prepared under the historical cost convention on an accrual basis
except in case of assets for which revaluation is carried out The
accounting policies adopted in the preparation of financial statements
are consistent with those of previous year, except for the change in
accounting policy as explained below
b) Change in accounting policy
Till the year ended March 31,2014, Schedule XIV to the Companies Act,
1956, prescribed requirements concerning depreciation of fixed assets
From the current year, Schedule XIV has been replaced by Schedule II to
the Companies Act, 2013 The applicability of Schedule II has resulted
in the following changes related to depreciation of fixed assets Unless
stated otherwise, the impact mentioned for the current year is likely
to hold good for future years also
Useful lives/ depreciation rates
Till the year ended March 31, 2014, depreciation rates prescribed under
Schedule XIV were treated as minimum rates and the company was not
allowed to charge depreciation at lower rates even if such lower rates
were justified by the estimated useful life of the asset Schedule II to
the Companies Act 2013 prescribes useful lives for fixed assets which,
in many cases, are different from lives prescribed under the erstwhile
Schedule XIV However, Schedule II allows companies to use higher/ lower
useful lives and residual values if such useful lives and residual
values can be technically supported and justification for difference is
disclosed in the financial statements Pursuant to the requirements of
Schedule II to the Companies Act, 2013, with effect from April 1, 2014
management has reassessed the useful life of all fixed assets based on
detailed technical evaluation The management believes that depreciation
rates currently used fairly reffect its estimate of the useful lives and
residual values of fixed assets, though these rates in certain cases are
diferent from lives prescribed under Schedule II Consequently,
depreciation charge to the statement of Profit and loss for the current
year ended March 31, 2015, is higher by Rs 50 87 lacs Further, based on
transitional provisions provided in Note 7(b) of Schedule II of the
Companies Act, 2013 the carrying value of fixed assets, where the
remaining useful life was nil as at April 1, 2014, amounting to Rs 6 29
lacs (net of deferred tax of Rs 4 21 lacs) has been adjusted with
retained earnings
Accounting for additional depreciation on account of revaluation of
assets
On October 31,1992 , the company revalued all its land , buildings &
plant and machinery existing as on that date Till year ended March 31,
2014, the Guidance Note on Treatment of Reserve created on Revaluation
of Fixed Assets issued by the ICAI allowed companies to transfer an
amount equivalent to the additional depreciation arising due to upward
revaluation of fixed assets from revaluation reserve to the statement of
Profit and loss Accordingly, the company was transferring an amount
equivalent to additional depreciation arising due to upward revaluation
of building from revaluation reserve to the statement of Profit and loss
In contrast, Schedule II to the Companies Act, 2013 applicable from the
current year, states that depreciable amount of an asset is the cost of
an asset or other amount substituted for cost Hence, in case of
revalued assets, depreciation computed on the revalued amount needs to
be charged to the statement of Profit and loss, without any recoupment
from revaluation reserve Consequently, to comply with the Schedule II
requirement, the company has discontinued the practice of recouping the
impact of additional depreciation from revaluation reserve The
management has decided to apply the revised accounting policy
prospectively from accounting periods commencing on or after April 1,
2014
Had the company continued its earlier policy of recouping the
additional depreciation arising due to upward revaluation of fixed
assets from revaluation assets, Profits for the current year would have
been higher by Rs 14 60 lacs However, the change in accounting policy
did not have any impact on reserves and surplus as at March 31, 2015
c) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that afect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods
d) Tangible fixed assets
Tangible fixed assets are stated at cost, less accumulated depreciation
and impairment losses, if any, except Land, Building and Plant &
Machinery, which had been revalued on December 31, 1992 by a Government
registered valuer on the basis of the then replacement value The cost
comprises purchase price, borrowing costs if capitalization criteria
are met and directly attributable cost of bringing the asset to its
working condition for the intended use Any trade discounts and rebates
are deducted in arrivin at the purchase price
Expenditure directly relating to construction activity is capitalized
(net of income, if any) Indirect expenditure specifcally attributable
to construction of a project or to the acquisition of the fixed assets
or bringing it to working condition is capitalised as part of
Construction project or as a part of Fixed assets Other indirect
expenditure incurred during the construction period which is not
related to construction activity nor is incidental thereto is charged
to Statement of Profit and loss
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the Statement of Profit and
loss when the asset is derecognized
Subsequent expenditure related to an item of fixed asset is added to its
book value only if it increases the future benefits from the existing
asset beyond its previously assessed standard of performance All other
expenses on existing fixed assets, including day-to- day repair and
maintenance expenditure and cost of replacing parts, are changed to the
Statement of Profit and loss for the period during which such expenses
are incurred
e) Depreciation
i) Depreciation on fixed assets (other than lease hold improvements) is
provided using Straight Line Method as per useful lives estimated by
the management The company has used the following rates to provide
depreciation on its fixed assets
* For these class of assets, based on detailed technical assessment,
the management believes that the useful life as given above best
represents the period over which management expects to use the assets
Hence, the useful lives for these assets is different from the useful
lives as prescribed under Part C of Schedule II of the Companies Act,
2013 The life of plant and machinery based on triple shift working
ii) Leasehold improvements are depreciated on life based on lease
period
iii) Fixed assets costing below Rs 5,000 are depreciated at the rate of
100% per annum
iv) Depreciation on the amount of additions made to fixed assets due to
up gradations / improvements is provided over the remaining useful life
of the asset to which it relates
v) Depreciation on fixed assets added/disposed of during the year is
provided on pro-rata basis
f) Intangibles
Software costs relating to acquisition of initial software license fee
and installation costs are capitalized in the year of purchase
Software's are amortized on a straight-line basis over its useful life,
which is considered to be of a period of three years
g) Impairment of assets
i) The carrying amounts of 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 estimated future cash fows
are discounted to their present value a pre-tax discount rate that
reflects current market assessment of the time value of money and risks
specific to asset
ii) After impairment, depreciation is provided on the revised carrying
amount of the asset over the remaining useful life
h) Leases
Where the Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as operating
leases Operating lease payments are recognized as an expense in the
Statement of Profit and loss on a straight-line basis over the lease
term
i) Investment
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments All other
investments are classified as long-term investments Current investments
are carried at lower of cost and fair value determined on an individual
investment basis Long-term investments are carried at cost However,
provision for diminution in value is made to recognize a decline other
than temporary in the value of such investments
j) Inventories
Inventories are valued as follows:
Raw materials, components and stores & spares
Lower of cost and net realizable value However, materials and other
items held for use in the production of inventories are not written
down below cost if the finished products, in which they will be
incorporated, are expected to be sold at or above cost Cost of raw
materials, components and stores & spares is determined on a moving
weighted average basis
Work-in-progress and finished goods
Lower of cost and net realizable value Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity Cost of finished goods includes excise duty Cost is
determined on moving weighted average basis
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale
k) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured
Sale of Goods
Revenue from sale of goods is recognized when all the significant risks
and rewards of ownership of the goods have been passed to the buyer The
company collects sales taxes and value added taxes (VAT) on behalf of
the government and, therefore, these are not economic benefits fowing to
the company Hence, they are excluded from revenue Excise duty deducted
from revenue (gross) is the amount that is included in the revenue
(gross) and not the entire amount of liability arising during the year
Export Benefit
Export benefits constituting Duty Draw back , licenses under Focus
Market Scheme and advance license scheme are accounted for on accrual
basis when there is reasonable assurance that the company will comply
with the conditions attached to them and the export benefits will be
received Export benefits under Duty Draw back & Focus Market Scheme are
considered as other operating income
Interest
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable
Dividends
Dividend income is recognized when the company's right to receive
dividend is established by the reporting date
Policy for Insurance Claims
Claims receivable on account of insurance are accounted for to the
extent the Company is reasonably certain of their ultimate
collection
l) Foreign currency transactions Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction
Conversion
Foreign currency monetary items are reported using the closing rate
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined
Exchange Differences
i) Exchange differences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalized and
depreciated over the remaining useful life of the asset For this
purpose, the Company treats a foreign currency monetary item as
"long-term foreign currency monetary item", if it has a term of 12
months or more at the date of its origination In accordance with MCA
circular dated August 9, 2012, exchange diferences for this purpose,
are total differences arising on long- term foreign currency monetary
items for the year
ii) All other exchange differences are recognized as income or as
expenses in the period in which they arise
Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract Exchange differences on such contracts are recognised in the
Statement of Profit and loss in the year in which the exchange rates
change Any Profit or loss arising on cancellation or renewal of forward
exchange contract is recognised as income or as expense for the year
m) Retirement and other employee benefits
i Retirement benefits in the form of Superannuation Fund (being funded
to LIC), Provident Fund (where contributed to the Regional Provident
Fund Commissioner) and employee state insurance are defned contribution
schemes The Company has no obligation, other than the contribution
payable to the respective authorities The Company recognizes
contribution payable to respective authorities as an expenditure, when
an employee renders the related service If the contribution payable to
the scheme for service received before the balance sheet date exceeds
the contribution already paid, the deficit payable to the scheme is
recognized as a liability after deducting the contribution already paid
If the contribution already paid exceeds the contribution due for
services received before the balance sheet date, then excess is
recognized as an asset to the extent that the pre payment will lead to,
for example, a reduction in future payment or a cash refund
ii Gratuity liability is defined benefit obligation and is provided for
on the basis of an actuarial valuation on projected unit credit method
made at the end of each financial year
iii Retirement benefit in the form of provident Fund (Where administered
by trust created and managed by Company) is a defined benefit obligation
of the company and the contributions are charged to Statement of Profit
& loss of the year when the contribution to the respective funds are
due Shortfall in the funds, if any, is adequately provided for by the
company based on the actuarial valuation on projected unit credit
method carried out at the end of each financial year
iv Short term compensated absences are provided for based on estimates
Long term compensated absences are provided for based on actuarial
valuation The actuarial valuation is done as per projected unit credit
method The Company presents the leave as a current liability in the
balance sheet, to the extent it does not have an unconditional right to
defer its settlement for 12 months after the reporting date
v Actuarial gains/losses are immediately taken to Statement of Profit
and loss and are not deferred
n) Income Taxes
Tax expense comprises of current and deferred tax Current income tax is
measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961 Deferred income taxes reflects
the impact of current year timing differences between taxable income and
accounting income for the year and reversal of timing differences of
earlier years
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date Deferred tax
assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available against
which such deferred tax assets can be realised If the company has
unabsorbed depreciation and carry forward of tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that such deferred tax assets can be realised
against future taxable Profits
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets It recognises unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realised
The carrying amount of deferred tax assets are reviewed at each balance
sheet date The Company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period In the year in which the Minimum Alternative
tax (MAT) credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in guidance note issued
by the Institute of Chartered Accountants of India, the said asset is
created by way of a credit to the Statement of Profit and loss and shown
as MAT Credit Entitlement The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specifed
period
o) Borrowing Costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset All other borrowing costs are
expensed in the period they occur
p) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event 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 are not discounted to
its present value and are determined based on best management 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
management estimates Provision for expenditure relating to voluntary
retirement is made when the employee accepts the offer of early
retirement
q) Segment Reporting Policies
Identification of segments:
Primary Segment
Business Segment
The Company's operating businesses are organized and managed separately
according to the nature of products, with each segment representing a
strategic business unit that offers different products and serves
different markets The identified segments are Manufacturing & Sale of
Polyester film and Engineering plastics
Secondary Segment
Geographical Segment
The analysis of geographical segments is based on the geographical
location of the customers
The geographical segments considered for disclosure are as follows:
- Sales within India include sales to customers located within India
- Sales outside India include sales to customers located outside India
Inter Segment Transfers:
Inter Segment transfers of goods, as marketable products produced by
separate segments of the Company for captive consumption, are not
accounted for in the books of account of the Company For the purpose of
segment disclosures, however, inter segment transfers have been taken
at cost
Allocation of common costs:
Common allocable costs are allocated to each segment in proportion to
the turnover of the segment, except where a more logical allocation is
possible
Unallocated items:
Corporate income and expense are considered as a part of un-allocable
income & expense, which are not identifiable to any business segment
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole
r) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less
s) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be required
to settle the obligation A contingent liability also arises in
extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably The company does not
recognize a contingent liability but discloses its existence in the
financial statements
t) Earnings Per Share
Basic earnings per share are calculated by dividing the net Profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the period Partly paid
equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period The weighted
average numbers of equity shares outstanding during the period are
adjusted for events of bonus issue; bonus element in a rights issue to
existing shareholders; share split; and reverse share split
(consolidation of shares)
For the purpose of calculating diluted earnings per share, the net
Profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares
u) Measurement of EBITDA
As permitted by the guidance note on revised schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest expense, tax, depreciation and amortization (EBITDA) as a
separate line item on the face of the statement of Profit & loss The
company measures EBITDA on the basis of Profit / (loss) from continuing
operations In its measurement, the company includes interest income but
does not include depreciation and amortization expenses, finance cost
and tax expenses
b) From Bank of India of Rs 1900 00 lacs (previous year Rs NIL) as
Corporate Loan for augmentation of Working Capital is secured by First
Pari Passu charge on fixed assets of the company (both present & future)
with other lenders, except fixed assets that are exclusively charged to
Karnataka Bank and Second Pari Passu charge on current assets and
further secured by irrevocable guarantee of Wilemina Finance Corp ,
(Holding Company) and Personal Guarantee of Mr Arvind Singhania
Corporate Loan bears floating interest at the rate base rate plus 3 25%
pa As per sanction, the Corporate Loan is repayable in 20 quarterly
installments starting from March 31, 2015 The outstanding amount as on
March 31, 2015 is repayable in 19 quarterly installments starting from
April 1, 2015
c) From Bank of Baroda of Rs NIL (previous year Rs 1,364.00 lacs) for
corporate Office project was secured by equitable mortgage created by way
of deposit of title deeds in respect of the immoveable property (land
and building) at Gurgaon and further secured by irrevocable guarantee
of Wilemina Finance Corp (Holding company) The term loan bears floating
interest at the base rate plus 4 25% pa The loan has been taken over by
Karnataka Bank & No Objection Certificate for the same has been issued by
Bank of Baroda
d) From Bank of Baroda of Rs 1,000 00 lacs as Corporate Loan for
augmentation of Working Capital is secured by First Pari Passu charge
on fixed assets of the company (both present & future) with other
lenders, except fixed assets that are exclusively charged to Karnataka
Bank and Second Pari Passu charge on current assets and further secured
by irrevocable guarantee of Wilemina Finance Corp , (Holding Company)
and Personal Guarantee of Mr Arvind Singhania Corporate Loan bears
floating interest at the base rate plus 3 25% pa As per sanction, the
Corporate Loan is repayable in 20 quarterly installments starting from
April 1, 2015 The outstanding amount as on March 31, 2015 is repayable
in 20 quarterly installments starting from April 1, 2015
e) From Union Bank of India of Rs 607.75 lacs (previous year Rs 793 64
lacs) for Metalizer Project is secured by first exclusive charge by way
of hypothecation of Metalizing Unit and further secured by irrevocable
guarantee of Wilemina Finance Corp (Holding company) The term loan
bears floating interest at the base rate plus 2 75% pa The Term Loan is
repayable in 20 quarterly installments starting from September 2013 The
outstanding amount as on March 31, 2015 is repayable in 13 quarterly
installments starting from April 1, 2015
f) From Union Bank of India of Rs 934 79 lacs (previous year Rs 709 56
lacs) for Bio Mass (Husk) fuelled Thermic Fluid Heater is secured by
first exclusive charge by way of hypothecation of Bio Mass (Husk)
fuelled Thermic Fluid Heater and further secured by irrevocable
guarantee of Wilemina Finance Corp (Holding company) The term loan
bears floating interest at the base rate plus 2 75% pa The Term Loan is
repayable in 20 quarterly installments starting from September 2014 The
outstanding amount as on March 31, 2015 is repayable in 17 quarterly
installments starting from April 1, 2015
g) From State bank of Bikaner and Jaipur of Rs 754 65lacs (previous
year Rs 111 82 lacs) is secured by first exclusive charge by way of
hypothecation of Oil Fired Heater, Reclaim Co-extruder and In-Line
Coater and further secured by irrevocable guarantee of Wilemina Finance
Corp (Holding company) The term loan bears floating interest at the base
rate plus 2 75% pa The Term Loan is repayable in 20 quarterly
installments starting from December 2011 The outstanding amount as on
March 31, 2015 is repayable in 6 quarterly installments starting from
April 1, 2015
h) From Karnataka Bank of Rs 392 83 lacs (previous year Rs NIL) towards
reimbursement of cost of certain machinery already purchased / certain
other machineries to be purchased is secured by hypothecation of
certain plant & machinery purchased / to be purchased at factory
premises at Uttrakhand and equitable mortgage by way of deposit of
title deeds of land & Corporate Office building constructed there upon in
Gurgaon as Collateral security and further secured by irrevocable
guarantee of Wilemina Finance Corp (Holding company) Sanction amount of
the Term Loan is Rs 480 Lacs whereas the disbursed amount till date is
Rs 432 85 Lacs The term loan bears floating interest at the base rate
plus 2 25% pa As per sanction, the term loan is repayable in 72 monthly
installments starting from October 25, 2014 The outstanding amount as
on March 31, 2015 together with balance amount (Rs 47 15 lacs) to be
disbursed is repayable in 66 monthly installments starting from April
1, 2015
i) From Karnataka Bank of Rs 1016 00 lacs (previous year Rs Nil) was
takeover from Bank of Baroda The term loan is secured by equitable
mortgage by way of deposit of title deeds of land & Corporate Office
building constructed thereupon in Gurgaon and further secured by
irrevocable guarantee of Wilemina Finance Corp (Holding company) The
term loan bears floating interest at the base rate plus 2 25% pa As per
sanction, the term loan is repayable in 45 months or period remaining
outstanding with Bank of Baroda ie 41 months whichever is less
Accordingly terminal date of repayment of the term loan is 31st March
2018 with monthly installments starting from October 25, 2014 The
outstanding amount as on March 31, 2015 is repayable in 35 monthly
installments starting from April 1, 2015
j) From Karnataka Bank of Rs 403 27 lacs (previous year Rs NIL) towards
reimbursement of extra cost incurred towards construction of Corporate
Office building is secured by equitable mortgage by way of deposit of
title deeds of land & Corporate Office building constructed thereupon in
Gurgaon and further secured by irrevocable guarantee of Wilemina
Finance Corp (Holding company) Sanctioned & disbursed amount of the
Term Loan is Rs 440 00 lacs The term loan bears floating interest at the
base rate plus 2 25% pa As per sanction, the term loan is repayable in
72 months with monthly installments starting from October 25, 2014 The
outstanding amount as on March 31, 2015 is repayable in 66 monthly
installments starting from April 1, 2015
k) From consortium member banks of Rs 8,545 45 lacs (previous year Rs
10,685 19 lacs) are secured by first mortgage created by way of deposit
of title deeds in respect of the immovable properties at Khatima, both
present & future and first charge by way of hypothecation of Company's
all movable assets (save and except inventories, book debts, vehicles
acquired through vehicles loans and machinery acquired through term
loan taken from banks / body corporate on exclusive charge basis),
ranking pari passu inter- se and further secured by irrevocable
guarantee of Wilemina Finance Corp (Holding company) The term loans
bear floating interest rate ranging from base rate plus 2 75% pa These
term loans are repayable in 28 quarterly installments starting from
April 1, 2012 The outstanding amount as on March 31, 2015 is repayable
in 16 quarterly installments starting from April 1, 2015
Term Loans from banks are further secured by second charge by way of
hypothecation of stocks of raw material, finished goods, semi finished
goods, stores and spares, book debts and other receivables (both
present and future)
II. Vehicle loans are secured by hypothecation of specific vehicles
acquired out of proceeds of the Loans Vehicle loans bears interest
rates ranging from 8 25% to 13 50% pa These loans are repayable in
monthly installments till March 2019
III. Buyers' credit for capital goods
a) Buyers' Credit amounting to Rs NIL (previous year Rs 1,205 18 lacs)
are against LOUs / LOCs issued by State bank of Bikaner & Jaipur (SBBJ)
LOUs / LOCs facility from SBBJ is secured by first exclusive charge by
way of hypothecation of Oil Fired Heater, Reclaim Co- extruder and
In-Line Coater, and further secured by irrevocable guarantee of
Wilemina Finance Corp (Holding company)
b) Buyers' Credit amounting to Rs 534 22 lacs (previous year Rs 237 12
lacs) are against LOUs / LOCs issued by Bank of India/ (Canara Bank to
be taken over by Bank of India) LOUs / LOCs facility from BOI is
secured by first exclusive charge by way of hypothecation of Engineering
Plastics Extruder, Twin Screw Extruder and UPS and further secured by
irrevocable guarantee of Wilemina Finance Corp (Holding company)
Company has availed LOUs / LOCs facilities from the banks to avail the
Buyers' Credit of Rs 534 22 lacs (previous year - Rs 1,442 30 Lacs)
These LOU / LOC facilities are sanctioned to the company as a sub limit
of term loans upto a period of 3 years till August 2017
LOCs / LOUs facilities are sanctioned to the company as a sub limit of
term loan, bears interest rate ranging from 0 81% to 1 18% Liability
towards Buyers' Credit under LOCs / LOUs will be liquidated out of the
proceeds of term loans that are repayable in 16 quarterly installments
Mar 31, 2014
A) Basis of preparation
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards notif ed
under the Companies (Accounting Standards) Rules, 2006,(as amended) and
the relevant provisions of the Companies Act,1956 read with General
Circular 8/2014 dated April 4, 2014 issued by the Ministry of Corporate
Af airs. The financial statements have been prepared under the
historical cost convention on an accrual basis except in case of assets
for which revaluation is carried out. The accounting policies adopted
in the preparation of financial statements are consistent with those of
previous year.
b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that af ect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
c) Tangible fixed Assets
Tangible fixed assets are stated at cost, less accumulated depreciation
and impairment losses, if any, except Land, Building and Plant &
Machinery, which had been revalued on December 31, 1992 by a Government
registered valuer on the basis of the then replacement value. The cost
comprises purchase price, borrowing costs if capitalization criteria
are met and directly attributable cost of bringing the asset to its
working condition for the intended use. Any trade discounts and rebates
are deducted in arriving at the purchase price.
Expenditure directly relating to construction activity is capitalized
(net of income, if any). Indirect expenditure specifically attributable
to construction of a project or to the acquisition of the fixed assets
or bringing it to working condition is capitalised as part of
Construction project or as a part of Fixed assets. Other indirect
expenditure incurred during the construction period which is not
related to construction activity nor is incidental thereto is charged
to Statement of Profit and loss.
Gains or losses arising from derecognition of fixed assets are measured
as the dif erence between the net disposal proceeds and the carrying
amount of the asset and are recognized in the Statement of Profit and
loss when the asset is derecognized.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
changed to the Statement of Profit and loss for the period during which
such expenses are incurred.
d) Depreciation
i. Depreciation on fixed assets (other than lease hold improvements) is
provided using Straight Line Method as per rates prescribed under
Schedule XIV of the Companies Act, 1956. The management of the Company
is of the view that this depreciation rate fairly represents the useful
life of the assets except for the following assets where a higher rate
is used:
Rates (SLM) Schedule XIV Rates (SLM)
Batteries under UPS project (Plant and Machinery) 19.60% 5.28%
ii. Fixed assets costing below Rs.5,000 are depreciated at the rate of
100%.
iii. Depreciation on the revalued portion of fixed assets is adjusted
against the revaluation reserve.
iv. Depreciation on the amount of additions made to fixed assets due to
up gradations / improvements is provided over the remaining useful life
of the asset to which it relates.
v. Depreciation on fixed assets added/disposed of during the year is
provided on pro-rata basis.
e) Intangibles
Software costs relating to acquisition of initial software license fee
and installation costs are capitalized in the year of purchase.
Softwares are amortized on a straight-line basis over its useful life,
which is considered to be of a period of three years
f) Impairment of assets
i) The carrying amounts of 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 estimated future cash f
ows are discounted to their present value a pre-tax discount rate that
reffects current market assessment of the time value of money and risks
specific to asset.
ii) After impairment, depreciation is provided on the revised carrying
amount of the asset over the remaining useful life.
g) Leases
Where the Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits oflownership of the leased item are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and loss on a straight- line basis over the
lease term.
h) Investment
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of such investments.
i) Inventories
Inventories are valued as follows:
Raw materials, Components and stores & spares
Lower of cost and net realizable value. However, materials and other
items held for use in the production of inventories are not written
down below cost if the f nished products, in which they will be
incorporated, are expected to be sold at or above cost. Cost of raw
materials, components and stores & spares is determined on a moving
weighted average basis.
Work-in-progress and f nished goods
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost of f nished goods includes excise duty. Cost
is determined on moving weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
j) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of Goods
Revenue from sale of goods is recognized when all the significant risks
and rewards of ownership of the goods have been passed to the buyer.
The company collects sales taxes and value added taxes (VAT) on behalf
of the government and, therefore, these are not economic benefits f
owing to the company. Hence, they are excluded from revenue. Excise
duty deducted from revenue (gross) is the amount that is included in
the revenue (gross) and not the entire amount of liability arising
during the year.
Export benefit
Export benefits constituting import duty benefits under Duty Exemption
Pass Book (DEPB), Duty Draw back and advance license scheme are
accounted for on accrual basis when there is reasonable assurance that
the company will comply with the conditions attached to them and the
export benefits will be received. Export benefits under Duty Exemption
Pass Book (DEPB) & Duty Draw back are considered as other operating
income.
Interest
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Dividends
Dividend income is recognized when the company''s right to receive
dividend is established by the reporting date.
Policy for Insurance Claims
Claims receivable on account of insurance are accounted for to the
extent the Company is reasonably certain of their ultimate collection.
k) Foreign currency transactions
Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non- monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange Diff erences
i) Exchange dif erences arising on long-term foreign currency monetary
items related to acquisition of a fixed asset are capitalized and
depreciated over the remaining useful life of the asset. For this
purpose, the Company treats a foreign currency monetary item as
"long-term foreign currency monetary item", if it has a term of 12
months or more at the date of its origination. In accordance with MCA
circular dated August 9, 2012, exchange dif erences for this purpose,
are total dif erences arising on long-term foreign currency monetary
items for the year.
ii) All other exchange dif erences are recognized as income or as
expenses in the period in which they arise.
Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange dif erences on such contracts are recognised in the
Statement of Profit and loss in the year in which the exchange rates
change. Any Profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or as expense for the
year.
l) Retirement and other employee benefits
i. Retirement benefits in the form of Superannuation Fund (being funded
to LIC), Provident Fund (where contributed to the Regional Provident
Fund Commissioner) and employee state insurance are defined
contribution schemes. The Company has no obligation, other than the
contribution payable to the respective authorities. The Company
recognizes contribution payable to respective authorities as an
expenditure, when an employee renders the related service. If the
contribution payable to the scheme for service received before the
balance sheet date exceeds the contribution already paid, the Deflicit
payable to the scheme is recognized as a liability after deducting the
contribution already paid. If the contribution already paid exceeds the
contribution due for services received before the balance sheet date,
then excess is recognized as an asset to the extent that the pre
payment will lead to, for example, a reduction in future payment or a
cash refund.
ii. Gratuity liability is defined benefit obligation and is provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year.
iii. Retirement benefit in the form of provident Fund (Where
administered by trust created and managed by Company) is a defined
benefit obligation of the company and the contributions are charged to
Statement of Profit & loss of the year when the contribution to the
respective funds are due. Shortfall in the funds, if any, is adequately
provided for by the company based on the actuarial valuation on
projected unit credit method carried out at the end of each financial
year.
iv. Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per projected
unit credit method. The Company presents the leave as a current
liability in the balance sheet, to the extent it does not have an
unconditional right to defer its settlement for 12 months after the
reporting date.
v. Actuarial gains/losses are immediately taken to Statement of Profit
and loss and are not deferred.
m) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961. Deferred income taxes ref
-lects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing dif
erences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that suf cient future taxable income will be available
against which such deferred tax assets can be realised. If the company
has unabsorbed depreciation and carry forward of tax losses, all
deferred tax assets are recognised only if there is virtual certainty
supported by convincing evidence that such deferred tax assets can be
realised against future taxable Profits.
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets. It recognises unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that suf cient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that suf cient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that suf
cient future taxable income will be available.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which the Minimum
Alternative tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in guidance note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of a credit to the Statement of Profit and loss
and shown as MAT Credit Entitlement. The Company reviews the same at
each balance sheet date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the effect that Company will pay normal Income Tax during the specif
ed period.
n) Borrowing Costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
o) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event 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 are not discounted to
its present value and are determined based on best management 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
management estimates. Provision for expenditure relating to voluntary
retirement is made when the employee accepts the of er of early
retirement.
p) Segment Reporting Policies
Identification of segments:
Primary Segment
Business Segment
The Company''s operating businesses are organized and managed separately
according to the nature of products, with each segment representing a
strategic business unit that of ers different products and serves dif
erent markets. The identif ed segments are Manufacturing & Sale of
Polyester film and Engineering plastics.
Secondary Segment
Geographical Segment
The analysis of geographical segments is based on the geographical
location of the customers.
The geographical segments considered for disclosure are as follows:
Sales within India include sales to customers located within India.
Sales outside India include sales to customers located outside India.
Inter Segment Transfers:
Inter Segment transfers of goods, as marketable products produced by
separate segments of the Company for captive consumption, are not
accounted for in the books of account of the Company. For the purpose
of segment disclosures, however, inter segment transfers have been
taken at cost.
Allocation of common costs:
Common allocable costs are allocated to each segment in proportion to
the turnover of the segment, except where a more logical allocation is
possible.
Unallocated items:
Corporate income and expense are considered as a part of un-allocable
income & expense, which are not identif able to any business segment.
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole.
q) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
r) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liability but discloses its existence in the f
nancial statements.
s) Earnings Per Share
Basic earnings per share are calculated by dividing the net Profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the period. Partly paid
equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average numbers of equity shares outstanding during the period are
adjusted for events of bonus issue; bonus element in a rights issue to
existing shareholders; share split; and reverse share split
(consolidation of shares).
For the purpose of calculating diluted earnings per share, the net prof
t or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
t) Measurement of EBITDA
As permitted by the guidance note on revised schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest expense, tax, depreciation and amortization (EBITDA) as a
separate line item on the face of the statement of Profit & loss. The
company measures EBITDA on the basis of Profit / (loss) from continuing
operations. In its measurement, the company includes interest income
but does not include depreciation and amortization expenses, finance
cost and tax expenses.
a) Terms / rights attached to equity shares
The Company has only one class of equity share having a par value of
Rs. 5 per share. Each equity shareholder is entitled for one vote per
share. The company declares and pays dividends in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
During the year ended March 31, 2014, the amount of dividend recognized
as distribution to equity shareholders was Rs. 0.50 per share (previous
year : Rs. nil).
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. This distribution will
be in proportion to the number of equity shares held by the
shareholder.
I. Term loans
a) From Bank of Baroda of Rs. 1,364.00 lacs (previous year Rs. 1,712.00
lacs) for corporate office project is secured by mortgage created by way
of deposit of title deeds in respect of the immoveable property (land
and building) at Gurgaon and further secured by irrevocable guarantee
of Wilemina Finance Corp. (Holding company). The term loan bears f
oating interest at the rate base rate plus 4.25% pa. As per sanction,
the term loans are repayable in 71 monthly installments starting from
April 1, 2012. The outstanding amount as on March 31, 2014 is repayable
in 47 monthly installments starting from April 1, 2014.
b) From State Bank of Bikaner and Jaipur of Rs. 111.82 lacs (previous
year Rs. 160.82 lacs) is secured by first exclusive charge by way of
hypothecation of Oil Fired Heater, Reclaim Co-extruder and In-Line
Coater and further secured by irrevocable guarantee of Wilemina Finance
Corp. (Holding company). The term loan bears floating interest at the
base rate plus 3.25% pa. The Term Loans are repayable in 20 quarterly
installments starting from December 2011. The outstanding amount as on
March 31, 2014 is repayable in 10 quarterly installments starting from
April 1, 2014.
c) From Union Bank of India of Rs. 793.64 lacs (previous year Rs. NIL)
for Metalizer Project is secured by first exclusive charge by way of
hypothecation of Metalizing Unit and further secured by irrevocable
guarantee of Wilemina Finance Corp. (Holding company). The term loan
bears floating interest at the base rate plus 2.75% pa. The Term Loans
are repayable in 20 quarterly installments starting from September
2013. The outstanding amount as on March 31, 2014 is repayable in 17
quarterly installments starting from April 1, 2014.
d) From Union Bank of India of Rs. 709.56 lacs (previous year Rs. NIL)
for Bio mass fulled Husk Fired thermic Fluid Heater is secured by first
exclusive charge by way of hypothecation of Bio Mass fulled Husk Fired
Thermic Fluid Heater and further secured by irrevocable guarantee of
Wilemina Finance Corp. (Holding company). The term loan bears floating
interest at the base rate plus 2.75% pa. The Term Loans are repayable
in 20 quarterly installments starting from September 2014. The
outstanding amount as on March 31, 2014 is repayable in 20 quarterly
installments starting from September 30, 2014.
e) From Bank of India of Rs. 246.44 lacs (previous year Rs. NIL) for
Engineering Plastics Extruder, Twin Screw extruder and UPS is secured
by first exclusive charge by way of hypothecation of Engineering
Plastics Extruder, Twin Screw extruder and UPS and further secured by
irrevocable guarantee of Wilemina Finance Corp. (Holding company). The
term loan bears floating interest at the base rate plus 3.00% pa. The
Term Loans are repayable in 20 quarterly installments starting from
June 2014. The outstanding amount as on March 31, 2014 is repayable in
20 quarterly installments starting from June 30, 2014.
f) From consortium member banks of Rs. 10,685.19 lacs (previous year
Rs. 2,253.03 lacs) are secured by first mortgage created by way of
deposit of title deeds in respect of the immovable properties at
Khatima, both present & future and first charge by way of hypothecation
of Company''s all movable assets (save and except inventories, book
debts, vehicles acquired through vehicles loans and machinery acquired
through term loan taken from banks / body corporate on exclusive charge
basis), ranking pari passu inter-se and further secured by irrevocable
guarantee of Wilemina Finance Corp. (Holding company). The term loans
bear floating interest rate ranging from Base Rate plus 2.75% pa. These
term loans are repayable in 28 quarterly installments starting from
April 1, 2012. The outstanding amount as on March 31, 2014 is repayable
in 20 quarterly installments starting from April 1, 2014.
Term Loans from banks are further secured by second charge by way of
hypothecation of stocks of raw material, f nished goods, semi f nished
goods, stores and spares, book debts and other receivables (both
present and future).
II. Vehicle loans are secured by hypothecation of specific vehicles
acquired out of proceeds of the Loans. Vehicle loans bears interest
rates ranging from 9.65 to 11.00% pa. These loans are repayable in
monthly installments till July 2017.
III. Buyers'' credit for capital goods
a) Buyers'' Credit amounting to Rs. 1,205.18 lacs (previous year Rs.
1,028.76 lacs) are against LOUs / LOCs issued by State bank of Bikaner
& Jaipur (SBBJ). LOUs / LOCs facility from SBBJ is secured by first
exclusive charge by way of hypothecation of Oil Fired Heater, Reclaim
Co-extruder and In-Line Coater, and further secured by irrevocable
guarantee of Wilemina Finance Corp. (Holding company).
b) Buyers'' Credit amounting to Rs. 237.12 lacs (previous year Rs. NIL)
are against LOUs / LOCs issued by Bank of India/ (Canara Bank to be
taken over by Bank of India). LOUs / LOCs facility from BOI is secured
by first exclusive charge by way of hypothecation of Engineering
Plastics Extruder, Twin Screw Extruder and UPS and further secured by
irrevocable guarantee of Wilemina Finance Corp. (Holding company).
Company has availed LOUs / LOCs facilities from the banks to avail the
Buyers'' Credit of Rs. 1442.30 lacs (previous year - Rs. 14,203.46
Lacs). These LOU / LOC facilities are sanctioned to the company as a
sub limit of term loans upto a period of 3 years till December 2015.
LOCs / LOUs facilities are sanctioned to the company as a sub limit of
term loan, bears interest rate ranging from 0.80% to 1.27%. Liability
towards Buyers'' Credit under LOCs / LOUs will be liquidated out of the
proceeds of term loans that are repayable in 20 quarterly installments.
Working capital loan, bills discounting and acceptances: These loans
are secured by first charge by way of hypothecation of stocks of raw
materials, f nished goods, semi f nished goods, stores and spares, book
debts and other receivables (both present and future) and further
secured by irrevocable guarantees of Wilemina Finance Corp. (Holding
company). Working Capital and Bill discounting facilities are further
secured by way of second charge in respect of immovable properties and
movable fixed assets.
The working capital loans from banks bear floating interest rate at
Base Rate plus ranging from 2.00% to 2.80% pa. The bill discounting
from banks bear floating interest rate ranging from 10.70% to 11.75%
pa.
Buyers'' credit for raw material are against LOUs / LOCs issued by
consortium of banks. The LOUs / LOCs facilities is sanctioned to the
Company as a sub limit of Non Fund (LCs) based facility. The facility
is secured by first charge by way of hypothecation of stocks of raw
materials, f nished goods, semi f nished goods, stores and spares, book
debts and other receivables (both present and future) and further
secured by irrevocable guarantees of Wilemina Finance Corp. (Holding
company). Buyers'' credit for raw material taken in USD and Euro bears
interest rate ranging from 0.73% to 1.17%.
Mar 31, 2013
A) Basis of preparation
The fnancial statements of the company have been prepared in accordance
with generally accepted accounting principles in India (Indian GAAP).
The company has prepared these fnancial statements to comply in all
material respects with the accounting standards notifed under the
Companies (Accounting Standards) Rules, 2006,(as amended) and the
relevant provisions of the Companies Act,1956. The fnancial statements
have been prepared under the historical cost convention on an accrual
basis except in case of assets for which revaluation is carried out.
The accounting policies adopted in the preparation of fnancial
statements are consistent with those of previous year, except for the
change in accounting policy explained below.
b) Change in accounting policy
Pursuant to clarifcation issued by Ministry of Corporate Afairs,
Government of India dated August 9, 2012, the Company has changed the
accounting policy in respect of foreign exchange fuctuation as
prescribed under para 4(e) of Accounting Standard 16 "Borrowing Costs".
Accordingly, foreign exchange fuctuations amounting to Rs. 614.88 lacs
has been capitalised and added to the cost of fxed assets. Hitherto
followed, loss of the Company would have been higher by Rs. 587.77 lacs
(net of tax of Rs. Nil) and net block of fxed assets would have been
lower by Rs. 587.36 lacs (net of depreciation of Rs. 27.52 lacs).
c) Use of estimates
The preparation of fnancial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that afect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management''s best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
d) Tangible fxed Assets
Tangible fxed assets are stated at cost, less accumulated depreciation
and impairment losses, if any, except Land, Building and Plant &
Machinery, which had been revalued on 31.10.1992 by a Government
registered valuer on the basis of the then replacement value. The cost
comprises purchase price, borrowing costs if capitalization criteria
are met and directly attributable cost of bringing the asset to its
working condition for the intended use. Any trade discounts and rebates
are deducted in arriving at the purchase price.
Expenditure directly relating to construction activity is capitalized
(net of income, if any). Indirect expenditure specifcally attributable
to construction of a project or to the acquisition of the fxed assets
or bringing it to working condition is capitalised as part of
Construction project or as a part of Fixed assets. Other indirect
expenditure incurred during the construction period which is not
related to construction activity nor is incidental thereto is charged
to Statement of proft and loss.
Gains or losses arising from derecognition of fxed assets are measured
as the diference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the Statement of proft and
loss when the asset is derecognized.
Subsequent expenditure related to an item of fxed asset is added to its
book value only if it increases the future benefts from the existing
asset beyond its previously assessed standard of performance. All other
expenses on existing fxed assets, including day-to-day repair and
maintenance expenditure and cost of replacing parts, are charged to the
Statement of proft and loss for the period during which such expenses
are incurred.
e) Depreciation
i. Depreciation on fxed assets (other than lease hold improvements) is
provided using Straight Line Method as per rates prescribed under
Schedule XIV of the Companies Act, 1956. The management of the Company
is of the view that this depreciation rate fairly represents the useful
life of the assets except for the following assets where a higher rate
is used:
ii. Fixed assets costing below Rs.5000 are depreciated at the rate of
100%.
iii. Depreciation on the revalued portion of fxed assets is adjusted
against the revaluation reserve.
iv. Depreciation on the amount of additions made to fxed assets due to
up gradations / improvements is provided over the remaining useful life
of the asset to which it relates.
v. Depreciation on fxed assets added/disposed of during the year is
provided on pro-rata basis.
vi. Lease hold improvements are amortised over a primary period of
lease i.e 9 years or useful life, whichever is lower.
f) Intangibles
Software costs relating to acquisition of initial software license fee
and installation costs are capitalized in the year of purchase.
Software''s are amortized on a straight-line basis over its useful life,
which is considered to be of a period of three years.
g) Impairment of assets
i) The carrying amounts of 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 estimated future cash fows
are discounted to their present value a pre-tax discount rate that
refects current market assessment of the time value of money and risks
specifc to asset.
ii) After impairment, depreciation is provided on the revised carrying
amount of the asset over the remaining useful life.
h) Leases
Where the Company is the lessee
Leases where the lessor efectively retains substantially all the risks
and benefts of ownership of the leased item are classifed as operating
leases. Operating lease payments are recognized as an expense in the
Statement of proft and loss on a straight- line basis over the lease
term.
i) Investment
Investments that are readily realizable and intended to be held for not
more than a year are classifed as current investments. All other
investments are classifed as long-term investments. Current investments
are carried at lower of cost and fair value determined on an individual
investment basis. Long-term investments are carried at cost. However,
provision for diminution in value is made to recognize a decline other
than temporary in the value of such investments.
j) Inventories
Inventories are valued as follows:
Raw materials, Components and stores & spares
Lower of cost and net realizable value. However, materials and other
items held for use in the production of inventories are not written
down below cost if the fnished products, in which they will be
incorporated, are expected to be sold at or above cost. Cost of raw
materials, components and stores & spares is determined on a moving
weighted average basis.
Work-in-progress and fnished goods
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost of fnished goods includes excise duty. Cost is
determined on moving weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
k) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefts will fow to the Company and the revenue can be
reliably measured.
Sale of Goods
Revenue from sale of goods is recognized when all the signifcant risks
and rewards of ownership of the goods have been passed to the buyer.
The company collects sales taxes and value added taxes (VAT) on behalf
of the government and, therefore, these are not economic benefts fowing
to the company. Hence, they are excluded from revenue. Excise duty
deducted from revenue (gross) is the amount that is included in the
revenue (gross) and not the entire amount of liability arising during
the year.
Export Beneft
Export Benefts constituting import duty benefts under Duty Exemption
Pass Book (DEPB), Duty Draw back and advance license scheme are
accounted for on accrual basis. Export benefts under Duty Exemption
Pass Book (DEPB) & Duty Draw back are considered as other operating
income.
Interest
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividends
Dividend income is recognized when the company''s right to receive
dividend is established by the reporting date.
Policy for Insurance Claims
Claims receivable on account of insurance are accounted for to the
extent the Company is reasonably certain of their ultimate collection.
l) Foreign currency transactions
Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non- monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange Diferences
i) Exchange diferences arising on long-term foreign currency monetary
items related to acquisition of a fxed asset are capitalized and
depreciated over the remaining useful life of the asset. For this
purpose, the Company treats a foreign currency monetary item as
"long-term foreign currency monetary item", if it has a term of 12
months or more at the date of its origination. In accordance with MCA
circular dated 09 August 2012, exchange diferences for this purpose,
are total diferences arising on long-term foreign currency monetary
items for the year.
ii) All other exchange diferences are recognized as income or as
expenses in the period in which they arise.
Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange diferences on such contracts are recognised in the
Statement of proft and loss in the year in which the exchange rates
change. Any proft or loss arising on cancellation or renewal of forward
exchange contract is recognised as income or as expense for the year.
m) Retirement and other employee benefts
i. Retirement benefts in the form of Superannuation Fund (being funded
to LIC), Provident Fund (where contributed to the Regional Provident
Fund Commissioner) and employee state insurance are defned contribution
schemes. The Company has no obligation, other than the contribution
payable to the respective authorities. The Company recognizes
contribution payable to respective authorities as an expenditure, when
an employee renders the related service. If the contribution payable to
the scheme for service received before the balance sheet date exceeds
the contribution already paid, the defcit payable to the scheme is
recognized as a liability after deducting the contribution already
paid. If the contribution already paid exceeds the contribution due for
services received before the balance sheet date, then excess is
recognized as an asset to the extent that the pre payment will lead to,
for example, a reduction in future payment or a cash refund.
ii. Gratuity liability is defned beneft obligation and is provided for
on the basis of an actuarial valuation on projected unit credit method
made at the end of each fnancial year.
iii. Retirement beneft in the form of provident Fund (Where
administered by trust created and managed by Company) is a defned
beneft obligation of the company and the contributions are charged to
Statement of proft & loss of the year when the contribution to the
respective funds are due. Shortfall in the funds, if any, is adequately
provided for by the company based on the actuarial valuation on
projected unit credit method carried out at the end of each fnancial
year.
iv. Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per projected
unit credit method. The Company presents the leave as a current
liability in the balance sheet, to the extent it does not have an
unconditional right to defer its settlement for 12 months after the
reporting date.
v. Actuarial gains/losses are immediately taken to Statement of proft
and loss and are not deferred.
n) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961. Deferred income taxes refects
the impact of current year timing diferences between taxable income and
accounting income for the year and reversal of timing diferences of
earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufcient future taxable income will be available against
which such deferred tax assets can be realised. If the company has
unabsorbed depreciation and carry forward of tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that such deferred tax assets can be realised
against future taxable profts.
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets. It recognises unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufcient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufcient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufcient future taxable income will be available.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specifed period. In the year in which the Minimum
Alternative tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in guidance note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of a credit to the Statement of proft and loss
and shown as MAT Credit Entitlement. The Company reviews the same at
each balance sheet date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the efect that Company will pay normal Income Tax during the
specifed period.
o) Borrowing Costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings.
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
p) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outfow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
its present value and are determined based on best management estimate
required to settle the obligation at the balance sheet date. These are
reviewed at each balance sheet date and adjusted to refect the current
management estimates. Provision for expenditure relating to voluntary
retirement is made when the employee accepts the ofer of early
retirement.
q) Segment Reporting Policies
Identifcation of segments:
Primary Segment
Business Segment
The Company''s operating businesses are organized and managed separately
according to the nature of products, with each segment representing a
strategic business unit that ofers diferent products and serves
diferent markets. The identifed segments are Manufacturing & Sale of
Polyester flm and Engineering plastics.
Secondary Segment
Geographical Segment
The analysis of geographical segments is based on the geographical
location of the customers.
The geographical segments considered for disclosure are as follows:
Sales within India include sales to customers located within India.
Sales outside India include sales to customers located outside India.
Inter Segment Transfers:
Inter Segment transfers of goods, as marketable products produced by
separate segments of the Company for captive consumption, are not
accounted for in the books of account of the Company. For the purpose
of segment disclosures, however, inter segment transfers have been
taken at cost.
Allocation of common costs:
Common allocable costs are allocated to each segment in proportion to
the turnover of the segment, except where a more logical allocation is
possible.
Unallocated items:
Corporate income and expense are considered as a part of un-allocable
income & expense, which are not identifable to any business segment.
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the fnancial
statements of the company as a whole.
r) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
s) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confrmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outfow of resources will be required
to settle the obligation. A contingent liability also arises in
extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liability but discloses its existence in the
fnancial statements.
t) Earnings Per Share
Basic earnings per share are calculated by dividing the net proft or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the period. Partly paid
equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average numbers of equity shares outstanding during the period are
adjusted for events of bonus issue; bonus element in a rights issue to
existing shareholders; share split; and reverse share split
(consolidation of shares).
For the purpose of calculating diluted earnings per share, the net
proft or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the efects of all dilutive potential equity shares.
u) Measurement of EBITDA
As permitted by the guidance note on revised schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest expense, tax, depreciation and amortization (EBITDA) as a
separate line item on the face of the statement of proft & loss. The
company measures EBITDA on the basis of proft / (loss) from continuing
operations. In its measurement, the company includes interest income
but does not include depreciation and amortization expenses, fnance
cost and tax expenses.
Mar 31, 2012
A) Change in accounting policy
Presentation and disclosure of financial statements
During the year ended March 31, 2012, the revised Schedule VI notified
under the Companies Act 1956, has become applicable to the Company, for
preparation and presentation of its financial statements. Except
accounting for dividend on investments in subsidiary Companies (see
below), the adoption of revised Schedule VI does not impact recognition
and measurement principles followed for preparation of financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
re-classified the previous year figures in accordance with the
requirements applicable in the current year.
Dividend on investment in subsidiary companies
Till the year ended March 31, 2011, the company, in accordance with the
pre-revised Schedule VI requirement, was recognizing dividend declared
by subsidiary companies after the reporting date in the current year's
statement of profit and loss if such dividend pertained to the period
ending on or before the reporting date. The revised Schedule VI,
applicable for financial years commencing on or after April 1, 2011,
does not contain this requirement. Hence, to comply with AS -9 Revenue
Recognition, the company has changed its accounting policy for
recognition of dividend income from subsidiary companies. In accordance
with the revised policy, the company recognizes dividend as income only
when the right to receive the same is established by the reporting
date. Dividend received during the year Rs. Nil (previous year Rs.
Nil).
b) Basis of preparation
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006,(as amended) and
the relevant provisions of the Companies Act.1956. The financial
statements have been prepared under the historical cost convention on
an accrual basis except in case of assets for which revaluation is
carried out. The accounting policies adopted in the preparation of
financial statements are consistent with those of previous year, except
for the change in accounting policy explained above.
c) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires the management to make judgments, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of
the reporting period. Although these estimates are based on the
management's best knowledge of current events and actions, uncertainty
about these assumptions and estimates could result in the outcomes
requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
d) Tangible fixed Assets
Tangible fixed assets are stated at cost, less accumulated depreciation
and impairment losses, if any, except Land, Building and Plant &
Machinery, which had been revalued on 31.10.1992 by a Government
registered valuer on the basis of the then replacement value. The cost
comprises purchase price, borrowing costs if capitalization criteria
are met and directly attributable cost of bringing the asset to its
working condition for the intended use. Any trade discounts and rebates
are deducted in arriving at the purchase price.
Expenditure directly relating to construction activity is capitalized
(net of income, if any). Indirect expenditure specifically attributable
to construction of a project or to the acquisition of the fixed assets
or bringing it to working condition is capitalised as part of
Construction project or as a part of Fixed assets. Other indirect
expenditure incurred during the construction period which is not
related to construction activity nor is incidental thereto is charged
to Profit & Loss account.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
e) Depreciation
i. Depreciation on fixed assets (other than lease hold improvements)
is provided using Straight Line Method as per rates prescribed under
Schedule XIV of the Companies Act, 1956. The management of the Company
is of the view that this depreciation rate fairly represents the useful
life of the assets except for the following assets where a higher rate
is used:
ii. Fixed assets costing below Rs.5000 are depreciated at the rate of
100%.
iii. Depreciation on the revalued portion of fixed assets is adjusted
against the revaluation reserve.
iv. Depreciation on the amount of additions made to fixed assets due
to upgradations / improvements is provided over the remaining useful
life of the asset to which it relates.
v. Depreciation on fixed assets added/disposed off during the year is
provided on pro-rata basis.
vi. Leasehold improvements are amortised over a primary period of
lease or useful life, whichever is lower.
f) Intangibles
Software costs relating to acquisition of initial software license fee
and installation costs are capitalized in the year of purchase.
Software's are amortized on a straight-line basis over its useful life,
which is considered to be of a period of three years.
g) Impairment of assets
i) The carrying amounts of 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 estimated future cash
flows are discounted to their present value a pre-tax discount rate
that reflects current market assessment of the time value of money and
risks specific to asset.
ii) After impairment, depreciation is provided on the revised carrying
amount of the asset over the remaining useful life.
h) Leases
Where the Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit & Loss Account on a straight-line basis over the lease
term.
i) Investment
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of such investments.
j) Inventories
Inventories are valued as follows:
Raw materials, Components and stores & spares
Lower of cost and net realizable value. However, materials and other
items held for use in the production of inventories are not written
down below cost if the finished products, in which they will be
incorporated, are expected to be sold at or above cost. Cost of raw
materials, components and stores & spares is determined on a moving
weighted average basis.
Work-in-progress and finished goods
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity. Cost of finished goods includes excise duty. Cost
is determined on moving weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
k) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of Goods
Revenue from sale of goods is recognized when all the significant risks
and rewards of ownership of the goods have been passed to the buyer.
The company collects sales taxes and value added taxes (VAT) on behalf
of the government and, therefore, these are not economic benefits
flowing to the company. Hence, they are excluded from revenue. Excise
duty deducted from revenue (gross) is the amount that is included in
the revenue (gross) and not the entire amount of liability arising
during the year.
Export Benefit
Export Benefits constituting import duty benefits under Duty Exemption
Pass Book (DEPB), Duty Draw back and advance license scheme are
accounted for on accrual basis. Export benefits under Duty Exemption
Pass Book (DEPB) & Duty Draw back are considered as other operating
income.
Interest
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable. Dividends
Dividend income is recognized when the company's right to receive
dividend is established by the reporting date.
Policy for Insurance Claims
Claims receivable on account of insurance are accounted for to the
extent the Company is reasonably certain of their ultimate collection.
l) Foreign currency transactions
Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange Differences
Exchange differences arising on the settlement of monetary items not
covered above, or on reporting such monetary items of company at rates
different from those at which they were initially recorded during the
year, or reported in previous financial statements, are recognized as
other income or as expenses in the year in which they arise.
Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or as expense for the
year.
m) Retirement and other employee benefits
i. Retirement benefits in the form of Superannuation Fund (being
funded to LIC) are funded defined contribution schemes and the
contributions are charged to the Profit and Loss Account of the year
when the contributions to the respective funds are due. There are no
other obligations other than the contribution payable.
ii. Gratuity liability is defined benefit obligation and is provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year.
iii. Retirement benefits in the form of Provident Fund (where
contributed to the Regional Provident Fund Commissioner) and employee
state insurance are defined contribution scheme and the contributions
are charged to the statement of profit and loss of the year when the
contributions to the fund are due. There are no other obligations other
than the contribution payable to the respective authorities.
Retirement benefit in the form of provident Fund (Where administered by
trust created and managed by Company) is a defined benefit obligation
of the company and the contributions are charged to statement of profit
& loss of the year when the contribution to the respective funds are
due. Shortfall in the funds, if any, is adequately provided for by the
company.
iv. Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per projected
unit credit method.
v. Actuarial gains/losses are immediately taken to Profit and Loss
account and are not deferred. n) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. If the company
has unabsorbed depreciation and carry forward of tax losses, all
deferred tax assets are recognised only if there is virtual certainty
supported by convincing evidence that such deferred tax assets can be
realised against future taxable profits.
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets. It recognises unrecognized deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which the Minimum
Alternative tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in guidance note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of a credit to the profit and loss account and
shown as MAT Credit Entitlement. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
o) Borrowing Costs
Borrowing cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as an adjustment to the interest cost.
Borrowing costs directly attributable to the acquisition,construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs
are expensed in the period they occur.
p) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event 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 are not discounted to
its present value and are determined based on best management 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
management estimates. Provision for expenditure relating to voluntary
retirement is made when the employee accepts the offer of early
retirement.
q) Segment Reporting Policies Identification of segments:
Primary Segment
Business Segment
The Company's operating businesses are organized and managed separately
according to the nature of products, with each segment representing a
strategic business unit that offers different products and serves
different markets. The identified segments are Manufacturing & Sale of
Polyester film and Engineering plastics.
Secondary Segment
Geographical Segment
The analysis of geographical segments is based on the geographical
location of the customers.
The geographical segments considered for disclosure are as follows:
- Sales within India include sales to customers located within India.
- Sales outside India include sales to customers located outside
India.
Inter Segment Transfers:
Inter Segment transfers of goods, as marketable products produced by
separate segments of the Company for captive consumption, are not
accounted for in the books of account of the Company. For the purpose
of segment disclosures, however, inter segment transfers have been
taken at cost.
Allocation of common costs:
Common allocable costs are allocated to each segment in proportion to
the turnover of the segment, except where a more logical allocation is
possible.
Unallocated items:
Corporate income and expense are considered as a part of un-allocable
income & expense, which are not identifiable to any business segment.
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole.
r) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
s) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liability but discloses its existence in the
financial statements.
t) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the period. Partly paid
equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average numbers of equity shares outstanding during the period are
adjusted for events of bonus issue; bonus element in a rights issue to
existing shareholders; share split; and reverse share split
(consolidation of shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
u) Measurement of EBITDA
As permitted by the guidance note on revised schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit & loss. The company
measures EBITDA on the basis of profit / (loss) from continuing
operations. In its measurement, the company does not include
depreciation and amortization expenses, finance cost and tax expenses.
Mar 31, 2011
A) Basis of preparation
The financial statements have been prepared to comply in all material
respects with the Accounting Standards notified by Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis
except in case of assets for which revaluation is carried out. The
accounting policies have been consistently applied by the Company and
are consistent with those used in the previous year.
b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon managements best
knowledge of current events and actions, actual results could differ
from these estimates.
c) Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses, if any, except Land, Building and Plant & Machinery,
which had been revalued on 31.10.1992 by a Government registered valuer
on the basis of the then replacement value. Cost comprises the purchase
price and any directly attributable cost of bringing the asset to its
working condition for its intended use.
Borrowing costs relating to acquisition of fixed assets which takes
substantial period of time to get ready for its intended use are also
included to the extent they relate to the period till such assets are
ready to be put to use.
d) Depreciation
ii. Fixed assets costing below Rs.5000 are depreciated at the rate of
100%.
iii. Depreciation on the revalued portion of fixed assets is adjusted
against the Revaluation Reserve.
iv. Depreciation on the amount of additions made to fixed assets due to
upgradations / improvements is provided over the remaining useful life
of the asset to which it relates.
v. Depreciation on fixed assets added/disposed off during the year is
provided on pro-rata basis.
vi. Lease hold improvements are amortised over a primary period of
lease or useful life, whichever is lower.
e) Expenditure incurred during the construction period
Expenditure directly relating to construction activity is capitalised
(net of income, if any). Indirect expenditure incurred during
construction period is capitalised as part of the indirect construction
cost to the extent to which the expenditure is indirectly related to
construction or is incidental thereto. Other indirect expenditure
incurred during the construction period which is not related to
construction activity nor is incidental thereto is charged to Profit &
Loss account.
f) Intangibles
Software costs relating to acquisition of initial software license fee
and installation costs are capitalised in the year of purchase.
Softwares are amortised on a straight-line basis over its useful life,
which is considered to be of a period of three years.
g) Impairment of assets
i) The carrying amounts of assets are reviewed at each balance sheet
date if there is any indication of impairment based on
internal/external factors. An impairment loss is recognised wherever
the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is the greater of the assets net selling price and
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value, using a pre-tax discount
rate that reflects current market assessment of the time value of money
and risks specific to the asset.
ii) After impairment, depreciation is provided on the revised carrying
amount of the asset over the remaining useful life.
h) Leases
Where the Company is the lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalised at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets. Lease payments are apportioned between the finance
charges and reduction of the lease liability based on the implicit rate
of return. Finance charges are charged directly against income. Lease
management fees, legal charges and other initial direct costs are
capitalised.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalised leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as
operating leases. Operating lease payments are recognised as an expense
in the Profit & Loss Account on a straight-line basis over the lease
term.
i) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of such investments.
j) Inventories
Inventories are valued as follows:
Raw materials, Lower of cost and net realizable value. However,
materials and other items held for use in the
Components and production of inventories are not written down below
cost if the finished products, in which
stores & spares they will be incorporated, are expected to be sold at
or above cost. Cost of raw materials,
components and stores & spares is determined on a
moving weighted average basis.
Work-in-progress
and Lower of cost and net realizable value. Cost
includes direct materials and labour and a
finished goods proportion of manufacturing overheads based on normal
operating capacity. Cost of finished
goods includes excise duty. Cost is determined on
moving weighted average basis.
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
k) Revenue recognition
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.
Sale of Goods
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excise Duty, Sales Tax
and VAT deducted from turnover (gross) are the amount that is included
in the amount of turnover (gross) and not the entire amount of
liability arised during the year.
Export Benefit
Export Benefits constituting import duty benefits under Duty Exemption
Pass Book (DEPB) and advance license scheme are accounted for on
accrual basis and have been credited to raw material and chemical
consumption account.
Interest
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividends
Dividend is recognised when the shareholders right to receive payment
is established by the balance sheet date. Dividend from subsidiaries is
recognised even if same are declared after the balance sheet date but
pertains to period on or before the date of balance sheet as per the
requirement of schedule VI of the Companies Act, 1956.
Policy for Insurance Claims
Claims receivable on account of insurance are accounted for to the
extent the Company is reasonably certain of their ultimate collection.
l) Foreign currency transactions Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange Differences
Exchange differences arising on the settlement of monetary items not
covered above, or on reporting such monetary items of company at rates
different from those at which they were initially recorded during the
year, or reported in previous financial statements, are recognised as
income or as expenses in the year in which they arise.
Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or as expense for the
year.
m) Retirement and other employee benefits
i. Retirement benefits in the form of Superannuation Fund (being funded
to LIC) are funded defined contribution schemes and the contributions
are charged to the Profit and Loss Account of the year when the
contributions to the respective funds are due. There are no other
obligations other than the contribution payable.
ii. Gratuity liability is defined benefit obligation and is provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year.
iii. Retirement benefits in the form of Provident Fund (where
contributed to the Regional PF Commissioner) and employee state
insurance are defined contribution scheme and the contributions are
charged to the Profit and Loss Account of the year when the
contributions to the fund are due. There are no other obligations other
than the contribution payable to the respective authorities.
Retirement benefit in the form of Provident Fund (where administered by
trust created and managed by the Company) is a defined benefit
obligation of the company and the contributions are charged to the
Profit and Loss Account of the
year when the contributions to the respective funds are due. Shortfalls
in the funds, if any, is adequately provided for by the Company.
iv. Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per projected
unit credit method.
v. Actuarial gains/losses are immediately taken to Profit and Loss
account and are not deferred.
n) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income Tax Act, 1961. Deferred income taxes
reflects the impact of current year timing differences between taxable
income and accounting income for the year and reversal of timing
differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. If the company
has unabsorbed depreciation and carry forward of tax losses, all
deferred tax assets are recognised only if there is virtual certainty
supported by convincing evidence that such deferred tax assets can be
realised against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which the Minimum
Alternative tax (MAT) credit becomes eligible to be recognised as an
asset in accordance with the recommendations contained in guidance note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of a credit to the profit and loss account and
shown as MAT Credit Entitlement. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
o) Borrowing Costs
Borrowing costs directly attributable to the acquisition and
construction of an asset that necessarily takes a substantial period of
time to get ready for its intended use are capitalised as part of the
cost of the respective asset. All other borrowing costs are expensed in
the period they occur. Borrowing costs consists of interest and other
costs that an entity incurs in connection with the borrowing of funds.
p) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event 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 are not discounted to
its present value and are determined based on best management 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
management estimates. Provision for expenditure relating to voluntary
retirement is made when the employee accepts the offer of early
retirement
q) Segment Reporting Policies Identification of segments: Primary
Segment Business Segment
The Companys operating businesses are organised and managed separately
according to the nature of products, with each segment representing a
strategic business unit that offers different products and serves
different markets. The identified segments are Manufacturing & Sale of
Polyester film and Engineering plastics.
Secondary Segment
Geographical Segment
The analysis of geographical segments is based on the geographical
location of the customers.
The geographical segments considered for disclosure are as follows:
- Sales within India include sales to customers located within India.
- Sales outside India include sales to customers located outside India.
Inter Segment Transfers:
Inter Segment transfers of goods, as marketable products produced by
separate segments of the Company for captive consumption, are not
accounted for in the books of account of the Company. For the purpose
of segment disclosures, however, inter segment transfers have been
taken at cost.
Allocation of common costs:
Common allocable costs are allocated to each segment in proportion to
the turnover of the segment, except where a more logical allocation is
possible.
Unallocated items:
Corporate income and expense are considered as a part of un-allocable
income & expense, which are not identifiable to any business segment.
r) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
s) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the period. Partly paid
equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average numbers of equity shares outstanding during the period are
adjusted for events of bonus issue; bonus element in a rights issue to
existing shareholders; share split; and reverse share split
(consolidation of shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2010
A) Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the Notified accounting standard by Companies Accounting
Standards Rules, 2006 (as amended) and the relevant provisions of the
Companies Act, 1956. The financial statements have been prepared under
the historical cost convention on an accrual basis except in case of
assets for which revaluation is carried out. The accounting policies
have been consistently applied by the Company and are consistent with
those used in the previous year.
b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period end. Although these estimates are based upon managementÃs best
knowledge of current events and actions, actual results could differ
from these estimates.
c) Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and
impairment losses, if any, except Land, Building and Plant & Machinery,
which had been revalued on 31.10.1992 by a Government registered valuer
on the basis of the then replacement value. Cost comprises the purchase
price and any directly attributable cost of bringing the asset to its
working condition for its intended use. Borrowing costs relating to
acquisition of fixed assets which takes substantial period of time to
get ready for its intended use are also included to the extent they
relate to the period till such assets are ready to be put to use.
d) Depreciation
i. Depreciation on fixed assets (other than lease hold improvements) is
provided on Straight Line Method as per Schedule XIV of the Companies
Act, 1956 on pro-rata basis with reference to the days of
addition/sale. The management of the company is of the view that this
depreciation rate fairly represents the useful life of the assets
except for the following assets where a higher rate is used:
ii. Fixed Assets costing below Rs.5000 are fully depreciated in the
year of acquisition.
iii. Depreciation on the amount of additions made to Fixed Assets on
Revaluation is adjusted against the Revaluation Reserve.
iv. Depreciation on the amount of addition made to Fixed Assets due
to upgradations / improvements is provided over the remaining useful
life of the asset to which it relates.
v. Depreciation on fixed assets added/disposed off during the year is
provided on pro-rata basis. vi. Lease hold improvements (LHI) are
amortised over a primary period of lease or useful life, whichever is
lower.
e) Expenditure incurred during the construction period
Expenditure directly relating to construction activity is capitalized
(net of income, if any). Indirect expenditure incurred during
construction period is capitalized as part of the indirect construction
cost to the extent to which the expenditure is indirectly related to
construction or is incidental thereto. Other indirect expenditure
incurred during the construction period which is not related to
construction activity nor is incidental thereto is charged to
Profit & Loss account.
f) Intangibles
Software costs relating to acquisition of initial software license fee
and installation costs are capitalized in the year of purchase.
Softwares are amortized on a straight-line basis over its useful life,
which is considered to be of a period of three years.
(g) Impairment of assets
The carrying amounts of 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 assetÃs net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
(h) Leases
Where the Company is the lessee
Finance leases, which effectively transfer to the Company substantially
all the risks and benefits incidental to ownership of the leased item,
are capitalized at the lower of the fair value and present value of the
minimum lease payments at the inception of the lease term and disclosed
as leased assets. Lease payments are apportioned between the finance
charges and reduction of the lease liability based on the implicit rate
of return. Finance charges are charged directly against income. Lease
management fees, legal charges and other initial direct costs are
capitalised.
If there is no reasonable certainty that the Company will obtain the
ownership by the end of the lease term, capitalized leased assets are
depreciated over the shorter of the estimated useful life of the asset
or the lease term.
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit & Loss Account on a straight-line basis over the lease
term.
(i) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of such investments.
(j) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of Goods
Revenue is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excise Duty, Sales
Tax and VAT deducted from turnover (gross) are the amount that is
included in the amount of turnover (gross) and not the entire amount of
liability arised during the year.
Export Benefit
Export Benefits constituting import duty benefits under Duty Exemption
Pass Book (DEPB) and advance license scheme are accounted for on
accrual basis and have been credited to Raw material and Chemical
Consumption Account.
Interest
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividends
Dividend is recognised when the shareholdersà right to receive payment
is established by the balance sheet date. Dividend from subsidiaries is
recognised even if same are declared after the balance sheet date but
pertains to period on or before the date of balance sheet as per the
requirement of schedule VI of the Companies Act, 1956.
(k) Deferred revenue expenditure
The Company recognizes payments made under voluntary retirement schemes
as Deferred Revenue Expenses and write off the same in monthly
instalments over a period of 36 months or by March 31, 2010, whichever
is earlier.
(l) Retirement and other Employee Benefits
i. Retirement benefits in the form of Superannuation Fund (being funded
to LIC) are funded defined contribution schemes and the contributions
are charged to the Profit and Loss Account of the year when the
contributions to the respective funds are due. There are no other
obligations other than the contribution payable.
ii. Gratuity liability is defined benefit obligation and is provided
for on the basis of an actuarial valuation on projected unit credit
method made at the end of each financial year.
iii. Retirement benefits in the form of Provident Fund (where
contributed to the Regional PF Commissioner) and employee state
insurance are defined contribution scheme and the contributions are
charged to the Profit and Loss Account of the year when the
contributions to the fund are due. There are no other obligations other
than the contribution payable to the respective authorities.
Provident Fund (Where administered by a Trust) is a defined benefit
scheme whereby the Company deposits an amount determined as a fixed
percentage of basic pay to the fund every month. The benefit vests upon
commencement of employment. The interest credited to the accounts of
the employees is adjusted on an annual basis to confirm to the interest
rate declared by the government for the Employees Provident Fund. The
Guidance Note on implementing AS-15, Employee Benefits (revised 2005)
issued by the Accounting Standard Board (ASB) states that provident
funds set up by employers, which requires interest shortfall to be met
by the employer, needs to be treated as defined benefit plan. Based on
the computation done by the Company, there is no deficit in the fund.
iv. Short term compensated absences are provided for based on
estimates. Long term compensated absences are provided for based on
actuarial valuation. The actuarial valuation is done as per projected
unit credit method.
v. Actuarial gains/losses are immediately taken to Profit and Loss
account and are not deferred.
(m) Income Taxes
Tax expense comprises of current, deferred and fringe benefit tax.
Current income tax and fringe benefit tax is measured at the amount
expected to be paid to the tax authorities in accordance with the
Income Tax Act, 1961. Deferred income taxes reflects the impact of
current year timing differences between taxable income and accounting
income for the year and reversal of timing differences of earlier
years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised. If the company
has unabsorbed depreciation and carry forward of tax losses, all
deferred tax assets are recognised only if there is virtual certainty
supported by convincing evidence that such deferred tax assets can be
realised against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets. It recognises unrecognised deferred tax assets to
the extent that it has become reasonably certain or virtually certain,
as the case may be that sufficient future taxable income will be
available against which such deferred tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it
becomes reasonably certain or virtually certain, as the case may be,
that sufficient future taxable income will be available.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the company will pay normal income tax
during the specified period. In the year in which the Minimum
Alternative tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in guidance note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of a credit to the profit and loss account and
shown as MAT Credit Entitlement. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal Income Tax during the specified
period.
(n) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event 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 are not discounted
to its present value and are determined based on best management
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 management estimates. Provision for expenditure relating to
voluntary retirement is made when the employee accepts the offer of
early retirement.
(o) Derivative Instruments
As per the ICAI Announcement, accounting for derivative contracts,
other than those covered under AS-11, are marked to market on a
portfolio basis, and the net loss after considering the offsetting
effect on the underlying hedge item is charged to the income statement.
Net gains are ignored.
(p) Segment Reporting Policies
Identification of segments:
Primary Segment
Business Segment
The CompanyÃs operating businesses are organized and managed separately
according to the nature of products, with each segment representing a
strategic business unit that offers different products and serves
different markets. The identified segments are Manufacturing & Sale of
Polyester film and Engineering plastics.
Secondary Segment
Geographical Segment
The analysis of geographical segments is based on the geographical
location of the customers.
The geographical segments considered for disclosure are as follows:
à Sales within India include sales to customers located within India.
à Sales outside India include sales to customers located outside India.
Inter Segment Transfers:
Inter Segment transfers of goods, as marketable products produced by
separate segments of the Company for captive consumption, are not
accounted for in the books of account of the Company. For the purpose
of segment disclosures, however, inter segment transfers have been
taken at cost.
Allocation of common costs:
Common allocable costs are allocated to each segment in proportion to
the turnover of the segment, except where a more logical allocation is
possible.
Unallocated items:
Corporate income and expense are considered as a part of un-allocable
income & expense, which are not identifiable to any business segment.
(q) Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank
and in hand and short-term investments with an original maturity of
three months or less.
(r) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders (after deducting
preference dividends and attributable taxes) by the weighted average
number of equity shares outstanding during the period. Partly paid
equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average numbers of equity shares outstanding during the period are
adjusted for events of bonus issue; bonus element in a rights issue to
existing shareholders; share split; and reverse share split
(consolidation of shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the year attributable to equity shareholders and the
weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.