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Accounting Policies of Filatex India Ltd. Company

Mar 31, 2023

SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied by the Company in
the preparation of its financial statements are listed below. Such
accounting policies have been applied consistently to all the
periods presented in these financial statements.

2.1 Basis of preparation of Financial Statements

a) Statement of compliance with Ind AS:

These financial statements are prepared in accordance with
the Indian Accounting Standards (hereinafter referred to as
the ''Ind AS'') notified under the Companies (Indian Accounting
Standards) Rules, 2015 (as amended from time to time) and
presentation requirements of Division II of Schedule III to
the Companies Act, 2013 (Ind AS compliant schedule III), as
are applicable.

b) Basis of measurement:

These financial statements are prepared under the historical cost
convention on accrual basis except for the following material
items that have been measured at fair value as required by

relevant Ind AS:

- certain financial assets (including derivative financial
instruments) that are measured at fair value;

- share based payments;

- defined benefit plans - plan assets measured at fair value;

- certain property, plant and equipment measured at fair
value (viz leasehold land and freehold land) which has been
considered as deemed cost.

The fair values of financial instruments measured at amortised
cost are required to be disclosed in the said financial statements.

Historical cost is generally based on the fair value of the
consideration given in exchange for assets.

Fair value measurement:

Fair value is the price that would be received on sale of an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date (that is, an exit
price). It is a market-based measurement, not an entity-specific

measurement. 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 to 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 best economic interest.

A fair value measurement of a non-financial asset takes into
account a market participant''s ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset
in its highest and best use.

The Company uses valuation techniques that are appropriate in
the circumstances and for which sufficient data is available to
measure fair value, maximizing the use of relevant observable
inputs and minimising the use of unobservable inputs.

Where required/appropriate, external valuers are involved.

All financial assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised
within the fair value hierarchy established by Ind AS 113, that
categorises into three levels, the inputs to valuation techniques
used to measure fair value. These are based on the degree to
which the inputs to the fair value measurements are observable
and the significance of the inputs to the fair value measurement
in its entirety:

Level 1 inputs are quoted prices (unadjusted) in active markets
for identical assets or liabilities that the entity can access at the
measurement date.

Level 2 inputs are inputs other than quoted prices included

within Level 1 that are observable for the asset or liability, either
directly(i.e. as prices) or indirectly(i.e. derived from prices).

Level 3 inputs are unobservable inputs for the asset or liability.

The fair value hierarchy gives the highest priority to quoted prices
(unadjusted) in active markets for identical assets or liabilities
(Level 1 inputs) and the lowest priority to unobservable inputs
(Level 3 inputs).

For financial assets and liabilities maturing within one year from
the Balance Sheet date and which are not carried at fair value,
the carrying amount approximates fair value due to the short
maturity of these instruments.

The Company recognises transfers between levels of fair value
hierarchy at the end of reporting period during which change
has occurred.

c) Current 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/services and time between
acquisition of assets for processing/rendering of services and
their realization in cash and cash equivalents, operating cycle is
less than 12 months. However, for the purpose of current/non-
current classification of assets & liabilities period of 12 months
has been considered as normal operating cycle.

d) Functional and presentation currency:

Items included in the financial statements of the Company
are measured using the currency of the primary economic
environment in which the Company operates (i.e. the "functional
currency"). The financial statements are presented in Indian
Rupee, the national currency of India, which is the functional
currency of the Company.

e) Rounding of amounts:

All amounts disclosed in the financial statements and notes are
in Indian Rupees in lakhs rounded off to two decimal places as
permitted by Schedule III to the Companies Act, 2013, unless
otherwise stated.

2.2 Use of estimates

The preparation of financial statements in conformity with the
recognition and measurement principles of the Ind AS requires
management to make judgements, estimates and assumptions
that affect the application of the accounting policies and the
reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities on the date of the financial
statements, and the reported amounts of revenues, expenses
and the results of operations during the reporting period. Actual
results could differ from those estimates. The estimates and
underlying assumptions are reviewed on an "ongoing basis". Such
estimates & assumptions are based on management evaluation
of relevant facts & circumstances as on date of financial
statements. Revisions to accounting estimates are recognised

in the period in which the estimate is revised if the revision
affects only that period; they are recognised in the period of the
revision and future periods if the revision affects both current and
future periods.

2.3 Revenue recognition

Sale of goods

Revenue from contract with customers is recognised when
the Company satisfies performance obligation by transferring
promised goods and services to the customer. Performance
obligations are satisfied at the point of time when the customer
obtains controls of the asset.

Revenue towards satisfaction of a performance obligation is
measured at the amount of transaction price (net of variable
consideration) allocated to that performance obligation. The
transaction price of goods sold and services rendered is net
of variable consideration on account of various discounts and
schemes offered by the Company as part of the contract.

Revenue (other than sale)

Revenue (other than sale) 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.

Insurance Claims

Insurance claims are accounted for on the basis of claims
admitted and to the extent that there is no uncertainty in
receiving the claims.

Export Benefits

Export benefits/incentives constituting Duty Draw back,
incentives under FPS/FMS/MEIS/RoDTEP and duty free advance
license scheme are accounted for on accrual basis where there
is reasonable assurance that the Company will comply with
the conditions attached to them and the export benefits will
be received.

Interest Income

Interest income is recognized on a time proportion basis taking
into account the amount outstanding and the applicable effective
interest rate (EIR). EIR is the rate that exactly discounts the
estimated future cash payments or receipts over the expected
life of a financial liability or a financial asset to their gross
carrying amount.

Dividend

Dividend income is recognized when the Company''s right to
receive dividend is established by the reporting date, which is
generally when shareholders approve the dividend.

2.4 Property, plant and equipment (PPE)

Property, plant and equipment is stated at acquisition cost net of
accumulated depreciation and accumulated impairment losses,
if any. Subsequent costs are included in the asset''s carrying
amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated
with the item will flow to the Company and the cost of the item
can be measured reliably. All other repairs and maintenance are
charged to the Statement of Profit and Loss during the period in
which they are incurred.

Cost of an item of property, plant and equipment comprises:

i. its purchase price, including import duties and non¬
refundable purchase taxes (net of duty/tax credit availed),

after deducting trade discounts and rebates.

ii. any costs directly attributable to bringing the asset to the
location and condition necessary for it to be capable of
operating in the manner intended by management.

iii. borrowing cost directly attributable to the qualifying asset in
accordance with accounting policy on borrowing cost.

iv. the costs of dismantling, removing the item and restoring

the site on which it is located.

PPE in the course of construction for production, supply or
administrative purposes are carried at cost, less any recognised
impairment loss. Cost includes direct costs, related pre¬
operational expenses and for qualifying assets applicable
borrowing costs to be capitalised in accordance with the
Company''s accounting policy. Administrative, general overheads
and other indirect expenditure (including borrowing costs)
incurred during the project period which are not directly related
to the project nor are incidental thereto, are expensed.

Property, plant and equipment which are not ready for intended
use as on the date of Balance Sheet are disclosed as "Capital
work-in-progress". They are classified to the appropriate
categories of property, plant and equipment when completed
and ready for intended use. Depreciation of these assets, on the

same basis as other items of PPE, commences when the assets
are ready for their intended use.

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 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.

The Company identifies and determines cost of each component/
part of the plant and equipment separately, if the component/
part has a cost which is significant to the total cost of the plant
and equipment and has useful life that is materially different
from that of the remaining plant and equipment.

Machinery spares which meets the criteria of PPE is capitalized
and depreciated over the useful life of the respective asset.

On transition to Ind AS:

Under the Previous GAAP, all property, plant and equipment
were carried at in the Balance Sheet on basis of historical cost.
In accordance with provisions of Ind AS 101 First time adoption
of Indian Accounting Standards, the Company, for certain
properties, has elected to adopt fair value and recognized as of
April 01, 2016 as the deemed cost as of the transition date. The
resulting adjustments have been directly recognized in retained
earnings. The balance assets have been recomputed as per the
requirements of Ind AS retrospectively as applicable.

Depreciation:

Depreciation on Property, Plant & Equipment (other than freehold land and capital work in progress) is provided on the straight line
method, based on their respective estimate of useful lives, as given below. Estimated useful lives of assets are determined based on
internal assessment estimated by the management of the Company and supported by technical advice wherever so required. The
management believes that useful lives currently used, which is as prescribed under Schedule II to the Companies Act, 2013, fairly reflect
its estimate of the useful lives and residual values of Property, Plant & Equipment (considered at 5% of the original cost), though these
lives in certain cases are different from lives prescribed under Schedule II.

Measurement of Fair Value:

a) Fair value hierarchy:

The fair value of freehold and leasehold land has been determined
by external, independent property valuers, having appropriate
recognised professional qualifications and experience in the
category of the property being valued. The fair value measurement
has been categorised as level 2 fair value based on the inputs to
the valuations technique used.

b) Valuation technique:

Value of the property has been arrived at using market approach
using market corroborated inputs. Adjustments have been made
for factors specific to the assets valued including location and
condition of the assets, the extent to which input relate to items
that are comparable to the assets and the volume or the level of
activity in the markets within which the inputs are observed.

2.5 Intangible assets

Identifiable intangible assets are recognised when the Company
controls the asset, it is probable that future economic benefits
attributed to the asset will flow to the Company and the cost of
the asset can be reliably measured.

At initial recognition, the separately acquired intangible assets
with finite useful lives are recognised at cost of acquisition.
Following initial recognition, the intangible assets are carried
at cost less any accumulated amortisation and accumulated
impairment losses, if any.

Intangible assets not ready for the intended use on the date
of the balance sheet are disclosed as "intangible assets under

development"

Intangible assets are derecognised (eliminated from the balance
sheet) on disposal or when no future economic benefits are
expected from its use and subsequent disposal.

Gains or losses arising from the retirement or disposal of an
intangible asset are determined as the difference between the
net disposal proceeds and the carrying amount of the asset
are recognised as income or expense in the statement of profit
and loss.

Deemed cost on transition to Ind AS:

Under the Previous GAAP, all Intangible assets were carried at in

the Balance Sheet on basis of historical cost. The Company has
elected to continue with the carrying value of all of its intangible
assets recognised as of April 01, 2016 (the transition date)
measured as per the previous GAAP and use such carrying value

as its deemed cost as of the transition date.

2.6 Financial Instruments

Financial Assets:

Initial recognition and measurement:

Financial assets are recognised when the Company becomes a
party to the contractual provisions of the instrument.

On initial recognition, a financial asset is recognised at fair value,
except for trade receivables which are initially measured at
transaction price. In case of financial assets which are recognised
at fair value through profit and loss (FVTPL), its transaction costs
are recognised in the statement of profit and loss. In other cases,
the transaction costs are added to or deducted from the fair
value of the financial assets.

Financial assets are subsequently classified and
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).

- fair value through profit and loss (FVTPL).

- fair value through other comprehensive income (FVOCI).

Equity Instruments:

Investment in associates are measured at cost less impairment

losses, if any.

All investments in equity instruments in scope of Ind AS 109
classified under financial assets are initially measured at
fair value.

If the equity investment is not held for trading, the Company
may, on initial recognition, irrevocably elect to measure the same
either at FVOCI or FVTPL. The Company makes such election on
an instrument-by-instrument basis. Equity Instruments which
are held for trading are classified as measured at FVTPL.

Fair value changes on an equity instrument is recognised as other
income in the Statement of Profit and Loss unless the Company
has elected to measure such instrument at FVOCI. Fair value
changes excluding dividends, on an equity instrument measured
at FVOCI are recognized in OCI. Amounts recognised in OCI are
not subsequently reclassified to the Statement of Profit and Loss.
Dividend income on the investments in equity instruments are
recognised as ''other income'' in the Statement of Profit and Loss.

The Company does not have any equity investments designated

at FVOCI.

On disposal of the investment, the difference between the net
disposal proceeds and the carrying amount is charged or credited

to the statement of profit & Loss.

Investments in Mutual fund:

Investments in Mutual funds are measured at fair value through

profit and loss (FVTPL).

Derivative financial instruments:

The Company uses derivative financial instruments, such as
forward currency contracts to mitigate its foreign currency risks
and interest rate risks. Such derivative financial instruments are
recorded at fair value. Derivatives are carried as financial assets
when the fair value is positive and as financial liabilities when the
fair value is negative.

The purchase contracts that meet the definition of a derivative
under Ind AS 109 are recognised in the statement of profit
and loss.

Any gains or losses arising from changes in the fair value of
derivatives are taken directly to statement of profit or loss.

Derecognition:

The Company derecognises a financial asset when the contractual
rights to the cash flows from the financial asset expire, or it
transfers the contractual rights to receive the cash flows from
the asset.

Impairment of Financial Asset:

In accordance with Ind AS 109, the Company applies the expected
credit loss ("ECL") model for measurement and recognition of
impairment loss on financial assets and credit risk exposures.
The Company follows ''simplified approach'' for recognition of
impairment loss allowance on trade receivables or contract
revenue receivables. Simplified approach does not require the
Company to track changes in credit risk. Rather, it recognizes
impairment loss allowance based on lifetime ECL at each
reporting date, right from its initial recognition. This involves use
of provision matrix constructed on the basis of historical credit
loss experience and adjusted for forward looking information.
The expected credit loss allowance is based on the ageing of the
receivables that are due and the rates used in the provision matrix.

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.

ECL is the difference between all contractual cash flows that
are due to the Company in accordance with the contract and all
the cash flows that the entity expects to receive (i.e., all cash
shortfalls), discounted at the original EIR. 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.

The Company measures the expected credit loss associated with
its assets based on historical trend, industry practices and the
business environment in which the entity operates or any other
appropriate basis. The impairment methodology applied depends
on whether there has been a significant increase in credit risk.

ECL impairment loss allowance (or reversal) recognised during
the period is recognised as income/expense in the Statement of

Profit and Loss.

Financial Liabilities and equity instruments:

Classification as debt or equity

Debt and equity instruments issued by the Company are classified
as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions
of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by the Company are recognised at the
proceeds received, net of direct issue costs.

Financial liabilities

Initial recognition and measurement:

Financial liabilities are recognised when the Company becomes a
party to the contractual provisions of the instrument.

Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans and
borrowings, payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. All financial
liabilities are recognised initially at fair value and, in the case of
loans and borrowings and payables, net of directly attributable
transaction costs.

The fair value of a financial instrument at initial recognition is
normally the transaction price. If the Company determines that
the fair value at initial recognition differs from the transaction
price, difference between the fair value at initial recognition and
the transaction price shall be recognized as gain or loss unless
it qualifies for recognition as an asset or liability. This normally
depends on the relationship between the lender and borrower or
the reason for providing the loan. Accordingly in case of interest-
free loan from promoters to the Company, the difference
between the loan amount and its fair value is treated as an equity
contribution to the Company.

In accordance with Ind AS 113, the fair value of a financial liability
with a demand feature is not less than the amount payable on
demand, discounted from the first date that the amount could be
required to be paid.

The Company''s financial liabilities include trade and other
payables and loans and borrowings including bank overdrafts.

Subsequent measurement

The measurement of financial liabilities depends on their

classification, as described below:

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings
are subsequently measured at amortised cost using the EIR
method. Gains and losses are recognised in profit or loss when
the liabilities are derecognised as well as through the EIR
amortisation process.

Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance costs
in the statement of profit and loss, unless and to the extent
capitalised as part of costs of an asset.

The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
(including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the
financial liability, or (where appropriate) a shorter period, to the
net carrying amount on initial recognition.

Trade and other payables

For trade and other payables maturing within one year from the
balance sheet date, the carrying amounts approximate fair value
due to the short maturity of these instruments.

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 or loss.

Off setting of Financial Instruments

Financial assets and financial liabilities are offset and the net
amount is reported in the Balance Sheet if there is currently
enforceable legal right to offset the recognised amount and there
is an intention to settle on a net basis, to realise the assets and
settle the liabilities simultaneously.

2.7 Impairment of Non-financial assets

The carrying amounts of non-financial assets other than
inventories are assessed at each reporting date to ascertain
whether there is any indication of impairment. If any such
indication exists then the asset''s recoverable amount is
estimated. An impairment loss is recognised, as an expense
in the Statement of Profit and Loss, for the amount by which
the asset''s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset''s fair value
less cost to sell and value in use. Value in use is ascertained
through discounting of the estimated future cash flows using
a discount rate that reflects the current market assessments
of the time value of money and the risk specific to the assets.
For the purpose of assessing impairment, assets are grouped at
the lowest levels into cash generating units for which there are
separately identifiable cash flows.

Impairment losses recognised in prior years are reversed when
there is an indication that the impairment losses recognised no
longer exist or have decreased. Such reversals are recognised
as an increase in carrying amounts of assets to the extent
that it does not exceed the carrying amounts that would have
been determined (net of amortization or depreciation) had no
impairment loss been recognised in previous years.

2.8 Borrowing costs

Borrowing costs comprises interest expense on borrowings
calculated using the effective interest method and exchange

differences arising from foreign currency borrowings to the
extent that they are regarded as an adjustment to interest costs.

The effective interest method is a method of calculating the
amortised cost of a financial asset or a financial liability and
of allocating the interest income or interest expense over the
relevant period.

The effective interest rate (EIR) is the rate that exactly discounts
estimated future cash payments or receipts through the expected
life of the financial instrument or, when appropriate, a shorter
period to the net carrying amount of the financial asset or financial
liability. EIR calculation does not include exchange differences.

Borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset, which are assets
that necessarily take a substantial period of time considering
project as a whole to get ready for their intended use or sale, are
included in the cost of those assets. Such borrowing costs are
capitalised as part of the cost of the asset when it is probable
that they will result in future economic benefits to the entity and
the costs can be measured reliably. Other borrowing costs are
recognised as an expense in the period in which they are incurred.

The Capitalisation of borrowing costs as part of the cost of a
qualifying asset commences when expenditure for the asset is
being incurred, borrowing costs are being incurred and activities
that are necessary to prepare the asset for its intended use or
sale are in progress.

Capitalisation of borrowing costs is suspended or ceases when
substantially all the activities necessary to prepare the qualifying
asset for its intended use or sale are interrupted or completed.

Investment income earned on the temporary investment of
specific borrowings pending their expenditure on qualifying assets
is deducted from the borrowing costs eligible for Capitalisation.

2.9 Foreign currency transactions

The financial statements are presented in Indian Rupees (INR),
the functional currency of the Company. Items included in the
financial statements of the Company are recorded using the
currency of the primary economic environment in which the
Company operates (the ''functional currency'').

Foreign currency transactions are translated into the functional
currency using exchange rates at the date of the transaction.
Foreign exchange gains and losses from settlement of these
transactions, and from translation of monetary assets and
liabilities at the reporting date exchange rates are recognised in
the Statement of Profit and Loss.

Non-monetary assets and liabilities denominated in a foreign
currency and measured at historical cost are translated at the
exchange rate prevalent at the date of transaction.

Under Previous GAAP, the Company had opted for paragraph
46A of Accounting Standard for ''Effect of Changes in Foreign
Exchange Rates'' (AS 11) which provided an alternative accounting
treatment whereby exchange differences arising on long term
foreign currency monetary items relating to depreciable capital
asset can be added to or deducted from the cost of the asset and
should be depreciated over the balance life of the asset.

Ind AS 101 includes an optional exemption that allows a first-time
adopter to continue the above accounting treatment in respect of
the long-term foreign currency monetary items recognised in the
financial statements for the period ending immediately before

the beginning of the first Ind AS financial reporting period as per
the previous GAAP. The Company has elected to avail this optional
exemption. However, the capitalization of exchange differences
is not allowed on any new long term foreign currency monetary
item recognized from the first Ind AS financial reporting period.

2.10 Leases

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

The Company''s lease asset classes primarily consist of leases
for Land & office building. The Company assesses whether a
contract contains a lease, at inception of a contract. A contract
is, or contains, a lease if the contract conveys the right to control
the use of an identified asset for a period of time in exchange
for consideration. To assess whether a contract conveys the right
to control the use of an identified asset, the Company assesses
whether: (i) the contract involves the use of an identified asset
(ii) the Company has substantially all of the economic benefits
from use of the asset through the period of the lease and (iii) the
Company has the right to direct the use of the asset.

The Company recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount
of the lease liability adjusted for any lease payments made at
or before the commencement date, plus any initial direct costs
incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on
which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the earlier
of the end of the useful life of the right-of-use asset or the end of
the lease term. The estimated useful lives of right-of-use assets
are determined on the same basis as those of property, plant
and equipment. In addition, the right-of-use asset is periodically
reduced by impairment losses, if any, and adjusted for certain re¬
measurements of the lease liability.

The lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement
date, discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, Company''s incremental
borrowing rate.

Generally, the Company uses its incremental borrowing rate as
the discount rate.

Lease payments included in the measurement of the lease
liability comprise the following:

- Fixed payments, including in-substance fixed payments;

- Variable lease payments that depend on an index or a
rate, initially measured using the index or rate as at the
commencement date;

- Amounts expected to be payable under a residual value
guarantee; and

- The exercise price under a purchase option that the Company
is reasonably certain to exercise, lease payments in an
optional renewal period if the Company is reasonably certain
to exercise an extension option, and penalties for early
termination of a lease unless the Company is reasonably
certain not to terminate early.

The lease liability is subsequently remeasured by increasing the
carrying amount to reflect interest on the lease liability, reducing
the carrying amount to reflect the lease payments made and
remeasuring the carrying amount to reflect any reassessment
or lease modifications or to reflect revised in-substance fixed
lease payments. The Company recognises the amount of the
re-measurement of lease liability due to modification as an
adjustment to the right-of-use asset and statement of profit
and loss depending upon the nature of modification. Where the
carrying amount of the right-of-use asset is reduced to zero and
there is a further reduction in the measurement of the lease
liability, the Company recognises any remaining amount of the
re-measurement in the statement of profit and loss.

The Company presents right-of-use assets and lease liabilities
separately in balance sheet.

Short-term leases and leases of low-value assets

The Company has elected not to recognise right-of-use assets
and lease liabilities for short term leases that have a lease term of
12 months or less and low value leases. The Company recognises
the lease payments associated with these leases as an expense
on a straight-line basis over the lease term.

2.11 Inventories

Inventories are valued at the lower of cost and net
realisable value.

Costs incurred in bringing each product to its present location and
condition, are accounted for as follows:

- Raw materials, stores and spares: cost includes cost of
purchase (viz. the purchase price, import duties and other
taxes (other than those subsequently recoverable by the
entity from the taxing authorities), and transport, handling
and other costs directly attributable to the acquisition and
is net of trade discounts, rebates and other similar items)
and other costs incurred in bringing the inventories to their
present location and condition. Cost is determined on Moving
Weighted Average Method.

- Materials and other supplies 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.

- Spare parts, which do not meet the definition of property,
plant and equipment are classified as inventory.

- Finished goods and work in progress: cost includes
cost of direct materials and labour and a proportion of
manufacturing overheads based on the normal operating
capacity, but excluding borrowing costs.

- Traded goods: cost includes cost of purchase and other costs
incurred in bringing the inventories to their present location
and condition. Cost is determined on first in first out basis.

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.

Obsolete, slow moving and defective inventories are identified
from time to time and, where necessary, a provision is made for
such inventories.

2.12 Employee benefits

Short- term employee benefits:

All employee benefits payable wholly within twelve months of
rendering the service are classified as short-term employee
benefits. Benefits such as salaries, wages, social security
contributions, short term compensated absences (paid annual
leaves) etc. are measured on an undiscounted basis at the
amounts expected to be paid when the liabilities are settled and
are expensed in the period in which the employee renders the
related service.

Post-employment benefits:

i) Defined contribution plan

The defined contribution plan is post employment benefit plan
under which the Company contributes fixed contribution to a
government administered fund and will have no obligation to pay
further contribution. The Company''s defined contribution plan
comprises of Provident Fund, Employee State Insurance Scheme
and Labour Welfare Fund. The Company''s contribution to defined
contribution plans are recognized in the Statement of Profit and
Loss in the period in which employee renders the related service.

ii) Defined benefit plan

The Company''s obligation towards gratuity liability is a "defined
benefit" obligation. The present value of the defined benefit
obligations is determined on the basis of actuarial valuation
using the projected unit credit method. The rate used to discount
"defined benefit obligation" is determined by reference to market
yields at the Balance Sheet date on Indian Government Bonds for
the estimated term of obligations.

The amount recognised as ''Employee benefit expenses'' in the
Statement of Profit and Loss is the cost of accruing employee
benefits promised to Employees over the current year and
the costs of individual events such as past/future service
benefit changes and settlements (such events are recognised
immediately in the Statement of Profit and Loss).

The amount of net interest expense, calculated by applying the
liability discount rate to the net defined benefit liability or asset,
is charged or credited to ''Finance costs'' in the Statement of Profit
and Loss.

Re-measurement of net defined benefit liability/asset pertaining
to gratuity comprise of actuarial gains/losses (i.e. changes in
the present value of the defined benefit obligation resulting
from experience adjustments and effects of changes in actuarial
assumptions), the return on plan assets (excluding interest) and
the effect of the asset ceiling (if any, excluding interest) and is
recognised immediately in the balance sheet with a charge or
credit recognised in other comprehensive income in the period in
which they occur. Re-measurements are not reclassified to profit
or loss account in subsequent periods.

Other long-term employee benefit obligations:

The liabilities for earned leave that are not expected to be settled
wholly within 12 months are measured as the present value
of expected future payments to be made in respect of services
provided by Employees up to the end of the reporting period using
the projected unit credit method. The benefits are discounted
using the market yields at the end of the reporting period that
have terms approximating to the terms of the related obligation.
Remeasurements as a result of experience adjustments and
changes in actuarial assumptions are recognised in the Statement
of Profit and Loss. Accumulated leave, which is expected to be
utilized within the next 12 months, is treated as short term
employee benefit.

2.13 Share-Based Payments:

Employees of the Company receive remuneration in the form of
share based payments in consideration of the services rendered
(equity settled transactions).

Under the equity settled share based payment, the fair value on
the grant date of the awards given to Employees is recognised
as ''employee benefit expense'' with a corresponding increase in
equity over the vesting period. The fair value of the options on
the grant date is calculated using an appropriate valuation model.

The total expense is recognised over the vesting period, which
is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, the entity revises
its estimates of the number of options that are expected to
vest based on the non-market vesting and service conditions.
It recognises the impact of the revision to original estimates, if
any, in profit or loss, with a corresponding adjustment to equity.
An additional expense is recognised for any modification that
increases the total fair value of the shares based payments
transactions, or is otherwise beneficial to the employee as
measured at the date of modification.

The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of diluted earnings
per share. When the options are exercised, the Company issues
fresh equity shares.

2.14 Government Grant:

Government grants are recognised only when there is reasonable
assurance that the Company will comply with the conditions
attaching to them and the grants will be received.

Government grants are recognised in profit or loss on a systematic
basis over the periods in which the Company recognises as
expenses the related costs for which the grants are intended
to compensate.

Accordingly, government grants:

a) related to or used for assets are included in the Balance
Sheet as deferred income and recognised as income in
profit or loss on a systematic basis over the useful life of
the assets.

b) related to an expense item is recognised in the statement of
profit and loss on a systematic basis over the periods that
the related costs, for which it is intended to compensate,
are expensed and presented as deduction from the related/
relevant expense.

In the unlikely event that a grant previously recognised is
ultimately not received, it is treated as a change in estimate
and the amount cumulatively recognised is expensed in the

Statement of Profit and Loss.

Export benefits available under prevalent schemes are accrued
in the year in which the goods are exported and there is no
uncertainty in receiving the same.

2.15 Taxation

Tax expense comprises of current and deferred tax and includes
any adjustments related to past periods in current and/or
deferred tax adjustments that may become necessary due to
certain developments or reviews during the relevant period.

Current income tax:

Tax on income for the current period is determined on the basis
of taxable income (or on the basis of book profits wherever
minimum alternate tax is applicable) and tax credits computed in
accordance with the provisions of the Income Tax Act 1961, and
based on the expected outcome of assessments/appeals.

Current income tax assets and liabilities are measured at the
amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted, at
the reporting date in the countries where the Company operates
and generates taxable income.

Current income tax relating to items recognised, either in other
comprehensive income or directly in equity, is also recognized in
other comprehensive income or in equity, as appropriate and not
in the Statement of Profit and Loss. 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.

Current tax assets and current tax liabilities are offset when there
is a legally enforceable right to set off the recognized amounts
and there is an intention to settle the asset and the liability on a
net basis.

Deferred tax:

Deferred tax is provided using the liability method on temporary
differences between the tax basis of assets and liabilities and
their carrying amounts for financial reporting purposes at the
reporting date.

Deferred tax liabilities are recognised for all taxable temporary
differences, except:

- When the deferred tax liability arises from the initial
recognition of goodwill or an asset or liability in a transaction
that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable
profit or loss.

- In respect of taxable temporary differences associated with
investments in subsidiaries, associates and interests in
joint arrangements, when the timing of the reversal of the
temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the
foreseeable future.

Deferred tax assets are recognised for all deductible temporary
differences, the carry forward of unused tax credits and any

unused tax losses unabsorbed tax depreciation. Deferred tax
assets are recognised to the extent that it is probable that taxable
profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and
unused tax losses can be utilised, except:

- When the deferred tax asset relating to the deductible
temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss.

- In respect of deductible temporary differences associated
with investments in subsidiaries, associates and interests
in joint arrangements, deferred tax assets are recognised
only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and
taxable profit will be available against which the temporary
differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow
all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are re-assessed at each reporting date
and are recognised to the extent that it has become probable
that future taxable profits will allow the deferred tax asset to
be recovered.

Deferred tax assets and liabilities are measured at the tax rates
that are expected to apply in the year when the asset is realised
or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss
is recognised outside profit or loss. Deferred tax items are
recognised in correlation to the underlying transaction either in
OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a
legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to the
same taxable entity and the same taxation authority.

Deferred Tax Assets include Minimum Alternative Tax (MAT) paid
in accordance with the tax laws in India, which is likely to give
future economic benefits in the form of availability of set off
against future income tax liability. Accordingly, MAT is recognised
as deferred tax assets in the Balance sheet when the asset can
be measured reliably and it is probable that the future economic
benefit associated with the asset will be realised.

Uncertain Tax Issue:

The Company determines whether to consider each uncertain
tax treatment separately or together with one or more other
uncertain tax treatments and uses the approach that better
predicts the resolution of the uncertainty.

In determining the approach that predicts the resolution of the
uncertainty, the Company has considered most likely amount
method & expected value method. Company adopted most
likely amount method for resolution of the uncertainty of its
tax treatment.

The Company determined, based on its tax compliance
that it is probable that its tax treatment will be accepted by
taxation authorities.


Mar 31, 2018

1. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied by The Company in the preparation of its financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these financial statements and in preparing the opening IndAS balance sheet as at April 01, 2016 for the purpose of transition to IndAS, unless otherwise indicated.

1.1 Basis of preparation

a) Statement of compliance with Ind AS:

These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ‘Ind AS’) as notified by Ministry of Corporate Affairs pursuant to section 133 of the Companies Act, 2013 and the Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act.

For all periods upto and including the year ended 31st March, 2017, The Company has prepared its financial statements in accordance with the accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (hereinafter referred to as ‘Previous GAAP’) used for its statutory reporting requirement in India immediately before adopting Ind AS.

These financial statements for the year ended 31st March, 2018 are the first financial statements that The Company has prepared under Ind AS. The financial statements for the year ended 31st March, 2017 and the opening Balance Sheet as at 1st April, 2016 (being the ‘date of transition to Ind AS’) have been restated in accordance with Ind AS for comparative information.

Reconciliations and explanations of the effect of the transition from Previous GAAP to Ind AS on The Company’s Balance Sheet, Statement of Profit and Loss and Statement of Cash Flows are provided in note 3.

b) Basis of measurement

These financial statements are prepared under the historical cost convention except for the following material items that have been measured at fair value as required by relevant Ind AS :

- certain financial assets (including derivative financial instruments) that are measured at fair value;

- share based payments;

- defined benefit plans - plan assets measured at fair value;

- certain property, plant and equipment measured at fair value (viz. leasehold land and freehold land) which has been considered as deemed cost.

The fair values of financial instruments measured at amortised cost are required to be disclosed in the said financial statements.

Historical cost is generally based on the fair value of the consideration given in exchange for assets.

Fair value measurement:

Fair value is the price that would be received on sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (that is, an exit price). It is a market-based measurement, not an entity-specific measurement. 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 to 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 best economic interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Where required/appropriate, external valuers are involved.

All financial assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy established by Ind As 113, that categorises into three levels, the inputs to valuation techniques used to measure fair value. These are based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly(i.e. as prices) or indirectly(i.e. derived from prices).

level 3 inputs are unobservable inputs for the asset or liability.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).

For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amount approximates fair value due to the short maturity of these instruments.

The Company recognises transfers between levels of fair value hierarchy at the end of reporting period during which change has occurred.

c) current 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 / services and time between acquisition of assets for processing / rendering of services and their realization in cash and cash equivalents, operating cycle is less than 12 months. However, for the purpose of current/non-current classification of assets & liabilities period of 12 months has been considered as normal operating cycle.

d) functional and presentation currency

Items included in the financial statements of The Company are measured using the currency of the primary economic environment in which The Company operates (i.e. the “functional currency”). The financial statements are presented in Indian Rupee, the national currency of India, which is the functional currency of The Company.

e) Rounding of amounts:

All amounts disclosed in the financial statements and notes are in Indian Rupees in lakhs rounded off to two decimal places as permitted by Schedule III to the Companies Act, 2013, unless otherwise stated.

1.2 Use of estimates

The preparation of financial statements in conformity with the recognition and measurement principles of the Ind AS requires management to make judgements, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the financial statements, and the reported amounts of revenues, expenses and the results of operations during the reporting period. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an “ongoing basis”. Such estimates & assumptions are based on management evaluation of relevant facts & circumstances as on date of financial statements. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period; they are recognised in the period of the revision and future periods if the revision affects both current and future periods.

1.3 Revenue recognition

sale of goods

Revenue from sale of goods is recognised when all the significant risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract, which is mainly upon delivery and the amount of revenue can be measured reliably. The Company retains no effective control of the goods transferred to a degree usually associated with ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. Revenue is measured at fair value of the consideration received or receivable, after deduction of any trade discounts, volume rebates and any taxes or duties collected on behalf of the government which are levied on sales such as goods and services tax, value added tax, etc.

Revenue (other than sale)

Revenue (other than sale) 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.

Claim on insurance company and others, where quantum of accrual cannot be ascertained with reasonable certainty, are accounted for on “acceptance basis”.

Export benefits/incentives constituting Duty Draw back, incentives under FPS/FMS/MEIS and duty free advance license scheme are accounted for on accrual basis where there is reasonable assurance that The Company will comply with the conditions attached to them and the export benefits will be received.

interest income

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of a financial liability or a financial asset to their gross carrying amount.

dividend

Dividend income is recognized when The Company’s right to receive dividend is established by the reporting date, which is generally when shareholders approve the dividend.

1.4 Property, plant and equipment (PPE)

Property, plant and equipment is stated at acquisition cost net of accumulated depreciation and accumulated impairment losses, if any. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to The Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Profit and Loss during the period in which they are incurred.

cost of an item of property, plant and equipment comprises

i. its purchase price, including import duties and non -refundable purchase taxes (net of duty/ tax credit availed), after deducting trade discounts and rebates.

ii. any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

iii. borrowing cost directly attributable to the qualifying asset in accordance with accounting policy on borrowing cost.

iv. the costs of dismantling, removing the item and restoring the site on which it is located.

PPE in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Cost includes direct costs, related pre-operational expenses and for qualifying assets applicable borrowing costs to be capitalised in accordance with The Company’s accounting policy. Administrative, general overheads and other indirect expenditure (including borrowing costs) incurred during the project period which are not directly related to the project nor are incidental thereto, are expensed.

Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as “Capital work-in-progress”. They are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other items of PPE, commences when the assets are ready for their intended use.

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 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.

The Company identifies and determines cost of each component/part of the plant and equipment separately, if the component/part has a cost which is significant to the total cost of the plant and equipment and has useful life that is materially different from that of the remaining plant and equipment.

Machinery spares which meets the criteria of PPE is capitalized and depreciated over the useful life of the respective asset.

On transition to Ind AS:

Under the Previous GAAP, all property, plant and equipment were carried at in the Balance Sheet on basis of historical cost. In accordance with provisions of Ind AS 101 First time adoption of Indian Accounting Standards, The Company, for certain properties, has elected to adopt fair value and recognized as of April 1, 2016 as the deemed cost as of the transition date. The resulting adjustments have been directly recognized in retained earnings. The balance assets have been recomputed as per the requirements of Ind AS retrospectively as applicable.

Depreciation:

Depreciation on Property, Plant & Equipment (other than freehold land and capital work in progress) is provided on the straight line method, based on their respective estimate of useful lives, as given below. Estimated useful lives of assets are determined based on internal assessment estimated by the management of The Company and supported by technical advice wherever so required. The management believes that useful lives currently used, which is as prescribed under Schedule II to the Companies Act, 2013, fairly reflect its estimate of the useful lives and residual values of Property, Plant & Equipment ( considered at 5% of the original cost), though these lives in certain cases are different from lives prescribed under Schedule II.

* Based on internal technical evaluation and external advise received, the management believes that the useful lives as considered for arriving at the depreciation rates, best represent the period over which management expect to use these assets. Hence, the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.

Assets individually costing Rs.5000 or less are fully depreciated in the year of acquisition.

Depreciation of an asset begins when it is available for use, i.e., when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Depreciation of an asset ceases at the earlier of the date that the asset is retired from active use and is held for disposal and the date that the asset is derecognised.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or,

where shorter, the term of the relevant lease.

Depreciation methods, useful lives and residual values are reviewed periodically including at the end of each financial year. Any changes in depreciation method, useful lives and residual values are treated as a change in accounting estimate and applied/adjusted prospectively, if appropriate.

1.5 intangible assets

Identifiable intangible assets are recognised when The Company controls the asset, it is probable that future economic benefits attributed to the asset will flow to The Company and the cost of the asset can be reliably measured.

At initial recognition, the separately acquired intangible assets with finite useful lives are recognised at cost of acquisition. Following initial recognition, the intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.

Intangible assets not ready for the intended use on the date of the balance sheet are disclosed as ‘intangible assets under development. This comprises expenditure on ERP software license fee and it’s configuration and customization.

Intangible assets are derecognised (eliminated from the balance sheet) on disposal or when no future economic benefits are expected from its use and subsequent disposal.

Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset are recognised as income or expense in the statement of profit and loss.

Deemed cost on transition to ind AS:

Under the Previous GAAP, all Intangible assets were carried at in the Balance Sheet on basis of historical cost. The Company has elected to continue with the carrying value of all of its intangible assets recognised as of April 1, 2016 (the transition date) measured as per the previous GAAP and use such carrying value as its deemed cost as of the transition date.

Amortisation:

Intangible assets are amortised on a straight line basis over the estimated useful lives of respective assets from the date when the asset are available for use, on pro-rata basis. Estimated useful

lives by major class of finite-life intangible assets are as follows:

Type of assets Useful life in years

Computer software 5 years

The amortisation period and the amortisation method for finite-life intangible assets is reviewed at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates and adjusted prospectively.

1.6 financial instruments

financial Assets:

initial recognition and measurement:

Financial assets are recognised when The Company becomes a party to the contractual provisions of the instrument.

On initial recognition, a financial asset is recognised at fair value, except for trade receivables which are initially measured at transaction price. In case of financial assets which are recognised at fair value through profit and loss (FVTPL), its transaction costs are recognised in the statement of profit and loss. In other cases, the transaction costs are added to or deducted from the fair value of the financial assets.

financial assets are subsequently classified and 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)”

- fair value through profit and loss (FVTPL)

- fair value through other comprehensive income (FVOCI).

Equity instruments:

Investment in subsidiaries are measured at cost less impairment losses, if any.

All investments in equity instruments in scope of Ind AS 109 classified under financial assets are initially measured at fair value.

If the equity investment is not held for trading, The Company may,

on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. Equity Instruments which are held for trading are classified as measured at FVTPL.

Fair value changes on an equity instrument is recognised as other income in the Statement of Profit and Loss unless The Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognized in OCI. Amounts recognised in OCI are not subsequently reclassified to the Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised as ‘other income’ in the Statement of Profit and Loss.

The Company does not have any equity investments designated at FVOCI.

derivative financial instruments:

The Company uses derivative financial instruments, such as forward currency contracts to mitigate its foreign currency risks and interest rate risks. Such derivative financial instruments are recorded at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

The purchase contracts that meet the definition of a derivative under Ind AS 109 are recognised in the statement of profit and loss.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit or loss.

derecognition:

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the contractual rights to receive the cash flows from the asset.

impairment of financial Asset:

In accordance with Ind AS 109, The Company applies the expected credit loss (“ECL”) model for measurement and recognition of impairment loss on financial assets and credit risk exposures. The Company follows ‘simplified approach’ for recognition of impairment loss allowance on trade receivables or contract revenue receivables. Simplified approach does not require The Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition. This involves use of provision matrix constructed on the basis of historical credit loss experience and adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables that are due and the rates used in the provision matrix.

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.

ECL is the difference between all contractual cash flows that are due to the group in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR. 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.

The Company measures the expected credit loss associated with its assets based on historical trend, industry practices and the business environment in which the entity operates or any other appropriate basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/ expense in the Statement of Profit and Loss.

financial Liabilities and equity instruments: classification as debt or equity

Debt and equity instruments issued by The Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a company entity are recognised at the proceeds received, net of direct issue costs.

Financial liabilities Initial recognition and measurement:

Financial liabilities are recognised when The Company becomes a party to the contractual provisions of the instrument.

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The fair value of a financial instrument at initial recognition is normally the transaction price. If The Company determines that the fair value at initial recognition differs from the transaction price, difference between the fair value at initial recognition and the transaction price shall be recognized as gain or loss unless it qualifies for recognition as an asset or liability. This normally depends on the relationship between the lender and borrower or the reason for providing the loan. Accordingly in case of interest-free loan from promoters to The Company, the difference between the loan amount and its fair value is treated as an equity contribution to The Company.

In accordance with Ind AS 113, the fair value of a financial liability with a demand feature is not less than the amount payable on demand, discounted from the first date that the amount could be required to be paid.

The Company’s financial liabilities include trade and other payables and loans and borrowings including bank overdrafts.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss, unless and to the extent capitalised as part of costs of an asset.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Trade and other payables

For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

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 or loss.

Off setting of Financial Instruments

Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet if there is currently enforceable legal right to offset the recognised amount and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

1.7 impairment of Non-financial assets

The carrying amounts of non-financial assets other than inventories are assessed at each reporting date to ascertain whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. An impairment loss is recognised, as an expense in the Statement of Profit and Loss, for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in use. Value in use is ascertained through discounting of the estimated future cash flows using a discount rate that reflects the current market assessments of the time value of money and the risk specific to the assets. For the purpose of assessing impairment, assets are grouped at the lowest levels into cash generating units for which there are separately identifiable cash flows.

Impairment losses recognised in prior years are reversed when there is an indication that the impairment losses recognised no longer exist or have decreased. Such reversals are recognised as an increase in carrying amounts of assets to the extent that it does not exceed the carrying amounts that would have been determined (net of amortization or depreciation) had no impairment loss been recognised in previous years.

1.8 Borrowing costs

Borrowing costs comprises interest expense on borrowings calculated using the effective interest method and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs.

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period.

The effective interest rate (EIR) is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. EIR calculation does not include exchange differences.

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are included in the cost of those assets. Such borrowing costs are capitalised as part of the cost of the asset when it is probable that they will result in future economic benefits to the entity and the costs can be measured reliably. Other borrowing costs are recognised as an expense in the period in which they are incurred.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress.

Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

1.9 foreign currency transactions

The financial statements are presented in Indian Rupees (INR), the functional currency of The Company. Items included in the financial statements of The Company are recorded using the currency of the primary economic environment in which The Company operates (the ‘functional currency’).

Foreign currency transactions are translated into the functional currency using exchange rates at the date of the transaction. Foreign exchange gains and losses from settlement of these transactions, and from translation of monetary assets and liabilities at the reporting date exchange rates are recognised in the Statement of Profit and Loss.

Non-monetary assets and liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction.

Under Previous GAAP, The Company had opted for paragraph 46A of Accounting Standard for ‘Effect of Changes in Foreign Exchange Rates’ (AS 11) which provided an alternative accounting treatment whereby exchange differences arising on long term foreign currency monetary items relating to depreciable capital asset can be added to or deducted from the cost of the asset and should be depreciated over the balance life of the asset.

Ind AS 101 includes an optional exemption that allows a first-time adopter to continue the above accounting treatment in respect of the long-term foreign currency monetary items recognised in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP. The Company has elected to avail this optional exemption. However, the capitalization of exchange differences is not allowed on any new long term foreign currency monetary item recognized from the first Ind AS financial reporting period.

1.10 leases

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.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

finance lease:

Assets held under finance leases are initially recognised as assets of The Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in 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 policy on borrowing cost. 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:

In respect of assets taken on operating lease, lease rentals are recognized as an expense in the Statement of Profit and Loss on straight line basis over the lease term unless another systematic basis is more representative of the time pattern in which the benefit is derived from the leased asset or the payments to the lessor are structured to increase in the line with expected general inflation to compensate for the lessor’s expected inflationary cost increases.

1.11 inventories

Inventories are valued at the lower of cost and net realisable value.

Costs incurred in bringing each product to its present location and condition, are accounted for as follows:

- Raw materials, stores and spares: cost includes cost of purchase (viz. the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling and other costs directly attributable to the acquisition and is net of trade discounts, rebates and other similar items) and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on Moving Weighted Average Method.

- Materials and other supplies 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.

- Spare parts, which do not meet the definition of property, plant and equipment are classified as inventory.

- Finished goods and work in progress: cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs.

- Traded goods: cost includes cost of purchase and other

costs incurred in bringing the inventories to their present

location and condition. Cost is determined on first in, first out

basis. 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.

Obsolete, slow moving and defective inventories are identified from time to time and, where necessary, a provision is made for such inventories.

1.12 Employee benefits

Short- term employee benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages, social security contributions, short term compensated absences (paid annual leaves) etc. are measured on an undiscounted basis at the amounts expected to be paid when the liabilities are settled and are expensed in the period in which the employee renders the related service.

Post-employment benefits :

i) Defined contribution plan

The defined contribution plan is post employment benefit plan under which The Company contributes fixed contribution to a government administered fund and will have no obligation to pay further contribution. The Company’s defined contribution plan comprises of Provident Fund, Employee State Insurance Scheme and Labour Welfare Fund. The Company’s contribution to defined contribution plans are recognized in the Statement of Profit and Loss in the period in which employee renders the related service.

ii) Defined benefit plan

The Company’s obligation towards gratuity liability is a “defined benefit” obligation. The present value of the defined benefit obligations is determined on the basis of actuarial valuation using the projected unit credit method. The rate used to discount “defined benefit obligation” is determined by reference to market yields at the Balance Sheet date on Indian Government Bonds for the estimated term of obligations.

The amount recognised as ‘Employee benefit expenses’ in the Statement of Profit and Loss is the cost of accruing employee benefits promised to employees over the current year and the costs of individual events such as past/future service

benefit changes and settlements (such events are recognised immediately in the Statement of Profit and Loss).

The amount of net interest expense, calculated by applying the liability discount rate to the net defined benefit liability or asset, is charged or credited to ‘Finance costs’ in the Statement of Profit and Loss.

Re-measurement of net defined benefit liability/ asset pertaining to gratuity comprise of actuarial gains/ losses (i.e. changes in the present value of the defined benefit obligation resulting from experience adjustments and effects of changes in actuarial assumptions), the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest) and is recognised immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Re-measurements are not reclassified to profit or loss account in subsequent periods.

Other long-term employee benefit obligations:

The liabilities for earned leave that are not expected to be settled wholly within 12 months are measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss. Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short term employee benefit.

1.13 Share-Based Payments:

Employees of The Company receive remuneration in the form of share based payments in consideration of the services rendered (equity settled transactions).

Under the equity settled share based payment, the fair value on the grant date of the awards given to employees is recognised as ‘employee benefit expense’ with a corresponding increase in equity over the vesting period. The fair value of the options on the grant date is calculated by an independent valuer on the basis of Black Scholes model.

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. When the options are exercised, The Company issues fresh equity shares.

1.14 Government Grant:

Government grants are recognised only when there is reasonable assurance that The Company will comply with the conditions attaching to them and the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which The Company recognises as expenses the related costs for which the grants are intended to compensate.

Accordingly, government grants:

a) related to or used for assets are included in the Balance Sheet as deferred income and recognised as income in profit or loss on a systematic basis over the useful life of the assets.

b) related to an expense item is recognised in the statement of profit and loss on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed and presented as deduction from the related/relevant expense.

In the unlikely event that a grant previously recognised is ultimately not received, it is treated as a change in estimate and the amount cumulatively recognised is expensed in the Statement of Profit and Loss.

Export benefits available under prevalent schemes are accrued in the year in which the goods are exported and there is no uncertainty in receiving the same.

1.15 Non-current assets held for sale and discontinued operations

Non-current assets (or disposal group) are classified as “held for sale” if their carrying amount will be recovered principally through a sale transaction rather than through continuing use.

The criteria for “held for sale” is regarded as met only when the assets is available for immediate sale in its present condition, subject only to terms that are usual and customary for sale of such assets, its sale is highly probable; and it will genuinely be sold, not abandoned.

Non-current assets held for sale are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.

If the criteria for held for sale is no longer met, the asset ceases to be classified as held for sale and the asset shall be measured at the lower of :

(a) its carrying amount before the asset was classified as held for sale, adjusted for any depreciation, amortisation or revaluations that would have been recognised had the asset not been classified as held for sale, and

(b) its recoverable amount at the date of the subsequent decision not to sell.

An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increase in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of de-recognition.

Property, plant and equipment and intangible assets once classified as “held for sale” are not depreciated or amortised.

A discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale, and:

- represents a separate major line of business or geographical area of operations,

- is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.

Discontinued operations are excluded from the results of continuing operations and are presented as profit or loss before / after tax from discontinued operations in the statement of profit and loss.

1.16 Taxation

Tax expense comprises of current and deferred tax and includes any adjustments related to past periods in current and/or deferred tax adjustments that may become necessary due to certain developments or reviews during the relevant period.

current income tax:

Tax on income for the current period is determined on the basis of taxable income (or on the basis of book profits wherever minimum alternate tax is applicable) and tax credits computed in accordance with the provisions of the Income Tax Act 1961, and based on the expected outcome of assessments/appeals.

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.

Current income tax relating to items recognised, either in other comprehensive income or directly in equity, is also recognized in other comprehensive income or in equity, as appropriate and not in the Statement of Profit and Loss. 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.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis.

Deferred tax:

Deferred tax is provided using the liability method on temporary differences between the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

- When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

- I n respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses unabsorbed tax depreciation. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:

- When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

- In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized”

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Deferred Tax Assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognised as deferred tax assets in the Balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realised.

1.17 Provisions and contingencies

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. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date.

If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Where The Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.

Contingencies:

Contingent liabilities

A contingent liability is:

- a possible obligation arising from past events, the existence

of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of The Company, or

- a present obligation that arises from past events but is not recognised because :

- it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or”

- the amount of the obligation cannot be measured with sufficient reliability.

Contingent liabilities are not recognized but disclosed unless the contingency is remote.

Contingent assets

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of The Company.

Contingent assets are not recognised but are disclosed when the inflow of economic benefits is probable. When inflow is virtually certain, an asset is recognized.

1.18 Segment Reporting

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources and assessing performance.

The Company is engaged in manufacture and trading of synthetic yarn and textiles which is considered as the only reportable business segment. The Company’s Chief Operating Decision Maker (CODM) is the Managing Director. He evaluates The Company’s performance and allocates resources based on analysis of various performance indicators by geographical areas only.

1.19 Related party

A related party is a person or entity that is related to the reporting entity and it includes :

(a) A person or a close member of that person’s family if that person:

(i) has control or joint control over the reporting entity;

(ii) has significant influence over the reporting entity; or

(iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.

(b) An entity is related to the reporting entity if any of the following conditions apply:

(i) The entity and the reporting entity are members of the same Group.

(ii) One entity is an associate or joint venture of the other entity.

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity.

(vi) The entity is controlled or jointly controlled by a person identified in (a).

(vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

(viii) The entity, or any member of a Group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity.

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity including:

(a) that person’s children, spouse or domestic partner, brother, sister, father and mother;

(b) children of that person’s spouse or domestic partner; and

(c) dependents of that person or that person’s spouse or domestic partner.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.

Related party transactions and outstanding balances disclosed in the financial statements are in accordance with the above definition as per Ind As 24.

1.20 cash and cash equivalents

Cash and cash equivalents in the Balance Sheet comprise cash at banks and on hand and short term deposits/ investments with an original maturity of three months or less from the date of acquisition, which are subject to an insignificant risk of changes in value. These exclude bank balances (including deposits) held as margin money or security against borrowings, guarantees etc. being not readily available for use by The Company.

For the purpose of the Statement of cash flows, cash and cash equivalents consist of cash and short term deposits and exclude items which are not available for general use as on the date of Balance Sheet, as defined above, net of bank overdrafts which are repayable on demand where they form an integral part of an entity’s cash management.

1.21 cash FIow Statement

Statement of Cash Flows is prepared segregating the cash flows into operating, investing and financing activities. Cash flow from operating activities is reported using indirect method as set out in Ind AS 7 ‘Statement of Cash Flows’, adjusting the net profit for the effects of:

i. changes during the period in inventories and operating receivables and payables transactions of a non-cash nature;

ii. non-cash items such as depreciation, provisions, deferred taxes, unrealised foreign currency gains and losses, and

iii. all other items for which the cash effects are investing or financing cash flows.

1.22 earnings per share

The Basic Earnings per equity share (‘EPS’) is computed by dividing the net profit or loss after tax before other comprehensive income for the year attributable to the equity shareholders of The Company by weighted average number of equity shares outstanding during the year. Ordinary shares that will be issued upon the conversion of a mandatorily convertible instrument are included in the calculation of basic earnings per share from the date the contract is entered into. Contingently issuable shares are treated as outstanding and are included in the calculation of basic earnings per share only from the date when all necessary conditions are satisfied (i.e the events have occurred).

Diluted earnings per equity share are computed by dividing the net profit or loss before OCI attributable to equity holders of The Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares (including options and warrants). The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value. Dilutive potential equity shares are deemed converted as of the beginning of the period unless issued at a later date. Anti-dilutive effects are ignored.

1.23 Events after Reporting date

Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Where the events are indicative of conditions that arose after the reporting period, the amounts are not adjusted, but are disclosed if those non-adjusting events are material.

1.24 Exceptional items

An item of Income or expense which by its size, type or incidence requires disclosure in order to improve an understanding of the performance of The Company is treated as an exceptional item and the same is disclosed in the financial statements.

1.25 corporate social Responsibility (csR) expenditure

The Company charges its CSR expenditure during the year to the statement of profit & loss.

1.26 New and amended standards and interpretations: issued but not yet effective

The Company is still evaluating the applicability and relevance of certain new standards & interpretations to existing standards issued, but not yet effective, upto the date of issuance of The Company’s financial statements, on The Company’s operations and its impact on the financial statements of The Company in terms of results, presentation or disclosure. Those that may be relevant to The Company are set out below. The Company shall adopt them, if applicable, when they become effective.

ind As 115 ‘Revenue from contracts with customers’

Ind AS 115 establishes a five-step model to account for revenue arising from contracts with customer. Under Ind AS 115, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard may supersede few revenue recognition practices under current Ind AS. The Company is in the process of analysing the impact of the proposed standard. This standard will come into force from accounting period commencing on or after April 1, 2018. The Company shall adopt the new standard on the required effective date.

Amen


Mar 31, 2016

1. Nature of Operation

Filatex India Limited (hereinafter referred to as “the Company”) is a manufacturer of Polyester Chips, Polyester/Nylon/Polypropylene Multi & Mono Filament Yarn and Narrow fabrics.

2. Statement of Significant Accounting Policies

a) Basis of preparation

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended), and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared under the historical cost convention on an accrual basis, except where stated otherwise. The accounting policies adopted in preparation of financial statements are consistent with those of previous year.

b) Use of estimates.

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although, these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

c) Fixed Assets & Depreciation:

i) Fixed Assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Borrowing costs relating to acquisition of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.

Subsequent expenditure relating to an item of fixed asset is added back for its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts are charged to the statement of profit and loss account for the period during which such expenses are incurred.

ii) Depreciation has been provided on straight-line method on pro-rata basis at the rates & manner prescribed in Schedule II of the Companies Act, 2013.

iii) Depreciation on the amount of additions made to fixed assets due to up gradation / improvements is provided over the remaining useful life of the asset to which it relates.

iv) Depreciation on fixed assets added / disposed off during the year is provided on pro-rata basis.

v) Lease hold improvements are amortized over the primary period of lease or useful life, whichever is lower.

vi) Lease hold Land is amortized on straight line basis over the period of lease.

d) Expenditure incurred during the construction period.

i) Expenditure directly relating to construction activity is capitalized (net of income, if any), Indirect expenditure incurred during construction period is capitalized as part of the indirect construction cost to the extent, to which the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure incurred during the construction period which is not related to construction activity nor is incidental thereto is charged to Profit & Loss Account.

ii) Capital Work in Progress is stated at cost (including borrowing cost, where applicable) incurred during construction, installation/ pre-operative period relating to items or projects in progress.

e) Intangibles

Intangible assets, software''s etc. are accounted at their cost of acquisition and amortized over their estimated economic life not exceeding 5 years. Leasehold improvements are charged to the Profit & Loss Account over the primary period of lease.

f) Impairment of Assets

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Company''s fixed assets. If any indication exists, an asset''s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is defined as value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discounting factor.

g) Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of such investments.

h) Leases

Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalized.

If there is no reasonable certainty that the company will obtain the ownership by the end of the lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as expenses in the statement of Profit & Loss Account on a straight-line basis over the lease term.

i) Foreign Currency Transactions

i) Initial Recognition:

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of transaction.

ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

iii) Exchange Differences:

Exchange differences arising on the settlement of monetary items or on reporting company''s 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 as expenses in the year in which they arise.

In terms of the Notification No. G.S.R. 225(E) dated 31.03.2009 as amended till date issued by the Ministry of Corporate Affairs on Accounting Standard (AS-11) read with Clause 4(e) of AS-16 and Para 46A read with clarification issued by the Ministry of Corporate Affairs vide Circular No.25/2012 dated August 09, 2012 on AS-11 relating to “the effects of changes in Foreign Exchange Rates”, the Company has exercised option to adjust the foreign exchange difference on long term foreign currency loans to the cost of qualifying capital assets.

iv) Forward exchange contracts not intended for trading or speculation purposes

The Company obtains forward exchange contracts to hedge its risk associated with foreign currency fluctuations. The premium or discount arising at the inception of forward exchange contract 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 an income or as an expense for the year.

j) Inventories

Inventories are valued as follows:

Raw material, consumables and stores & spares:

Lower of cost or net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if finished products, in which they will be incorporated, are expected to be sold at or above cost. Cost is determined on Moving Weighted Average Method.

Work in Progress and Finished Goods:

Lower of cost or net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty.

Waste

At net realizable value which is the estimated selling price in the ordinary course of business, less selling expenses.

k) Employees Benefits

The employees'' gratuity fund and leave encashment schemes are the company''s defined benefit plan. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the Projected Unit credit Method.

l) 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 measured.

Sale of Goods

Revenue is recognized when the significant risks and rewards of ownership of the goods have been passed to the buyers. Sales are net of return, volume discount, trade discounts & sales tax /VAT including excise duty.

Export Benefits

Export benefits constituting duty drawback, incentives under FPS/FMS and Duty Free Advance License are accounted for on accrual basis.

Interest Income

Interest is recognized on a time proportion basis taking into account the amount outstanding and rate applicable.

Dividend Income

Dividend income is recognized when the company''s right to receive dividend is established by the reporting date.

Insurance claims

Insurance claims are recognized to the extent the company is reasonably certain of their ultimate receipt.

m) Borrowing cost

Borrowing cost attributable to acquisitions and construction of assets are capitalized as a part of cost of such assets upto the date when such assets are ready for its intended use and other borrowing cost are charged to Profit & Loss Account.

n) Accounting for Taxes on Income

Provision for tax on income is made after taking into consideration benefits admissible under the provisions of the Income-tax Act, 1961.

Deferred tax resulting from “timing difference” between book and taxable profit is accounted for using the tax rates and laws that have been enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future.

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss account and shown as MAT Credit Entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

o) Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best management estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

p) Cash and Cash Equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

q) Contingent Liabilities.

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow or 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.

r) Earnings Per Share (EPS)

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. For the purpose of calculating Diluted Earnings per Share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year and adjusted for the effects of all dilutive potential Equity Shares.


Mar 31, 2015

A) Basis of preparation

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended), and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared under the historical cost convention on an accrual basis, except where stated otherwise. The accounting policies adopted in preparation of financial statements are consistent with those of previous year.

b) Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although, these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

c) Fixed Assets & Depreciation:

i) Fixed Assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Borrowing costs relating to acquisition of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.

Subsequent expenditure relating to an item of fixed asset is added back for its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts are charged to the statement of profit and loss account for the period during which such expenses are incurred.

ii) Depreciation has been provided on straight-line method on pro-rata basis at the rates & manner prescribed in Schedule II of the Companies Act, 2013.

iii) Effective from April 01, 2014 the company has charged depreciation based on the revised remaining useful life of the assets as per the requirement of Schedule II of the Companies Act, 2013. Due to above, depreciation charge for the year ended March 31, 2015, is lower by Rs. 568 lacs. Further based on transitional provision provided in Note 7(b) of Schedule II of the Companies Act, 2013, an amount of Rs.74 lacs (Net of Deferred Tax) has been adjusted with retained earnings.

iv) Depreciation on the amount of additions made to fixed assets due to upgradation / improvements is provided over the remaining useful life of the asset to which it relates.

v) Depreciation on fixed assets added / disposed off during the year is provided on pro-rata basis.

vi) Lease hold improvements are amortized over the primary period of lease or useful life, whichever is lower.

vii) Lease hold Land is amortized on straight line basis over the period of lease.

d) Expenditure incurred during the construction period.

i) Expenditure directly relating to construction activity is capitalized (net of income, if any), Indirect expenditure incurred during construction period is capitalized as part of the indirect construction cost to the extent, to which the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure incurred during the construction period which is not related to construction activity nor is incidental thereto is charged to Profit & Loss Account.

ii) Capital Work in Progress is stated at cost (including borrowing cost, where applicable) incurred during construction, installation/ pre-operative period relating to items or projects in progress.

e) Intangibles

Intangible assets, softwares etc. are accounted at their cost of acquisition and amortized over their estimated economic life not exceeding 5 years. Leasehold improvements are charged to the Profit & Loss Account over the primary period of lease.

f) Impairment of Assets

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Company's fixed assets. If any indication exists, an asset's recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is defined as value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discounting factor.

g) Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of such investments.

h) Leases

Finance leases, which effectively transfer to the Company, substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalized.

If there is no reasonable certainty that the company will obtain the ownership by the end of the lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as expenses in the statement of Profit & Loss Account on a straight-line basis over the lease term.

i) Foreign Currency Transactions

i) Initial Recognition:

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of transaction.

ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

iii) Exchange Differences:

Exchange differences arising on the settlement of monetary items or on reporting company's 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 as expenses in the year in which they arise.

In terms of the Notification No.G.S.R. 225(E) dated 31.03.2009 as amended till date issued by the Ministry of Corporate Affairs on Accounting Standard (AS-11) read with Clause 4(e) of AS-16 and Para 46A read with clarification issued by the Ministry of Corporate Affairs vide Circular No.25/2012 dated August 09, 2012 on AS-11 relating to "the effects of changes in Foreign Exchange Rates", the Company has exercised option to adjust the foreign exchange difference on long term foreign currency loans to the cost of qualifying capital assets.

iv) Forward Exchange Contracts not intended for trading or speculation purposes

The Company obtains forward exchange contracts to hedge its risk associated with foreign currency fluctuations. The premium or discount arising at the inception of forward exchange contract 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 an income or as an expense for the year.

j) Inventories

Inventories are valued as follows:

Raw material, consumables and stores & spares:

Lower of cost or net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if finished products, in which they will be incorporated, are expected to be sold at or above cost. Cost is determined on Moving Weighted Average Method.

Work in Progress and Finished Goods:

Lower of cost or net realisable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty.

Waste

At net realizable value which is the estimated selling price in the ordinary course of business, less selling expenses.

k) Employees Benefits

The employees' gratuity fund and leave encashment schemes are the company's defined benefit plan. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the Projected Unit credit Method.

l) 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 measured.

Sale of Goods

Revenue is recognized when the significant risks and rewards of ownership of the goods have been passed to the buyers. Sales are net of return, volume discount, trade discounts & sales tax /VAT including excise duty.

Export Benefits

Export benefits constituting duty drawback, incentives under FPS/FMS and Duty Free Advance License are accounted for on accrual basis.

Interest Income

Interest is recognized on a time proportion basis taking into account the amount outstanding and rate applicable.

Dividend Income

Dividend income is recognized when the company's right to receive dividend is established by the reporting date.

Insurance claims

Insurance claims are recognized to the extent the company is reasonably certain of their ultimate receipt.

m) Borrowing cost

Borrowing cost attributable to acquisitions and construction of assets are capitalized as a part of cost of such assets upto the date when such assets are ready for its intended use and other borrowing cost are charged to Profit & Loss Account.

n) Accounting for Taxes on Income

Provision for tax on income is made after taking into consideration benefits admissible under the provisions of the Income-tax Act, 1961.

Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that have been enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future.

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss account and shown as MAT Credit Entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

o) Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best management estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

p) Cash and Cash Equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

q) Contingent Liabilities.

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow or 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.

r) Earnings Per Share (EPS)

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. For the purpose of calculating Diluted Earnings per Share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year and adjusted for the effects of all dilutive potential Equity Shares.


Mar 31, 2013

A) Basis of preparation

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended), and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis, except where stated otherwise. The accounting policies adopted in preparation of financial statements are consistent with those of previous year.

b) Use of estimates.

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although, these estimates are based on the management''s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assts or liabilities in future periods.

c) Fixed Assets & Depreciation

i) Fixed Assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Borrowing costs relating to acquisition of fixed assets which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.

Subsequent expenditure relating to an item of fixed asset is added back to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts are charged to the statement of profit and loss account for the period during which such expenses are incurred.

ii) Depreciation has been provided on straight-line method on pro-rata basis at the rates & manner prescribed in Schedule XIV of the Companies Act, 1956 except for the following assets where higher rate of depreciation is charged to represent the useful life of these assets.

iii) Fixed assets costing below Rs.5,000/- are fully depreciated in the year of acquisition.

iv) Depreciation on the amount of additions made to fixed assets due to upgradation / improvements is provided over the remaining useful life of the asset to which it relates.

v) Depreciation on fixed assets added / disposed off during the year is provided on pro-rata basis.

vi) Lease hold improvements are amortized over the primary period of lease or useful life, whichever is lower.

d) Expenditure incurred during the construction period

i) Expenditure directly relating to construction activity is capitalized (net of income, if any), Indirect expenditure incurred during construction period is capitalized as part of the indirect construction cost to the extent, to which the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure incurred during the construction period which is not related to construction activity nor is incidental thereto is charged to Profit & Loss Account.

ii) Capital Work in Progress is stated at cost (including borrowing cost, where applicable) incurred during construction, installation/ pre-operative period relating to items or projects in progress.

e) Intangible

Intangible assets, software etc. are accounted at their cost of acquisition and amortized over their estimated economic life not exceeding 5 years. Leasehold improvements are charged to the Profit & Loss Account over the primary period of lease.

f) Impairment of Assets

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Company''s fixed assets. If any indication exists, an asset''s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is defined as value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

g) Investments

Investments are stated at cost less provision for diminution in value.

h) Leases

Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalized.

If there is no reasonable certainty that the company will obtain the ownership by the end of the lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as expenses in the statement of Profit & Loss Account on a straight-line basis over the lease term.

i) Foreign Currency Transactions

i) Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of transaction.

ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

iii) Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting company''s 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 as expenses in the year in which they arise .

In terms of the Notification No.G.S.R. 225(E) dated 31.03.2009 as amended till date issued by the Ministry of Corporate Affairs on Accounting Standard (AS-11) read with Clause 4(e) of AS-16 and Para 46A read with clarification issued by the Ministry of Corporate Affairs vide Circular No.25/2012 dated August 09, 2012 on AS-11 relating to "the effects of changes in Foreign Exchange Rates", the Company has exercised option to adjust the foreign exchange difference on long term foreign currency loans to the cost of qualifying capital assets.

(iv) Forward Exchange Contracts not intended for trading or speculation purposes

The Company obtains forward exchange contracts to hedge its risk associated with foreign currency fluctuations. The premium or discount arising at the inception of forward exchange contract 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 as expense for the year.

j) Inventories

Inventories are valued as follows:

Raw material, consumables and stores & spares:

Lower of cost or net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if finished products, in which they will be incorporated, are expected to be sold at or above cost. Cost is determined on Weighted Average Method as against First In First Out (FIFO) followed in the previous year.

Work in Progress and Finished Goods:

Lower of cost or net realisable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty.

Waste

At net realizable value which is the estimated selling price in the ordinary course of business, less selling expenses.

k) Employees Benefits

The employees'' gratuity fund and leave encashment schemes are the company''s defined benefit plan. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the Projected Unit credit Method.

l) 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 measured.

Sale of Goods

Revenue is recognized when the significant risks and rewards of ownership of the goods have been passed to the buyers. Sales are net of return, volume discount, trade discounts & sales tax /VAT including excise duty.

Export Benefits

Export benefits constituting duty drawback, incentives under FPS/FMS and Duty Free Advance License are accounted for on accrual basis.

Interest Income

Interest is recognized on a time proportion basis taking into account the amount outstanding and rate applicable.

Dividend Income

Dividend income is recognized when the company''s right to receive dividend is established by the reporting date.

Insurance claims

Insurance claims are recognized to the extent the company is reasonably certain of their ultimate receipt.

m) Borrowing cost

Borrowing cost attributable to acquisitions and construction of assets are capitalized as a part of cost of such assets upto the date when such assets are ready for its intended use and other borrowing cost are charged to Profit & Loss Account.

n) Accounting for Taxes on Income

Provision for tax on income is made after taking into consideration benefits admissible under the provisions of the Income-tax Act, 1961.

Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that have been enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future.

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss account and shown as MAT Credit Entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

o) Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best management estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

p) Cash and Cash Equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

q) Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow or 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.

r) Earnings Per Share (EPS)

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. For the purpose of calculating Diluted Earnings per Share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year adjusted for the effects of all dilutive potential Equity Shares.


Mar 31, 2012

A) Preparation and disclosure of financial statements

During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company, for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The company has re-classified previous year figures in accordance with the requirements applicable in the current year.

b) Basis of preparation

The financial statements of the company have been prepared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended), and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis, except where stated otherwise. The accounting policies adopted in preparation of financial statements are consistent with those of previous year.

c) Use of estimates

The preparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although, these estimates are based on the management's best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

d) Fixed Assets & Depreciation

i) Fixed Assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Borrowing cost relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.

Subsequent expenditure relating to an item of fixed asset is added back for its book value only if it increases the future benefits from the existing asset beyond it previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts are charged to the statement of profit and loss account for the period during which such expenses are incurred.

ii) Depreciation has been provided on straight-line method on pro-rata basis at the rates & manner prescribed in Schedule XIV of the Companies Act, 1956 except for the following assets where higher rate of depreciation is charged to represent the useful life of these assets.

iii) Fixed assets costing below Rs.5,000/- are fully depreciated in the year of acquisition.

iv) Depreciation on the amount of additions made to fixed assets due to upgradation / improvements is provided over the remaining useful life of the asset to which it relates.

v) Depreciation on fixed assets added / disposed off during the year is provided on pro-rata basis.

vi) Lease hold improvements are amortized over the primary period of lease or useful life, whichever is lower.

e) Expenditure incurred during the construction period

i) Expenditure directly relating to construction activity is capitalized (net of income, if any), indirect expenditure incurred during construction period is capitalized as part of the indirect construction cost to the extent, to which the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure incurred during the construction period which is not related to construction activity nor is incidental thereto is charged to Profit & Loss Account.

ii) Capital Work in Progress is stated at cost (including borrowing cost, where applicable) incurred during construction, installation/ pre-operative period relating to items or projects in progress.

f) Intangible

Intangible assets, software etc. are accounted at their cost of acquisition and amortized over their estimated economic life not exceeding 5 years. Leasehold improvements are charged to the Profit & Loss Account over the primary period of lease.

g) Impairment of Assets

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Company's fixed assets. If any indication exists, an asset's recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is defined as value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

h) Investments

Investments are stated at cost less provision for diminution in value.

i) Leases

Where the company is the lessee

Finance leases, which effectively transfer to the company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalized.

It there is no reasonable certainty that the company will obtain the ownership by the end of the lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as expenses in the Profit & Loss Account on a straight-line basis over the lease term.

j) Foreign Currency Transactions

i) Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of transaction.

ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.

iii) Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting company's 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 as expenses in the year in which they arise.

In terms of the Notification No. G.S.R. 225(E) dated 31.03.2009 as amended till date issued by the Ministry of Corporate Affairs on Accounting Standard (AS-11) read with Clause 4(e) of AS-16, the Company has exercised option to adjust the foreign exchange difference on long term foreign currency loans to the cost of qualifying capital assets.

(iv) Forward Exchange Contracts (Derivative instruments) not intended for trading or speculation purposes

The Company uses derivative financial instruments including forward exchange contracts to hedge its risk associated with foreign currency fluctuations. The premium or discount arising at the inception of forward exchange contract 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 as expense for the year.

k) Inventories

Inventories are valued as follows:

Raw material, consumables and stores & spares:

Lower of cost or net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if finished products, in which they will be incorporated, are expected to be sold at or above cost. Cost is determined on first in first out (FIFO) basis.

Work in Progress and Finished Goods:

Lower of cost or net realisable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty.

Waste

At net realizable value which is the estimated selling price in the ordinary course of business, less selling expenses.

l) Employees Benefits

The employees' gratuity fund and leave encashment schemes are the company's defined benefit plan. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the Projected Unit credit Method.

m) 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 measured.

Sale of Goods

Revenue is recognized when the significant risks and rewards of ownership of the goods have been passed to the buyer. Sales are net of return, volume discount, trade discounts & sales tax /VAT including excise duty.

Export Benefits

Export benefits constituting import duty benefits under Duty Exemption Pass Book (DEPB) and Advance License Scheme are accounted for on accrual basis.

Interest Income

Interest is recognized on a time proportion basis taking into account the amount outstanding and rate applicable.

Dividend Income

Dividend income is recognized when the company's right to receive dividend is established by the reporting date.

Insurance claims

Insurance claims are recognized to the extent the company is reasonably certain of their ultimate receipt. n) Borrowing cost

Borrowing cost attributable to acquisitions and construction of assets are capitalized as a part of cost of such assets upto the date when such assets are ready for its intended use and other borrowing cost are charged to Profit & Loss Account.

o) Accounting for Taxes on Income

Provision for tax on income is made after taking into consideration benefits admissible under the provisions of the Income-tax Act, 1961.

Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that have been enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future.

Minimum Alternate Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

p) Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best management estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

q) Cash and Cash Equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

r) Contingent Liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow or 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.

s) Earnings Per Share (EPS)

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. For the purpose of calculating Diluted Earnings per Share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year and adjusted for the effects of all dilutive potential Equity Shares.

t) Miscellaneous Expenditure

Miscellaneous expenditure represents expenses incurred for issue of share capital. The same are written off over a period of five years in equal installments.

b. Terms / rights attached to equity shares

The company has only one class of equity shares having a par value of Rs.10/- 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 2012, the amount of dividend recognized as distribution to equity shareholders is Rs.1/- per share (previous year Rs.1/- per share).

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

c. Agreegate number of equity shares issued for consideration other than cash during the period of five years immediately preceding the reporting date 8,41,397 equity shares of Rs. 10/- each issued to IDBI Limited as per terms of negotiated settlement with them at a premium of Rs. 13.77 per share on 18th September, 2007.

d. Conversion of convertible warrants and issue of fresh equity shares

(i) During the year company has further received Rs.280 lacs against 40,00,000 convertible warrants (total Rs.1,600 lacs inlcuding Rs.1,320 lacs received upto previous year) which have been converted into 40,00,000 equity shares of Rs.10/- each at a premium of Rs.30/- per share.

(ii) The company has also received an amount of Rs.1,429.30 lacs (previous year Nil) and has issued 2858603 equity shares of Rs.10/- each at a premium of Rs.40 per share.

I. Term loans

a) From consortium member banks of Rs.5,397.69 lacs (Previous Year Rs.2,375.29 lacs) are secured by first mortgage created by way of deposit of title deeds on pari passu basis in respect of immovable properties, both present and future, and first charge by way of hypothecation of company's all movable assets (save & except inventories, book debts, vehicles acquired through specific loans). These loans are further secured by second charge by way of hypothecation of stocks of raw material, finished goods, semi-finished goods, stores & spares, book debts and other receivables (both present and future), pledge of 500000 equity shares of the face value of Rs.10/- each of the company, mortgage of an immovable property owned by a promoter director and personal guarantees of the promoter directors. These loans bear floating interest rate ranging from Base Rate plus 3.00% - 4.25% p.a. and are repayable in quarterly installments from April, 2012 to March, 2019.

b) From State Bank of India of Rs.2,198.53 lacs (Previous year Rs. Nil) is collateraly secured by mortgage created by way of deposit of title deeds in respect of the immoveable property situated at (i) Ground floor and Third floor of Plot no. 43, New Friends Colony, New Delhi 110025, belonging to promoters group, (ii) pledge of 35 lacs equity shares of the Company having face value of Rs.10/- each held in the name of the promoters (iii) Third charge on company's fixed assets and current assets and are further secured by personal guarantee of Promoter Directors and the property owners. The loan bears floating interest at base rate plus 4.00% pa and is repayable in 8 quarterly balooning instalments from July, 2012.

II. Vehicle loans are secured by hypothecation of specific vehicles acquired out of proceeds of the Loans.

The said loans carry interest rate which varies 7.79% to 13.31% repayables in 36 - 60 monthly instalments.

III. Buyers' Credit for capital goods

a) Buyers' credit amounting to Rs.13,689.77 lacs (Previous Year Rs.1,607.79 lacs) are against Letters of Undertaking (LOUs) / Letter of Comfort (LOCs) issued by consortium of banks. LOUs / LOCs facility is secured by first mortgage created by way of deposit of title deeds on pari passu basis in respect of immovable properties, both present and future, and first charge by way of hypothecation of company's all movable assets (save & except inventories, book debts, vehicles acquired through specific loans). These loans are further securied by second charge by way of hypothecation of stocks of raw material, finished goods, semi-finished goods, stores & spares, book debts and other receivables (both present and future), pledge of 500000 equity shares of the face value of Rs.10/- each of the company, mortgage of an immovable property owned by a promoter director and personal guarantees of the promoter directors. The loan bears floating interest @ US Libor / Euribor plus 1.10% - 2.00%.

b) LOCs / LOUs facilities are sanctioned to the company as a sub limit of term loan. Liability towards Buyers' Credit under LOCs / LOUs will be liquidated out of the proceeds of term loans that are repayable over a period upto seven years.

I. Working capital loans from consortium member banks are secured by first charge by way of hypothecation of stocks of raw materials, finished goods, semi finished goods, stores and spares, book debts and other receivables (both present and future) and are futher secured by way of second charge on block of fixed assets of the company except vehicles acquired out of specific loans(s). These are further secured by pledge of 500000 equity shares of the face value of Rs.10/- each of the company, mortgage of an immovable property owned by a promoter director and personal guarantees of promoter directors on pari passu basis.

II. The working capital loans from banks are repayable on demand and carry interest at Base Rate plus 3.25% pa.

III. Buyers' Credit for raw material are against LOUs / LOCs issued by consortium of banks. The LOUs / LOCs facility is sanctioned to the Company as a sub limit of Non Fund (LCs) based facility. The facility is secured by first charge by way of hypothecation of stocks of raw materials, finished goods, semi finished goods, stores and spares, book debts and other receivables (both present and future) further secured by way of second charge in respect of entire block of fixed assets of the company except vehicles acquired out of specfic loans(s). These are further secured by pledge of 500000 equity shares of the face value of Rs.10/- each of the company, mortgage of an immovable property owned by a promoter director and personal guarantees of promoter directors on pari passu basis. The loan bears floating interest @ US Libor / Euribor plus 1.10% - 2.00%.

IV. Liability under deferred payments for the previous year pertained to the land allotted by Gujarat Industrial Development Corporation (GIDC) on lease hold basis and the amount deferred was payable in 12 quarterly installments w.e.f. March 31, 2011 and carried interest @ 12.50% per annum. However, the company has made payment of the defered amount in the current financial year.

* Included vehicle taken on hire purchase amounting to Rs.189.85 lacs (previous year Rs. 65.10 lacs)

# Additions to buildings and plant & machinery include pre-operative expenses and interest during construction of Rs. 604.65 lacs (previous year nil and capital work in progress Rs. 2,523,62 lacs (previous year 280.54 lacs), for details refer note 39.

Note:

In terms of the Notification No.G.S.R. 225(E) dated 31.03.2009 as amended till date issued by the Ministry of Corporate Affairs on Accounting Standard (AS-11) read with Clause 4(e) of AS-16, the Company has exercised option to adjust the foreign exchange difference on long term foreign currency loans (including foreign currency loans obtained under buyers credit with maturity of less than one year and have been considered as long term liabilities, as the same are to be rolled over for a period of three years from the date of origination) to the cost of qualifying capital assets for its project at Dahej, Gujarat and modernization scheme at its existing unit at Dadra. Accordingly, exchange difference amounting to Rs.1,305.77 lacs arising from foreign currency borrowings to the extend they are regarded as an adjustment to interest cost has been added to the cost of qualifying asset / capital work in progress pending capitalization. Further, exchange difference of Rs.7.58 lacs for the period after capitalization in resepct of the assets capitalized during the year has been added to the cost of respective assets.

Excise duty on sales amounting to Rs.4,593.71 lacs (previous year - Rs.5,068.41 lacs) has been reduced from sales in statement of profit & loss and excise duty on increase/decrease in stock amounting to 54.10 lacs (previous year - Rs.55.34 lacs) has been considered as (income)/expenses in Note 25 of financial statements.


Mar 31, 2011

A) Accounting Concepts

The financial statements are prepared under the historical cost convention in compliance with the Accounting Standards specified to be mandatory by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

b) Fixed Assets & Depreciation:

i) Fixed Assets are stated at cost less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use.

Borrowing cost relating to acquisition of fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.

ii) Depreciation has been provided on straight-line method on pro-rata basis at the rates & manner prescribed in Schedule XIV of the Companies Act, 1956 except for the following assets where higher rate of depreciation is charged to represent the useful life of these assets.

iii) Fixed assets costing below Rs.5,000/- are fully depreciated in the year of acquisition.

iv) Lease hold land is amortized over the period of lease.

v) Expenditure incurred during the construction period.

Expenditure directly relating to construction activity is capitalized (net of income, if any), Indirect expenditure incurred during construction period is capitalized as part of the indirect construction cost to the extent, to which the expenditure is indirectly related to construction or is incidental thereto. Other indirect expenditure incurred during the construction period which is not related to construction activity nor is incidental thereto is charged to Profit & Loss Account.

vi) Capital Work in Progress is stated at cost (including borrowing cost, where applicable) incurred during construction, installation/ pre-operative period relating to items or projects in progress.

c) Foreign Currency Transactions

i) Initial Recognition:

Foreign currency transactions are recorded at the rate of exchange prevailing on the date of transactions.

ii) Exchange Differences:

Exchange differences arising on the settlement of monetary items or on reporting companys 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 as expenses in the year in which they arise except those arising from investments in non-integral operations.

iii) Forward Exchange Contracts (Derivative instruments) not intended for trading or speculation purposes

The Company uses derivative financial instruments including forward exchange contracts to hedge its risk associated with foreign currency fluctuations. The premium or discount arising at the inception of forward exchange contract 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 as expense for the year.

d) Inventories

Inventories are valued as follows:

Raw Material & Others:

Lower of cost or net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if finished products, in which they will be incorporated, are expected to be sold at or above cost. Cost is determined on First In First Out (FIFO) basis.

Work in Progress and Finished Goods:

Lower of cost or net realisable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty.

By Products and Waste :

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and to make the sale.

e) Investments

Investments are stated at Cost less provision for diminution in value.

f) Employees Benefits

The Employees Gratuity Fund and Leave Encashment schemes are the companys defined benefit plan. The present value of the obligation under such defined benefit plan is determined based on the actuarial valuation using the Projected Unit credit Method.

g) 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 measured.

Sale of Goods

Revenue is recognized when the significant risks and rewards of ownership of the goods have been passed to the buyer. Sales are net of return, volume discount, trade discounts & sales tax /VAT including excise duty.

Export Benefits

Export benefits constituting import duty benefits under Duty Exemption Pass Book (DEPB) and Advance License Scheme are accounted for on accrual basis.

Interest Income

Interest is recognized on a time proportion basis taking into account the amount outstanding and rate applicable.

Insurance claims

Insurance claims are recognized to the extent the company is reasonably certain of their ultimate receipt.

h) Borrowing cost

Borrowing cost attributable to acquisitions and construction of assets are capitalized as a part of cost of such assets upto the date when such assets are ready for its intended use and other borrowing cost are charged to Profit & Loss Account.

i) Accounting for Taxes on Income

Provision for tax on income is made after taking into consideration benefits admissible under the provisions of the Income-tax Act, 1961. Deferred tax resulting from “timing difference” between book and taxable profit is accounted for using the tax rates and laws that have been enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future.

j) Impairment of Assets

Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Companys fixed assets. If any indication exists, an assets recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is defined as value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

k) Intangibles

Intangible assets, software etc. are accounted at their cost of acquisition and amortized over their estimated economic life not exceeding 5 years. Leasehold improvements are charged to the Profit & Loss Account over the primary period of lease.

l) Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best management estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

m) Earnings Per Share (EPS)

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. For the purpose of calculating Diluted Earnings per Share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year and adjusted for the effects of all dilutive potential Equity Shares.

n) Leases

Where the Company is the lessee

Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged directly against income. Lease management fees, legal charges and other initial direct costs are capitalized.

If there is no reasonable certainty that the company will obtain the ownership by the end of the lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item are classified as operating leases. Operating lease payments are recognized as expenses in the Profit & Loss Account on a straight-line basis over the lease term.

o) Miscellaneous Expenditure

Miscellaneous expenditure represents expenses incurred for issue of share capital. The same are written off over a period of five years in equal installments.


Mar 31, 2010

A) Accounting Concepts

The financial statements are prepared under the historical cost convention in compliance with the Account- ing Standards specified to be mandatory by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

b) Fixed Assets & Depreciation:

i) Fixed Assets are stated at cost net of cenvat / value added tax and includes amounts added on revalu- ation, less accumulated depreciation and impairment loss, if any. All costs, including financial costs till commencement of commercial production, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable directly to fixed assets are capitalized.

iii) Fixed assets costing below Rs.5,000/- are fully depreciated in the year of acquisition. iv) Lease hold land is amortized over the period of lease.

c) Foreign Currency Transactions:

i) Initial Recognition :

Foreign currency transactions are recorded at the rate of exchange prevailing on the date of transa tions.

ii) Exchange Differences :

Exchange differences arising on the settlement of monetary items or on reporting companys 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 as expenses in the year in which they arise except those arising from investments in non-integral operations.

iii) Forward Exchange Contracts (Derivative instruments) not intended for trading or speculation purposes The Company uses derivative financial instruments including forward exchange contracts to hedge its risk associated with foreign currency fluctuations. The premium or discount arising at the inception of forward exchange contract 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 as expense for the year.

d) Inventories

Inventories are valued as follows:

Raw Material & Others:

Lower of cost or net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if finished products, in which they will be incorporated, are expected to be sold at or above cost. Cost is determined on First In First Out (FIFO) basis.

Work in Progress and Finished Goods:

Lower of cost or net realisable value. Cost includes direct materials and labor and a proportion of manufac turing overheads based on normal operating capacity. Cost of finished goods includes excise duty.

By Products and Waste :

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and to make the sale.

e) Investments

Investments are stated at Cost less provision for diminution in value.

f) Employees Benefits

The employees gratuity fund and leave encashment schemes are the companys defined benefit plan. The present value of the obligation under such defined benefit plan is determined based on the actuarial valua- tion using the Projected Unit credit Method.

g) 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 measured.

Sale of Goods

Revenue is recognized when the significant risks and rewards of ownership of the goods have been passed to the buyer. Sales are net of return, volume discount, trade discounts & sales tax including excise duty.

Export Benefits

Export benefits constituting import duty benefits under Duty Exemption Pass Book (DEPB) and Advance License Scheme are accounted for on accrual basis.

Interest Income

Interest is recognized on a time proportion basis taking into account the amount outstanding and rate appli- cable.

h) Borrowing cost

Borrowing cost attributable to acquisitions and construction of assets are capitalized as a part of cost of such assets upto the date when such assets are ready for its intended use and other borrowing cost are charged to Profit & Loss Account.

i) Accounting for Taxes on Income

Provision for tax on income is made after taking into consideration benefits admissible under the provisions of the Income-tax Act, 1961. Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that have been enacted as on the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be realized in future.

j) Impairment of Assets

Consideration is given at each balance sheet date to determine whether there is any indication of impair- ment of the carrying amount of the Companys fixed assets. If any indication exists, an assets recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is defined as value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor. Reversal of impairment losses recognized in prior years is recorded when there is an indication that the

impairment losses recognized for the asset no longer exist or have decreased. However, the increase in carrying amount of an asset due to reversal of an impairment loss is recognized to the extent it does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognized for the asset in prior years.

k) Intangibles

Intangible assets, software etc. are accounted at their cost of acquisition and amortised over their estimated economic life not exceeding 5 years. Leasehold improvements are charged to the Profit & Loss Account over the primary period of lease.

l) Provisions

A provision is recognized when an enterprise has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best management estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

m) Earnings Per Share (EPS)

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the year. For the purpose of calculating Diluted Earnings per Share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year and adjusted for the effects of all dilutive potential Equity Shares.

n) Miscellaneous Expenditure

Miscellaneous expenditure represents expenses incurred for issue of share capital. The same are written off over a period of five years in equal installments.

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