Accounting Policies of FDC Ltd. Company
Mar 31, 2023
COMPANY OVERVIEW, SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS.
FDC Limited (the "Company") is a public listed Company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its equity shares are listed on two recognized stock exchanges Bombay Stock Exchange and National Stock Exchange in India. The registered office of the Company is located at Waluj, Dist. Aurangabad, Maharashtra.
The Company is principally engaged in the business of Pharmaceuticals.
The standalone financial statements for the year ended March 31,2023 were authorized for issue by the Companyâs board of directors on May 25, 2023.
1.2 BASIS OF PREPARATION AND MEASUREMENTStatement of compliance
These standalone financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) to comply with the Section 133 of the Companies Act, 2013 (" the Act") read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amended Rules, 2016, and the relevant provisions and amendments, as applicable.
Basis of preparation and measurement
The standalone financial statements have been prepared on a historical cost basis, except for the following:
- Certain financial assets and liabilities (including derivative instruments and mutual funds) that are measured at fair value; and
- Defined benefit plans - plan assets measured at fair value.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Accounting policies and methods of computation followed in the financial statements are same as compared with the annual financial statements for the year ended March 31, 2023,except for adoption of new standard or any pronouncements effective from April 1,2021.
The standalone financial statements are presented in Indian Rupees (''), which is the Companyâs functional currency. All financial information have presented in Indian Rupees (?) and all amount have been rounded-off to the nearest Lakhs, unless otherwise stated.
1.3 SIGNIFICANT ACCOUNTING POLICIESa Current and 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 realized 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:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is 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
- Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
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 realization in cash and cash equivalents. Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has identified twelve months as its operating cycle for the purpose of current / non-current classification of assets and liabilities.
Revenue recognition under Ind AS 115 (applicable from April 1,2018)
Under Ind AS 115, the Company recognized revenue when (or as) a performance obligation was satisfied, i.e. when ''control'' of the goods underlying the particular performance obligation were transferred to the customer. Further, revenue from sale of goods is recognized based on a 5-Step Methodology which is as follows:
Step 1 : Identify the contract(s) with a customer
Step 2 : Identify the performance obligation in contract
Step 3 : Determine the transaction price
Step 4 : Allocate the transaction price to the performance obligations in the contract
Step 5 : Recognise revenue when (or as) the entity satisfies a performance obligation
The Company has adopted Ind AS 115 using the cumulative effect method whereby the effect of applying this standard is recognised at the date of initial application (i.e. April 1,2018).
The specific recognition criteria described below must also be met before revenue is recognised.
Revenue from sale of goods is recognized at point in time when control is transferred to the customer and it is probable that consideration will be collected. Control of goods is transferred upon the shipment of the goods to the customer or when goods is made available to the customer.
Revenue is measured based on the transaction price, which is the consideration, adjusted for variable consideration such as volume discounts, cash discounts etc. as specified in the contract with the customer. The Company collects Goods and Services Tax on behalf of the government and therefore, these are not economic benefits flowing to the Company. Hence, these are excluded from the revenue.
The Company has certain marketing arrangements based on the profit sharing model whereby Company sells its products to the business partner on price agreed upon agreement and is also entitled for profit share over and above its sale price. Revenue from the sale of goods to the partner is recognized upon delivery of products to them. Whereas amount representing the profit share component is recognized as revenue in the period which corresponds to the ultimate sales of the products made by business partners and when the collectability of the profit share becomes probable and reliable.
The Company accounts for sales returns by recording an allowance for sales returns concurrent with the recognition of revenue at the time of product sale. This allowance is based on the Company''s estimate of expected sales returns towards expiry, breakages and damages. The estimate of sales returns is determined primarily by the Company''s historical experience of sales returns trends with respect to the shelf life of various products.
For all debt instruments measured at amortized cost, interest income is recorded using the effective interest rate (EIR) as set out in Ind AS 109. EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
Revenue is recognized when the Companyâs right to receive the payment is established, which is generally when shareholders approve the dividend.
Rental income, included under other income, is recognized on a straight-line basis over the term of the lease except where the rentals are structured to increase in line with expected general inflation.
Export incentives principally comprises of focus market scheme, and other export incentive schemes. The benefits under these incentive schemes are available based on the guidelines formulated for respective schemes by the government authorities. These incentives are recognized as revenue on accrual basis to the extent it is probable that realization is certain.
Other income is accounted for on accrual basis except where the receipt of income is uncertain.
c Property, Plant And Equipment
The items of Property, plant and equipment including capital work-in-progress are stated at cost, net of accumulated depreciation (other than freehold land) and accumulated impairment losses, if any. Cost comprises the purchase price, taxes, duties, freight,and any attributable cost of bringing the asset to its working condition for its intended use. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.
When significant parts of plant and equipment are required to be replaced at regular intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized in statement of profit and loss as incurred. In respect of additions to /deletions from the plant, property and equipment, depreciation is provided on pro-rata reference to the month of addition/deletion of the Assets.
Subsequent expenditures related to an item of Property, plant and equipments is added to its book value, only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance, The cost of the item can be measured reliably. Incomes and expenses related to the incidental operations not necessary to bring the item to the location and the condition necessary for it to be capable of operating in the manner intended by Management are recognized in the Statement of profit and loss.
Capital work-in-progress in respect of assets which are not ready for their intended use are carried at cost, comprising of direct costs, related incidental expenses and attributable interest.
All identifiable revenue expenses including interest incurred in respect of various projects / expansion, net of income earned during the project development stage prior to its intended use, are considered as pre-operative expenses and disclosed under Capital work-in-progress.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arize from the continued use of the asset. Any gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between sales proceeds and the carrying amount of the asset and is recognized in profit or loss. Fully depreciated assets still in use are retained in standalone financial statements.
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.
Depreciation method and estimated useful lives
Depreciation on the property, plant and equipment is provided on straight line method.
The Company, based on technical assessment made by technical expert and management estimate, depreciates certain items of plant and equipment over estimated useful lives which are different from the useful life prescribed in Schedule II to the Companies Act, 2013. The management believes these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
Any gain or losses on disposal of property, plant and equipment is recognized in the standalone statement of profit and loss.
Estimated useful lifeâs of the assets are as follows:
|
Nature of Tangible Assets |
Useful Life (No. of Years) As per Companies Act, 2013 |
Useful Life (No. of Years) As estimated by the Company |
|
Plant and machinery |
7.5 to 15 |
7.5 to 15 |
|
Building |
30 to 60 |
30 to 60 |
|
Laboratory testing machines |
10 |
10 |
|
Office equipments |
5 |
5 |
|
Furniture, fixtures and fittings |
10 |
10 |
|
Computers and peripherals |
3 to 6 |
3 to 6 |
|
Vehicles |
8 |
6 |
|
Electrical installations |
10 |
10 |
Assets costing less than '' 5,000 are depreciated at the rate of hundred per cent.
The carrying amounts of assets are reviewed at each balance sheet date and if there is any indication of impairment based on internal/ external factors. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assetâs fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of the money and risks specific to the assets. In determining fair value less costs of disposal, recent market transactions taken into account. If no such transactions can be identified, an appropriate valuation model is used.
After recognition of impairment loss, the depreciation charge for the asset is adjusted in future periods to allocate the assetâs revised carrying amount, less its residual value (if any), on straight line basis over its remaining useful life.
A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.
Other Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets with finite life are measured at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in the statement of profit and loss in the period in which the expenditure is incurred.
The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the amount of the asset and are recognized in the statement of profit and loss when the asset is de-recognized.
A summary of the policies applied to the Companyâs other intangible assets is as follows:
|
Nature of Other Intangible assets |
Useful life (No. of years) As estimated by the Company |
Amortisation method used |
|
Software and |
5 to 10 |
Amortised on |
|
Trademarks |
straight line |
|
|
basis |
Depreciation is not recorded on intangible assets under development until the asset is ready for its intended use.
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.
The Company classifies financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss, on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
Initial recognition and measurement
All financial assets (not measured subsequently at fair value through profit or loss) are recognized initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset.
Financial assets: Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:
⢠the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management''s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;
⢠how the performance of the portfolio is evaluated and reported to the Company''s management;
⢠the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed how managers of the business are compensated -e.g. whether compensation
is based on the fair value of the assets managed or the contractual cash flows collected; and
⢠the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity. Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Company''s continuing recognition of the assets. Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
For purpose of subsequent measurements, financial
assets are classified in following categories:
(a) Debt instruments at amortised cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are integral part of EIR. The EIR amortization is included in Other Income in the statement of profit and loss.
(b) Debt instruments at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at
each reporting date at fair value. Fair value movements is recognized in the OCI. However, company recognizes any interest income or impairment losses in the statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the OCI to statement of profit and loss.
(c) Debt instruments at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss. Debt instruments included within FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss. Derivatives are initially measured at fair value. Subsequent to the initial recognition, derivatives are measured at fair value and changes therein are recognized in Statement of profit and loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when fair value is negative.
All equity investments in scope of Ind AS 109 are measured at fair value. For all equity instruments, the Company may make an irrevocable election to present in other comprehensive income, subsequent changes in the fair value. All fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity. The Company has made such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
*The rights to receive cash flows from the asset has expired, or
* The Company has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a ''pass throughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
The continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
(a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance ;
(b) Financial assets that are equity instruments and are measured as at FVTOCI ;
(c) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of trade receivables or contract assets.
The Company follows ''simplified approachâ for recognition of impairment loss allowance on Trade Receivables and Other Receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
As a practical expedient, 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 forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss. This amount is reflected under the head ''other expensesâ in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:
Financial assets measured as at amortized cost, contractual revenue receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross
carrying amount.
Equity instruments measured at FVTOCI: Since financial assets are already reflected at fair value, impairment allowance is not further reduced from its value. Rather, ECL amount is presented as ''accumulated impairment amountâ in the OCI.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 financial instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
The Company classifies all financial liabilities as subsequently measured at amortized cost or FVTPL.
Initial recognition and measurement
All financial liabilities are recognized initially at fair value, in the case of loans and borrowings, payables, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables and borrowings including bank overdrafts.
Subsequent measurementFinancial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as instruments in hedge relationships as defined by Ind AS 109.
Gains or losses on liabilities held for trading are recognized in the statement of profit and loss.
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative amortization.
A Financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit and loss.
The Company measures financial instruments, such as, derivatives, mutual funds etc. at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction 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 principal or the most advantageous market must be accessible by the Company.
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 economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized 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/ declared buyback NAV for identical assets or liabilities
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarizes accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
Raw materials and packing materials are valued at lower of cost and net realizable value, cost of which includes duties and taxes and is arrived at on weighted average cost basis. Cost of imported raw materials and packing materials lying in bonded warehouse includes customs duty. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
Finished products including traded goods and work-in-progress are valued at lower of cost and net realizable value. Cost is arrived at on weighted average cost basis. Cost of finished products and work-in-progress includes material cost, labour, direct expenses, production overheads and applicable taxes, where applicable.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.The comparison of cost and net realizable value is made on an item-by-item basis.
h Foreign Currency Translation/ Transactions
The financial statements are presented in Indian Rupees (?) which is companyâs functional and presentation currency.
Monetary assets and liabilities denominated in a foreign currency outstanding at the year end are restated at the year end exchange rates. Nonmonetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
The derivative financial instruments such as forward exchange contracts to hedge its risk associated with foreign currency fluctuations are stated at fair value. Any gains or losses arising from changes in fair value are taken directly to Statement of Profit or Loss.
Exchange difference arising on the settlement of monetary items at rates different from those at
which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or expense in the year in which they arise.
Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/ subsidy will be received and all attaching conditions will be complied with.
Government grants related to revenue is recognized 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.
Government grants relating to specific fixed assets is recognized as income in equal amounts over the expected useful life of the related asset.
All employee benefits payable wholly within twelve months rendering service are classified as short term employee benefits. Benefits such as salaries, wages, short-term compensated absences, performance incentives etc., and the expected cost of bonus, exgratia are recognised during the period in which the employee renders related service.
Companyâs contribution to recognized provident fund, family pension fund and superannuation fund is defined contribution plan and is charged to the statement of profit and loss on accrual basis. The Company recognizes contribution payable to the provident fund scheme as an expenditure, when an employee renders the related service. There are no other obligations other than the contribution payable to the respective trusts.
The Company fully contributes all ascertained liabilities to the FDC Limited Gratuity Trust (the Trust). Trustees administer contributions made to the Trust and contributions are invested in a scheme with Life Insurance Corporation of India as permitted by laws of India.
The Company provides for gratuity, a defined benefit retirement plan (''the Gratuity Planâ) covering eligible
employees. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment with the Company.
Contribution to gratuity fund is defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.
Remeasurement of the net defined liability, which comprize actuarial gains and losses, the return on plan assets (excluding interest income) are recognized in other comprehensive income. Remeasurement are not reclassified to the statement of profit and loss in subsequent periods. Net interest and other expenses related to defined benefits plan are recognized in the statement of profit and loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (''past service cost'' or ''past service gain'') or the gain or loss on curtailment is recognized immediately in Statement of profit and Loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.
When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contribution to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. The Company has other long-term employee benefits in the nature of leave encashment. The liability in respect of leave encashment is provided for on the basis of an actuarial valuation on projected unit credit method at the end of financial year.
k Research And Development Expenses
Research costs are expensed as incurred. Development expenditures on an individual project are recognized as an other intangible asset when
the Company can demonstrate technical and commercial feasibility of making the asset available for use.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit. Amortization expense is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
A subsidiary is an entity that is controlled by the Company.
The Company accounts for the investments in equity shares of subsidiaries at cost in accordance with Ind AS 27- Separate Financial Statements.
m Lease Accounting Company as a lessee
The Company lease asset classes primarily consist of leases for land and buildings. The Company assess whether a contract contains a lease, at inception of contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether :
(!) the contract involves the use of an identified asset;
(2) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(3) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short
term leases) and low value leases. For these short term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the generally accepted interest rate. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms
of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.
Basic earning per share is computed by dividing the net profit after tax attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus / rights issue, if any, that have changed the number of equity shares outstanding, without a corresponding change in resources.
Diluted earning per share is computed by dividing the net profit after tax attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, if any. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the year.
Income tax expense comprises current and deferred income tax.
Current tax expense is recognized in the statement of profit and loss, except when they relates to items that are recognized in other comprehensive income or directly in equity, in which case, the current tax is also recognized in other comprehensive income or directly in equity respectively. Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted by the balance sheet date.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities in accordance with the Income-tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax expense is recognized in the statement of profit and loss, except when they relates to items that are recognized in other comprehensive income or directly in equity, in which case, the deferred tax is also recognized in other comprehensive income or directly in equity respectively.
Deferred tax is provided using the balance sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date using the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax assets are recognized for carry forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profit will be available against which unused tax credits and unused tax losses can be recognized. At each balance sheet date, the Company reassesses unrecognized deferred tax assets and are recognized to the extent that it is probable that future taxable profit will be available for their realization.
Current and deferred tax for the year
The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible a temporary differences and tax losses can be utilized. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax are recognized in the statement of profit and loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the
current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. Provisions are reviewed at each balance sheet and adjusted to reflect the current best estimates.If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.
q Contingent Liabilities, Contingent Assets And Commitments
A contingent liability is a possible obligation that arizes from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
A contingent asset is not recognized unless it becomes virtually certain that an inflow of economic benefits will arize. When an inflow of benefits is probable, contingent asset is disclosed in the financial statements.
Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets and Non-cancellable operating lease.
Contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.
Based on "Management Approach" as defined in Ind AS 108 - Operating Segments, the Chief Operating Decision Maker evaluates the Companyâs performance and allocate the resources based on an analysis of various performance indicators by business segments. The Companyâs chief operating decision maker is the Managing Director of the Company.
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.
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the cash flows statement, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
Non-current assets or disposal groups comprising of assets and liabilities are classified as ''held for saleâ when all the following criteria are met: (i) decision has been made to sell (ii) the assets are available for immediate sale in its present condition (iii) the assets are being actively marketed and (iv) sale has been agreed or is expected to be concluded within 12 months of the Balance Sheet date.
Subsequently, such non-current assets and disposal groups classified as ''held for saleâ are measured at the lower of its carrying value and fair value less costs to sell. Non-current assets held for sale are not depreciated or amortised.
u Cash Dividend To Equity Holders
The Company recognizes a liability to make cash distribution to equity holders of the Company when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the law, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity.
v Policy For Statement Of Cash Flows
The Companyâs statement of cash flows are prepared using the Indirect method, whereby profit/ loss for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
Cash and cash equivalents comprise cash and bank balances and short-term fixed bank deposits that are subject to an insignificant risk of changes in value.
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.
w Changes in significant accounting policies
The Company has not been required to apply any new standard, interpretation or amendment that has been issued and therefore there were no significant changes in accounting policies.
The amendments to Schedule III of the Companies Act, 2013 are applicable from April 1, 2021. The Company has given effect of amendment by inclusion of the relevant disclosures under explanatory notes or by way of additional notes, wherever significant in nature.
y Recent Indian Accounting Standards (Ind AS) issued not yet effective
"Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:
Ind AS 1 - Presentation of Financial Statements -This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and the impact of the amendment is insignificant in the standalone financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - This amendment has introduced a definition of ''accounting estimatesâ and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1,2023. The Company has ev
Mar 31, 2022
COMPANY OVERVIEW, SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS.1.1 CORPORATE INFORMATION
FDC Limited (the "Company") is a public listed Company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its equity shares are listed on two recognised stock exchanges Bombay Stock Exchange and National Stock Exchange in India. The registered office of the Company is located at Waluj, Dist. Aurangabad, Maharashtra.
The Company is principally engaged in the business of Pharmaceuticals.
The standalone financial statements for the year ended March 31, 2022 were authorised for issue by the Companyâs board of directors on May 25, 2022.
1.2 BASIS OF PREPARATION AND MEASUREMENTStatement of compliance
These standalone financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) to comply with the Section 133 of the Companies Act, 2013 (" the Act") read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amended Rules, 2016, and the relevant provisions and amendments, as applicable.
Basis of preparation and measurement
The standalone financial statements have been prepared on a historical cost basis, except for the following:
- Certain financial assets and liabilities (including derivative instruments and mutual funds) that are measured at fair value; and
- Defined benefit plans - plan assets measured at fair value.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Accounting policies and methods of computation followed in the financial statements are same as compared with
the annual financial statements for the year ended March 31, 2021,except for adoption of new standard or any pronouncements effective from April 1,2021.
The standalone financial statements are presented in Indian Rupees (''), which is the Companyâs functional currency. All financial information have presented in Indian Rupees (?) and all amount have been rounded-off to the nearest Lakhs, unless otherwise stated.
1.3 SIGNIFICANT ACCOUNTING POLICIESa Current and 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:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is 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
- Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
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 equivalents. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has identified twelve months as its operating cycle for the purpose of current / non-current classification of assets and liabilities.
Revenue recognition under Ind AS 115 (applicable from April 1,2018)
Under Ind AS 115, the Company recognized revenue when (or as) a performance obligation was satisfied, i.e. when ''control'' of the goods underlying the particular performance obligation were transferred to the customer. Further, revenue from sale of goods is recognized based on a 5-Step Methodology which is as follows:
Step 1 : Identify the contract(s) with a customer
Step 2 : Identify the performance obligation in contract
Step 3 : Determine the transaction price
Step 4 : Allocate the transaction price to the performance obligations in the contract
Step 5 : Recognise revenue when (or as) the entity satisfies a performance obligation
The Company has adopted Ind AS 115 using the cumulative effect method whereby the effect of applying this standard is recognised at the date of initial application (i.e. April 1,2018).
The specific recognition criteria described below must also be met before revenue is recognised.
Revenue from sale of goods is recognized at point in time when control is transferred to the customer and it is probable that consideration will be collected. Control of goods is transferred upon the shipment of
the goods to the customer or when goods is made available to the customer.
Revenue is measured based on the transaction price, which is the consideration, adjusted for variable consideration such as volume discounts, cash discounts etc. as specified in the contract with the customer. The Company collects Goods and Services Tax on behalf of the government and therefore, these are not economic benefits flowing to the Company. Hence, these are excluded from the revenue.
The Company has certain marketing arrangements based on the profit sharing model whereby Company sells its products to the business partner on price agreed upon agreement and is also entitled for profit share over and above its sale price. Revenue from the sale of goods to the partner is recognised upon delivery of products to them. Whereas amount representing the profit share component is recognised as revenue in the period which corresponds to the ultimate sales of the products made by business partners and when the collectability of the profit share becomes probable and reliable.
The Company accounts for sales returns by recording an allowance for sales returns concurrent with the recognition of revenue at the time of product sale. This allowance is based on the Company''s estimate of expected sales returns towards expiry, breakages and damages. The estimate of sales returns is determined primarily by the Company''s historical experience of sales returns trends with respect to the shelf life of various products.
For all debt instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR) as set out in Ind AS 109. 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. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
Revenue is recognised when the Companyâs right to receive the payment is established, which is generally when shareholders approve the dividend.
Rental income, included under other income, is recognised on a straight-line basis over the term of the lease except where the rentals are structured to increase in line with expected general inflation.
Export incentives principally comprises of focus market scheme, and other export incentive schemes. The benefits under these incentive schemes are available based on the guidelines formulated for respective schemes by the government authorities. These incentives are recognised as revenue on accrual basis to the extent it is probable that realisation is certain.
Other income is accounted for on accrual basis except where the receipt of income is uncertain.
c Property, Plant And Equipment
The items of Property, plant and equipment including capital work-in-progress are stated at cost, net of accumulated depreciation (other than freehold land) and accumulated impairment losses, if any. Cost comprises the purchase price, taxes, duties, freight,and any attributable cost of bringing the asset to its working condition for its intended use. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for longterm construction projects if the recognition criteria are met.
When significant parts of plant and equipment are required to be replaced at regular intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in statement of profit and loss as incurred. In respect of additions to /deletions from the plant, property and equipment, depreciation is provided on pro-rata reference to the month of addition/deletion of the Assets.
Subsequent expenditures related to an item of Property, plant and equipments is added to its book value, only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. Incomes and expenses related to the incidental operations not necessary to bring the item to the location and the condition necessary for it to be capable of operating in the manner intended by Management are recognized in the Statement of profit and loss.
Capital work-in-progress in respect of assets which are not ready for their intended use are carried at cost, comprising of direct costs, related incidental expenses and attributable interest.
All identifiable revenue expenses including interest incurred in respect of various projects / expansion, net of income earned during the project development stage prior to its intended use, are considered as pre-operative expenses and disclosed under Capital work-in-progress.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between sales proceeds and the carrying amount of the asset and is recognised in profit or loss. Fully depreciated assets still in use are retained in standalone financial statements.
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the
future economic benefits embodied in the items of property, plant and equipment.
Depreciation method and estimated useful lives
Depreciation on the property, plant and equipment is provided on straight line method.
The Company, based on technical assessment made by technical expert and management estimate, depreciates certain items of plant and equipment over estimated useful lives which are different from the useful life prescribed in Schedule II to the Companies Act, 2013. The management believes these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
Any gain or losses on disposal of property, plant and equipment is recognised in the standalone statement of profit and loss.
Estimated useful lifeâs of the assets are as follows:
|
Nature of Tangible Assets |
Useful Life (No. of Years) As per Companies Act, 2013 |
Useful Life (No. of Years) As estimated by the Company |
|
Plant and machinery |
7.5 to 15 |
7.5 to 15 |
|
Building |
30 to 60 |
30 to 60 |
|
Laboratory testing machines |
10 |
10 |
|
Office equipments |
5 |
5 |
|
Furniture, fixtures and fittings |
10 |
10 |
|
Computers and peripherals |
3 to 6 |
3 to 6 |
|
Vehicles |
8 |
6 |
|
Electrical installations |
10 |
10 |
Assets costing less than '' 5,000 are depreciated at the rate of hundred per cent.
The carrying amounts of assets are reviewed at each balance sheet date and if there is any indication of impairment based on internal/ external factors. An
impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assetâs fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of the money and risks specific to the assets. In determining fair value less costs of disposal, recent market transactions taken into account. If no such transactions can be identified, an appropriate valuation model is used.
After recognition of impairment loss, the depreciation charge for the asset is adjusted in future periods to allocate the assetâs revised carrying amount, less its residual value (if any), on straight line basis over its remaining useful life.
A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.
Other Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets with finite life are measured at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in the statement of profit and loss in the period in which the expenditure is incurred.
The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the amount of the asset and are recognised in the statement of profit and loss when the asset is de-recognised.
|
A summary of the policies applied to the Company''s other intangible assets is as follows: |
||
|
Nature of Other Intangible assets |
Useful life (No. of years) As estimated by the Company |
Amortisation method used |
|
Software and Trademarks |
5 to 10 |
Amortised on straight line basis |
Depreciation is not recorded on intangible assets under development until the asset is ready for its intended use.
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.
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss, on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset.
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
Initial recognition and measurement
All financial assets (not measured subsequently at fair value through profit or loss) are recognised initially at fair value plus transaction costs that are attributable to the acquisition of the financial asset.
Financial assets: Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:
⢠the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management''s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets;
⢠how the performance of the portfolio is evaluated and reported to the Company''s management;
⢠the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed how managers of the business are compensated -e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
⢠the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity. Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Company''s continuing recognition of the assets. Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
For purpose of subsequent measurements, financial
assets are classified in following categories:
(a) Debt instruments at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest 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 integral part of EIR. The EIR amortisation is included in Other Income in the statement of profit and loss.
(b) Debt instruments at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements is recognised in the OCI. However, company recognises any interest income or impairment losses in the statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the OCI to statement of profit and loss.
(c) Debt instruments at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss. Debt instruments included within FVTPL category are measured at fair value with all changes recognised in the statement of profit and loss.
Derivatives are initially measured at fair value. Subsequent to the initial recognition, derivatives are measured at fair value and changes therein are recognised in Statement of profit and loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when fair value is negative.
All equity investments in scope of Ind AS 109 are measured at fair value. For all equity instruments, the Company may make an irrevocable election to present in other comprehensive income, subsequent changes in the fair value. All fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity. The Company has made such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
*The rights to receive cash flows from the asset has expired, or
*The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass throughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a
basis that reflects the rights and obligations that the Company has retained.
The continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
(a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance ;
(b) Financial assets that are equity instruments and are measured as at FVTOCI ;
(c) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of trade receivables or contract assets.
The Company follows ''simplified approachâ for recognition of impairment loss allowance on Trade Receivables and Other Receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality
of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
As a practical expedient, 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 forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the statement of profit and loss. This amount is reflected under the head ''other expensesâ in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:
Financial assets measured as at amortised cost, contractual revenue receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
Equity instruments measured at FVTOCI: Since financial assets are already reflected at fair value, impairment allowance is not further reduced from its value. Rather, ECL amount is presented as ''accumulated impairment amountâ in the OCI.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 financial instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
The Company classifies all financial liabilities as subsequently measured at amortised cost or FVTPL.
Initial recognition and measurement
All financial liabilities are recognised initially at fair value, in the case of loans and borrowings, payables, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables and borrowings including bank overdrafts.
Subsequent measurement
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as instruments in hedge relationships as defined by Ind AS 109.
Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a
loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
Derecognition
A Financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
The Company measures financial instruments, such as, derivatives, mutual funds etc. at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction 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 principal or the most advantageous market must be accessible by the Company.
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 economic best interest
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
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/ declared buyback NAV for identical assets or liabilities
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - Valuation 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.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
Raw materials and packing materials are valued at lower of cost and net realisable value, cost of which includes duties and taxes and is arrived at on weighted average cost basis. Cost of imported raw materials and packing materials lying in bonded warehouse includes customs duty. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
Finished products including traded goods and work-in-progress are valued at lower of cost and net realisable value. Cost is arrived at on weighted average cost basis. Cost of finished products and work-in-progress includes material cost, labour, direct expenses, production overheads and applicable taxes, where applicable.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.The comparison of cost and net realisable value is made on an item-by-item basis.
h Foreign Currency Translation/ Transactions
The financial statements are presented in Indian Rupees (?) which is companyâs functional and presentation currency.
Monetary assets and liabilities denominated in a foreign currency outstanding at the year end are restated at the year end exchange rates. Nonmonetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
The derivative financial instruments such as forward exchange contracts to hedge its risk associated with foreign currency fluctuations are stated at fair
value. Any gains or losses arising from changes in fair value are taken directly to Statement of Profit or Loss.
Exchange difference arising on the settlement of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or expense in the year in which they arise.
Grants and subsidies from the government are recognised when there is reasonable assurance that the grant/ subsidy will be received and all attaching conditions will be complied with.
Government grants related to revenue is recognised 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.
Government grants relating to specific fixed assets is recognised as income in equal amounts over the expected useful life of the related asset.
All employee benefits payable wholly within twelve months rendering service are classified as short term employee benefits. Benefits such as salaries, wages, short-term compensated absences, performance incentives etc., and the expected cost of bonus, exgratia are recognised during the period in which the employee renders related service.
Companyâs contribution to recognised provident fund, family pension fund and superannuation fund is defined contribution plan and is charged to the statement of profit and loss on accrual basis. The Company recognises contribution payable to the provident fund scheme as an expenditure, when an employee renders the related service. There are no other obligations other than the contribution payable to the respective trusts.
The Company fully contributes all ascertained liabilities to the FDC Limited Gratuity Trust
(the Trust). Trustees administer contributions made to the Trust and contributions are invested in a scheme with Life Insurance Corporation of India as permitted by laws of India.
The Company provides for gratuity, a defined benefit retirement plan (''the Gratuity Planâ) covering eligible employees. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employeeâs salary and the tenure of employment with the Company.
Contribution to gratuity fund is defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.
Remeasurement of the net defined liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest income) are recognised in other comprehensive income. Remeasurement are not reclassified to the statement of profit and loss in subsequent periods. Net interest and other expenses related to defined benefits plan are recognised in the statement of profit and loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service (''past service costâ or ''past service gainâ) or the gain or loss on curtailment is recognised immediately in Statement of profit and Loss. The Company recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.
When the calculation results in a potential asset for the Company, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contribution to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.
Short-term employee benefit obligations are measured on an undiscounted basis and are
expensed as the related service is provided. The Company has other long-term employee benefits in the nature of leave encashment. The liability in respect of leave encashment is provided for on the basis of an actuarial valuation on projected unit credit method at the end of financial year.
k Research And Development Expenses
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an other intangible asset when the Company can demonstrate technical and commercial feasibility of making the asset available for use.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation expense is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
A subsidiary is an entity that is controlled by the Company.
The Company accounts for the investments in equity shares of subsidiaries at cost in accordance with Ind AS 27- Separate Financial Statements.
m Lease Accounting Company as a lessee
The Company lease asset classes primarily consist of leases for land and buildings. The Company assess whether a contract contains a lease, at inception of contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether :
(!) the contract involves the use of an identified asset
(2) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and
(3) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short term leases) and low value leases. For these short term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the generally accepted interest rate. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases. For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.
Basic earning per share is computed by dividing the net profit after tax attributable to equity
shareholders for the year by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus / rights issue, if any, that have changed the number of equity shares outstanding, without a corresponding change in resources.
Diluted earning per share is computed by dividing the net profit after tax attributable to equity
shareholders for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, if any. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the year.
Income tax expense comprises current and deferred income tax.
Current tax expense is recognized in the statement of profit and loss, except when they relates to items that are recognized in other comprehensive income or directly in equity, in which case, the current tax is also recognized in other comprehensive income or directly in equity respectively. Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted by the balance sheet date.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities in accordance with the Income-tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax expense is recognized in the statement of profit and loss, except when they relates to items that are recognized in other comprehensive income or directly in equity, in which case, the deferred tax is also recognized in other comprehensive income or directly in equity respectively.
Deferred tax is provided using the balance sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date using the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax assets are recognised for carry forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profit will be available against which unused tax credits and unused tax losses can be recognised. At each balance sheet date, the Company reassesses unrecognised
deferred tax assets and are recognised to the extent that it is probable that future taxable profit will be available for their realisation.
Current and deferred tax for the year
The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible a temporary differences and tax losses can be utilized. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax are recognised in the statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pretax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of
time is recognised as a finance cost. Provisions are reviewed at each balance sheet and adjusted to reflect the current best estimates.If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.
q Contingent Liabilities, Contingent Assets And Commitments
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
A contingent asset is not recognised unless it becomes virtually certain that an inflow of economic benefits will arise. When an inflow of benefits is probable, contingent asset is disclosed in the financial statements.
Commitments include the amount of purchase order (net of advances) issued to parties for completion of assets and Non-cancellable operating lease.
Contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.
r Segment Reporting
Based on "Management Approach" as defined in Ind AS 108 - Operating Segments, the Chief Operating Decision Maker evaluates the Companyâs performance and allocate the resources based on an analysis of various performance indicators by business segments. The Companyâs chief operating decision maker is the Managing Director of the Company.
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.
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the cash flows statement, cash and cash equivalents consist of cash and shortterm deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
Non-current assets or disposal groups comprising of assets and liabilities are classified as ''held for saleâ when all the following criteria are met: (i) decision has been made to sell (ii) the assets are available for immediate sale in its present condition, (iii) the assets are being actively marketed and (iv) sale has been agreed or is expected to be concluded within 12 months of the Balance Sheet date.
Subsequently, such non-current assets and disposal groups classified as ''held for saleâ are measured at the lower of its carrying value and fair value less costs to sell. Non-current assets held for sale are not depreciated or amortised.
u Cash Dividend To Equity Holders
The Company recognises a liability to make cash distribution to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the company. As per the law, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
v Policy For Statement Of Cash Flows
The Companyâs statement of cash flows are prepared using the Indirect method, whereby profit/ loss for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
Cash and cash equivalents comprise cash and bank balances and short-term fixed bank deposits that are subject to an insignificant risk of changes in value.
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.
w Changes in significant accounting policies
The Company has not been required to apply any new standard, interpretation or amendment that has been issued and therefore there were no significant changes in accounting policies.
x Recent Pronouncements
The amendments to Schedule III of the Companies Act, 2013 are applicable from April 1, 2021. The Company has given effect of amendment by inclusion of the relevant disclosures under explanatory notes or by way of additional notes, wherever significant in nature.
y Recent Indian Accounting Standards (Ind AS) issued not yet effective
Ministry of Corporate Affairs ("MCA") notified new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, applicable from April 1, 2022, as below:
Ind AS 103 - Reference to Conceptual Framework
The amendments specify that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities
assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India at the acquisition date. These changes do not significantly change the requirements of Ind AS 103. The Company does not expect the amendment to have any significant impact in its financial statements.
Mar 31, 2018
a. CURRENT VERSUS 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:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is 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 equivalents. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has identified twelve months as its operating cycle for the purpose of current / non-current classification of assets and liabilities.
b. REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
The recovery of excise duty flows to the Company on its own account since it is a liability of the manufacturer irrespective of whether the goods are sold or not. Accordingly revenue is stated inclusive of excise duty.
However, Goods and Service Tax (GST), sales tax or value added tax (VAT) is not received by the Company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognised.
Sale of products
Revenue from the sale of products is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from sale of products is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts, volume rebates and cash discounts.
Profit share revenues
The Company has certain marketing arrangements based on the profit sharing model whereby company sells its products to the business partner on price agreed upon agreement and is also entitled for profit share over and above its sale price. Revenue from the sale of goods to the partner is recognised upon delivery of products to them and additional amount representing the profit share component is recognised as revenue in the period which corresponds to the ultimate sales of the products made by business partners only when the collectability of the profit share becomes probable and a reliable measurement of the profit share is available.
Sales returns
The Company accounts for sales returns by recording an allowance for sales returns concurrent with the recognition of revenue at the time of a product sale. This allowance is based on the Companyâs estimate of expected sales returns towards expiry, breakages and damages. The estimate of sales returns is determined primarily by the Companyâs historical experience of sales returns trends with respect to the shelf life of various products.
Interest income
For all debt instruments measured either 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. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
Dividends
Revenue is recognised when the Companyâs right to receive the payment is established, which is generally when shareholders approve the dividend.
Other income
Other income is accounted for on accrual basis except where the receipt of income is uncertain.
c. PROPERTY, PLANT AND EQUIPMENT
The items of Property, plant and equipment including Capital-work in-progress are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.
When significant parts of plant and equipment are required to be replaced at regular intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in statement of profit and loss as incurred. In respect of additions to / deletions from the plant, property and equipment, depreciation is provided on pro-rata reference to the month of addition / deletion of the Assets.
Subsequent expenditure related to an item of Property, plant and equipment is added to its book value, only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the statement of profit and loss.
Depreciation method and estimated useful lives
The Company, based on technical assessment made by technical expert and management estimate, depreciates certain items of plant and equipment over estimated useful lives which are different from the useful life prescribed in Schedule II to the Companies Act, 2013. The management believes these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used.
Assets costing less than Rs. 5,000 are depreciated at the rate of hundred per cent.
Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/ external factors. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assetâs fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of the money and risks specific to the assets. In determining fair value less costs of disposal, recent market transactions taken into account. If no such transactions can be identified, an appropriate valuation model is used.
After recognition of impairment loss, the depreciation charge for the asset is adjusted in future periods to allocate the assetâs revised carrying amount, less its residual value (if any), on straight line basis over its remaining useful life.
A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.
d. INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets with finite life at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in the statement of profit and loss in the period in which the expenditure is incurred.
The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the amount of the asset and are recognised in the statement of profit and loss when the asset is de-recognised.
A summary of the policies applied to the Companyâs intangible assets is as follows:
e. 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
All financial assets are recognised initially at fair value. Further, in the case of financial assets not recorded at fair value through profit or loss, transactions costs that are attributable to the acquisition of the financial assets are also recognised.
Subsequent measurement
For purpose of subsequent measurements, financial assets are classified in following categories:
(a) Debt instruments at amortised cost
A financial asset is subsequently measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest 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 integral part of EIR. The EIR amortisation is included in Other Income in the statement of profit and loss.
(b) Debt instruments at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements is recognised in the OCI. However, Company recognises any interest income or impairment losses in the statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the OCI to statement of profit and loss.
(c) Debt instruments at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss. Debt instruments included within FVTPL category are measured at fair value with all changes recognised in the statement of profit and loss.
(d) Equity instruments
All equity investments in scope of Ind AS 109 are measured at fair value. For all equity instruments, the Company may make an irrevocable election to present in other comprehensive income, subsequent changes in the fair value. All fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity. The Company has made such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
- The rights to receive cash flows from the asset has expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass throughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
The continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
(a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance
(b) Financial assets that are equity instruments and are measured as at FVTOCI
(c) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18
The Company follows âsimplified approachâ for recognition of impairment loss allowance on Trade Receivables and Other Receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
As a practical expedient, 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 forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the statement of profit and loss. This amount is reflected under the head âother expensesâ in the statement of profit and loss. The balance sheet presentation for various financial instruments is described below:
Financial assets measured as at amortised cost, contractual revenue receivables: ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
Equity instruments measured at FVTOCI: Since financial assets are already reflected at fair value, impairment allowance is not further reduced from its value. Rather, ECL amount is presented as âaccumulated impairment amountâ in the OCI.
For trade receivables only, the company applies the simplified approach permitted by Ind AS 109 financial instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Financial liabilities Initial recognition and measurement
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.
The Companyâs financial liabilities include trade and other payables and borrowings including bank overdrafts. Subsequent measurement
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as instruments in hedge relationships as defined by Ind AS 109.
Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation.
Derecognition
A Financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
f FAIR VALUE MEASUREMENT
The Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction 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 principal or the most advantageous market must be accessible by the Company.
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 economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
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 / declared buyback NAV for identical assets or liabilities Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable Level 3 -Valuation 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.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
g INVENTORIES
Raw materials and packing materials are valued at lower of cost and net realisable value, cost of which includes duties and taxes (net of GST, CENVAT and VAT, wherever applicable) and is arrived at on weighted average cost basis. Cost of imported raw materials and packing materials lying in bonded warehouse includes customs duty. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
Finished products including traded goods and work-in-progress are valued at lower of cost and net realisable value. Cost is arrived at on weighted average cost basis. Cost of finished products and work-in-progress includes material cost, labour, direct expenses, production overheads and excise duty, where applicable.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
h FOREIGN CURRENCY TRANSLATION/ TRANSACTIONS
The financial statements are presented in Indian Rupees (INR) which is companyâs functional and presentation currency.
Transactions in foreign currency are recorded at the rates prevailing on the date of the transaction.
Monetary assets and liabilities denominated in a foreign currency outstanding at the year end are restated at the year end exchange rates. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
Exchange difference arising on the settlement of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or expense in the year in which they arise.
i GOVERNMENT GRANTS
Grants and subsidies from the government are recognised when there is reasonable assurance that the grant/ subsidy will be received and all attaching conditions will be complied with.
Government grants related to revenue is recognised 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.
Government grants relating to specific fixed assets is recognised as income in equal amounts over the expected useful life of the related asset.
j EMPLOYEE BENEFITS
Defined contribution plans
The Companyâs contribution to recognised provident fund, family pension fund and superannuation fund is defined contribution plan and is charged to the statement of profit and loss on accrual basis. The Company recognises contribution payable to the provident fund scheme as an expenditure, when an employee renders the related service. There are no other obligations other than the contribution payable to the respective trusts.
The Company fully contributes all ascertained liabilities to the FDC Limited Gratuity Trust (the Trust). Trustees administer contributions made to the Trust and contributions are invested in a scheme with Life Insurance Corporation of India as permitted by laws of India.
Defined benefit plans
Contribution to gratuity fund is defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.
Remeasurement of the net defined liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest income) are recognised in other comprehensive income. Remeasurements are not reclassified to the statement of profit and loss in subsequent periods. Net interest and other expenses related to defined benefit plans are recognised in the statement of profit and loss.
Other employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. The company has other long-term employee benefits in the nature of leave encashment. The liability in respect of leave encashment is provided for on the basis of an actuarial valuation on projected unit credit method at the end of financial year.
k RESEARCH AND DEVELOPMENT
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Company can demonstrate technical and commercial feasibility of making the asset available for use.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation expense is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
l LEASE ACCOUNTING
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Companyâs general policy on the borrowing costs. Contingent rentals are recognised as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
m EARNING PER SHARE
Basic earning per share is computed by dividing the net profit after tax attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year.
Diluted earning per share is computed by dividing the net profit after tax attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, if any.
n TAXATION Current tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities in accordance with the Income-tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, reporting date.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the balance sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date using the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax assets are recognised for carry forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profit will be available against which unused tax credits and unused tax losses can be recognised. At each balance sheet date, the Company reassesses unrecognised deferred tax assets and are recognised to the extent that it is probable that future taxable profit will be available for their realisation.
Current and deferred tax for the year
Current and deferred tax are recognised in the statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
Minimum Alternate tax ( MAT)
Minimum Alternate Tax (MAT) paid as per Indian Income Tax Act, 1961 is in the nature of unused tax credit which can be carried forward and adjusted when the Company will pay normal income tax during the specified period. Deferred tax assets on such tax credit is recognised to the extent probable that the unused tax credit can be utilised in the specified future period. The net amount of tax recoverable from, or payable to, the authority is included as part of receivables or payables in the balance sheet.
o PROVISIONS
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. Provisions are reviewed at each balance sheet and adjusted to reflect the current best estimates.
p CONTINGENT LIABILITIES AND CONTINGENT ASSETS
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
A contingent asset is not recognised unless it becomes virtually certain that an inflow of economic benefits will arise. When an inflow of benefits is probable, contingent asset is disclosed in the financial statements.
Contingent liabilities and contingent assets are reviewed at each balance sheet date.
q SEGMENT REPORTING
Based on âManagement Approachâ as defined in Ind AS 108 -Operating Segments, the Chief Operating Decision Maker evaluates the Companyâs performance and allocate the resources based on an analysis of various performance indicators by business segments.
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
r CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the cash flows statement, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
s CASH DIVIDEND TO EQUITY HOLDERS
The Company recognises a liability to make cash distribution to equity holders of the company when the distribution is authorised and the distribution is no longer at the discretion of the company. As per the law, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
Mar 31, 2017
1. COMPANY OVERVIEW, SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS.
1.1 CORPORATE INFORMATION
FDC Limited (the Company) is a public Company domiciled in India and is incorporated under the provisions of the Companies Act applicable in India. Its shares are listed on two recognized stock exchanges in India. The registered office of the Company is located at Waluj, Dist. Aurangabad, Maharashtra.
The Company is principally engaged in the business of Pharmaceuticals.
The financial statements were authorized for issue in accordance with a resolution of the board of directors on May 26, 2017.
1.2 BASIS OF PREPARATION
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time).
For all periods up to and including the year ended 31st March 2016, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP). These financial statements for the year ended 31st March 2017 are the first the Company has prepared in accordance with Ind AS.
These financial statements are prepared on accrual basis under the historical cost convention, except for certain financial assets and liabilities which are measured at fair value (refer accounting policy regarding financial instruments).
The financial statements are prepared in INR and all values are rounded to the nearest lakhs (INR 00,000), except when otherwise stated.
1.3 SIGNIFICANT ACCOUNTING POLICIES
a. Current versus 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 realized or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realized 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:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is 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 realization in cash and cash equivalents. Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has identified twelve months as its operating cycle for the purpose of current / non-current classification of assets and liabilities.
b. 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, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
The recovery of excise duty flows to the Company on its own account since it is a liability of the manufacturer irrespective of whether the goods are sold or not. Accordingly revenue is stated inclusive of excise duty.
However, sales tax/ value added tax (VAT) is not received by the Company on its own account. Rather, it is tax collected on value added to the commodity by the seller on behalf of the government. Accordingly, it is excluded from revenue.
The specific recognition criteria described below must also be met before revenue is recognized.
Sale of products
Revenue from the sale of products is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from sale of products is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts, volume rebates and cash discounts.
Profit share revenues
The Company has certain marketing arrangements based on the profit sharing model whereby Company sells its products to the business partner on price agreed upon agreement and is also entitled for profit share over and above its sale price. Revenue from the sale of goods to the partner is recognized upon delivery of products to them and additional amount representing the profit share component is recognized as revenue in the period which corresponds to the ultimate sales of the products made by business partners only when the collectability of the profit share becomes probable and a reliable measurement of the profit share is available.
Sales returns
The Company accounts for sales returns by recording an allowance for sales returns concurrent with the recognition of revenue at the time of a product sale. This allowance is based on the Company''s estimate of expected sales returns towards expiry, breakages and damages. The estimate of sales returns is determined primarily by the Company''s historical experience of sales returns trends with respect to the shelf life of various products.
Interest income
For all debt instruments measured either at amortized cost, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortized cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
Dividends
Revenue is recognized when the Company''s right to receive the payment is established, which is generally when shareholders approve the dividend.
Other income
Other income is accounted for on accrual basis except where the receipt of income is uncertain.
c. PROPERTY, PLANT & EQUIPMENT
The items of property, plant and equipment including Capital-work in-progress are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.
When significant parts of plant and equipment are required to be replaced at regular intervals, the Company depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognized statement of profit or loss as incurred. In respect of additions to /deletions from the plant, property & equipment, depreciation is provided on pro-rata reference to the month of addition/deletion of the assets.
Subsequent expenditure related to an item of plant, property & equipments is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in statement of profit or loss.
Assets costing less than Rs.5,000 are depreciated at the rate of hundred per cent.
Impairment of assets
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/ external factors. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of the money and risks specific to the assets. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.
After recognition of impairment loss, the depreciation charge for the asset is adjusted in future periods to allocate the assets revised carrying amount, less its residual value (if any), on straight line basis over its remaining useful life.
A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.
d. INTANGIBLE ASSETS
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets with finite life at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.
The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the amount of the asset and are recognized in the statement of profit or loss when the asset is de-recognized.
e. FINANCIAL INSTRUMENTS
A Financial instrument is any contract that gives rise to a financial assets of one entity and a financial liabilities or equity instrument of another entity.
Financial assets
Initial recognition and measurement
All financial assets are recognized initially at fair value. Further, in the case of financial assets not recorded at fair value through profit and loss, transactions cost that are attributable to the acquisition of the financial assets are also recognized.
Subsequent measurement
For purpose of subsequent measurements, financial assets are classified in following categories:
(a) Debt instruments at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are integral part of EIR. The EIR amortization is included in other income in the profit and loss.
(b) Debt instruments at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements is recognized in the OCI. However, the Company recognizes any interest income or impairment losses in profit and loss. On derecognition of the asset, cumulative gain or loss previously recognized in OCI is reclassified from the OCI to profit and loss.
(c) Debt instruments at fair value through profit and loss
A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss. Debt instruments included within FVTPL category are measured at fair value with all changes recognized in the P&L.
(d) Equity instruments
All equity investments in scope of Ind AS 109 are measured at fair value. For all equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fair value. All fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to P&L, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity. The Company has made such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized when:
* The rights to receive cash flows from the asset have expired, or
* The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
The Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
(a) Financial assets that are debt instruments, and are measured at amortized cost e.g., loans, debt securities, deposits, trade receivables and bank balance
(b) Financial assets that are equity instruments and are measured as at FVTOCI
(c) Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18
The Company follows ''simplified approach'' for recognition of impairment loss allowance on Trade Receivable and Other Receivables.
The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognizing impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial instrument. The 12-month ECL is a portion of the lifetime ECL which results from default events that are possible within 12 months after the reporting date.
As a practical expedient, 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 forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the statement of profit and loss (P&L). This amount is reflected under the head ''other expenses'' in the P&L. The balance sheet presentation for various financial instruments is described below:
Financial assets measured as at amortized cost, contractual revenue receivables:
ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.
Equity instruments measured at FVTOCI:
Since financial assets are already reflected at fair value, impairment allowance is not further reduced from its value. Rather, ECL amount is presented as ''accumulated impairment amount'' in the OCI.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 financial instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables.
Financial liabilities
Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables and borrowings including bank overdrafts.
Subsequent measurement
Financial liabilities at fair value through profit and loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as instruments in hedge relationships as defined by Ind AS 109.
Gains or losses on liabilities held for trading are recognized in the statement of profit and loss.
Financial guarantee contracts
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instruments. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative amortization.
Derecognition
A Financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit and loss.
f. FAIR VALUE MEASUREMENT
The Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction 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 principal or the most advantageous market must be accessible by the Company.
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 economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized 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 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized 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.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarizes accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
g. INVENTORIES
Raw materials and packing materials are valued at lower of cost and net realizable value, cost of which includes duties and taxes (net of CENVAT and VAT, wherever applicable) and is arrived at on weighted average cost basis. Cost of imported raw materials and packing materials lying in bonded warehouse includes customs duty. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
Finished products including traded goods and work-in-progress are valued at lower of cost and net realizable value. Cost is arrived at on weighted average cost basis. Cost of finished products and work-in-progress includes material cost, labour, direct expenses, production overheads and excise duty, where applicable.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
h. FOREIGN CURRENCY TRANSLATION/ TRANSACTIONS
The financial statements are presented in Indian Rupees (INR) which is company''s functional and presentation currency.
Transactions in foreign currency are recorded at the rates prevailing on the date of the transaction.
Monetary assets and liabilities denominated in a foreign currency outstanding at the yearend are restated at the yearend exchange rates. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
Exchange difference arising on the settlement of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or expenses in the year in which they arise.
i. GOVERNMENT GRANTS
Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/ subsidy will be received and all attaching conditions will be complied with.
Government grants related to revenue is recognized 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.
Government grants relating to specific fixed assets is recognized as income in equal amounts over the expected useful life of the related asset.
j. EMPLOYEE BENEFITS Defined contribution plans
The Company''s contribution to recognized provident fund, family pension fund and superannuation fund is defined contribution plan and is charged to the Statement of Profit and Loss on accrual basis. The Company recognizes contribution payable to the provident fund scheme as an expenditure, when an employee renders the related service. There are no other obligations other than the contribution payable to the respective trusts.
Defined benefit plans
Contribution to gratuity fund is defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.
Remeasurement of the net defined liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest income) are recognized in other comprehensive income. Remeasurements are not reclassified to profit and loss in subsequent periods. Net interest and other expenses related to defined benefit plans are recognized in profit and loss.
Other employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. The Company has other long-term employee benefits in the nature of leave encashment. The liability in respect of leave encashment is provided for on the basis of an actuarial valuation on projected unit credit method at the end of financial year.
k. RESEARCH AND DEVELOPMENT
Research costs are expensed as incurred. Development expenditures on an individual project are recognized as an intangible asset when the Company can demonstrate technical and commercial feasibility of making the asset available for use.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit. Amortization expense is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
l. LEASE ACCOUNTING
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
Company as a lessee
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalized at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Company''s general policy on the borrowing costs. Contingent rentals are recognized as expenses in the periods in which they are incurred.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Company as a less or
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognized on a straight-line basis over the term of the relevant lease.
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
m. EARNING PER SHARE
Basic earnings per share is computed by dividing the net profit after tax attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the net profit after tax attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, if any.
n. TAXATION Current tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities in accordance with the Income-tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, reporting date.
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the balance sheet approach on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date using the tax rates and the tax laws enacted or substantively enacted at the reporting date.
Deferred tax assets are recognized for carry forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profit will be available against which unused tax credits and unused tax losses can be recognized. At each balance sheet date, the Company reassesses unrecognized deferred tax assets and are recognized to the extent that it is probable that future taxable profit will be available for their realization.
Current and deferred tax for the year
Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
Minimum Alternate tax ( MAT)
Minimum Alternate Tax (MAT) paid as per Indian Income Tax Act, 1961 is in the nature of unused tax credit which can be carried forward and adjusted when the Company will pay normal income tax during the specified period. Deferred tax assets on such tax credit is recognized to the extent probable that the unused tax credit can be utilized in the specified future period. The net amount of tax recoverable from, or payable to, the authority is included as part of receivables or payables in the balance sheet.
o. PROVISIONS
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. Provisions are reviewed at each balance sheet and adjusted to reflect the current best estimates.
p. CONTINGENT LIABILITY AND CONTINGENT ASSETS
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
A contingent asset is not recognized unless it becomes virtually certain that an inflow of economic benefits will arise. When an inflow of benefits is probable, contingent asset are disclosed in the financial statements.
Contingent liabilities and contingent assets are reviewed at each balance sheet date.
q. SEGMENT REPORTING
Based on "Management Approach" as defined in Ind AS 108 -Operating Segments, the Chief Operating Decision Maker evaluates the Company''s performance and allocate the resources based on an analysis of various performance indicators by business segments.
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
r. CASH AND CASH EQUIVALENTS
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
s. CASH DIVIDEND TO EQUITY HOLDERS
The Company recognizes a liability to make cash distribution to equity holders of the Company when the distribution is authorized and the distribution is no longer at the discretion of the company. As per the law, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity.
1.4 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect reported amounts of revenue, expenses, assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and the results of operations during the reported period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.
Sales returns
Revenue from sale of goods is recognized when significant risks and rewards of ownership are transferred to customers, which coincides with dispatch of goods to customers. However, the Company needs to accept goods returned from its customers towards expiry, breakages and damages. Accordingly, the Company has made provision based on the historical sales return trends with respect to the shelf life of various products.
Impairment of financial assets
The Company recognizes loss allowances on financial assets using expected credit loss model which is equal to the 12 months expected credit losses or full time expected credit losses.
The Company follows ''Simplified approach'' for recognition of loss allowance on trade receivables under which Company does not track changes in credit risk. Rather, it recognizes loss allowance based on lifetime expected credit losses at each reporting date, right from its initial recognition.
The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward looking estimates are analyzed.
Defined benefit plans (gratuity benefits)
The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These includes the determination of the discount rate, future salary increases, mortality rates and attrition rate. Due to the complexities involved in the valuation and its long term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
Fair value measurement of financial instruments
When the fair value of financial assets and liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments includes considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
Taxes
There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. Where the final tax outcome of these matters is different from the amounts initially recorded, such differences will impact the current and deferred tax provisions in the period in which the tax determination is made. Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against which the assets can be utilized. The assessment of probability involves estimation of a number of factors including future taxable income.
Provisions against obsolete and slow - moving inventories
The Company reviews the condition of its inventories and makes provision against obsolete and slow-moving inventory items which are identified as no longer suitable for sale or use. The Company estimates the net realizable value for such inventories based on the latest invoice prices and current market conditions. The Company carries out an inventory review at each balance sheet date and makes provision against obsolete and slow-moving items. The Company reassesses the estimation on each balance sheet date.
The provision against obsolete and slow-moving inventories requires the use of judgments and estimates. Where the expectation is different from the original estimate, such difference will impact on the carrying value of inventories and the write-down of inventories recognized in the periods in which such estimates have been changed.
b. Terms/rights attached to equity shares
The Company has one class of equity shares having a par value of Re.1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian Rupees. The Final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
During the year ended 31st March 2017, the amount of per share dividend proposed as distribution to equity shareholders is Rs.2.25 (Previous year - Nil).
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders.
Note:
(a) As per the information available with the Company, there are no Micro, Small and Medium Enterprises, as defined in the Micro, Small, Medium Enterprises Development Act 2006, to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosure have been made. The Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the Auditors.
(b) Terms and conditions of the above trade payables:
Trade payables are non interest bearing and are normally settled on 90-360 days terms.
Note:- There are no amounts due and outstanding to be credited to Investor Education and Protection Fund. There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection fund.
Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognized as a liability (including tax thereon) as at 31st March 2017.
34. Financial Risk Management Objectives and Policies
Risk Management is an integral part of the Companyâs plans and operations. While the Company has a proven ability to successfully take on challenges, the efforts are to become even more proactive in recognizing and managing risks, through an organized framework. The Company recognizes risk management as an integral component of good corporate governance and fundamental in achieving its strategic and operational objectives.
The Company, through its Board of Directors, has constituted a Risk Management Committee, consisting of majority of Board members. The Board has defined the roles and responsibilities of the Risk Management Committee and may delegate monitoring and reviewing of the Risk Management plan, to the Committee, and such other functions as it may deem fit.
Market risk :
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk. Financial instruments affected by market risk include deposits, FVTOCI investments and derivative financial instruments.
The Company has designed risk management frame work to control various risks effectively to achieve the business objectives. This includes identification of risk, its assessment, control and monitoring at timely intervals.
Interest rate risk :
Interest rate risk is the loss of fair value of future earnings of financial instruments because of changes in market interest rates. Investment committee manages and constantly reviewing the interest rate movements in the market in order to optimize the company''s interest income. The Companyâs exposures to interest rate risk is not significant.
Foreign currency risk :
Foreign currency risk is the loss of fair value of future earnings of a financial instruments because of changes in foreign exchange rates. The Companyâs exposure to the risk of changes in foreign exchange rates relates primarily to the Companyâs operating activities (when revenue or expense is denominated in a foreign currency).
Foreign currency sensitivity
The following table demonstrate the sensitivity to a reasonably possible change in USD rate, with all other variables held constant. The impact on the Companyâs profit before tax is due to changes in the fair value of monetary assets and liabilities. The Companyâs exposure to foreign currency changes for all other currencies is not material.
Credit risk :
Credit risk is the risk of possible default by the counter party resulting in a financial loss. The Company manages its credit risk through various internal policies and procedure set forth for effective control over credit exposure. Major credit risk at the reporting date is from trade receivables. Trade receivables are managed by way of setting various parameters like credit limit, evaluation of financial condition before supply, supply terms, industry trends, ageing analysis.
Liquidity risk:
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.
The Company manages liquidity risk by maintaining adequate reserves, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of the financial assets and liabilities.
The table below summarizes the maturity profile of the Companyâs financial liabilities based on the contractual undiscounted payments.
The management assessed that cash and cash equivalents, trade receivables, loans, trade payables, other financial assets and other financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
The fair values of quoted equity instruments are derived from quoted market prices in active markets.
Reconciliation of fair value measurement of equity shares classified as FVTOCI assets:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly unobservable.
The following table represents the fair value hierarchy of financial assets and liabilities as on 31st March 2017:
There have been no transfer between Level 1 and Level 2 during the period .
Mar 31, 2016
2. Previous yearâs figures have been regrouped/rearranged to confirm to the current year''s presentation wherever necessary.
3. Rs. 159.16 lacs (Previous year Rs. 117.45 lacs) in unclaimed dividend accounts are not available for use by the Company as they represent corresponding dividend liabilities.
4. The amalgamation of Soven Trading and Investment Company Private Limited, Sudipta Trading and Investment Company Private Limited, Transgene Trading and Investment Company Private Limited, and Anand Synthochem Limited with the Company is non-cash transaction and hence, has no impact on the Company''s cash flow for the year.
a. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost convention, except for certain fixed assets, which were revalued on 30th September 1993 (Refer Note No. c below) and in case of assets where a provision is made for impairment losses, on accrual basis and are in accordance with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.
b. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles in India 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 as at the date of financial statements and the result of operations during the reported period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates.
c. TANGIBLE FIXED ASSETS
All fixed assets other than revalued assets are stated at cost less accumulated depreciation / amortization less impairment losses. Cost comprises of the purchase price and any other directly attributable costs of bringing the assets to its working condition for its intended use. Adjustments arising from exchange rates variances relating to liabilities attributable to fixed assets are taken to the Statement of Profit and Loss.
Leasehold Land, buildings, major items of plant and machinery and research and development equipment at Jogeshwari and Roha were revalued on 30th September 1993 on the basis of the report of an approved valuer. Difference between the book value and the value as per valuer''s report amounting to Rs. 730.70 lacs was transferred to Revaluation Reserve during the year ended 31st March 1994. These fixed assets are stated at revalued amounts less accumulated depreciation.
d. DEPRECIATION/ AMORTISATION/ IMPAIRMENT
Depreciation on the historical cost of tangible fixed assets is provided on straight line method using the rates arrived at based on the useful life prescribed under Schedule II to the Companies Act, 2013 except for the below mentioned asset where higher rate is considered based on the useful life of the asset as estimated by the management:
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/ external factors. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of the money and risks specific to the assets.
After recognition of impairment loss, the depreciation charge for the asset is adjusted in future periods to allocate the asset''s revised carrying amount, less its residual value (if any), on straight line basis over its remaining useful life.
A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.
Assets costing less than Rs. 5,000 are depreciated at the rate of hundred per cent.
Leasehold land/ improvements are amortized on a straight line basis over the period of lease ranging from 30 to 99 years.
e. INTANGIBLE ASSETS
Technical know-how
Technical know-how which are acquired, are capitalized and amortized over the period of its estimated useful life as estimated by the management on a straight line basis, not exceeding ten years.
Marketing Rights and Software
Cost relating to marketing rights and software, which are acquired, are capitalized and amortized over the period of its estimated useful life as estimated by the management on a straight line basis, not exceeding ten years.
f. INVESTMENTS
Investments that are readily realizable and intended to be held for not more than one year from the reporting period are classified as Current Investments. These are valued at lower of cost and fair value (repurchase price or market value) on an individual item basis.
Investments other than current are classified as Non-Current Investments which are valued at cost less provision for diminution in value, other than temporary, if any.
g. INVENTORIES
Raw materials and packing materials are valued at lower of cost and net realizable value, cost of which includes duties and taxes (net of CENVAt and VAT, wherever applicable) and is arrived at on weighted average cost basis. Cost of imported raw materials and packing materials lying in bonded warehouse includes customs duty. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
Finished products including traded goods and work-in-progress are valued at lower of cost and net realizable value. Cost is arrived at on weighted average cost basis. Cost of finished products and work-in-progress includes material cost, labour, direct expenses, production overheads and excise duty, where applicable.
h. 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
Revenue from sale of goods is recognized when significant risks and rewards of ownership are transferred to customers, which coincides with 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 the liability arising during the year.
Dividend is recognized when the Company''s right to receive the payment is established by the balance sheet date.
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Other income is accounted for on accrual basis except where the receipt of income is uncertain.
i. FOREIGN CURRENCY TRANSLATION/ TRANSACTIONS
Transactions in foreign currency are recorded at the rates prevailing on the date of the transaction.
Monetary assets and liabilities denominated in a foreign currency outstanding at the yearend are restated at the yearend exchange rates. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
Exchange differences arising out of settlement and restatement of foreign exchange monetary items are taken to the Statement of Profit and Loss.
The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or expense for the year.
j. GOVERNMENT GRANTS
Grants and subsidies from the government are recognized when there is reasonable assurance that the grant/ subsidy will be received and all attaching conditions will be complied with.
Government grants received as capital incentives/subsidies are credited to Capital Reserve. Government grants related to revenue is recognized 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.
Government grants relating to specific fixed assets are disclosed as deduction from the gross value of the assets concerned.
k. EMPLOYEE BENEFITS
Company''s contribution to recognized provident fund, family pension fund and superannuation fund is defined contribution plan and is charged to the Statement of Profit and Loss on accrual basis. The Company recognizes contribution payable to the provident fund scheme as an expenditure, when an employee renders the related service. There are no other obligations other than the contribution payable to the respective trusts.
Contribution to gratuity fund is defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.
Short term compensated absences are provided for based on estimates. Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method.
Actuarial gains/ losses are immediately recognized in the Statement of Profit and Loss.
l. RESEARCH AND DEVELOPMENT
Revenue expenditure is charged off to Statement of Profit and Loss in the year in which it is incurred.
m. LEASE ACCOUNTING
Leases where substantially all the risks and benefits of ownership are retained by the less or, are classified as operating leases. Operating lease expenses/income is recognized in the Statement of Profit and Loss on a straight line basis over the lease term.
n. EARNING PER SHARE
Basic earnings per share is computed by dividing the net profit after tax attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share is computed by dividing the net profit after tax attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, if any.
o. ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises of current and deferred tax. Provision for current tax is made, based on the tax payable under the Income-tax Act, 1961. Deferred tax assets and liabilities from timing differences between taxable income and accounting income is accounted for using the tax rates and the tax laws enacted or substantially enacted as on the balance sheet date.
At each balance sheet date, the Company reassesses unrecognized deferred tax assets. Deferred tax assets are recognized only to the extent that there is a reasonable certainty of their realization. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
MAT credit is recognized as an asset when there is convincing evidence that the Company will pay normal income tax during the specified period. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.
p. PROVISIONS AND CONTINGENCIES
The Company creates a provision when there exist a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
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. When 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.
q. 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.
b. Terms/ rights attached to equity shares
The Company has only one class of equity shares having a par value of Re. 1 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The final dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
During the year ended 31st March 2016, the amount of per share dividend recognized as distributions to equity shareholders was Rs. 2.25 (Previous year - Rs. 2.25).
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders.
* These shares are cancelled and new shares have been issued to the shareholders of the respective companies pursuant to the Scheme of Amalgamation.
As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.
a. As per the information available with the Company, there are no Micro, Small and Medium Enterprises, as defined in the Micro, Small, Medium Enterprises Development Act 2006, to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosure have been made. The Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the Auditors.
b. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund. There has been no delay in transferring amounts required to be transferred to the Investor Education and Protection Fund.
* Includes leasehold land at Delhi which is in the process of being registered in the name of the Company.
** Freehold land of Rs. 640.66 lacs (Previous year - Rs. 640.66 lacs) includes cost of unquoted fully paid shares in various co-operative housing societies.
*** Building of Rs. 3,289.99 lacs (Previous year - Rs 3,151.05 lacs) includes cost of unquoted fully paid shares in various co-operative housing societies.
@ Includes impairment of Rs 49.80 lacs.
# Net of provision for impairment of Rs. 144.79 lacs(Previous year-Rs 144.79 lacs)
## As detailed in Note No. 1b, the Company has re-worked depreciation in accordance with the useful lives of fixed assets prescribed by Part C of Schedule II to the Companies Act, 2013. Accordingly, depreciation for the year includes Rs. 1,311.10 lacs which is adjusted against the General Reserve net of deferred tax of Rs. 445.64 lacs.
Mar 31, 2015
A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention, except for certain fixed assets, which were revalued on 30th
September 1993 (Refer Note No. d below) and in case of assets where a
provision is made for impairment losses, on accrual basis and are in
accordance with the accounting standards notified under section 133 of
the Companies Act 2013, read together with paragraph 7 of the Companies
(Accounts) Rules 2014. The accounting policies have been consistently
applied by the Company and are consistent with those used in the
previous year, except for change in accounting policy explained below.
b. CHANGE IN ACCOUNTING POLICY
Consequent to the enactment of the Companies Act, 2013 ("the Act") and
its applicability for accounting periods commencing on or after 1st
April, 2014, the Company has re-worked depreciation in accordance with
the useful lives of fixed assets prescribed by Part C of schedule II to
the Act. Where the revised residual life of the fixed assets is Nil as
at 1st April, 2014, carrying values aggregating to Rs.865.46 lacs (net
of deferred tax) have been adjusted against the General reserve and in
other cases the carrying values have been depreciated over the
remaining revised lives and recognised in the Statement of Profit and
Loss. As a result the charge for depreciation for the year ended 31st
March, 2015 is higher by Rs.1,318.00 lacs.
Further to comply with the Schedule II requirement, the company has
discontinued the practice of recouping the impact of additional
depreciation from revaluation reserve. The management has decided to
apply the revised accounting policy of charging depreciation on the
revalued amount to the Statement of Profit and Loss prospectively from
accounting periods commencing on or after 1st April 2014.
c. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles in India 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 as at the date of financial statements and the
result of operations during the reported period. Although these
estimates are based upon management''s best knowledge of current events
and actions, actual results could differ from these estimates.
d. TANGIBLE FIXED ASSETS
All fixed assets other than revalued assets are stated at cost less
accumulated depreciation / amortisation less impairment losses. Cost
comprises of the purchase price and any other directly attributable
costs of bringing the assets to its working condition for its intended
use. Adjustments arising from exchange rates variances relating to
liabilities attributable to fixed assets are taken to the Statement of
Profit and Loss.
Leasehold Land, buildings, major items of plant and machinery and
research and development equipment at Jogeshwari and Roha were revalued
on 30th September 1993 on the basis of the report of an approved
valuer. Difference between the book value and the value as per valuer''s
report amounting to Rs. 730.70 lacs was transferred to Revaluation
Reserve during the year ended 31st March 1994. These fixed assets are
stated at revalued amounts less accumulated depreciation.
e. DEPRECIATION/ AMORTISATION/ IMPAIRMENT
Depreciation on the historical cost of tangible fixed assets is provided
on straight line method using the rates arrived at based on the useful
life prescribed under Schedule II to the Companies Act, 2013 except for
the below mentioned asset where higher rate is considered based on the
useful life of the asset as estimated by the management:
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognised whenever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that refects
current market assessments of the time value of the money and risks
specifc to the assets.
After recognition of impairment loss, the depreciation charge for the
asset is adjusted in future periods to allocate the asset''s revised
carrying amount, less its residual value (if any), on straight line
basis over its remaining useful life.
A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation if there was no
impairment.
Assets costing less than Rs. 5,000 are depreciated at the rate of
hundred per cent.
Leasehold land/ improvements are amortised on a straight line basis
over the period of lease ranging from 30 to 99 years.
f. INTANGIBLE ASSETS
Technical know-how
Technical know-how which are acquired, are capitalised and amortised
over the period of its estimated useful life as estimated by the
management on a straight line basis, not exceeding ten years.
Marketing Rights and Software
Cost relating to marketing rights and software , which are acquired,
are capitalized and amortised over the period of its estimated useful
life as estimated by the management on a straight line basis, not
exceeding ten years.
g. INVESTMENTS
Investments that are readily realisable and intended to be held for not
more than a year from the reporting period are classified as Current
Investments. These are valued at lower of cost and fair value
(repurchase price or market value) on an individual item basis.
Investments other than current are classified as Non-Current Investments
which are valued at cost less provision for diminution in value, other
than temporary, if any.
h. INVENTORIES
Raw materials and packing materials are valued at lower of cost and net
realisable value, cost of which includes duties and taxes (net of
CENVAT and VAT, wherever applicable) and is arrived at on weighted
average cost basis. Cost of imported raw materials and packing
materials lying in bonded warehouse includes customs duty. However,
materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they
will be incorporated are expected to be sold at or above cost.
Finished products including traded goods and work-in-progress are
valued at lower of cost and net realisable value. Cost is arrived at on
weighted average cost basis. Cost of finished products and
work-in-progress includes material cost, labour, direct expenses,
production overheads and excise duty, where applicable.
i. REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured
Revenue from sale of goods is recognised when significant risks and
rewards of ownership are transferred to customers, which coincides with
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 the liability arising during the year.
Dividend is recognised when the Company''s right to receive the payment
is established by the balance sheet date.
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Other income is accounted for on accrual basis except where the receipt
of income is uncertain.
j. FOREIGN CURRENCY TRANSLATION/ TRANSACTIONS
Transactions in foreign currency are recorded at the rates prevailing
on the date of the transaction.
Monetary assets and liabilities denominated in a foreign currency
outstanding at the year end are restated at the year end exchange
rates. Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange differences arising out of settlement and restatement of
foreign exchange monetary items are taken to the Statement of Profit and
Loss.
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
Statement of Profit and Loss in the year in which the exchange rates
change. Any Profit or loss arising on cancellation or renewal of forward
exchange contract is recognised as income or expense for the year.
k. GOVERNMENT GRANTS
Grants and subsidies from the government are recognised when there is
reasonable assurance that the grant/ subsidy will be received and all
attaching conditions will be complied with.
Government grants received as capital incentives/subsidies are credited
to Capital Reserve. Government grants related to revenue is recognised
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.
Government grants relating to specific fixed assets are disclosed as
deduction from the gross value of the assets concerned.
l. EMPLOYEE BENEFITS
Company''s contribution to recognised provident fund, family pension
fund and superannuation fund is defined contribution plan and is charged
to the Statement of Profit and Loss on accrual basis. The Company
recognises contribution payable to the provident fund scheme as an
expenditure, when an employee renders the related service. There are no
other obligations other than the contribution payable to the respective
trusts.
Contribution to gratuity fund is defined benefit obligation and is
provided for on the basis of an actuarial valuation on projected unit
credit method made at the end of each financial year.
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided for based on actuarial
valuation. The actuarial valuation is done as per projected unit credit
method.
Actuarial gains/ losses are immediately recognised in the Statement of
Profit and Loss.
m. RESEARCH AND DEVELOPMENT
Revenue expenditure is charged off to Statement of Profit and Loss in
the year in which it is incurred.
n. LEASE ACCOUNTING
Leases where substantially all the risks and benefits of ownership are
retained by the lessor, are classified as operating leases. Operating
lease expenses/income is recognised in the Statement of Profit and Loss
on a straight line basis over the lease term.
o. EARNING PER SHARE
Basic earning per share is computed by dividing the net Profit after tax
attributable to equity shareholders for the year by the weighted
average number of equity shares outstanding during the year.
Diluted earning per share is computed by dividing the net Profit after
tax attributable to equity shareholders for the year by the weighted
average number of equity shares outstanding during the year as adjusted
for the effects of all dilutive potential equity shares, if any.
p. ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises of current and deferred tax. Provision for
current tax is made, based on the tax payable under the Income-tax Act,
1961. Deferred tax assets and liabilities from timing differences
between taxable income and accounting income is accounted for using the
tax rates and the tax laws enacted or substantially enacted as on the
balance sheet date.
At each balance sheet date, the Company reassesses unrecognised
deferred tax assets. Deferred tax assets are recognised only to the
extent that there is a reasonable certainty of their realisation. In
situations where the Company has unabsorbed depreciation or carry
forward tax losses, all deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that they
can be realised against future taxable Profits.
MAT credit is recognised as an asset when there is convincing evidence
that the Company will pay normal income tax during the specified period.
The Company reviews the same at each balance sheet date and writes down
the carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that Company will pay normal
income tax during the specified period.
q. PROVISIONS AND CONTINGENCIES
The Company creates a provision when there exist a present obligation
as a result of a past event that probably requires an outfow of
resources and a reliable estimate can be made of the amount of the
obligation. Provisions are not discounted to its present value and are
determined based on best estimate required to settle the obligation at
the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best estimates.
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. When 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.
r. CASH AND CASH EQUIVALENTS
Cash and cash equivalents for the purposes of cash fow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less
Mar 31, 2014
A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention, except for certain fixed assets, which were revalued on
30th September 1993 (Refer Note No. c below) and in case of assets
where a provision is made for impairment losses, on accrual basis and
are in accordance with the requirements of the Companies Act, 1956 and
comply with the accounting standards notified by the Companies
(Accounting Standards) Rules, 2006 (as amended). The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
b. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles in India 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 as at the date of financial statements and the
result of operations during the reported period. Although these
estimates are based upon management''s best knowledge of current events
and actions, actual results could differ from these estimates.
c. TANGIBLE FIXED ASSETS
All fixed assets other than revalued assets are stated at cost less
accumulated depreciation / amortisation less impairment losses. Cost
comprises of the purchase price and any other directly attributable
costs of bringing the assets to its working condition for its intended
use. Adjustments arising from exchange rates variances relating to
liabilities attributable to fixed assets are taken to the Statement of
Profit and Loss.
Leasehold Land, buildings, major items of plant and machinery and
research and development equipment at Jogeshwari and Roha were revalued
on 30th September 1993 on the basis of the report of an approved
valuer. Difference between the book value and the value as per
valuer''s report amounting to Rs. 730.70 lacs was transferred to
Revaluation Reserve during the year ended 31st March 1994. These fixed
assets are stated at revalued amounts less accumulated depreciation.
d. DEPRECIATION/ AMORTISATION/ IMPAIRMENT
Depreciation on the historical cost of tangible fixed assets is
provided on straight line method at the rates and in the manner
prescribed under Schedule XIV to the Companies Act, 1956 except for the
below mentioned assets where higher rates are considered based on the
useful life of the assets as estimated by the management:
Depreciation on revalued portion of fixed assets is calculated on
straight line method over balance useful life of assets as determined
by the valuer and is transferred from Revaluation Reserve to the
Statement of Profit and Loss.
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/ external
factors. An impairment loss is recognised whenever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of the money and risks
specific to the assets.
After recognition of impairment loss, the depreciation charge for the
asset is adjusted in future periods to allocate the asset''s revised
carrying amount, less its residual value (if any), on straight line
basis over its remaining useful life.
A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation if there was no
impairment.
Assets costing less than Rs. 5,000 are depreciated at the rate of
hundred per cent.
Leasehold land/ improvements are amortised on a straight line basis
over the period of lease ranging from 30 to 99 years.
e. INTANGIBLE ASSETS
Technical know-how
Technical know-how which are acquired, are capitalised and amortised
over the period of its estimated useful life as estimated by the
management on a straight line basis, not exceeding ten years.
Marketing Rights and Software
Cost relating to marketing rights and software, which are acquired, are
capitalized and amortised over the period of its estimated useful life
as estimated by the management on a straight line basis, not exceeding
ten years.
f. INVESTMENTS
Investments that are readily realisable and intended to be held for not
more than a year from the reporting period are classified as Current
Investments. These are valued at lower of cost and fair value
(repurchase price or market value) on an individual item basis.
Investments other than current are classified as Non-Current
Investments which are valued at cost less provision for diminution in
value, other than temporary, if any.
g. INVENTORIES
Raw materials and packing materials are valued at lower of cost and net
realisable value, cost of which includes duties and taxes (net off
CENVAT and VAT, wherever applicable) and is arrived at on weighted
average cost basis. Cost of imported raw materials and packing
materials lying in bonded warehouse includes customs duty. However,
materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they
will be incorporated are expected to be sold at or above cost.
Finished products including traded goods and work-in-progress are
valued at lower of cost and net realisable value. Cost is arrived at
on weighted average cost basis. Cost of finished products and
work-in-progress includes material cost, labour, direct expenses,
production overheads and excise duty, where applicable.
h. REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Revenue from sale of goods is recognised when significant risks and
rewards of ownership are transferred to customers, which coincides with
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 the liability arising during the year.
Dividend is recognised when the Company''s right to receive the payment
is established by the balance sheet date.
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Other income is accounted for on accrual basis except where the receipt
of income is uncertain.
i. FOREIGN CURRENCY TRANSLATION/ TRANSACTIONS
Transactions in foreign currency are recorded at the rates prevailing
on the date of the transaction.
Monetary assets and liabilities denominated in a foreign currency
outstanding at the year end are restated at the year end exchange
rates. Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange differences arising out of settlement and restatement of
foreign exchange monetary items are taken to the Statement of Profit
and Loss.
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
Statement of Profit and Loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or expense for the
year.
j. GOVERNMENT GRANTS
Grants and subsidies from the government are recognised when there is
reasonable assurance that the grant/ subsidy will be received and all
attaching conditions will be complied with.
Government grants received as capital incentives/ subsidies are
credited to Capital Reserve. Government grants related to revenue is
recognised 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.
Government grants relating to specific fixed assets are disclosed as
deduction from the gross value of the assets concerned.
k. EMPLOYEE BENEFITS
Company''s contribution to recognised provident fund, family pension
fund and superannuation fund is defined contribution plan and is
charged to the Statement of Profit and Loss on accrual basis. The
Company recognises contribution payable to the provident fund scheme as
an expenditure, when an employee renders the related service. There
are no other obligations other than the contribution payable to the
respective trusts.
Contribution to gratuity fund is defined benefit obligation and is
provided for on the basis of an actuarial valuation on projected unit
credit method made at the end of each financial year.
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided for based on actuarial
valuation. The actuarial valuation is done as per projected unit credit
method.
Actuarial gains/ losses are immediately recognised in the Statement of
Profit and Loss.
l. RESEARCH AND DEVELOPMENT
Revenue expenditure is charged off to Statement of Profit and Loss in
the year in which it is incurred.
m.LEASE ACCOUNTING
Leases where substantially all the risks and benefits of ownership are
retained by the lessor, are classified as operating leases. Operating
lease expenses/ income is recognised in the Statement of Profit and
Loss on a straight line basis over the lease term.
n. EARNING PER SHARE
Basic earning per share is computed by dividing the net profit after
tax attributable to equity shareholders for the year by the weighted
average number of equity shares outstanding during the year.
Diluted earning per share is computed by dividing the net profit after
tax attributable to equity shareholders for the year by the weighted
average number of equity shares outstanding during the year as adjusted
for the effects of all dilutive potential equity shares, if any.
o. ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises of current and deferred tax. Provision for
current tax is made, based on the tax payable under the Income-tax Act,
1961. Deferred tax assets and liabilities from timing differences
between taxable income and accounting income is accounted for using the
tax rates and the tax laws enacted or substantially enacted as on the
balance sheet date.
At each balance sheet date, the Company reassesses unrecognised
deferred tax assets. Deferred tax assets are recognised only to the
extent that there is a reasonable certainty of their realisation. In
situations where the Company has unabsorbed depreciation or carry
forward tax losses, all deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that they
can be realised against future taxable profits.
MAT credit is recognised as an asset when there is convincing evidence
that the Company will pay normal income tax during the specified
period. The Company reviews the same at each balance sheet date and
writes down the carrying amount of MAT Credit Entitlement to the extent
there is no longer convincing evidence to the effect that Company will
pay normal income tax during the specified period.
p. PROVISIONS AND CONTINGENCIES
The Company creates a provision when there exist a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. Provisions are not discounted to its present value and are
determined based on best estimate required to settle the obligation at
the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best estimates.
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. When 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.
q. 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.
b. Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of
Re.1 per share. Each holder of equity shares is entitled to one vote
per share. The company declares and pays dividend in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting.
During the year ended 31 March 2014, the amount of per share dividend
recognized as distributions to equity shareholders was Rs. 2.25
(Previous year - Rs. 2.25).
In the event of liquidation of the company, the holders of equity
shares will be entitled to receive remaining assets of the company. The
distribution will be in proportion to the number of equity shares held
by the shareholders.
c. Aggregate number of bonus shares issued, share issued for
consideration other than cash and shares bought back during the period
of five years immediately preceding the reporting date:
In accordance with section 77A, 77AA and 77B of the Companies Act, 1956
and pursuant to the buy back announcement made by the Company on 22nd
August 2012, the Company has bought back from open market through stock
exchanges 2,999,911 equity shares (Previous year - 2,087,432 equity
shares) of Re.1 each during the year for a total consideration of Rs.
2,717.75 lacs (Previous year - Rs. 1933.41 lacs) and the same has been
extinguished. Consequently, an amount of Rs. 30 lacs (Previous year -
Rs. 20.87 lacs) being the nominal value of equity shares bought back
has been transferred to Capital Redemption Reserve from General
Reserve. An amount of Rs. 2,687.75 lacs (Previous year - Rs. 1912.54
lacs) being the premium on buyback has been appropriated from General
Reserve.
d. Details of shareholders holding more than 5% shares in the Company
As per records of the Company, including its register of
shareholders/members and other declarations received from shareholders
regarding beneficial interest, the above shareholding represents both
legal and beneficial ownerships of shares.
Mar 31, 2013
A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention, except for certain fixed assets, which were revalued on
30th September 1993 (Refer Note No. c below) and in case of assets
where a provision is made for impairment losses, on accrual basis and
are in accordance with the requirements of the Companies Act, 1956 and
comply with the accounting standards notified by the Companies
(Accounting Standards) Rules, 2006 (as amended). The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
b. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles in India 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 as at the date of financial statements and the
result of operations during the reported period. Although these
estimates are based upon management''s best knowledge of current events
and actions, actual results could differ from these estimates.
c. TANGIBLE FIXED ASSETS
All fixed assets other than revalued assets are stated at cost less
accumulated depreciation / amortisation less impairment losses. Cost
comprises of the purchase price and any other directly attributable
costs of bringing the assets to its working condition for its intended
use. Adjustments arising from exchange rates variances relating to
liabilities attributable to fixed assets are taken to the Statement of
Profit and Loss.
Leasehold Land, buildings, major items of plant and machinery and
research and development equipments at Jogeshwari and Roha were
revalued on 30th September 1993 on the basis of the report of an
approved valuer. Difference between the book value and the value as
per valuer''s report amounting to Rs. 730.70 lacs was transferred to
Revaluation Reserve during the year ended 31st March 1994. These fixed
assets are stated at revalued amounts less accumulated depreciation.
d. DEPRECIATION/ AMORTISATION/ IMPAIRMENT
Depreciation on the historical cost of tangible fixed assets is
provided on straight line method at the rates and in the manner
prescribed under Schedule XIV to the Companies Act, 1956 except for the
below mentioned assets where higher rates are considered based on the
useful life of the assets as estimated by the management:
Depreciation on revalued portion of fixed assets is calculated on
straight line method over balance useful life of assets as determined
by the valuer and is transferred from Revaluation Reserve to the
Statement of Profit and Loss.
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/ external
factors. An impairment loss is recognised whenever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of the money and risks
specific to the assets.
After recognition of impairment loss, the depreciation charge for the
asset is adjusted in future periods to allocate the asset''s revised
carrying amount, less its residual value (if any), on straight line
basis over its remaining useful life.
A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation if there was no
impairment.
Assets costing less than Rs. 5,000 are depreciated at the rate of
hundred per cent.
Leasehold land/ improvements are amortised on a straight line basis
over the period of lease ranging from 30 to 99 years.
e. INTANGIBLE ASSETS
Technical know-how
Technical know-how which are acquired, are capitalised and amortised
over the period of its estimated useful life as estimated by the
management on a straight line basis, not exceeding ten years.
Marketing Rights and Software
Cost relating to marketing rights and software , which are acquired,
are capitalized and amortised over the period of its estimated useful
life as estimated by the management on a straight line basis, not
exceeding ten years.
f. INVESTMENTS
Investments that are readily realisable and intended to be held for not
more than a year from the reporting period are classified as Current
Investments. These are valued at lower of cost and fair value
(repurchase price or market value) on an individual item basis.
Investments other than current are classified as Non-Current
Investments which are valued at cost less provision for diminution in
value, other than temporary, if any.
g. INVENTORIES
Raw materials and packing materials are valued at lower of cost and net
realisable value, cost of which includes duties and taxes (net off
CENVAT and VAT, wherever applicable) and is arrived at on weighted
average cost basis. Cost of imported raw materials and packing
materials lying in bonded warehouse includes customs duty. However,
materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they
will be incorporated are expected to be sold at or above cost.
Finished products including traded goods and work-in-progress are
valued at lower of cost and net realisable value. Cost is arrived at
on weighted average cost basis. Cost of finished products and
work-in-progress includes material cost, labour, direct expenses,
production overheads and excise duty, where applicable.
h. REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Revenue from sale of goods is recognised when significant risks and
rewards of ownership are transferred to customers, which coincides with
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 the liability arising during the year.
Dividend is recognised when the Company''s right to receive the payment
is established by the balance sheet date.
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Other income is accounted for on accrual basis except where the receipt
of income is uncertain.
i. FOREIGN CURRENCY TRANSLATION/ TRANSACTIONS
Transactions in foreign currency are recorded at the rates prevailing
on the date of the transaction.
Monetary assets and liabilities denominated in a foreign currency
outstanding at the year end are restated at the year end exchange
rates. Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange differences arising out of settlement and restatement of
foreign exchange monetary items are taken to the Statement of Profit
and Loss.
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
Statement of Profit and Loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or expense for the
year.
j. GOVERNMENT GRANTS
Grants and subsidies from the government are recognised when there is
reasonable assurance that the grant/ subsidy will be received and all
attaching conditions will be complied with.
Government grants received as capital incentives/subsidies are credited
to Capital Reserve. Government grants related to revenue is recognised
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.
Government grants relating to specific fixed assets are disclosed as
deduction from the gross value of the assets concerned.
k. EMPLOYEE BENEFITS
Company''s contribution to recognised provident fund, family pension
fund and superannuation fund is defined contribution plan and is
charged to the Statement of Profit and Loss on accrual basis. The
Company recognises contribution payable to the provident fund scheme as
an expenditure, when an employee renders the related service. There
are no other obligations other than the contribution payable to the
respective trusts.
Contribution to gratuity fund is defined benefit obligation and is
provided for on the basis of an actuarial valuation on projected unit
credit method made at the end of each financial year.
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided for based on actuarial
valuation. The actuarial valuation is done as per projected unit credit
method.
Actuarial gains/ losses are immediately recognised in the Statement of
Profit and Loss.
l. RESEARCH AND DEVELOPMENT
Revenue expenditure is charged off to Statement of Profit and Loss in
the year in which it is incurred.
m. LEASE ACCOUNTING
Leases where substantially all the risks and benefits of ownership are
retained by the lessor, are classified as operating leases. Operating
lease expenses/income is recognised in the Statement of Profit and Loss
on a straight line basis over the lease term.
n. EARNING PER SHARE
Basic earning per share is computed by dividing the net profit after
tax attributable to equity shareholders for the year by the weighted
average number of equity shares outstanding during the year.
Diluted earning per share is computed by dividing the net profit after
tax attributable to equity shareholders for the year by the weighted
average number of equity shares outstanding during the year as adjusted
for the effects of all dilutive potential equity shares, if any.
o. ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises of current and deferred tax. Provision for
current tax is made, based on the tax payable under the Income-tax Act,
1961. Deferred tax assets and liabilities from timing differences
between taxable income and accounting income is accounted for using the
tax rates and the tax laws enacted or substantially enacted as on the
balance sheet date.
At each balance sheet date, the Company reassesses unrecognised
deferred tax assets. Deferred tax assets are recognised only to the
extent that there is a reasonable certainty of their realisation. In
situations where the Company has unabsorbed depreciation or carry
forward tax losses, all deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that they
can be realised against future taxable profits.
MAT credit is recognised as an asset when there is convincing evidence
that the Company will pay normal income tax during the specified
period. The Company reviews the same at each balance sheet date and
writes down the carrying amount of MAT Credit Entitlement to the extent
there is no longer convincing evidence to the effect that Company will
pay normal income tax during the specified period.
p. PROVISIONS AND CONTINGENCIES
The Company creates a provision when there exist a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. Provisions are not discounted to its present value and are
determined based on best estimate required to settle the obligation at
the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best estimates.
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. When 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.
q. 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.
Mar 31, 2012
A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention, except for certain fixed assets, which were revalued on
30th September 1993 (Refer Note No. c below) and in case of assets
where a provision is made for impairment losses, on accrual basis and
are in accordance with the requirements of the Companies Act, 1956 and
comply with the accounting standards notified by the Companies
(Accounting Standards) Rules, 2006 (as amended). The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
During the year ended 31st March 2012, the revised schedule VI notified
under the Companies Act 1956, has become applicable to the Company, for
the preparation and presentation of its financial statements. The
adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of financial
statements. The Company has reclassified the previous year's figures
to conform to this year's classification.
b. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles in India 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 as at the date of financial statements and the
result of operations during the reported period. Although these
estimates are based upon management's best knowledge of current events
and actions, actual results could differ from these estimates.
c. TANGIBLE FIXED ASSETS
All fixed assets other than revalued assets are stated at cost less
accumulated depreciation/ amortisation less impairment losses. Cost
comprises of the purchase price and any other directly attributable
costs of bringing the assets to its working condition for its intended
use. Adjustments arising from exchange rates variances relating to
liabilities attributable to fixed assets are taken to the Statement of
Profit and Loss.
Leasehold Land, buildings, major items of plant and machinery and
research and development equipment at Jogeshwari and Roha were revalued
on 30th September 1993 on the basis of the report of an approved
valuer. Difference between the book value and the value as per
valuer's report amounting to Rs. 730.70 lacs was transferred to
Revaluation Reserve during the year ended 31st March 1994. These fixed
assets are stated at revalued amounts less accumulated depreciation.
d. DEPRECIATION/ AMORTISATION/ IMPAIRMENT
Depreciation on the historical cost of tangible fixed assets is
provided on straight line method at the rates and in the manner
prescribed under Schedule XIV to the Companies Act, 1956.
Depreciation on revalued portion of fixed assets is calculated on
straight line method over balance useful life of assets as determined
by the valuer and is transferred from Revaluation Reserve to the
Statement of Profit and Loss.
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/ external
factors. An impairment loss is recognised whenever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of the money and risks
specific to the assets.
After recognition of impairment loss, the depreciation charge for the
asset is adjusted in future periods to allocate the asset's revised
carrying amount, less its residual value (if any), on straight line
basis over its remaining useful life.
A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation if there was no
impairment.
Assets costing less than Rs. 5,000 are depreciated at the rate of
hundred per cent.
Leasehold land/ improvements are amortised on a straight line basis
over the period of lease ranging from 30 to 99 years.
e. INTANGIBLE ASSETS
Technical know-how
Technical know-how which are acquired, are capitalised and amortised
over the period of its estimated useful life as estimated by the
management on a straight line basis, not exceeding ten years.
Licenses and Software
Cost relating to licenses and software, which are acquired, are
capitalised and amortised over the period of its estimated useful life
as estimated by the management on a straight line basis, not exceeding
ten years.
f. INVESTMENTS
Investments that are readily realisable and intended to be held for not
more than a year from the reporting period are classified as Current
Investments. These are valued at lower of cost and fair value
(repurchase price or market value) on an individual item basis.
Investments other than current are classified as Non-Current
Investments which are valued at cost less provision for diminution in
value, other than temporary, if any.
g. INVENTORIES
Raw materials and packing materials are valued at lower of cost and net
realisable value, cost of which includes duties and taxes (net off
CENVAT and VAT, wherever applicable) and is arrived at on weighted
average cost basis. Cost of imported raw materials and packing
materials lying in bonded warehouse includes customs duty. However,
materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they
will be incorporated are expected to be sold at or above cost.
Finished products including stock-in-trade and work-in-progress are
valued at lower of cost and net realisable value. Cost is arrived at
on weighted average cost basis. Cost of finished products and
work-in-progress includes material cost, labour, direct expenses,
production overheads and excise duty, where applicable.
h. REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured
Revenue from sale of goods is recognised when significant risks and
rewards of ownership are transferred to customers, which coincides with
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 the liability arising during the year.
Dividend is recognised when the Company's right to receive the payment
is established by the balance sheet date.
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Other income is accounted for on accrual basis except where the receipt
of income is uncertain.
i. FOREIGN CURRENCY TRANSLATION/ TRANSACTIONS
Transactions in foreign currency are recorded at the rates prevailing
on the date of the transaction.
Monetary assets and liabilities denominated in a foreign currency
outstanding at the year end are restated at the year end exchange
rates. Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange differences arising out of settlement and restatement of
foreign exchange monetary items are taken to the Statement of Profit
and Loss.
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
Statement of Profit and Loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or expense for the
year.
j. GOVERNMENT GRANTS
Grants and subsidies from the government are recognised when there is
reasonable assurance that the grant/ subsidy will be received and all
attaching conditions will be complied with.
Government grants received as capital incentives/subsidies are credited
to Capital Reserve. Government grants related to revenue is recognised
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.
Government grants relating to specific fixed assets are disclosed as
deduction from the gross value of the assets concerned.
k. EMPLOYEE BENEFITS
Company's contribution to recognised provident fund, family pension
fund and superannuation fund is defined contribution plan and is
charged to the Statement of Profit and Loss on accrual basis. There are
no other obligations other than the contribution payable to the
respective trusts.
Contribution to gratuity fund is defined benefit obligation and is
provided for on the basis of an actuarial valuation on projected unit
credit method made at the end of each financial year.
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided for based on actuarial
valuation. The actuarial valuation is done as per projected unit credit
method.
Actuarial gains/ losses are immediately recognised in the Statement of
Profit and Loss.
l. RESEARCH AND DEVELOPMENT
Revenue expenditure is charged off to Statement of Profit and Loss in
the year in which it is incurred.
m.LEASE ACCOUNTING
Leases where substantially all the risks and benefits of ownership are
retained by the lessor, are classified as operating leases. Operating
lease expenses/income is recognised in the Statement of Profit and Loss
on a straight line basis over the lease term.
n. EARNING PER SHARE
Basic earning per share is computed by dividing the net profit after
tax attributable to equity shareholders for the year by the weighted
average number of equity shares outstanding during the year.
Diluted earning per share is computed by dividing the net profit after
tax attributable to equity shareholders for the year by the weighted
average number of equity shares outstanding during the year as adjusted
for the effects of all dilutive potential equity shares, if any.
o. ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises of current and deferred tax. Provision for
current tax is made, based on the tax payable under the Income-tax
Act,1961. Deferred tax assets and liabilities from timing differences
between taxable income and accounting income is accounted for using the
tax rates and the tax laws enacted or substantially enacted as on the
balance sheet date.
At each balance sheet date, the Company reassesses unrecognised
deferred tax assets. Deferred tax assets are recognised only to the
extent that there is a reasonable certainty of their realisation. In
situations where the Company has unabsorbed depreciation or carry
forward tax losses, all deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that they
can be realised against future taxable profits.
MAT credit is recognised as an asset when there is convincing evidence
that the Company will pay normal income tax during the specified
period. The Company reviews the same at each balance sheet date and
writes down the carrying amount of MAT Credit Entitlement to the extent
there is no longer convincing evidence to the effect that Company will
pay normal income tax during the specified period.
p. PROVISIONS AND CONTINGENCIES
The Company creates a provision when there exist a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. Provisions are not discounted to its present value and are
determined based on best estimate required to settle the obligation at
the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best estimates.
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. When 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.
q. 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.
Mar 31, 2011
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention, except for certain fixed assets, which were revalued on
30th September 1993 (refer Note 3 below) and in case of assets where a
provision is made for impairment losses, on accrual basis and are in
accordance with the requirements of the Companies Act, 1956 and comply
with the accounting standards notified by the Companies (Accounting
Standards) Rules, 2006 (as amended). The accounting policies have been
consistently applied by the Company and are consistent with those used
in the previous year.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities as at the
date of financial statements and the result of operations during the
reported period. Although these estimates are based upon management's
best knowledge of current events and actions, actual results could
differ from these estimates.
3. FIXED ASSETS
All fixed assets other than revalued assets are stated at cost less
accumulated depreciation/ amortisation less impairment losses. Cost
comprises of the purchase price and any other directly attributable
costs of bringing the assets to its working condition for its intended
use. Adjustments arising from exchange rates variances relating to
liabilities attributable to fixed assets are taken to the Profit and
Loss Account.
Land, buildings, major items of plant and machinery and research and
development equipment at Jogeshwari and Roha were revalued on 30th
September 1993 on the basis of the report of an approved valuer.
Difference between the book value and the value as per valuer's report
amounting to Rs. 730.70 lacs was transferred to Revaluation Reserve
during the year ended 31st March 1994. These fixed assets are stated at
revalued amounts less accumulated depreciation.
4. DEPRECIATION/ AMORTISATION/ IMPAIRMENT
Depreciation on the historical cost of fixed assets is provided on
straight line method at the rates and in the manner prescribed under
Schedule XIV to the Companies Act, 1956.
Depreciation on revalued portion of fixed assets is calculated on
straight line method over balance useful life of assets as determined
by the valuer and is transferred from Revaluation Reserve to the Profit
and Loss Account.
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/ external
factors. An impairment loss is recognised whenever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of the money and risks
specific to the assets.
After recognition of impairment loss, the depreciation charge for the
asset is adjusted in future periods to allocate the asset's revised
carrying amount, less its residual value (if any), on straight line
basis over its remaining useful life.
A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevailed by charging usual depreciation if there was no
impairment.
Assets costing less than Rs. 5,000 are depreciated at the rate of
hundred percent.
Leasehold land/ improvements are amortised over the period of lease
ranging from 30 to 99 years.
5. INTANGIBLE ASSETS
Technical know-how
Technical know-how which are acquired, are capitalised and amortised
over the period of its estimated useful life as estimated by the
management on a straight line basis, not exceeding ten years.
Licenses
Cost relating to licenses, which are acquired, are capitalized and
amortised over the period of its estimated useful life as estimated by
the management on a straight line basis, not exceeding ten years.
6. INVESTMENTS
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. These are
valued at lower of cost and fair value (repurchase price or market
value) on an individual item basis.
Investments other than current are classified as long-term investments
which are valued at cost less provision for diminution in value, other
than temporary, if any.
7. INVENTORIES
Raw materials and packing materials are valued at lower of cost and net
realisable value, cost of which includes duties and taxes (net off
CENVAT and VAT, wherever applicable) and is arrived at on weighted
average cost basis. Cost of imported raw materials and packing
materials lying in bonded warehouse includes customs duty. However,
materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they
will be incorporated are expected to be sold at or above cost.
Finished products including traded goods and work-in-process are valued
at lower of cost and net realisable value. Cost is arrived at on
weighted average cost basis. Cost of finished products and
work-in-process includes material cost, labour, direct expenses,
production overheads and excise duty, where applicable.
8. REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Revenue from sale of goods is recognised when significant risks and
rewards of ownership are transferred to customers, which coincides with
dispatch of goods to customers. Sales include excise duty but exclude
sales tax/ value added tax.
Dividend is recognised when the Company's right to receive the payment
is established by the balance sheet date. Dividend from subsidiaries is
recognised even if same are declared after the balance sheet date but
pertains to period on or before the date of balance sheet as per the
requirement of Schedule VI of the Companies Act, 1956.
Interest income is recognized on a time proportion basis taking into
account the amount outstanding and the rate applicable.
Other income is accounted for on accrual basis except where the receipt
of income is uncertain.
9. FOREIGN CURRENCY TRANSLATION/ TRANSACTIONS
Transactions in foreign currency are recorded at the rates prevailing
on the date of the transaction.
Monetary assets and liabilities denominated in a foreign currency
outstanding at the year end are restated at the year end exchange
rates. Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange differences arising out of settlement and restatement of
foreign exchange monetary items are taken to the Profit and Loss
Account.
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
Profit and Loss Account in the year in which the exchange rates change.
Any profit or loss arising on cancellation or renewal of forward
exchange contract is recognised as income or expense for the year.
10. GOVERNMENT GRANTS
Grants and subsidies from the government are recognised when there is
reasonable assurance that the grant/ subsidy will be received and all
attaching conditions will be complied with.
Government grants received as capital incentives are credited to
Capital Reserve. Government grants related to revenue is recognised on
a systematic basis in the Profit and Loss Account over the periods
necessary to match them with the related costs which they are intended
to compensate.
Government grants relating to specific fixed assets are disclosed as
deduction from the gross value of the assets concerned.
11. EMPLOYEE BENEFITS
Company's contribution to recognised provident fund, family pension
fund and superannuation fund is defined contribution plan and is
charged to the Profit and Loss Account on accrual basis. There are no
other obligations other than the contribution payable to the respective
trusts.
Contribution to gratuity fund is defined benefit obligation and is
provided for on the basis of an actuarial valuation on projected unit
credit method made at the end of each financial year.
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided for based on actuarial
valuation. The actuarial valuation is done as per projected unit credit
method.
Actuarial gains/ losses are immediately recognised in the Profit and
Loss Account.
12. RESEARCH AND DEVELOPMENT
Capital expenditure on capital assets for Research and Development is
included in fixed assets. Revenue expenditure is charged off to Profit
and Loss Account in the year in which it is incurred.
13. LEASE ACCOUNTING
Leases where substantially all the risks and benefits of ownership are
retained by the lessor, are classified as operating leases. Operating
lease expenses/income is recognised in the Profit and Loss Account on a
straight line basis over the lease term.
14. EARNING PER SHARE
Basic earning per share is computed by dividing the net profit after
tax attributable to equity shareholders for the year by the weighted
average number of equity shares outstanding during the year.
Diluted earning per share is computed by dividing the net profit after
tax attributable to equity shareholders for the year by the weighted
average number of equity shares outstanding during the year as adjusted
for the effects of all dilutive potential equity shares, if any.
15. ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises of current and deferred tax. Provision for
current tax is made, based on the tax payable under the Income-tax Act,
1961. Deferred tax assets and liabilities from timing differences
between taxable income and accounting income is accounted for using the
tax rates and the tax laws enacted or substantially enacted as on the
balance sheet date.
At each balance sheet date, the Company reassesses unrecognised
deferred tax assets. Deferred tax assets are recognised only to the
extent that there is a reasonable certainty of their realisation. In
situations where the Company has unabsorbed depreciation or carry
forward tax losses, all deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that they
can be realised against future taxable profits.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the Company will pay normal income tax
during the specified period. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal income tax during the specified
period.
16. PROVISIONS AND CONTINGENCIES
The Company creates a provision when there exist a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. Provisions are not discounted to its present value and are
determined based on best estimate required to settle the obligation at
the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best estimates.
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. When 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.
17. 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.
Mar 31, 2010
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared under the historical cost
convention, except for certain fixed assets, which were revalued on
30th September 1993 (refer Note 3 below) and in case of assets where a
provision is made for impairment losses, on accrual basis and are in
accordance with the requirements of the Companies Act, 1956 and comply
with the accounting standards notified by the Companies (Accounting
Standards) Rules, 2006 (as amended). The accounting policies have been
consistently applied by the Company and are consistent with those used
in the previous year.
2. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities as at the
date of financial statements and the result of operations during the
reported period. Although these estimates are based upon managements
best knowledge of current events and actions, actual results could
differ from these estimates.
3. FIXED ASSETS
All fixed assets other than revalued assets are stated at cost less
accumulated depreciation/ amortisation less impairment losses. Cost
comprises of the purchase price and any other directly attributable
costs of bringing the assets to its working condition for its intended
use. Adjustments arising from exchange rates variances relating to
liabilities attributable to fixed assets are taken to the Profit and
Loss Account.
Land, buildings, major items of plant and machinery and research and
development equipment at Jogeshwari and Roha were revalued on 30th
September 1993 on the basis of the report of an approved valuer.
Difference between the book value and the value as per valuers report
amounting to Rs. 730.70 lacs was transferred to Revaluation Reserve
during the year ended 31st March 1994. These fixed assets are stated at
revalued amounts less accumulated depreciation.
4. DEPRECIATION/ AMORTISATION/ IMPAIRMENT
Depreciation on the historical cost of fixed assets is provided on
straight line method at the rates and in the manner prescribed under
Schedule XIV to the Companies Act, 1956.
Depreciation on revalued portion of fixed assets is calculated on
straight line method over balance useful life of assets as determined
by the valuer and is transferred from Revaluation Reserve to the Profit
and Loss Account.
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/ external
factors. An impairment loss is recognised whenever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
After recognition of impairment loss, the depreciation charge for the
asset is adjusted in future periods to allocate the assets revised
carrying amount, less its residual value (if any), on straight line
basis over its remaining useful life.
A previously recognised impairment loss is increased or reversed
depending on changes in circumstances. However, the carrying value
after reversal is not increased beyond the carrying value that would
have prevail by charging usual depreciation if there was no impairment.
Assets costing less than Rs. 5,000 are depreciated at the rate of
hundred per cent.
Leasehold land / improvements are amortised over the period of lease.
5. INTANGIBLE ASSETS
Technical know-how
Technical know-how which are acquired, are capitalised and amortised
over the period of its estimated useful life on a straight line basis,
not exceeding ten years.
6. INVESTMENTS
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. These are
valued at lower of cost and fair value (repurchase price or market
value) on an individual item basis.
Investments other than current are classified as long-term investments
which are valued at cost less provision for diminution in value, other
than temporary, if any.
7. INVENTORIES
Raw materials and packing materials are valued at lower of cost and net
realisable value, cost of which includes duties and taxes (net off
CENVAT and VAT, wherever applicable) and is arrived at on weighted
average cost basis. Cost of imported raw materials and packing
materials lying in bonded warehouse includes customs duty. However,
materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they
will be incorporated are expected to be sold at or above cost.
Finished products including traded goods and work-in-process are valued
at lower of cost and net realisable value and is arrived at on weighted
average cost basis. Cost of finished products and work-in-process
includes material cost, labour, direct expenses, production overheads
and excise duty, where applicable.
8. REVENUE RECOGNITION
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Revenue from sale of goods is recognised when significant risks and
rewards of ownership are transferred to customers, which coincides with
dispatch of goods to customers. Sales include excise duty but exclude
sales tax/ value added tax.
Dividend is recognised when the Companys right to receive the payment
is established by the balance sheet date. Dividend from subsidiaries
is recognised even if same are declared after the balance sheet date
but pertains to period on or before the date of balance sheet as per
the requirement of Schedule VI of the Companies Act, 1956.
Other income is accounted for on accrual basis except where the receipt
of income is uncertain.
9. FOREIGN CURRENCY TRANSLATION/ TRANSACTIONS
Transactions in foreign currency are recorded at the rates prevailing
on the date of the transaction.
Monetary assets and liabilities denominated in a foreign currency
outstanding at the year end are restated at the year end exchange
rates. Non-monetary items which are carried in terms of historical cost
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction; and non-monetary items which are
carried at fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rates that existed
when the values were determined.
Exchange differences arising out of settlement and restatement of
foreign exchange monetary items are taken to the Profit and Loss
Account.
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
Profit and Loss Account in the year in which the exchange rates change.
Any profit or loss arising on cancellation or renewal of forward
exchange contract is recognised as income or expense for the year.
10. GOVERNMENT GRANTS
Grants and subsidies from the government are recognised when there is
reasonable assurance that the grant/ subsidy will be received and all
attaching conditions will be complied with.
Government grants received as capital incentives are credited to
Capital Reserve. Government grants related to revenue is recognised on
a systematic basis in the Profit and Loss Account over the periods
necessary to match them with the related costs which they are intended
to compensate.
Government grants relating to specific fixed assets are disclosed as
deduction from the gross value of the assets concerned.
11. EMPLOYEE BENEFITS
Companys contribution to recognised provident fund, family pension
fund and superannuation fund is defined contribution plan and is
charged to the Profit and Loss Account on accrual basis. There are no
other obligations other than the contribution payable to the respective
trusts.
Contribution to gratuity fund is defined benefit obligation and is
provided for on the basis of an actuarial valuation on projected unit
credit method made at the end of each financial year.
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided for based on actuarial
valuation. The actuarial valuation is done as per projected unit credit
method.
Actuarial gains/ losses are immediately recognised in the Profit and
Loss Account.
12. RESEARCH AND DEVELOPMENT
Capital expenditure on capital assets for Research and Development is
included in fixed assets. Revenue expenditure is charged off to Profit
and Loss Account in the year in which it is incurred.
13. LEASE ACCOUNTING
Leases where substantially all the risks and benefits of ownership are
retained by the lessor, are classified as operating leases. Operating
lease expenses/ income is recognised in the Profit and Loss Account on
a straight line basis over the lease term.
14. EARNING PER SHARE
Basic earning per share is computed by dividing the net profit after
tax attributable to equity shareholders for the year by the weighted
average number of equity shares outstanding during the year.
Diluted earning per share is computed by dividing the net profit after
tax attributable to equity shareholders for the year by the weighted
average number of equity shares outstanding during the year as adjusted
for the effects of all dilutive potential equity shares, if any.
15. ACCOUNTING FOR TAXES ON INCOME
Tax expense comprises of current, deferred and fringe benefit tax.
Provision for current tax and fringe benefit tax is made, based on the
tax payable under the Income-tax Act, 1961. Deferred tax assets and
liabilities from timing differences between taxable income and
accounting income is accounted for using the tax rates and the tax laws
enacted or substantially enacted as on the balance sheet date.
At each balance sheet date, the Company reassesses unrecognised
deferred tax assets. Deferred tax assets are
recognised only to the extent that there is a reasonable certainty of
their realisation. In situations where the Company has unabsorbed
depreciation or carry forward tax losses, all deferred tax assets are
recognised only if there is virtual certainty supported by convincing
evidence that they can be realised against future taxable profits.
MAT credit is recognised as an asset only when and to the extent there
is convincing evidence that the Company will pay normal income tax
during the specified period. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal income tax during the specified
period.
16. PROVISIONS AND CONTINGENCIES
The Company creates a provision when there exist a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. Provisions are not discounted to its present value and are
determined based on best estimate required to settle the obligation at
the balance sheet date. These are reviewed at each balance sheet date
and adjusted to reflect the current best estimates.
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. When 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.
17. 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.
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