Mar 31, 2019
(i) Current Vs Non-Current Classification
The Company presents assets and liabilities in the balance sheet based on current/non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- Expected to be settled in normal operating cycle
- Held primarily for the purpose of trading
- Due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalent. The Company has identified twelve months as its operating cycle.
(ii) Cash Dividend
The Company recognises a liability to make cash distributions to the shareholders of the Company when the distribution is approved by the shareholder in the Annual General Meeting of the Company.
(iii) Fair values measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 - Other techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - Techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
(iv) Property, Plant and Equipment
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property plant and equipment recognised as at April 1, 2016, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property plant and equipment.
Property, plant & equipment and capital work in progress are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met, directly attributable cost of bringing the asset to its working condition for the intended use. Such cost includes the cost of replacing part of the plant and equipment.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of repairs and maintenance are recognised in the Statement of Profit and Loss as incurred.
The Company identifies and determines cost of each component/ part of the asset separately, if the component/ part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset.
An item of property, plant and equipment and any significant part 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 derecognition of the asset is included in the Statement of Profit or Loss when the asset is derecognised.
The residual values, useful lives and methods of depreciation of Property, plant and equipment are reviewed at each financial year end and adjusted, if appropriate.
(v) Depreciation on Property, plant & equipment
- Lease hold improvements (LHI) & leasehold lands are amortised on straight line basis over the period of lease or useful life whichever is lower.
- Depreciation on other Property, plant & equipment is provided on straight line basis at the rates based on the estimated useful life of the assets. The Company, based on management estimates, depreciates the assets over estimated useful lives which coincides with the useful life prescribed in Schedule II to the Companies Act, 2013.
The Company, based on technical assessment made by technical expert and management estimate, depreciates certain items of plant and equipment over estimated useful lives of 15 years which are different from the useful life of 8 years, prescribed in Schedule II to the Companies Act, 2013. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
- Depreciation on Property, plant & equipment added/ disposed off during the year is provided on pro-rata basis with respect to date of acquisition/ disposal.
(vi) Intangible assets
Intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
Technical know-how is amortised over the term of the agreement. Computer software is amortised over the estimated useful life of 3 years.
An item of intangible assets is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the Statement of Profit or Loss when the asset is derecognised. The residual values, useful lives and methods of amortisation of intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
(vii) Research and development costs
Research and development costs of revenue nature are charged to the Statement of Profit and Loss when incurred. Fixed assets utilised for research and development are capitalised and depreciated in accordance with the rates set out in Note 1.3 (iv) above.
(viii) Revenue Recognition
- Revenue from contract with customers
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
In respect of pre-engineered building contracts, revenue is recognised over a period of time using the input method (equivalent to percentage-of-completion method; POCM) of accounting with contract costs incurred determining the degree of completion of the performance obligation.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, price concessions and incentives, if any, as specified in the contract with the customer. Revenue also excludes taxes collected from customers on behalf of the government.
Effective April 1, 2018, the Company has applied Ind AS 115 âRevenue from contracts with customersâ which establishes a comprehensive framework for determining whether, how much and when revenue is to be recognised. Ind AS 115 replaces Ind AS 18 âRevenueâ and Ind AS 11 âConstruction Contractsâ. The effect of initially applying this standard is recognised at the date of initial application (i.e. April 1, 2018). The Company has adopted Ind AS 115 using the modified retrospective approach. Under the modified retrospective approach, there were no significant adjustments required to the retained earnings at April 1, 2018. Also, the application of Ind AS 115 did not have any significant impact on recognition and measurement of revenue and related items in the financial statements.
- Interest
For all debt instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR).
EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. Interest income is included in finance income in the Statement of Profit and Loss.
(ix) Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
- Financial assets Initial recognition and measurement
On initial recognition, a financial asset is recognised at fair value, in case of financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction cost are recognised in the Statement of Profit and Loss. In other cases, the transaction cost are attributed to the acquisition value of the financial asset.
Subsequent measurement Debt instruments at amortised cost
A âdebt instrumentâ is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in other income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade receivables, security deposits & other receivables.
Investments in subsidiaries
Investments in subsidiaries are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognized in the statement of profit and loss.
Derecognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.
Impairment of financial assets
The Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the trade receivable.
The Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for estimated losses on the current portfolio. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
The impairment losses and reversals are recognised in Statement of Profit and Loss.
- Financial liabilities Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using the EIR method.
Other financial liabilities (Loans and borrowings)
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are derecognised as well as through the EIR amortisation process.
The EIR amortisation is included as finance costs in the statement of profit and loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Derivative financial instruments and hedge accounting
The Company uses derivative financial instruments such as foreign exchange forward contracts, option contracts and swap contracts to hedge its foreign currency risk.
Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value at the end of each reporting period.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.
(x) Inventories
Inventories are valued at the lower of cost and the net realisable value after providing for obsolescence and other losses, where considered necessary and includes all applicable costs incurred in bringing goods to their present location and condition. The basis for determining cost for various categories of inventories is as follows:
Stores and spare parts - Weighted average Raw materials - Weighted average
Materials in transit - At cost Work in progress and
Finished goods - Material cost determined on weighted average basis plus appropriate share of labour, manufacturing and other overheads.
Stock in trade - Weighted average
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.
(xi) Retirement and other Employee Benefits
Employee benefits include provident fund, superannuation, performance incentives, gratuity and compensated absences.
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange of services rendered by employees is recognised during the period when the employee renders the services. These benefits include compensated absences and performance incentives.
Post-employment benefit plans
The Company has various schemes of retirement benefits namely provident fund, superannuation schemes and gratuity, which are administered by trustees of independently constituted trusts recognised by the Income-tax authorities.
The Companyâs contributions towards provident fund are deposited in a trust formed by the Company under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. Contributions to superannuation fund are deposited in a separate trust. These trusts are recognised by the Income Tax authorities. The contributions to the trusts are managed by the trustees of the respective trusts.
The Companyâs superannuation scheme is considered as defined contribution scheme. The Company has no obligation, other than the contribution payable to the super-annuation fund. The Company recognizes contribution payable to the superannuation fund scheme as an expense, when an employee renders the related service.
The Provident Fund (administered by a Trust) is a defined benefit scheme where by 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 Company has adopted actuary valuation based on project unit credit method to arrive at provident fund liability as at year end. The Provident Fund scheme additionally requires the Company to guarantee payment of interest at rates notified by the Central Government from time to time, for which shortfall as at the Balance Sheet date, if any, is provided for.
The Company operates a defined benefit gratuity plan, which requires contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. Remeasurements, comprising of actuarial gains and losses, and the return on plan assets (excluding net interest), are recognised to OCI in the period in which they occur and are not reclassified to profit or loss.
Benefits comprising compensated absences constitute other employee benefits. The liability for compensated absences is provided on the basis of an actuarial valuation done by an independent actuary at the year end. Actuarial gains/losses are immediately taken to the Statement of Profit and Loss for the period in which they are occur.
(xii) Borrowing Costs
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 are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
(xiii) Foreign Exchange Transactions and balances
The functional currency of the company is India Rupees.
Initial recognition
Transactions in foreign currencies are initially recorded by the Company at their respective functional currency spot rates at the date the transaction first qualifies for recognition.
Conversion
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency exchange rate at the reporting date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date and exchange gains and losses arising on settlement and restatement are recognised in the Statement of Profit and Loss. Nonmonetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.
(xiv) Taxation
Tax expense represents the sum of current tax and deferred tax.
Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the reporting date and includes any adjustment to tax payable in respect of previous years. Subject to exceptions below, deferred tax is provided, using the balance sheet method, on all deductible temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, on carry forward of unused tax credits and unused tax loss; deferred income tax is not recognised on the initial recognition (including MAT) of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and deferred tax assets are recognised only to the extent that it is more likely than not that they will be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Tax relating to items recognized outside profit or loss is recognised outside profit or loss (either in other comprehensive income or equity).
The carrying amount of deferred tax assets (including MAT credit available) is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
(xv) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders 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 such as bonus issue, bonus element in a rights issue, that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss 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.
(xvi) 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) fair value less costs of disposal or its value in use. 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 group of assets. When 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.
Impairment losses, are recognised in the Statement of Profit and Loss
Intangible assets with indefinite useful lives are tested for impairment annually, as appropriate and when circumstances indicate that the carrying value may be impaired.
(xvii) Provisions and contingencies
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. The expense relating to any provision is presented in the Statement of Profit or Loss, net of any reimbursement.
(xviii) Contingent liability
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
(xix) Share based payment transaction
Selected employees of the Company receive remuneration in the form of equity settled instruments, for rendering services over a defined vesting period. Equity instruments granted are measured by reference to the fair value of the instrument at the date of grant.
The fair value determined at the grant date of the equity-settled share based payments is expensed on a straight line basis over the vesting period, based on the Companyâs estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
(xx) Leases
Assets taken under lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis over the lease term.
(xxi) Segment reporting
Operating segment are reported in a manner consistent with the internal reporting provided to chief operating decision maker (CODM). The managing director is considered to be the âChief Operating Decision Makerâ (CODM).
Refer Note 2.37 for segment information presented.
(xxii) Government grants and subsidies
Grants and subsidies from the government are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them, and the grant/ subsidy will be received.
When the grant or subsidy relates to revenue, it is recognised as income on a systematic basis in profit or loss over the periods necessary to match them with the related costs, which they are intended to compensate.
Where the grant relates to an asset, it is recognised as deferred income and released to income when on a systematic basis when related conditions or obligations are met by the Company.
(xxiii) Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdraft as they are considered an integral part of the companyâs cash management.
(xxiv) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded of the nearest two decimal lakhs as per the requirement of schedule III, unless otherwise stated.
Mar 31, 2018
The Company presents assets and liabilities in the balance sheet based on current/non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- Expected to be settled in normal operating cycle
- Held primarily for the purpose of trading
- Due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalent. The Company has identified twelve months as its operating cycle.
Fair value is the price that would be received to sell an asset or paid to transfer a liability between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 - Other techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - Techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property plant and equipment recognised as at April 1, 2016, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property plant and equipment (See Note 2.56 (1) (a)).
Property, plant & equipment and capital work in progress are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met, directly attributable cost of bringing the asset to its working condition for the intended use. Such cost includes the cost of replacing part of the plant and equipment.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of repairs and maintenance are recognised in the statement of profit and loss as incurred.
The Company identifies and determines cost of each component/ part of the asset separately, if the component/ part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset.
An item of property, plant and equipment and any significant part 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 derecognition of the asset is included in the Statement of Profit or Loss when the asset is derecognised.
The residual values, useful lives and methods of depreciation of Property, plant and equipment are reviewed at each financial year end and adjusted, if appropriate.
- Lease hold improvements (LHI) & leasehold lands are amortised on straight line basis over the period of lease or useful life whichever is lower.
- Depreciation on other Property, plant & equipment is provided on straight line basis at the rates based on the estimated useful life of the assets. The Company, based on management estimates, depreciates the assets over estimated useful lives which coincides with the useful life prescribed in Schedule II to the Companies Act, 2013.
- Depreciation on Property, plant & equipment added/ disposed off during the year is provided on pro-rata basis with respect to date of acquisition/ disposal.
Intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
Technical know-how is amortised over the term of the agreement. Computer software is amortised over the estimated useful life of 3 years.
An item of intangible assets is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the Statement of Profit or Loss when the asset is derecognised. The residual values, useful lives and methods of amortisation of intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
Research and development costs of revenue nature are charged to the Statement of Profit and Loss when incurred. Fixed assets utilised for research and development are capitalised and depreciated in accordance with the rates set out in Note 1.3 (iv) above.
Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Based on Ind AS 18, the Company has assumed that recovery of excise duty flows to the Company on its own account, hence revenue includes excise duty. However, sales tax/ value added tax (VAT)/goods and service tax (GST) is not received by the company on its own account, rather it is tax collected on behalf of the government. Accordingly, it is excluded from revenue.
The following specific recognition criteria must also be met before revenue is recognize.
Revenue from sale of goods is recognized, net of returns and rebates when all the significant risks and rewards of ownership of the goods have been passed to the buyer, which generally coincides with the despatch of goods to customers.
Revenue from fixed price contracts is recognised in accordance with the percentage of completion method based on the work performed and when it is probable that the economic benefits associated with the contract will flow to the Company. The stage of completion of a contract is determined based on the proportion that contract costs incurred for work performed upto the reporting date bare to the total estimated contract costs. If a loss is projected on any of the contracts in process, the entire projected loss is recognised.
For all debt instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR).
EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. Interest income is included in finance income in the statement of profit and loss.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Initial recognition and measurement
On initial recognition, a financial asset is recognised at fair value, in case of financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction cost are recognised in the statement of profit and loss. In other cases, the transaction cost are attributed to the acquisition value of the financial asset.
Debt instruments at amortised cost
A ''debt instrument'' is measured at the amortised cost if both the following conditions are met:
a. The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b. Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in other income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade receivables, Security deposits & other receivables.
Investments in subsidiaries are carried at cost less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. On disposal of investments in subsidiaries, the difference between net disposal proceeds and the carrying amounts are recognized in the statement of profit and loss.
Upon first-time adoption of Ind AS, the Group has elected to measure its investments in subsidiaries at fair value as its deemed cost on the date of transition to Ind AS.
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.
The Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the trade receivable.
Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for estimated losses on the current portfolio. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
The impairment losses and reversals are recognised in Statement of Profit and Loss.
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Financial liabilities are subsequently measured at amortised cost using the EIR method.
Other financial liabilities (Loans and borrowings)
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit and loss when the liabilities are derecognised as well as through the EIR amortisation process.
The EIR amortisation is included as finance costs in the statement of profit and loss.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
The Company uses derivative financial instruments such as foreign exchange forward contracts, option contracts and swap contracts to hedge its foreign currency risk.
Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value at the end of each reporting period.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss,
Inventories are valued at the lower of cost and the net realisable value after providing for obsolescence and other losses, where considered necessary and includes all applicable costs incurred in bringing goods to their present location and condition. The basis for determining cost for various categories of inventories is as follows:
Stores and spare parts - Weighted average
Raw materials - Weighted average
Materials in transit - At cost
Work in progress and - Material cost determined
Finished goods on weighted average basis
plus appropriate share of labour, manufacturing and other overheads.
Stock in trade - Weighted average
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.
Employee benefits include provident fund, superannuation, performance incentives, gratuity and compensated absences.
The undiscounted amount of short-term employee benefits expected to be paid in exchange of services rendered by employees is recognised during the period when the employee renders the services. These benefits include compensated absences and performance incentives.
The Company has various schemes of retirement benefits namely provident fund, superannuation schemes and gratuity, which are administered by trustees of independently constituted trusts recognised by the Income-tax authorities.
The Company''s contributions towards provident fund are deposited in a trust formed by the Company under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. Contributions to superannuation fund are deposited in a separate trust. These trusts are recognised by the Income Tax authorities. The contributions to the trusts are managed by the trustees of the respective trusts.
The Company''s superannuation scheme is considered as defined contribution scheme. The Company has no obligation, other than the contribution payable to the superannuation fund. The Company recognizes contribution payable to the super-annuation fund scheme as an expense, when an employee renders the related service.
The Provident Fund (administered by a Trust) is a defined benefit scheme where by 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 Company has adopted actuary valuation based on project unit credit method to arrive at provident fund liability as at year end. The Provident Fund scheme additionally requires the Company to guarantee payment of interest at rates notified by the Central Government from time to time, for which shortfall as at the Balance Sheet date, if any, is provided for.
The Company operates a defined benefit gratuity plan, which requires contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method. Remeasurements, comprising of actuarial gains and losses, and the return on plan assets (excluding net interest), are recognised to OCI in the period in which they occur and are not reclassified to profit or loss.
Benefits comprising compensated absences constitute other employee benefits. The liability for compensated absences is provided on the basis of an actuarial valuation done by an independent actuary at the year end. Actuarial gains/losses are immediately taken to the statement of profit and loss for the period in which they are occur.
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 are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
The functional currency of the company is India Rupees
Transactions in foreign currencies are initially recorded by the Company at their respective functional currency spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency exchange rate at the reporting date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Nonmonetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.
Tax expense represents the sum of current tax and deferred tax.
Current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the reporting date and includes any adjustment to tax payable in respect of previous years. Subject to exceptions below, deferred tax is provided, using the balance sheet method, on all deductible temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, on carry forward of unused tax credits and unused tax loss; deferred income tax is not recognised on the initial recognition (including MAT) of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and deferred tax assets are recognised only to the extent that it is more likely than not that they will be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Tax relating to items recognized outside profit or loss is recognised outside profit or loss (either in other comprehensive income or equity).
The carrying amount of deferred tax assets (including MAT credit available) is reviewed at each reporting date and is adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders 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 such as bonus issue, bonus element in a rights issue, that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss 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.
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) fair value less costs of disposal or its value in use. 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 group of assets. When 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.
Impairment losses, are recognised in the statement of profit and loss.
Intangible assets with indefinite useful lives are tested for impairment annually, as appropriate and when circumstances indicate that the carrying value may be impaired.
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. The expense relating to any provision is presented in the statement of profit or loss, net of any reimbursement.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Selected employees of the Company receive remuneration in the form of equity settled instruments, for rendering services over a defined vesting period. Equity instruments granted are measured by reference to the fair value of the instrument at the date of grant.
The fair value determined at the grant date of the equity-settled share based payments is expensed on a straight line basis over the vesting period, based on the Company''s estimate of equity instruments that will eventually vest, with a corresponding increase in equity.
Assets taken under lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis over the lease term.
Operating segment are reported in a manner consistent with the internal reporting provided to chief operating decision maker (CODM). The managing director is considered to be the ''Chief Operating Decision Maker'' (CODM).
Refer Note 2.37 for segment information presented.
Grants and subsidies from the government are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them, and the grant/ subsidy will be received.
When the grant or subsidy relates to revenue, it is recognised as income on a systematic basis in profit or loss over the periods necessary to match them with the related costs, which they are intended to compensate.
Where the grant relates to an asset, it is recognised as deferred income and released to income when on a systematic basis when related conditions or obligations are met by the Company.
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and shortterm investments with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdraft as they are considered an integral part of the company''s cash management.
All amounts disclosed in the financial statements and notes have been rounded of the nearest two decimal lakhs as per the requirement of schedule III, unless otherwise stated.
Mar 31, 2017
NOTE 1.1
Corporate information
Everest Industries Limited (''the Company'') is engaged in manufacturing and trading of building products like roofing products, boards and panels, other building products and accessories and manufacturing of components of pre-engineered steel buildings and related accessories.
NOTE 1.2
Basis of preparation
The financial statements of the company have been prepared in accordance with the 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 section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 and Companies (Accounting Standards) Amendment Rules, 2016. The financial statements have been prepared on an accrual basis and under the historical cost convention.
NOTE 1.3
Change in Accounting Policies I. Classification of items of stores and spares
Pre-revisied AS 10 required, that stand-by and servicing equipments should normally be capitalized as property, plant and equipment along with related assets. It required that machinery spares are usually treated as inventory and charged to profit or loss on consumption. Spares parts that can be only used in connection with a particular item of property, plant and equipment, and whose use is expected to be irregular, are capitalized. Such spare parts are depreciated over a period, not exceeding the remaining useful life of the principal asset.
The company has changed its accounting policy of property, plant and equipment to comply with AS 10 (R). The company has applied transitional provisions, which requires previously recognized stores and spares as inventory should be capitalized as a PPE at its carrying amount and depreciated prospectively over its remaining useful life.
Had the company continued to use the earlier policy of classifying stores and spares as inventories, its financial statements for the period would have been impacted as below:
Inventories would have been higher by Rs. 199 Lakhs, property, plant and equipment would have been lower by Rs. 199 Lakhs, depreciation would have been lower by Rs. 10 Lakhs, and other expense would have been higher by Rs. 0.34 Lakhs. Profit for the current period would have been higher by Rs. 9.66 Lakhs (net of tax impact of Rs. 6.32 Lakhs).
II. Accounting for Proposed Dividend
As per the requirements of pre-revised AS 4, the Company used to create a liability for dividend proposed/ declared after the balance sheet date if dividend related to periods covered by the financial statements. Going forward, as per AS 4(R), the company does not create provision for dividend proposed/ declared after the balance sheet date unless a statute requires otherwise. The company has disclosed dividend proposed by board of directors after the balance sheet date in the notes (refer note 2.49).
Significant Accounting Policies
i. 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.
ii. Property, Plant and Equipment
Fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost of fixed assets comprises its purchase price, any import duties and other taxes, any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use.
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.
Gains or losses arising from de-recognition 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.
Capital work-in-progress:
Projects under which fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest.
iii. Depreciation / Amortization
Leasehold land and leasehold improvements are amortized on a straight line basis over the period of lease
Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management which coincides with the useful life prescribed in Schedule II to the Companies Act, 2013.
iv. Intangible assets
Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any.
Technical know-how is amortized over the term of the agreement. Computer software is amortized over the estimated useful life of 3 years.
v. 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. The following specific recognition criteria must also be met before revenue is recognized
Sale of goods
Revenue from sale of goods is recognized, net of returns and rebates when all the significant risks and rewards of ownership of the goods have been passed to the buyer, which generally coincides with the dispatch of goods to customers. 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.
Revenue from fixed price contracts is recognized in accordance with the percentage of completion method based on the work performed and when it is probable that the economic benefits associated with the contract will flow to the Company. The stage of completion of a contract is determined based on the proportion that contract costs incurred for work performed up to the reporting date bare to the total estimated contract costs. If a loss is projected on any of the contracts in process, the entire projected loss is recognized.
vi. Interest
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "other incomeâ in the statement of profit and loss.
vii. Investments
Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.
Current investments are carried in the financial statements 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 the investments.
viii. Inventories
Inventories are valued at the lower of cost and the net realizable value after providing for obsolescence and other losses, where considered necessary and includes all applicable costs incurred in bringing goods to their present location and condition. The basis for determining cost for various categories of inventories is as follows:
.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.
ix. Research and Development Costs
Research and development costs of revenue nature are charged to the Statement of Profit and Loss when incurred. Fixed assets utilized for research and development are capitalized and depreciated in accordance with the rates set out in Note 1.3 (iii) above.
x. Retirement and other Employee Benefits
Employee benefits include provident fund, superannuation fund, and gratuity fund and compensated absences.
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange of services rendered by employees is recognized during the period when the employee renders the services. These benefits include compensated absences and performance incentives.
Post-employment benefit plans
The Company has various schemes of retirement benefits namely provident fund, superannuation schemes and gratuity, which are administered by trustees of independently constituted trusts recognized by the Income-tax authorities.
The Company''s contributions towards provident fund are deposited in a trust formed by the Company under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. Contributions to superannuation fund are deposited in a separate trust. These trusts are recognized by the Income Tax authorities. The contributions to the trusts are managed by the trustees of the respective trusts.
The Company''s superannuation scheme is considered as defined contribution schemes. The Company''s contribution paid/ payable under these schemes are recognized as expenses in the Statement of Profit and Loss during the period in which the employee renders the related service.
The Provident Fund (administered by a Trust) is a defined benefit scheme where by 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 Company has adopted actuary valuation based on project unit credit method to arrive at provident fund liability as at year end. The Provident Fund scheme additionally requires the Company to guarantee payment of interest at rates notified by the Central Government from time to time, for which shortfall as at the Balance Sheet date, if any, is provided for.
The Company''s gratuity scheme is a defined benefit scheme. For defined benefit schemes, the cost of providing benefits is determined using projected unit credit method, with actuarial valuation being carried out at each balance sheet date. Actuarial gains and losses are recognized in full in the Statement of Profit and Loss for the period in which they occur. Past service cost is recognized to the extent the benefits are already vested, and otherwise is amortized on a straight-line method over the average period until the benefits become vested.
The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligations as adjusted for unrecognized past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the scheme.
Benefits comprising compensated absences constitute other employee benefits. The liability for compensated absences is provided on the basis of an actuarial valuation done by an independent actuary at the year end. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.
xi. Borrowing Costs
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 are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.
xii. Foreign Exchange Translation and balances 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 retranslated using the exchange rate prevailing at the reporting date. Nonmonetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.
Forward exchange contracts entered into to hedge foreign currency risk of an existing asset/ liability
The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense/ income over the life of the contract. Exchange differences on such contracts, except the contracts which are long-term foreign currency monetary items, are recognized in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or as expense for the period.
Derivative contracts
The Company enters into derivative contracts in the nature of interest rate swaps and forward contracts with an intention to hedge its existing assets and liabilities and firm commitments. Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign Exchange Transactions.
All derivative contracts are marked-to-market and losses are recognized in the Statement of Profit and Loss. Gains arising on the same are not recognized, until realized.
xiii. Taxation
Income tax comprises current tax and deferred tax. Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws. Deferred tax assets and liabilities are recognized for the future tax consequences of timing differences, subject to the consideration of prudence. Deferred tax assets and liabilities are measured using the tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.
In the situations where the company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in respect of timing differences which reverse during the tax holiday period, to the extent the company''s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the year in which the timing differences originate. However, the company restricts recognition of 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 realized. For recognition of deferred taxes, the timing differences which originate first are considered to reverse first.
At each reporting date, the company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset 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 realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The company writes-down the carrying amount of 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 realized. 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
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.
Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the MAT credit would be realized i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as "MAT Credit Entitlement.â The company reviews the "MAT credit entitlementâ asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
xiv. Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders 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 such as bonus issue, bonus element in a rights issue, that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss 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
xv. Impairment of Assets
The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets (Cash Generating Unit or CGU) that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. The recoverable amount of an asset or CGU is the greater of its value in use and its net selling price. Value in use is the present value of the estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
If such recoverable amount of the asset or the recoverable amount of the CGU to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of profit and loss. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of amortized historical cost.
xvi. Provisions and contingencies
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an expense is incurred on historical cost basis. These are reviewed at each balance sheet date and adjusted to reflect the current best estimate. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.
Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit and loss net of any reimbursement.
xvii. Employee Stock Option Scheme
Stock options granted to the employees under the stock options schemes are accounted as per the accounting treatment prescribed by the SEBI. Accordingly, the excess of average market value of the shares over the preceding two weeks of the date of grant of options over the exercise price of the options is recognized as deferred employee compensation and is charged to the Statement of Profit and Loss on straight line basis over the vesting period of the options.
xviii. Leases
Assets taken under lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis over the lease term.
xix. Export Incentives
Export benefits are accounted for in the year of exports based on eligibility and there is reasonable certainty in receiving the same.
xx. Segment reporting Identification of segments
The company''s operating businesses are organized and managed separately according to the nature of products and services provided.
Since the Company''s activities/operations are primarily within the country and as such there is only one geographical segment.
Unallocated items
Unallocated items include general corporate income and expense items which are not allocated to any business segment.
Segment accounting policies
The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.
xxi. Government grants and subsidies
Grants and subsidies from the government are recognized when there is reasonable assurance that (i) the company will comply with the conditions attached to them, and (ii) the grant/subsidy will be received.
When the grant or subsidy relates to revenue, it is recognized as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate.
xxii. Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.
The Company has received show cause notice from VAT authorities which have been responded during the year. As per management assessment the Company has a good case in these matters.
Mar 31, 2015
(i) Accounting Convention
The financial statements of the company have been prepared in
accordance with the Generally Accepted Accounting principles in India
(Indian GAAp) to comply with the accounting standards specified under
section 133 of the companies act, 2013, read with Rule 7 of the
companies (accounts) rules, 2014 and the relevant provisions of the
companies act, 2013 ("the 2013 act") / companies act, 1956 ("the 1956
act"), as applicable. the accounting policies adopted in the
preparation of the financial statements are consistent with those
followed in the previous year.
(ii) Use of Estimates
the preparation of the financial statements in conformity with Indian
GAAp requires the management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. the Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to the differences between these estimates and the
actual results and the differences are recognised in the periods in
which these differences are known / materialise.
(iii) Fixed Assets
Fixed assets are carried at cost less accumulated depreciation /
amortisation and impairment losses, if any. the cost of fixed assets
comprises its purchase price, any import duties and other taxes, any
directly attributable expenditure on making the asset ready for its
intended use, other incidental expenses and interest on borrowings
attributable to acquisition of qualifying fixed assets up to the date
the asset is ready for its intended use.
Capital work-in-progress:
projects under which fixed assets are not yet ready for their intended
use are carried at cost, comprising direct cost, related incidental
expenses and attributable interest.
(iv) Depreciation / Amortisation
Depreciable amount for assets is the cost of an asset, or other amount
substituted for cost, less its estimated residual value. depreciation
on tangible fixed assets has been provided on the straight-line method
as per the useful life prescribed in schedule II to the companies Act,
2013.
Leasehold land and leasehold improvements are amortised over the term
of the lease.
technical know-how is amortised over the term of the agreement.
computer software is amortised over the estimated useful life of 3
years.
the estimated useful life of the intangible assets and the amortisation
period are reviewed at the end of each financial year and the
amortisation period is revised to reflect the changed pattern, if any.
(v) Revenue Recognition
revenue from sale of products is recognised, net of returns and
rebates, on transfer of significant risks and rewards of ownership to
the buyer, which generally coincides with the despatch of goods to
customers. sales include excise duty but exclude sales tax and value
added tax, wherever applicable.
revenue from fixed price pre-engineered buildings contracts (contracts)
is recognised in accordance with the percentage of completion method
based on the work performed and when it is probable that the economic
benefits associated with the contract will flow to the company. the
stage of completion of a contract is determined based on the proportion
that contract costs incurred for work performed upto the reporting date
bear to the total estimated contract costs. If a loss is projected on
any of the contracts in process, the entire projected loss is
recognised.
(vi) Investments
Long-term investments, are carried individually at cost less provision
for diminution, other than temporary, in the value of such investments.
current investments are carried individually, at the lower of cost and
fair value.
(vii) Inventories
Inventories are valued at the lower of cost and the net realisable
value after providing for obsolescence and other losses, where
considered necessary and includes all applicable costs incurred in
bringing goods to their present location and condition. the basis for
determining cost for various categories of inventories is as follows:
stores and spare parts - weighted average
raw materials - weighted average
materials in transit - At cost
work in progress and - material cost plus appropriate
Finished goods share of labour, manufacturing
and other overheads
stock in trade - weighted average
(viii) Research and Development Costs
research and development costs of revenue nature are charged to the
statement of profit and Loss when incurred. Fixed assets utilised for
research and development are capitalised and depreciated in accordance
with the rates set out in Note 1.2 (iv) above.
(ix) Employee Benefits
Employee benefits include provident fund, superannuation fund, gratuity
fund and compensated absences.
a. Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange of services rendered by employees is recognised during
the period when the employee renders the services. These benefits
include compensated absences and performance incentives.
b. Post-employment benefit plans
the company has various schemes of retirement benefits namely provident
fund, superannuation schemes and gratuity, which are administered by
trustees of independently constituted trusts recognised by the
Income-tax authorities.
the company's contributions towards provident fund are deposited in a
trust formed by the company under the Employees provident Fund and
Miscellaneous provisions Act, 1952. contributions to superannuation
fund are deposited in a separate trust. these trusts are recognised by
the Income tax authorities. the contributions to the trusts are managed
by the trustees of the respective trusts.
the company's superannuation scheme and the employee's provident fund
scheme are considered as defined contribution schemes. the company's
contribution paid/ payable under these schemes are recognised as
expenses in the statement of profit and Loss during the period in which
the employee renders the related service. the provident Fund scheme
additionally requires the company to guarantee payment of interest at
rates notified by the central Government from time to time, for which
shortfall as at the Balance sheet date, if any, is provided for.
the company's gratuity scheme is a defined benefit scheme. For defined
benefit schemes, the cost of providing benefits is determined using
projected unit credit method, with actuarial valuation being carried
out at each balance sheet date. Actuarial gains and losses are
recognised in full in the statement of profit and Loss for the period
in which they occur. past service cost is recognised to the extent the
benefits are already vested, and otherwise is amortised on a
straight-line method over the average period until the benefits become
vested.
the retirement benefit obligation recognised in the balance sheet
represents the present value of the defined benefit obligations as
adjusted for unrecognised past service cost, and as reduced by the fair
value of scheme assets. Any asset resulting from this calculation is
limited to past service cost, plus the present value of available
refunds and reductions in future contributions to the scheme.
Benefits comprising compensated absences constitute other employee
benefits. the liability for compensated absences is provided on the
basis of an actuarial valuation done by an independent actuary at the
year end. Actuarial gains and losses are recognised immediately in the
statement of profit and Loss.
(x) Borrowing Costs
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of the cost
of such assets. 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 revenue.
(xi) Foreign Exchange Transactions
Initial recognition
transactions in foreign currencies entered into by the company are
accounted at the exchange rates prevailing on the date of the
transaction or at rates that closely approximate the rate at the date
of the transaction.
Measurement at the balance sheet date Foreign currency monetary items
(other than derivative contracts) of the company, outstanding at the
balance sheet date are restated at the year-end rates. Non-monetary
items of the company are carried at historical cost.
Treatment of exchange differences
the exchange differences arising on settlement / restatement of
long-term foreign currency monetary items are capitalised as part of
the depreciable fixed assets to which the monetary item relates and
depreciated over the remaining useful life of such assets. If such
monetary items do not relate to acquisition of depreciable fixed
assets, the exchange difference is charged to the statement of profit
and Loss.
In other cases, the exchange differences arising on settlement /
restatement of foreign currency monetary assets and liabilities of the
company are recognised as income or expense in the statement of profit
and Loss.
Accounting for forward contracts
premium / discount on forward exchange contracts are amortised over the
period of the contracts if such contracts relate to monetary items as
at the balance sheet date. Any profit or loss arising on cancellation
or renewal of a forward exchange contract is recognised as income or as
expense when the same is effected.
Derivative contracts
the company enters into derivative contracts in the nature of interest
rate swaps and forward contracts with an intention to hedge its
existing assets and liabilities and firm commitments. Derivative
contracts which are closely linked to the existing assets and
liabilities are accounted as per the policy stated for Foreign Exchange
transactions.
Allderivativecontractsaremarked-to-marketandlossesarerecognised
inthestatementofprofitandLoss.Gains
arisingonthesamearenotrecognised,untilrealised,ongroundsof prudence.
(xii) Taxation
Income tax comprises current tax and deferred tax. Current tax is the
amount of tax payable on the taxable income for the year as determined
in accordance with the applicable tax rates and the provisions of the
Income Tax Act, 1961 and other applicable tax laws. Deferred tax assets
and liabilities are recognised for the future tax consequences of
timing differences, subject to the consideration of prudence. Deferred
tax assets and liabilities are measured using the tax rates enacted or
substantively enacted at the balance sheet date. Deferred tax assets
are recognised for timing differences of items other than unabsorbed
depreciation and carry forward losses only to the extent that
reasonable certainty exists that sufficient future taxable income will
be available against which these can be realized. However, if there are
unabsorbed depreciation and carry forward of losses, deferred tax
assets are recognised only if there is virtual certainty supported by
convincing evidence that there will be sufficient future taxable income
available to realise the assets. Minimum alternate tax (Mat) paid in
accordance with the tax laws, which gives future economic benefits in
the form of adjustment to future income tax liability, is considered as
an asset if there is convincing evidence that the company will pay
normal income tax. Accordingly, Mat is recognised as an asset in the
Balance sheet when it is highly probable that future economic benefit
associated with it will flow to the company.
(xiii) Earnings Per Share
The company reports basic and diluted earnings per equity share in
accordance with Accounting Standard 'AS20 - Earning Per Share'. Basic
earnings per equity share has been computed by dividing net profit
after tax by the weighted average number of equity shares outstanding
during the year. Diluted earnings per equity share is computed using
the weighted average number of equity shares and dilutive potential
equity shares outstanding during the year except where the result would
be anti-dilutive.
(xiv) Impairment of Assets
At each balance sheet date, the company reviews the carrying amount of
its assets to determine whether there is any indication that those
assets suffered an impairment loss. If any such indication exists, the
recoverable amount of the assets is estimated in order to determine the
extent of impairment loss. Recoverable amount is the higher of an
asset's net selling price and value in use. In assessing value in use
the estimated future cash flows expected from the continuing use of the
asset and from its disposal are discounted to their present value using
a discount rate that reflects the current market assessments of time
value of money and the risks specific to the asset.
Reversal of impairment loss is recognised as income in the Statement of
Profit and Loss.
(xv) Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past event; it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation,
in respect of which a reliable estimate can be made. Provisions
(excluding retirement benefits) are not discounted to its present value
and are determined based on best estimate of the expenditure requiredto
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimate. A contingent liability is disclosed, unless the possibilityof
an outflow of resources embodying the economic benefit is remote.
Contingent assets are not recognised in the financial statements.
(xvi) Employee Stock Option Scheme
Stock options granted to the employees under the stock options schemes
are accounted as per the accounting treatment prescribed by the SEBI
(Employee Stock Option and Employees Stock Purchase Scheme Guidelines,
1999). Accordingly, the excess of average market value of the shares
over the preceding two weeks of the date of grant of options over the
exercise price of the options is recognised as deferred employee
compensation and is charged to the Statement of Profit and Loss on
straight line basis over the vesting period of the options.
(xvii) Leases
Assets taken under lease arrangements where the risks and rewards
incidental to ownership of an asset substantially vest with the lessor
are recognised as operating leases. Lease rentals under operating
leases are recognised in the Statement of Profit and Loss on a
straight-line basis over the lease term.
(xviii) Export Incentives
Export benefits are accounted for in the year of exports based on
eligibility and there is no significant uncertainty in receiving the
same.
(xix) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
(xx) Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash and cash equivalents in Cash Flow Statement comprises of cash on
hand, bank balances and short-term deposits with banks with an original
maturity of three months or less.
(xxi) Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and reasonable
certainty exists in availing / utilising the credits.
(xxii) Operating Cycle
Based on the nature of products / activities of the Company and the
normal time between acquisition of assets and their realisation in cash
or cash equivalents, the Company has determined its operating cycle as
12 months for the purpose of classification of its assets and
liabilities as current and non-current.
Mar 31, 2013
(i) Accounting Convention
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
the Companies (Accounting Standards) Rules, 2006 and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared on accrual basis under the historical cost convention.
The accounting policies adopted in the preparation of the financial
statements are consistent with those followed in the previous years.
(ii) Use of Estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to the differences between these estimates and the
actual results and the differences are recognised in the periods in
which these differences are known / materialise.
(iii) Fixed Assets
Fixed assets are carried at cost less accumulated depreciation /
amortisation and impairment losses, if any. The cost of fixed assets
comprises its purchase price, any import duties and other taxes, any
directly attributable expenditure on making the asset ready for its
intended use, other incidental expenses and interest on borrowings
attributable to acquisition of qualifying fixed assets up to the date
the asset is ready for its intended use.
Capital work-in-progress:
Projects under which fixed assets are not yet ready for their intended
use are carried at cost, comprising direct cost, related incidental
expenses and attributable interest.
(iv) Depreciation / Amortisation
Depreciation on assets is charged proportionately from the month of
acquisition/ installation on a straight line basis on rates prescribed
by Schedule XIV of the Companies Act, 1956 other than for the following
assets, where higher rates are used based on the useful life of the
assets as determined by the Company:
Leasehold land and leasehold improvements are amortised over the term
of the lease. Technical know-how is amortised over the term of the
agreement. Computer software is amortised over a period of 3 years.
Assets acquired under finance lease are recognised at the lower of the
fair value of the leased assets at inception and the present value of
minimum lease payments and are depreciated over the lease term or
useful life, whichever is shorter. Lease payments are apportioned
between the finance charges and the reduction of the outstanding
liability. The finance charge is allocated to periods during the lease
term at a constant periodic rate of interest on the remaining balance
of the liability.
(v) Revenue Recognition
Revenue from sale of products is recognised on dispatch of goods to
customers which coincides with the transfer of risk and rewards
associated with the ownership of goods. Sales are net of rebates and
sales taxes, wherever applicable.
Revenue from fixed price contracts pertaining to pre- engineered
buildings is recognised in accordance with the percentage of completion
method based on the work performed and when it is probable that the
economic benefits associated with the contract will flow to the
company. The stage of completion of a contract is determined based on
the proportion that contract costs incurred for work performed upto the
reporting date bear to the total estimated contract costs. If a loss is
projected on any of the contracts in process, the entire projected loss
is recognised.
(vi) Investments
Long-term investments, are carried individually at cost less provision
for diminution, other than temporary, in the value of such investments.
(vii) Inventories
Inventories are valued at cost or net realisable value after providing
for obsolescence and other losses whichever is lower and includes all
applicable costs incurred in bringing goods to their present location
and condition. The basis for determining cost for various categories of
inventories is as follows:
(viii) Research and Development Costs
Research and development costs of revenue nature are charged to the
Statement of Profit and Loss when incurred. Expenditure of capital
nature is capitalised and depreciated in accordance with the rates set
out in Note 2 (iv) above.
(ix) Employee Benefits (See also Note 2.29)
a. Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange of services rendered by employees is recognised during
the period when the employee renders the services. These benefits
include compensated absences and performance incentives.
b. Post-employment benefit plans
The Company has various schemes of retirement benefits namely provident
fund, superannuation schemes and gratuity, which are administered by
trustees of independently constituted trusts recognised by the
Income-tax authorities.
The Company''s contributions towards provident fund are deposited in a
trust formed by the Company under the Employees Provident Fund and
Miscellaneous Provisions Act, 1952. Contributions to superannuation
fund are deposited in a separate trust. These trusts are recognised by
the Income Tax authorities. The contributions to the trusts are managed
by the trustees of the respective trusts.
The Company''s superannuation scheme and the employee''s provident fund
scheme are defined contribution schemes. The Company''s contribution
paid/ payable under these schemes are recognised as expenses in the
Statement of Profit and Loss during the period in which the employee
renders the related service. The Provident Fund scheme additionally
requires the Company to guarantee payment of interest at rates notified
by the Central Government from time to time, for which shortfall as at
the Balance Sheet date, if any, is provided for.
The Company''s gratuity scheme is a defined benefit scheme. For defined
benefit schemes, the cost of providing benefits is determined using
projected unit credit method, with actuarial valuation being carried
out at each balance sheet date. Actuarial gains and losses are
recognised in full in the Statement of Profit and Loss for the period
in which they occur. Past service cost is recognised to the extent the
benefits are already vested, and otherwise is amortised on a straight-
line method over the average period until the benefits become vested.
The retirement benefit obligation recognised in the balance sheet
represents the present value of the defined benefit obligations as
adjusted for unrecognised past service cost, and as reduced by the fair
value of scheme assets. Any asset resulting from this calculation is
limited to past service cost, plus the present value of available
refunds and reductions in future contributions to the scheme.
Benefits comprising compensated absences constitute other employee
benefits. The liability for compensated absences is provided on the
basis of an actuarial valuation done by an independent actuary at the
year end. Actuarial gains and losses are recognised immediately in the
Statement of Profit and Loss.
(x) Borrowing Costs
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
(xi) Foreign Exchange Transactions
Initial recognition
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction or at rates that closely approximate the rate at the date
of the transaction.
Measurement at the balance sheet date
Foreign currency monetary items (other than derivative contracts) of
the Company, outstanding at the balance sheet date are restated at the
year- end rates. Non-monetary items of the Company are carried at
historical cost.
Treatment of exchange differences
Exchange differences arising on settlement / restatement of foreign
currency monetary assets and liabilities of the Company are recognised
as income or expense in the Statement of Profit and Loss.
Accounting for forward contracts
Premium / discount on forward exchange contracts, are amortised over
the period of the contracts if such contracts relate to monetary items
as at the balance sheet date.
Derivative contracts
The Company enters into derivative contracts in the nature of interest
rate swaps and forward contracts with an intention to hedge its
existing assets and liabilities and firm commitments. Derivative
contracts which are closely linked to the existing assets and
liabilities are accounted as per the policy stated for Foreign Exchange
Transactions.
All derivative contracts are marked-to-market and losses are recognised
in the Statement of Profit and Loss. Gains arising on the same are not
recognised, until realised, on grounds of prudence.
The Company had opted for accounting the exchange rate differences
arising on reporting of Long term foreign currency monetary items in
line with the Companies (Accounting Standard) Amendments Rules, 2009 on
Accounting Standard ÂAS11 Â The Effects of Change in Foreign Exchange
Rates'' (See also Note 2.37).
(xii) Taxation (See also Note 2.30)
Income tax comprises current tax and deferred tax. Deferred tax assets
and liabilities are recognised for the future tax consequences of
timing differences, subject to the consideration of prudence. Deferred
tax assets and liabilities are measured using the tax rates enacted or
substantively enacted at the balance sheet date.
(xiii) Earnings Per Share (See also Note 2.38)
The Company reports basic and diluted earnings per equity share in
accordance with Accounting Standard ÂAS20 Â Earning Per Share''. Basic
earnings per equity share has been computed by dividing net profit
after tax by the weighted average number of equity shares outstanding
for the year. Diluted earnings per equity share is computed using the
weighted average number of equity shares and dilutive potential equity
shares outstanding during the year except where the result would be
anti-dilutive.
(xiv) Impairment of Assets
At each balance sheet date, the Company reviews the carrying amount of
its assets to determine whether there is any indication that those
assets suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the
extent of impairment loss. Recoverable amount is the higher of an
assets net selling price and value in use. In assessing value in use
the estimated future cash flows expected from the continuing use of the
asset and from its disposal are discounted to their present value using
a discount rate that reflects the current market assessments of time
value of money and the risks specific to the asset.
Reversal of impairment loss is recognised as income in the Statement of
Profit and Loss.
(xv) Contingencies/ Provisions
A provision is recognised when the Company has a present obligation as
a result of past event; it is probable that an outflow of resources
embodying economic benefits 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
estimate of the expenditure required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimate. A contingent liability
is disclosed, unless the possibility of an outflow of resources
embodying the economic benefit is remote.
(xvi) Employee Stock Option Scheme (See also Note 2.46)
Stock options granted to the employees under the stock options schemes
are accounted as per the accounting treatment prescribed by the
Employee Stock Option and Employees Stock Purchase Scheme Guidelines,
1999 issued by Securities and Exchange Board of India. Accordingly, the
excess of average market value of the shares over the preceding two
weeks of the date of grant of options over the exercise price of the
options is recognised as deferred employee compensation and is charged
to the Statement of Profit and Loss on straight line basis over the
vesting period of the options.
(xvii) Leases (See also Note 2.36)
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis.
(xviii) Export Incentives
Export benefits are accounted for in the year of exports based on
eligibility and there is no uncertainty in receiving the same.
(xix) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non- cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
(xx) Service tax input credit
Service tax input credit is accounted for in the books in the period in
which the underlying service received is accounted and when there is no
uncertainty in availing / utilising the credits.
Mar 31, 2012
(i) Accounting Convention
These financial statements have been prepared under the historical cost
convention, on the accrual basis of accounting and in accordance with
the Generally Accepted Accounting Principles ('GAAP') in India and
comply with the accounting standards prescribed by the Companies
(Accounting Standards) Rules, 2006 and in accordance with the
provisions of the Companies Act, 1956, as adopted consistently by the
Company.
(ii) Use of Estimates
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures relating to the
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period. Example of
such estimates include provisions for doubtful debts, employee
retirement benefit plans, provision for income taxes, accounting for
contract costs expected to be incurred to complete construction and the
useful lives of fixed assets.
(iii) Fixed Assets and Depreciation / Amortization
Fixed assets are stated at cost less accumulated
depreciation/amortization. Cost includes purchase price and all other
attributable costs of bringing the assets to working condition for
intended use.
Depreciation on assets is charged proportionately from the month of
acquisition/ installation on a straight line basis on rates prescribed
by Schedule XIV of the Companies Act, 1956 other than for the following
assets, where higher rates are used based on the useful life of the
assets as determined by the Company:
Furniture and fixtures, office equipment
(except data processing equipment) 10%
Buildings 5%
Roads 3.34%
Vehicles 20%
Pallets used for autoclaving
(included in plant and equipment) 20%
Leasehold land and leasehold improvements are amortized over the term
of the lease.
Technical know-how is amortized over the term of the agreement.
Computer software is amortized over a period of 3 years.
Assets acquired under finance lease are recognized at the lower of the
fair value of the leased assets at inception and the present value of
minimum lease payments and are depreciated over the lease term or
useful life, whichever is shorter. Lease payments are apportioned
between the finance charges and the reduction of the outstanding
liability. The finance charge is allocated to periods during the lease
term at a constant periodic rate of interest on the remaining balance
of the liability.
(iv) Revenue Recognition
Revenue from sale of products is recognized on dispatch of goods to
customers which coincides with the transfer of risk and rewards
associated with the ownership of goods. Sales are net of rebates and
sales taxes, wherever applicable.
Revenue from erection business on fixed price contracts is recognized
in accordance with the percentage of completion method based on the
work completed.
(v) Investments
Long term investments are stated at cost less provision for other than
temporary diminution in the carrying value of each investment. Current
investments are carried forward at lower of cost or fair value.
(vi) Inventories
Inventories are valued at cost or net realizable value after providing
for obsolescence and other losses whichever is lower and includes all
applicable costs incurred in bringing goods to their present location
and condition. The basis for determining cost for various categories of
inventories is as follows:
Stores and spare parts - Weighted average
Raw materials - Weighted average
Materials in transit - At cost
Work in progress and
Finished goods - Material cost plus appropriate
share of lab our, manufacturing
and other overheads.
Stock in trade - Weighted average
(vii) Research and Development Costs
Research and development costs of revenue nature are charged to the
Statement of Profit and Loss when incurred. Expenditure of capital
nature is capitalized and depreciated in accordance with the rates set
out in paragraph 1 (iii) above.
(viii) Employee Benefits (See also Note 2.27)
a. Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange of services rendered by employees is recognized during
the period when the employee renders the services. These benefits
include compensated absences and performance incentives.
b. Post-employment benefit plans
The Company has various schemes of retirement benefits namely provident
fund, superannuation schemes and gratuity, which are administered by
trustees of independently constituted trusts recognized by the
Income-tax authorities.
The Company's contributions towards provident fund are deposited in a
trust formed by the Company under the Employees Provident Fund and
Miscellaneous Provisions Act, 1952. Contributions to superannuation
fund are deposited in a separate trust. These trusts are recognized by
the Income Tax authorities. The contributions to the trusts are managed
by the trustees of the respective trusts.
The Company's superannuation scheme and the employee's provident fund
scheme are defined contribution schemes. The Company's contribution
paid/ payable under these schemes are recognized as expenses in the
Statement of Profit and Loss during the period in which the employee
renders the related service. The Provident Fund scheme additionally
requires the Company to guarantee payment of interest at rates notified
by the Central Government from time to time, for which shortfall as at
the Balance Sheet date, if any, is provided for.
The Company's gratuity scheme is a defined benefit scheme. For defined
benefit schemes, the cost of providing benefits is determined using
projected unit credit method, with actuarial valuation being carried
out at each balance sheet date. Actuarial gains and losses are
recognized in full in the profit & loss account for the period in which
they occur. Past service cost is recognized to the extent the benefits
are already vested, and otherwise is amortized on a straight-line
method over the average period until the benefits become vested.
The retirement benefit obligation recognized in the balance sheet
represents the present value of the defined benefit obligations as
adjusted for unrecognized past service cost, and as reduced by the fair
value of scheme assets. Any asset resulting from this calculation is
limited to past service cost, plus the present value of available
refunds and reductions in future contributions to the scheme.
Benefits comprising compensated absences constitute other employee
benefits. The liability for compensated absences is provided on the
basis of an actuarial valuation done by an independent actuary at the
year end. Actuarial gains and losses are recognized immediately in the
Statement of Profit and Loss.
(ix) Borrowing Costs
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
(x) Foreign Exchange Transactions
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction. Monetary items denominated
in foreign currency and outstanding at the balance sheet date are
translated at the exchange rate ruling on that date. Exchange
differences arising on foreign currency transactions are recorded as
income or expense in the period in which they arise.
In respect of forward contracts taken by the Company, the difference
between the forward rate and the exchange rate at the date of the
transaction is recognized as expense over the life of the forward
contract.
The Company enters into derivative contracts in the nature of interest
rate swaps and forward contracts with an intention to hedge its
existing assets and liabilities, firm commitments and highly probable
transactions. Derivative contracts which are closely linked to the
existing assets and liabilities are accounted as per the policy stated
for Foreign Exchange Transactions.
All other derivative contracts are marked-to-market and losses are
recognized in the Statement of Profit and Loss. Gains arising on the
same are not recognized, until realized, on grounds of prudence.
The Company had opted for accounting the exchange rate differences
arising on reporting of Long term foreign currency monetary items in
line with the Companies (Accounting Standard) Amendments Rules, 2009 on
Accounting Standard 'AS11 - The Effects of Change in Foreign Exchange
Rates' (See also Note 2.36).
(xi) Taxation (See also Note 2.28)
Income tax comprises current tax and deferred tax. Deferred tax assets
and liabilities are recognized for the future tax consequences of
timing differences, subject to the consideration of prudence. Deferred
tax assets and liabilities are measured using the tax rates enacted or
substantively enacted at the balance sheet date.
(xii) Earnings Per Share (See also Note 2.37)
The Company reports basic and diluted earnings per equity share in
accordance with Accounting Standard 'AS20 - Earning Per Share'.
Basic earnings per equity share has been computed by dividing net
profit after tax by the weighted average number of equity shares
outstanding for the year. Diluted earnings per equity share is computed
using the weighted average number of equity shares and dilutive
potential equity shares outstanding during the year except where the
result would be anti-dilutive.
(xiii) Impairment of Assets
At each balance sheet date, the Company reviews the carrying amount of
its assets to determine whether there is any indication that those
assets suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the
extent of impairment loss. Recoverable amount is the higher of an
assets net selling price and value in use. In assessing value in use
the estimated future cash flows expected from the continuing use of the
asset and from its disposal are discounted to their present value using
a discount rate that reflects the current market assessments of time
value of money and the risks specific to the asset.
Reversal of impairment loss is recognized as income in the Statement of
Profit and Loss.
(xiv) Contingencies/ Provisions
A provision is recognized when the Company has a present obligation as
a result of past event; it is probable that an outflow of resources
embodying economic benefits 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
estimate of the expenditure required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimate. A contingent liability
is disclosed, unless the possibility of an outflow of resources
embodying the economic benefit is remote.
(xv) Employee Stock Option Scheme (See also Note 2.45)
Stock options granted to the employees under the stock options schemes
are accounted as per the accounting treatment prescribed by the
Employee Stock Option and Employees Stock Purchase Scheme Guidelines,
1999 issued by Securities and Exchange Board of India. Accordingly, the
excess of average market value of the shares over the preceding two
weeks of the date of grant of options over the exercise price of the
options is recognized as deferred employee compensation and is charged
to the Statement of Profit and Loss on straight line basis over the
vesting period of the options.
(xvi) Leases (See also Note 2.35)
Operating Lease
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Operating lease charges are recognized as an expense
in the Statement of Profit and Loss on a straight - line basis over the
lease term.
Finance Lease
Leases under which the Company assumes substantially all the risks and
rewards of ownership are classified as finance leases. The lower of
fair value of asset and present minimum lease rentals is capitalized as
fixed assets with corresponding amount shown as lease liability. The
principal component in the lease rentals is adjusted against the lease
liability and interest component is charged to Statement of Profit and
Loss.
(xvii) Export Incentives
Export benefits are accounted for in the year of exports based on
eligibility and there is no uncertainty in receiving the same.
(xviii)Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
Mar 31, 2011
(i) Accounting Convention
These financial statements have been prepared under the historical cost
convention, on the accrual basis of accounting and in accordance with
the Generally Accepted Accounting Principles (GAAP) in India and
comply with the accounting standards prescribed by the Companies
(Accounting Standards) Rules, 2006 to the extent applicable and in
accordance with the provisions of the Companies Act, 1956, as adopted
consistently by the Company.
(ii) Use of Estimates
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures relating to the
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period. Example of
such estimates include provisions for doubtful debts, employee
retirement benefit plans, provision for income taxes, accounting for
contract costs expected to be incurred to complete construction and the
useful lives of fixed assets.
(iii) Fixed Assets and Depreciation
Fixed assets are stated at cost less accumulated depreciation. Cost
includes purchase price and all other attributable costs of bringing
the assets to working condition for intended use.
Depreciation on assets is charged proportionately from the month of
acquisition/ installation on a straight line basis on rates prescribed
by Schedule XIV of the Companies Act, 1956 other than for the following
assets, where higher rates are used based on the useful life of the
assets as determined by the Company:
Leasehold land and improvements are amortised over the term of the
lease.
Technical know-how is amortised over the term of the agreement.
Computer software is amortised over a period of 3 years.
Assets acquired under finance lease are recognised at the lower of the
fair value of the leased assets at inception and the present value of
minimum lease payments and are depreciated over the lease term or
useful life, whichever is shorter. Lease payments are apportioned
between the finance charges and the reduction of the outstanding
liability. The finance charge is allocated to periods during the lease
term at a constant periodic rate of interest on the remaining balance
of the liability.
(iv) Revenue Recognition
Revenue from sale of products is recognised on dispatch of goods to
customers which coincides with the transfer of risk and rewards
associated with the ownership of goods. Sales are net of rebates and
sales taxes, wherever applicable.
Revenue from erection business on fixed price contracts is recognised
in accordance with the percentage of completion method based on the
work completed.
(v) Investments
Investments are stated at cost. Provision is made for other than
temporary diminution in the value of investments.
(vi) Inventories
Inventories are valued at cost or net realisable value, whichever is
lower and includes all applicable costs incurred in bringing goods to
their present location and condition. The basis for determining cost
for various categories of inventories is as follows:
Stores and spare parts - Weighted average
Raw materials - Weighted average
Materials in transit - At cost
Work in process and Finished goods - Material cost plus appropriate
share of labour, manufacturing and other overheads.
(vii) Research and Development Costs
Research and development costs of revenue nature are charged to the
profit and loss account when incurred. Expenditure of capital nature is
capitalised and depreciated in accordance with the rates set out in
paragraph 1 (iii) above.
(viii) Employee Benefits (See also Note 6)
a. Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange of services rendered by employees is recognised during
the period when the employee renders the services. These benefits
include compensated absences and performance incentives.
b. Post-employment benefit plans
The Company has various schemes of retirement benefits namely provident
fund, superannuation schemes and gratuity, which are administered by
trustees of independently constituted trusts recognised by the
Income-tax authorities.
The Companys contributions towards provident fund are deposited in
trusts formed by the Company under the Employees Provident Fund and
Miscellaneous Provisions Act, 1952. Contributions to superannuation
fund are deposited in a separate trust. These trusts are recognised by
the Income Tax authorities. The contributions to the trusts are managed
by the trustees of the respective trusts.
The Companys superannuation scheme and the employees provident fund
scheme are defined contribution schemes. The Companys contribution
paid/ payable under these schemes are recognised as expenses in the
profit and loss account during the period in which the employee renders
the related service. The Provident Fund scheme additionally requires
the Company to guarantee payment of interest at rates notified by the
Central Government from time to time, for which shortfall as at the
Balance Sheet date, if any, is provided for.
The Companys gratuity scheme is a defined benefit scheme. For defined
benefit schemes, the cost of providing benefits is determined using
projected unit credit method, with actuarial valuation being carried
out at each balance sheet date. Actuarial gains and losses are
recognised in full in the profit & loss account for the period in which
they occur. Past service cost is recognised to the extent the benefits
are already vested, and otherwise is amortised on a straight-line
method over the average period until the benefits become vested.
The retirement benefit obligation recognised in the balance sheet
represents the present value of the defined benefit obligations as
adjusted for unrecognised past service cost, and as reduced by the fair
value of scheme assets. Any asset resulting from this calculation is
limited to past service cost, plus the present value of available
refunds and reductions in future contributions to the scheme.
Benefits comprising compensated absences constitute other long term
employee benefits. The liability for compensated absences is provided
on the basis of an actuarial valuation done by an independent actuary
at the year end. Actuarial gains and losses are recognised immediately
in the profit and loss account.
(ix) Borrowing Costs
Borrowing costs that are attributable to the acquisition, construction
or production of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
(x) Foreign Exchange Transactions
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction. Monetary items denominated
in foreign currency and outstanding at the balance sheet date are
translated at the exchange rate ruling on that date. Exchange
differences arising on foreign currency transactions are recorded as
income or expense in the period in which they arise.
In respect of forward contracts taken by the Company, the difference
between the forward rate and the exchange rate at the date of the
transaction is recognised as expense over the life of the forward
contract.
The Company had opted for accounting the exchange rate differences
arising on reporting of Long term foreign currency monetary items in
line with the Companies (Accounting Standard) Amendments Rules, 2009 on
Accounting Standard AS11 Ã The Effects of Change in Foreign Exchange
Rates (See also Note 15).
(xi) Taxation (See also Note 7)
Income tax comprises current tax and deferred tax. Deferred tax assets
and liabilities are recognised for the future tax consequences of
timing differences, subject to the consideration of prudence. Deferred
tax assets and liabilities are measured using the tax rates enacted or
substantively enacted at the balance sheet date.
(xii) Earnings Per Share (See also Note 16)
The Company reports basic and diluted earnings per equity share in
accordance with Accounting Standard AS20 Ã Earning Per Share. Basic
earnings per equity share has been computed by dividing net profit
after tax by the weighted average number of equity shares outstanding
for the year. Diluted earnings per equity share is computed using the
weighted average number of equity shares and dilutive potential equity
shares outstanding during the year except where the result would be
anti-dilutive.
(xiii) Impairment of Assets
At each balance sheet date, the Company reviews the carrying amount of
its assets to determine whether there is any indication that those
assets suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the
extent of impairment loss. Recoverable amount is the higher of an
assets net selling price and value in use. In assessing value in use
the estimated future cash flows expected from the continuing use of the
asset and from its disposal are discounted to their present value using
a discount rate that refects the current market assessments of time
value of money and the risks specific to the asset.
Reversal of impairment loss is recognised as income in the profit and
loss account.
(xiv) Contingencies/ Provisions
A provision is recognised when the Company has a present obligation as
a result of past event; it is probable that an outflow of resources
embodying economic benefits 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
estimate of the expenditure required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to refect the current best estimate. A contingent liability is
disclosed, unless the possibility of an outflow of resources embodying
the economic benefit is remote.
(xv) Employee Stock Option Scheme (See also Note 22)
Stock options granted to the employees under the stock options schemes
are accounted as per the accounting treatment prescribed by the
Employee Stock Option and Employees Stock Purchase Scheme Guidelines,
1999 issued by Securities and Exchange Board of India. Accordingly,
the excess of average market value of the shares over the preceding two
weeks of the date of grant of options over the exercise price of the
options is recognised as deferred employee compensation and is charged
to the profit and loss account on straight line basis over the vesting
period of the options.
(xvi) Leases (See also Note 14)
Operating Lease
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Operating lease charges are recognised as an expense
in the profit and loss account on a straight à line basis over the
lease term.
Finance Lease
Leases under which the Company assumes substantially all the risks and
rewards of ownership are classified as finance leases. The lower of
fair value of asset and present minimum lease rentals is capitalised as
fixed assets with corresponding amount shown as lease liability. The
principal component in the lease rentals is adjusted against the lease
liability and interest component is charged to profit and loss account.
Mar 31, 2010
(i) Accounting Convention
These financial statements have been prepared under the historical cost
convention, on the accrual basis of accounting and in accordance with
the Generally Accepted Accounting Principles (ÃGAAPÃ) in India and
comply with the accounting standards prescribed by the Companies
(Accounting Standards) Rules, 2006 to the extent applicable and in
accordance with the provisions of the Companies Act, 1956, as adopted
consistently by the Company.
(ii) Use of Estimates
The preparation of financial statements requires the management of the
Company to make estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures relating to the
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period. Example of
such estimates include provisions for doubtful debts, employee
retirement benefit plans, provision for income taxes, accounting for
contract costs expected to be incurred to complete construction and the
useful lives of fixed assets.
(iii) Fixed Assets and Depreciation
Fixed assets are stated at cost less accumulated depreciation. Cost
includes purchase price and all other attributable costs of bringing
the assets to working condition for intended use.
Depreciation on assets is charged proportionately from the month of
acquisition/ installation on a straight line basis on rates prescribed
by schedule XIV of the Companies Act,1956 other than for the following
assets, where higher rates are used based on the useful life of the
assets as determined by the Company:
Furniture, fixtures and office equipment (except data processing
equipment) 10%
Buildings 5%
Factory roads 3.34%
Vehicles 20%
Pallets used for autoclaving 20%
Leasehold land and improvements are amortised over the term of the
lease.
Technical know-how is amortised over the term of the agreement.
Computer software is amortised over a period of 3 years.
Assets acquired under finance lease are recognised at the lower of the
fair value of the leased assets at inception and the present value of
minimum lease payments and are depreciated over the lease term or
useful life, whichever is shorter. Lease payments are apportioned
between the finance charges and the reduction of the outstanding
liability. The finance charge is allocated to periods during the lease
term at a constant periodic rate of interest on the remaining balance
of the liability.
(iv) Revenue Recognition
Revenue from sale of products is recognised on dispatch of goods to
customers which coincides with the transfer of risk and rewards
associated with the ownership of goods. Sales are net of rebates and
sales taxes, wherever applicable.
Revenue from erection business on fixed price contracts is recognised
in accordance with the percentage of completion method based on the
work completed.
(v) Investments
Investments are stated at cost. Provision is made for other than
temporary diminution in the value of investments.
(vi) Inventories
Inventories are valued at cost or net realisable value, whichever is
lower and includes all applicable costs incurred in bringing goods to
their present location and condition. The basis for determining cost
for various categories of inventories is as follows:
Stores and spare parts - Weighted average
Raw materials - Weighted average
Materials in transit - At cost
Work in process and Finished goods - Material cost plus appropriate
share of labour, manufacturing and other overheads.
(vii) Research and Development Costs
Research and development costs of revenue nature are charged to the
profit and loss account when incurred. Expenditure of capital nature is
capitalised and depreciated in accordance with the rates set out in
paragraph 1 (iii) above.
(viii) Employee Benefits (See also Note 6)
a. Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange of services rendered by employees is recognised during
the period when the employee renders the services. These benefits
include compensated absences and performance incentives.
b. Post-employment benefit plans
The Company has various schemes of retirement benefits namely provident
fund, superannuation schemes and gratuity, which are administered by
trustees of independently constituted trusts recognized by the
Income-tax authorities.
The CompanyÃs superannuation scheme and the employeeÃs provident fund
scheme are defined contribution schemes. The CompanyÃs contribution
paid/ payable under the schemes are recognised as expenses in the
profit and loss account during the period in which the employee renders
the related service.
The CompanyÃs gratuity scheme is a defined benefit scheme. For defined
benefit schemes, the cost of providing benefits is determined using
projected unit credit method, with actuarial valuation being carried
out at each balance sheet date. Actuarial gains and losses are
recognised in full in the profit and loss account for the period in
which they occur. Past service cost is recognised to the extent the
benefits are already vested, and otherwise is amortised on a
straight-line method over the average period until the benefits become
vested.
The retirement benefit obligation recognised in the balance sheet
represents the present value of the defined benefit obligations as
adjusted for unrecognised past service cost, and as reduced by the fair
value of scheme assets. Any asset resulting from this calculation is
limited to past service cost, plus the present value of available
refunds and reductions in future contributions to the scheme.
Benefits comprising compensated absences constitute other long term
employee benefits. The liability for compensated absences is provided
on the basis of an actuarial valuation done by an independent actuary
at the year end. Actuarial gains and losses are recognised immediately
in the profit and loss account.
(ix) Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalised as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
(x) Foreign Exchange Transactions
Transactions in foreign currencies are recorded at the exchange rate
prevailing on the date of the transaction. Monetary items denominated
in foreign currency and outstanding at the balance sheet date are
translated at the exchange rate ruling on that date. Exchange
differences arising on foreign currency transactions are recorded as
income or expense in the period in which they arise.
In respect of forward contracts taken by the Company, the difference
between the forward rate and the exchange rate at the date of the
transaction is recognised as expense over the life of the forward
contract.
The Company has opted for accounting the exchange rate differences
arising on reporting of Long term foreign currency monetary items in
line with the Companies (Accounting Standard) Amendments Rules, 2009 on
Accounting Standard ÃAS11 Ã The Effects of Change in Foreign Exchange
Ratesà (See also Note 13).
(xi) Taxation (See also Note 7)
Income tax comprises current tax and deferred tax. Deferred tax assets
and liabilities are recognised for the future tax consequences of
timing differences, subject to the consideration of prudence. Deferred
tax assets and liabilities are measured using the tax rates enacted or
substantively enacted at the balance sheet date.
(xii) Earnings Per Share (See also Note 14)
The Company reports basic and diluted earnings per equity share in
accordance with Accounting Standard ÃAS20 Ã Earning Per ShareÃ. Basic
earnings per equity share has been computed by dividing net profit
after tax by the weighted average number of equity shares outstanding
for the year. Diluted earnings per equity share is computed using the
weighted average number of equity shares and dilutive potential equity
shares outstanding during the year except where the result would be
anti-dilutive.
(xiii) Impairment of Assets
At each balance sheet date, the Company reviews the carrying amount of
its assets to determine whether there is any indication that those
assets suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the
extent of impairment loss. Recoverable amount is the higher of an
assets net selling price and value in use. In assessing value in use
the estimated future cash flows expected from the continuing use of the
asset and from its disposal are discounted to their present value using
a discount rate that reflects the current market assessments of time
value of money and the risks specific to the asset.
Reversal of impairment loss is recognised as income in the profit and
loss account.
(xiv) Contingencies/ Provisions
A provision is recognised when the Company has a present obligation as
a result of past event; it is probable that an outflow of resources
embodying economic benefits 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
estimate of the expenditure required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimate. A contingent liability
is disclosed, unless the possibility of an outflow of resources
embodying the economic benefit is remote.
(xv) Employee Stock Option Scheme (See also Note 20)
Stock options granted to the employees under the stock options schemes
are accounted as per the accounting treatment prescribed by the
Employee Stock Option and Employees Stock Purchase Scheme Guidelines,
1999 issued by Securities and Exchange Board of India. Accordingly, the
excess of average market value of the shares over the preceding 2 weeks
of the date of grant of options over the exercise price of the options
is recognised as deferred employee compensation and is charged to the
profit and loss account on straight line basis over the vesting period
of the options.
(xvi) Leases (See also Note 12)
Operating Lease
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased asset are classified as
operating leases. Operating lease charges are recognised as an expense
in the profit and loss account on a straight-line basis over the lease
term.
Finance Lease
Leases under which the Company assumes substantially all the risks and
rewards of ownership are classified as finance leases. The lower of
fair value of asset and present minimum lease rentals is capitalised as
fixed assets with corresponding amount shown as lease liability. The
principal component in the lease rentals is adjusted against the lease
liability and interest component is charged to profit and loss account.