Mar 31, 2018
NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31.03.2018
1. CORPORATE INFORMATION
Freshtrop Fruits Limited ("The Company") is a public company domiciled in India and incorporated under provisions of the Companies Act, 1956.The company is primarily engaged in the business of exports of fresh fruits and vegetables to leading supermarket chains in various parts of Europe, Russia & Hong Kong as well as in Domestic Market. The company is producing Fruit Pulp & Concentrate for both the Domestic & International Customers. The company has started new venture of cold processed juice for the domestic customers.
2. SIGNIFICANT ACCOUNTING POLICIES:
2.1 Basis of preparation of financial statements
(i) Compliance with Ind AS
These financial statements have been prepared in accordance with Indian Accounting Standards (hereinafter referred to as the ''Ind AS") as notified under Section 133 of the Companies Act, 2013 ("Act) read with the Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act.
For all periods up to and including the year ended 31st March, 2017, the Company had prepared its financial statements in accordance with Accounting Standards notified under the Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (''Previous GAAP'').
These financial statements are the first financial statements prepared under Ind AS. The date of transition to Ind AS is 1st April, 2016. Refer Note 46 for an explanation of how the transition from Indian GAAP (IGAAP) to Ind AS has affected the Company''s financial position, financial performance and cash flows.
These financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting except for certain financial assets and financial liabilities (including Derivative Instrument) that are measured at fair values (Refer note No. 34) and Defined benefit planned assets measured at fair value (Refer note no. 37)at the end of each reporting period, as stated in the accounting policies set out below. The accounting policies have been applied consistently over all the periods presented in these financial statements.
(ii) Use of estimates and judgments
The estimates and judgments used in the preparation of the financial statements are continuously evaluated by the Company and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Differences between actual results and estimates are recognized in the period in which the results are known/materialized.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date.
(iii) Current / Non-Current Classification
All assets and liabilities have been classified as current or noncurrent as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of assets and liabilities.
2.2 Property Plant and Equipment Recognition and measurement
Freehold land is carried at historical cost. All the other items of Property, Plant and Equipment are stated at cost, net of recoverable taxes, less accumulated depreciation and accumulated impairment losses, if any.
The cost of Property, Plant and Equipment comprises of its purchase price or construction cost, any costs directly attributable to bringing the asset into the location and condition necessary for it to be capable of operating in the manner intended by management, the initial estimate of any decommissioning obligation, if any, and borrowing costs for assets that necessarily take a substantial period of time to get ready for their intended use. Subsequent costs are included in the asset''s carrying amount 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.
Capital work-in-progress is stated at cost. All the direct expenditure related to implementation including incidental expenditure incurred during the period of implementation of a project, till it is commissioned, is accounted as Capital work-in-progress (CWIP) and after commissioning the same is transferred / allocated to the respective item of property, plant and equipment.
Pre-operating costs, are expensed to the Statement of Profit and Loss as and when incurred.
If significant parts of an item of Property, Plant and Equipment have different useful lives and cost, then they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment is recognized in Statement of Profit and Loss.
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue the previous GAAP carrying value of all its Property Plant and Equipment as at April 1, 2016 and use that carrying value as deemed cost of property plant and equipment.
2.3 Intangible asset Recognition and measurement
Intangible assets are initially measured at cost. Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of the asset can be measured reliably.
Such intangible assets are subsequently measured at cost less accumulated amortization and any accumulated impairment losses. The cost of an intangible asset comprises of its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use
Transition to Ind AS
On transition to Ind AS, the Company has elected to continue with the previous GAAP carrying value of all the intangible assets recognized as at April 1, 2016 and use that carrying value as the deemed cost of the intangible assets.
2.4 Depreciation method, estimated useful lives and residual value
The estimate of the useful life of the assets has been assessed based on technical advice which considered the nature of the asset, the usage of the asset, expected physical wear and tear, the operating conditions of the asset, anticipated technological changes, manufacturers warranties and maintenance support, etc.
Depreciation is provided on a pro-rata basis on the straight line method over the useful lives as prescribed under Schedule II to the Companies Act, 2013 with the exception of the following:
The management believes that these estimated useful lives reflect fair approximation of the period over which the assets are likely to be used.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if required.
Intangible assets are amortized over the estimated period of benefit, not exceeding five years.
2.5 Impairment
Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested for impairment annually and whenever there is an indication that the asset may be impaired. Assets that are subject to depreciation are reviewed for impairment, whenever events or changes in
circumstances indicate that carrying amount may not be recoverable. Such circumstances include, though are not limited to, significant or sustained decline in revenues or earnings and material adverse changes in the economic environment.
An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit (CGU) exceeds its recoverable amount. The recoverable amount of an asset is the greater of its fair value less cost to sell and value in use. To calculate value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market rates and the risk specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the CGU to which the asset belongs. Fair value less cost to sell is the best estimate of the amount obtainable from the sale of an asset in an arm''s length transaction between knowledgeable, willing parties, less the cost of disposal.
Impairment losses, if any, are recognized in the Statement of Profit and Loss and included in depreciation and amortization expense. Impairment losses are reversed in the Statement of Profit and Loss only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had previously been recognized.
2.6 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
A financial asset is recognized in the balance sheet when the Company becomes party to the contractual provisions of the instrument. At initial recognition, the Company measures a financial asset at its fair value plus or minus, in the case of a financial asset not at fair value through statement of profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified into:
a. Financial assets measured at amortized cost;
b. Financial assets measured at fair value through other comprehensive income (FVTOCI);
c. Financial assets measured at fair value through statement of profit and loss (FVTPL)
The Company classifies its financial assets in the above mentioned categories based on:
a. The Company''s business model for managing the financial assets;
b. The contractual cash flows characteristics of the financial asset.
Financial assets measured at amortized cost
This category generally applies to trade and other receivables.
A financial asset is measured at amortized cost if both of the following conditions are met:
a. The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows;
b. The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Financial assets are subsequently measured at amortized cost using the Effective Interest Rate (EIR) method.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit and loss. The losses arising from impairment are recognized in the statement of profit and loss.
Financial assets measured at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
a. The financial asset is held within a business model whose objective is achieved by both collecting the contractual cash flows and selling financial assets;
b. The asset''s contractual cash flows represent SPPI.
Financial assets measured at fair value through the statement of profit and loss (FVTPL)
FVTPL is a residual category. Any financial asset, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to designate a financial asset, which otherwise meets amortized costor FVTOCI criteria, as at FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognized as ''other income'' in the Statement of Profit and Loss.
Equity Instruments
All the equity instruments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL.
If the company decides to classify an equity instrument as at FVTOCI, then all the fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the company may transfer the cumulative gain or loss within equity. Equity instruments included within FVTPL category are measured at fair value with all the changes recognized in statement of profit and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized (i.e. removed from the Company''s balance sheet) when:
a. The contractual rights to the cash flows from the financial asset have expired, or
b. The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either
c. The Company has transferred substantially all the risks and rewards of the asset, or
d. The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
In accordance with Ind AS 109, the Company assesses impairment based on expected credit loss (ECL) model to the following:
a. Financial assets measured at amortized cost;
b. Financial assets measured at fair value through other comprehensive income Expected credit losses are measured through a loss allowance at an amount equal to:
a. The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
b. Full time expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
The Company follows simplified approach for recognition of impairment loss allowance on trade receivables, under the simplified approach; the Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable which is adjusted for management''s estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through statement of profit and loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognized initially at fair value and, in case of loans and borrowings and payables, net of directly attributable transaction costs.
The Company''s financial liabilities include trade and other payables and short term borrowings. Subsequent measurement
a. Financial liabilities measured at amortized cost;
b. Financial liabilities subsequently measured at fair value through statement of profit and loss.
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognized in the statement of profit and loss. Financial liabilities designated upon initial recognition at fair value through statement of profit and loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied.
Trade and other payables
These amounts represent liability for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
Fair Value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
(i) In the principal market for the asset or liability, or
(ii) In the absence of a principal market, in the most advantageous market for the asset or liability The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
2.7 Derivative financial instruments and Hedge Accounting
The company''s activities exposes it to the financial risk of the changes in foreign exchange and interest rates. The use of financial derivative is governed by the company''s risk management policies approved by the board of the directors. The company has taken cross currency interest rate swaps for its floating rate foreign currency borrowings to hedge foreign currency risk and interest rate risk. The company has taken forward contracts to hedge future probable forecasted export sales.
The company documents at the inception of the hedging transaction the economic relationship between hedging instruments and hedged items including whether the hedging instrument is expected to offset changes in cash flows of hedged items. The company documents its risk management objective and strategy for undertaking various hedge transactions at the inception of each hedge relationship. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are also classified as a current asset or liability when expected to be realized /settled within 12 months of the balance sheet date.
a. Cash flow hedges that qualify for hedge accounting:
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in the other comprehensive income in cash flow hedging reserve within equity, limited to the cumulative change in fair value of the hedged item on a present value basis from the inception of the hedge. The gain or loss relating to the ineffective portion is recognized immediately in statement of profit and loss, within other gains/(losses). Amounts accumulated in equity are reclassified to statement of profit and loss in the periods when the hedged item affects statement of profit and loss
2.8 Inventories
Inventories are valued at cost or net realizable value (NRV), whichever is lower. The basis of determining cost for various categories of inventories is as follows:
a. Raw materials, finished goods, packing materials, stores and spares and consumables are carried at the lower of cost and net realizable value after providing for obsolescence, if any. The comparison of cost and NRV is made on an item-by item basis.
b. In determining the cost of raw materials, packing materials, consumables, stores and spares, First-in-First-Out (FIFO) method is used. Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and condition.
c. Cost of finished goods includes the cost of raw materials, packing materials, an appropriate share of fixed and variable production overheads, excise duty as applicable and other costs incurred in bringing the inventories to their present location and condition.
2.9 Employee benefit Short-term employee benefits
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus, short term compensated absences, ex-gratia, etc. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognized as an expense as the related service is rendered by employees.
Compensated Absences
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. Post-Employment Benefits:
(i) Defined Contribution plans:
Defined contribution plans are employee state insurance scheme and Government administered provident funds scheme for all applicable employees and superannuation scheme for eligible employees.
Recognition and measurement of defined contribution plans:
The Company recognizes contribution payable to a defined contribution plan as an expense in the Statement of Profit and Loss when the employees render services to the Company during the reporting period. If the contributions payable for services received from employees before the reporting date exceed the contributions already paid, the deficit payable is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the reporting date, the excess is recognized as an asset to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund.
(ii) Defined Benefit Plans Provident Fund scheme:
Defined Contribution Plans such as Provident Fund etc., are charged to the Statement of Profit and Loss as incurred. The contributions are made to a government administered Provident Fund scheme towards which the Company has no further obligations beyond its monthly contributions.
Defined benefit Gratuity plan:
The Company has funded its gratuity liability with Life Insurance Corporation of India (LIC) under the Group Gratuity Cash Accumulation Plan.
Recognition and measurement of Defined Benefit plans:
The cost of providing defined benefits is determined using the Projected Unit Credit method with actuarial valuations being carried out at each reporting date. The defined benefit obligations recognized in the Balance Sheet represent the present value of the defined benefit obligations as reduced by the fair value of plan assets, if applicable. Any defined benefit asset (negative defined benefit obligations resulting from this calculation) is recognized representing the present value of available refunds and reductions in future contributions to the plan.
All expenses represented by current service cost, past service cost, if any, and net interest on the defined benefit liability / (asset) are recognized in the Statement of Profit and Loss. Remeasurements of the net defined benefit liability / (asset) comprising actuarial gains and losses and the return on the plan assets (excluding amounts included in net interest on the net defined benefit liability/asset), are recognized in Other Comprehensive Income. Such remeasurements are not reclassified to the Statement of Profit and Loss in the subsequent periods.
The Company presents the above liability/(asset) as current and non-current in the Balance Sheet as per actuarial valuation by the independent actuary; however, the entire liability towards gratuity is considered as current as the Company will contribute this amount to the LIC within the next twelve months.
2.10 Borrowing Cost
The Company is capitalizing borrowing costs that are directly attributable to the acquisition or construction of qualifying assets. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. For borrowing cost capitalization, the capital cost of a particular project is identified against a borrowing in terms of period of construction and the borrowing cost for the relevant period is added to the capital cost till the particular project is capitalized and thereafter the interest is charged to the statement of profit and loss. All other borrowing costs are recognized as expense in the period in which they are incurred and charged to the statement of profit and loss. 2.11Foreign Currency Translation
Functional and presentation currency
The financial statements are presented in Indian rupee (INR), which is Company''s functional and presentation currency.
Initial Recognition:
On initial recognition, transactions in foreign currencies entered into by the Company are recorded in the functional currency (i.e. Indian Rupees), by applying to the foreign currency amount, the spot exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss.
Transactions and balances:
Transactions in foreign currencies are recognized at the prevailing exchange rates on the transaction dates. Realized gains and losses on settlement of foreign currency transactions are recognized in the Statement of Profit and Loss.
Monetary foreign currency assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognized in the Statement of Profit and Loss. 2.12Revenue Recognition Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing effective control over, or managerial involvement with, the goods, and the amount of revenue can be measured reliably.
Amount disclosed as revenue are inclusive of excise duty and net of returns, trade allowance, rebates, goods services and tax (GST) and amount collected on behalf of third parties.
Revenue from export sales is recognized when the significant risks and rewards of ownership of products are transferred to the customers.
Sale of service- Job work
Job Work Sales are recognized as and when the processing of specific products is completed and related costs are incurred in accordance with the terms of the specific contracts.
Export incentive
Export Incentives are recognized as income when right to receive credit as per the terms of the scheme is established in respect of the exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.
Interest and Dividend Income
Interest income is recognized using effective interest method. Dividend income is recognized when the right to receive dividend is established.
2.13Taxation
Income taxes
Tax expense is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.
Current tax:
Current tax is the amount of income taxes payable in respect of taxable profit for a period. Taxable profit differs from ''profit before tax'' as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible under the Income Tax Act, 1961.
Current tax is measured using tax rates that have been enacted by the end of reporting period for the amounts expected to be recovered from or paid to the taxation authorities.
Deferred tax:
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit under Income Tax Act, 1961.
Deferred tax liabilities are generally recognized for all taxable temporary differences. However, in case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the taxable profit nor the accounting profit, deferred tax liabilities are not recognized. Also, for temporary differences if any that may arise from initial recognition of goodwill, deferred tax liabilities are not recognized.
Deferred tax assets are generally recognized for all deductible temporary differences to the extent it is probable that taxable profits will be available against which those deductible temporary difference can be utilized. In case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the taxable profit nor the accounting profit, deferred tax assets are not recognized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefits of part or all of such deferred tax assets to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Minimum Alternate Tax credit is recognized as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.
Presentation of current and deferred tax:
Current and deferred tax are recognized as income or an expense in the Statement of Profit and Loss, except when they relate to items that are recognized in Other Comprehensive Income, in which case, the current and deferred tax income/ expense are recognized in Other Comprehensive Income.
The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. In case of deferred tax assets and deferred tax liabilities, the same are offset if the Company has a legally enforceable right to set off corresponding current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority on the Company.
2.14Provisions and Contingent Liabilities
The Company recognizes provisions when a present obligation (legal or constructive) as a result of a past event exists and it is probable that an outflow of resources embodying economic benefits will be required to settle such obligation and the amount of such obligation can be reliably estimated.
If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.
2.15 Research and Development Expenditure
Expenditure on research is recognized as an expense when it is incurred. Expenditure on development which does not meet the criteria for recognition as an intangible asset is recognized as an expense when it is incurred.
Items of property, plant and equipment and acquired Intangible Assets utilized for Research and Development are capitalized and depreciated in accordance with the policies stated for Property, Plant and Equipment and Intangible Assets.
2.16 Earnings per Share
Basic EPS is computed by dividing net profit after taxes for the year by weighted average number of equity shares outstanding during the financial year, adjusted for bonus share elements in equity shares issued during the year and excluding treasure shares, if any.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential equity shares and the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
2.17 Segment Reporting
The Chief Operational Decision Maker (CODM) monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Operating segments are reported in a manner consistent with the internal reporting provided to the CODM.
The Board of Directors (BOD) of the Company assesses the financial performance and position of the Company, and makes strategic decisions; hence the Board of Directors are CODM. Refer note 39 for segment related information.
2.18 Cash and cash equivalents
Cash and cash equivalents comprise cash and deposits with banks. The Company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.
2.19 Statement of Cash Flows
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
2.20 KEY ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of the Company''s financial statements requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures,and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Critical accounting estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below:
Income taxes
The Company''s tax jurisdiction is India. Significant judgments are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions (Refer Note 33).
Property, Plant and Equipment
Property, Plant and Equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset''s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company''s assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.
Defined Benefit Obligation
The costs of providing gratuity and other post-employment benefits are charged to the Statement of Profit and Loss in accordance with Ind AS 19 ''Employee benefits'' over the period during which benefit is derived from the employees'' services. The costs are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates. The same is disclosed in Note 37, ''Employee benefits''.
Fair value measurement of Financial Instruments
When the fair values of financials assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques, including the discounted cash flow model, which involve various judgments and assumptions.
3. STANDARAD ISSUED NOT YET EFFECTIVE Standards issued but not yet effective
In March, 2018, the Ministry of Corporate Affairs (MCA) issued the Companies (Indian Accounting Standards) Amendment Rules, 2018, notifying Ind AS 115, Revenue from Contract with Customers, Appendix B to Ind AS 21, Foreign Currency Transactions and advance consideration and amendments to certain other standards. These amendments are in line with recent amendments made by International Accounting Standards Board (IASB). These amendments are applicable to the Company from 1st April, 2018. The Company will be adopting the amendments from their effective date.
a) Ind AS 115, Revenue from Contract with Customers:
Ind AS 115supersedes Ind AS 11, Construction Contracts and Ind AS 18, Revenue, Ind AS 115 requires an entity to report information regarding nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with customers. The Principle of Ind AS 115 is that an entity should recognize revenue that demonstrates the transfer of promised goods and services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard can be applied either retrospectively to each prior reporting period presented or can be applied retrospectively with recognition of cumulative effect of contracts that are not completed contracts at the date of initial application of the standard.
Based on the preliminary assessment performed by the Company, the impact of application of the standard is not expected to be material.
b) Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: The Appendix clarifies that the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the asset, expenses or income (or part of it) is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration towards such asset, expenses or income. If there are multiple payments or receipts in advance, then an entity must determine transaction date for each payment or receipts of advance consideration.
The impact of the Appendix on the financial statements, as assessed by the Company, is expected to be not material.
Mar 31, 2016
1 Significant Accounting Policies :
1.1 Basis of Preparation of Financial Statements
a) Basis of Accounting
These financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting in accordance with the accounting principles generally accepted in India (''Indian GAAP'') and comply with the Accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 which continue to apply under Section 133 of the Companies Act, 2013 (''the Act'') read with Rule 7 of the Companies (Accounts) Rules, 2014.
b) Use of Estimates
The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying financial statements are based upon management evaluation of the relevant facts and circumstances as on the date of the financial statements. Actual results may differ from the estimates and assumptions used in preparing the accompanying financial statements. Any revisions to accounting estimates are recognized prospectively in current and future periods.
c) Current / Non Current Classification
All assets and liabilities have been classified as current or noncurrent as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current/non-current classification of assets and liabilities.
1.2 Fixed Assets and Depreciation / Amortization
a) Tangible Fixed Assets
Tangible Assets are stated at cost net of recoverable taxes, trade discounts and rebates, less accumulated depreciation and impairment loss, if any. The cost of Tangible Assets comprises its purchase price, borrowing cost and any cost directly attributable to bringing the asset to its working condition for its intended use.
Subsequent expenditures related to an item of Tangible Asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.
Depreciation on tangible fixed assets is provided using the Straight Line Method based on the useful lives of the assets as estimated by the management and is charged to the Statement of Profit and Loss as per the requirement of Schedule II of the Companies Act, 2013. The estimate of the useful life of the assets has been assessed based on technical advice which considered the nature of the asset, the usage of the asset, expected physical wear and tear, the operating conditions of the asset, anticipated technological changes, manufacturers warranties and maintenance support, etc. Depreciation is provided on a pro-rata basis on the straight line method over the useful lives as prescribed under Schedule II to the Companies Act, 2013 with the exception of the following :
i) Office Building with RCC frame structure is depreciated over 30 years based on the technical evaluation of useful life done by the management.
ii) Factory Building is depreciated over 20 years based on the technical evaluation of useful life done by the management.
b) Intangible Assets
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to enterprise and the cost of the assets can be measured reliably. The intangible assets are recorded at the consideration paid for the acquisition of such assets and are carried at cost less accumulated amortization and accumulated impairment loss, if any.
Costs incurred on acquisition of intangible assets are capitalized and amortized on a straight-line basis over their technically assessed useful lives, as mentioned below :
c) Capital Work in Progress & Capital Advances
Cost of Assets not ready for intended use, as on the balance sheet date, is shown as capital work in progress. Advances given towards acquisition of fixed assets outstanding at each balance sheet date are disclosed as Long Term Loans & Advances.
d) Impairment
The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the statement of Profit and Loss in the year in which an asset is identified as impaired. An impairment loss recognized in prior accounting periods is reversed if there has been change in the estimate of the recoverable amount.
1.3 Investments
Investments are classified into current and non-current investments. Investments that are readily realizable and intended to be held for not more than a year from the date of acquisition are classified as current investments. All other investments are classified as non-current investments.
Current investments are stated at the lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments.
Non-current investments are stated at cost. A provision for diminution in the value of long-term investments is made only if such a decline is other than temporary in the opinion of the management.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is recognized in the Statement of Profit and Loss.
1.4 Inventories
a) Raw materials, finished goods, packing materials, stores and spares and consumables are carried at the lower of cost and net realizable value after providing for obsolescence, if any. The comparison of cost and net realizable value is made on an item-by item basis.
b) In determining the cost of raw materials, packing materials, consumables, stores and spares, First-in-First-Out (FIFO) method is used. Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and condition.
c) Cost of finished goods includes the cost of raw materials, packing materials, an appropriate share of fixed and variable production overheads, excise duty as applicable and other costs incurred in bringing the inventories to their present location and condition.
d) Materials in transit are valued at cost-to-date.
1.5 Transactions in Foreign Currency:
a) Initial recognition:
Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the statement of profit and loss.
b) Measurement of foreign currency items at the Balance Sheet date:
Foreign currency monetary items of the Company are restated at the closing exchange rates. Non-monetary items are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising out of these translations are recognized in the Statement of Profit and Loss.
c) Forward exchange contracts:
The Company enters into forward exchange contracts to hedge against its foreign currency exposures relating to the underlying transactions and firm commitments. The Company does not enter into any derivative instruments for trading or speculative purposes.
The premium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense/income over the life of the contract. Exchange differences on such contracts are recognized in the Statement of Profit and Loss in the period in which the exchange rate changes. Any Profit or Loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or expense for the period.
1.6 Revenue Recognition
a) Export Sales
Sales against fixed price contract are recognized when the significant risks and rewards of ownership are transferred to the buyer.
b) Domestic Sales
Revenue from sale of goods is recognized on transfer of all significant risks and rewards of ownership to the buyer. The amount recognized as sale is exclusive of sales tax/VAT and is net of returns & discounts. Sales are stated gross of excise duty as well as net of excise duty; excise duty being the amount included in the amount of gross turnover. The excise duty related to the difference between the closing stock and opening stock is recognized separately as part of changes in inventories of finished goods.
c) Job Work Sales
Job Work Sales are recognized as and when the processing of specific products is completed and related costs are incurred in accordance with the terms of the specific contracts.
d) Export Incentive
Export Incentives are recognized when the right to receive credit as per the terms of Incentives is established in respect of the exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.
e) Other Income
Interest income is recognized on the time proportion basis.
Dividend income is recognized when the right to receive payment is established.
1.7 Employee Benefits
a) Short Term Employees Benefit
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus, short term compensated absences, ex-gratia, etc. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognized as an expense as the related service is rendered by employees.
b) Post Employment Benefit Defined Contribution Plans :
A defined contribution plan is a post-employment benefit plan under which an entity pays specified contributions to a separate entity and has no obligation to pay any further amounts. The Company makes specified monthly contributions towards employee provident fund to
Government administered provident funds scheme and Employees'' State Insurance Corporation (ESIC) which are a defined contribution plan. The Company''s contribution is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.
Defined Benefit Plans :
The Company''s gratuity benefit scheme is a defined benefit plan. The Company''s net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service costs and the fair value of any plan assets are deducted. The calculation of the Company''s obligation under the plan is performed annually by a qualified actuary using the projected unit credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the Balance sheet date.
The Company recognizes all actuarial gains and losses arising from defined benefit plans immediately in the Statement of Profit and Loss. All expenses related to defined benefit plans are recognized in employee benefits expense in the Statement of Profit and Loss. The Company recognizes gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs.
The Company has funded its gratuity liability with Life Insurance Corporation of India (LIC) under the Group Gratuity Cash Accumulation Plan.
c) Compensated Absences
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
1.8 Borrowing Cost
Borrowing costs attributable to the acquisition, construction or production of qualifying assets, are added to the cost of those assets, upto the date when the assets are ready for their intended use. All other borrowing costs are expensed in the period they occur.
1.9 Provisions and Contingencies
A provision is recognized if, as a result of a past event, the Company has a present obligation that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognized at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. The provisions are measured on an undiscounted basis.
A contingent liability exists when there is a possible but not probable obligation or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote. Contingent assets are neither recognized nor disclosed in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognized in the period in which the change occurs.
1.10 Taxes on Income
Income tax expenses comprise current and deferred taxes. Current tax is determined on income for the year chargeable to tax in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws and after considering credit for Minimum Alternate Tax (MAT) available under the said Act. MAT paid in accordance with the tax laws which gives future economic benefits in the form of adjustments to future tax liability, is considered as an asset if there is convincing evidence that the future economic benefit associated with it will flow to the Company resulting in payment of normal income tax.
Deferred tax is recognized on timing differences; being the difference between taxable income and accounting income that originate in one period and are capable of reversing in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that there is a reasonable certainty that there will be sufficient future taxable income will be available against which these can be realized. However if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability.
1.11 Research and Development Expenditure
Revenue expenditure on research and development is charged under respective heads of account in the year in which it is incurred. Capital expenditure on research and development is included as part of fixed assets and depreciated on the same basis as other fixed assets.
1.12 Segment Accounting
Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:
a) Segment revenue includes sales and other income directly identifiable with/ allocable to the segment.
b) Expenses that are directly identifiable with/ allocable to segments are considered for determining the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under "Un-allocable Corporate Expenditure".
c) Income which relates to the Company as a whole and not allocable to segments is included in "Un-allocable Corporate Income".
d) Segment assets and liabilities include those directly identifiable with the respective segments. Un-allocable Corporate Assets and Liabilities represent the assets and liabilities that relate to the Company as whole and not allocable to any segment.
1.13 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders after deducting preference dividends and attributable taxes by the weighted average number of equity shares outstanding during the year.
For the purpose of calculating diluted earning per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares, if any.
1.14 Cash and Cash Equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into known amount of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents.
1.15 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
1.16 Proposed Dividend
Dividend recommended by the Board of Directors is provided for in the accounts, pending approval at the Annual General Meeting.
Mar 31, 2015
A) Basis of Accounting
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under historical cost
convention on accrual basis. Pursuant to Section 133 of the Companies
Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014,
till the standards of accounting or any addendum thereto are prescribed
by Central Government in consultation and recommendation of the
National Financial Reporting Authority, the existing Accounting
Standards notified under the Companies Act, 1956 shall continue to
apply. Consequently, these financial statements have been prepared to
comply in all material aspects with the accounting standards notified
under Section 211(3C) [Companies (Accounting Standards) Rules, 2006, as
amended] of the Companies Act, 1956 and the other relevant provisions
of the Companies Act, 2013.
b) Use of Estimates
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses and disclosure of contingent assets
and liabilities. The estimates and assumptions used in the accompanying
financial statements are based upon management evaluation of the
relevant facts and circumstances as on the date of the financial
statements. Actual results may differ from the estimates and
assumptions used in preparing the accompanying financial statements.
Any revisions to accounting estimates are recognised prospectively in
current and future periods.
c) Current / Non Current Classification
All assets and liabilities have been classified as current or
noncurrent as per the Company's normal operating cycle and other
criteria set out in the Schedule III to the Companies Act, 2013. Based
on the nature of products and the time between acquisition of assets
for processing and their realisation in cash and cash equivalents, the
Company has ascertained its operating cycle as 12 months for the
purpose of current/non-current classification of assets and
liabilities.
1.2 Fixed Assets and Depreciation / Amortization
a) Tangible Fixed Assets
Tangible Assets are stated at cost net of recoverable taxes, trade
discounts and rebates, less accumulated depreciation and impairment
loss, if any. The cost of Tangible Assets comprises its purchase price,
borrowing cost and any cost directly attributable to bringing the asset
to its working condition for its intended use.
Subsequent expenditures related to an item of Tangible Asset are added
to its book value only if they increase the future benefits from the
existing asset beyond its previously assessed standard of performance.
Depreciation on tangible fixed assets of the company is provided using
Straight line method on pro-rata basis at rates and in manner specified
in Schedule II of the Companies Act, 2013. Pursuant to the enactment of
Companies Act 2013, the company has applied the estimated useful lives
as specified in Schedule II.
b) Intangible Assets
Intangible assets are recognized when it is probable that the future
economic benefits that are attributable to the assets will flow to
enterprise and the cost of the assets can be measured reliably. The
intangible assets are recorded at the consideration paid for the
acquisition of such assets and are carried at cost less accumulated
amortization and accumulated impairment loss, if any.
Costs incurred on acquisition of intangible assets are capitalized and
amortized on a straightline basis over their technically assessed
useful lives, as mentioned below :
Intangible Assets Estimated Useful Lives (Years)
Software/Website 5
c) Capital Work in Progress & Capital Advances
Cost of Assets not ready for intended use, as on the balance sheet
date, is shown as capital work in progress. Advances given towards
acquisition of fixed assets outstanding at each balance sheet date are
disclosed as Long Term Loans & Advances.
d) Impairment
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is impaired when the carrying amount of the asset
exceeds the recoverable amount. An impairment loss is charged to the
statement of Profit and Loss in the year in which an asset is
identified as impaired. An impairment loss recognised in prior
accounting periods is reversed if there has been change in the estimate
of the recoverable amount.
1.3 Investments
Investments are classified into current and non-current investments.
Investments that are readily realizable and intended to be held for not
more than a year from the date of acquisition are classified as current
investments. All other investments are classified as non-current
investments.
Current investments are stated at the lower of cost and fair value. The
comparison of cost and fair value is done separately in respect of each
category of investments.
Non-current investments are stated at cost. A provision for diminution
in the value of long-term investments is made only if such a decline is
other than temporary in the opinion of the management.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is recognised in the Statement of
Profit and Loss.
1.4 Inventories
a) Raw materials, finished goods, packing materials, stores and spares
and consumables are carried at the lower of cost and net realizable
value after providing for obsolescence, if any. The comparison of cost
and net realizable value is made on an item-by item basis.
b) In determining the cost of raw materials, packing materials,
consumables, stores and spares, First-in-First-Out (FIFO) method is
used. Cost of inventory comprises all costs of purchase, duties, taxes
(other than those subsequently recoverable from tax authorities) and
all other costs incurred in bringing the inventory to their present
location and condition.
c) Cost of finished goods includes the cost of raw materials, packing
materials, an appropriate share of fixed and variable production
overheads, excise duty as applicable and other costs incurred in
bringing the inventories to their present location and condition.
d) Materials in transit are valued at cost-to-date.
1.5 Transactions in Foreign Currency:
a) Initial recognition:
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction. Exchange differences arising on foreign exchange
transactions settled during the year are recognized in the statement of
profit and loss.
b) Measurement of foreign currency items at the Balance Sheet date:
Foreign currency monetary items of the Company are restated at the
closing exchange rates. Non-monetary items are recorded at the exchange
rate prevailing on the date of the transaction. Exchange differences
arising out of these translations are recognized in the Statement of
Profit and Loss.
c) Forward exchange contracts:
The Company enters into forward exchange contracts to hedge against its
foreign currency exposures relating to the underlying transactions and
firm commitments. The Company does not enter into any derivative
instruments for trading or speculative purposes.
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/income over the life
of the contract. Exchange differences on such contracts are recognized
in the Statement of Profit and Loss in the period in which the exchange
rate changes. Any Profit or Loss arising on cancellation or renewal of
such forward exchange contract is also recognized as income or expense
for the period.
1.6 Revenue Recognition
a) Export Sales
i) Consignment Sales
Sale of goods in case of goods exported on consignment basis is
recognized on acknowledgment of sale by the consignee.
ii) Sales by Fixed Price Contract
Sales against fixed price contract are recognized when the significant
risks and rewards of ownership are transferred to the buyer.
b) Domestic Sales
Revenue from sale of goods is recognized on transfer of all significant
risks and rewards of ownership to the buyer. The amount recognized as
sale is exclusive of sales tax/VAT and is net of returns & discounts.
Sales are stated gross of excise duty as well as net of excise duty;
excise duty being the amount included in the amount of gross turnover.
The excise duty related to the difference between the closing stock and
opening stock is recognized separately as part of changes in
inventories of finished goods.
c) Job Work Sales
Job Work Sales are recognized as and when the processing of specific
products is completed and related costs are incurred in accordance with
the terms of the specific contracts.
d) Export Incentive
Export Incentives are recognized when the right to receive credit as
per the terms of Incentives is established in respect of the exports
made and when there is no significant uncertainty regarding the
ultimate collection of the relevant export proceeds.
e) Other Income
Interest income is recognized on the time proportion basis.
Dividend income is recognized when the right to receive payment is
established.
1.7 Employee Benefits
a) Short Term Employees Benefit
Employee benefits payable wholly within twelve months of receiving
employee services are classified as short-term employee benefits. These
benefits include salaries and wages, bonus, short term compensated
absences, ex-gratia, etc. The undiscounted amount of short-term
employee benefits to be paid in exchange for employee services is
recognized as an expense as the related service is rendered by
employees.
b) Post Employment Benefit
Defined Contribution Plans :
A defined contribution plan is a post-employment benefit plan under
which an entity pays specified contributions to a separate entity and
has no obligation to pay any further amounts.
The Company makes specified monthly contributions towards employee
provident fund to Government administered provident funds scheme and
Employees' State Insurance Corporation (ESIC) which are a defined
contribution plan. The Company's contribution is recognized as an
expense in the Statement of Profit and Loss during the period in which
the employee renders the related service.
Defined Benefit Plans :
The Company's gratuity benefit scheme is a defined benefit plan. The
Company's net obligation in respect of a defined benefit plan is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value. Any
unrecognized past service costs and the fair value of any plan assets
are deducted. The calculation of the Company's obligation under the
plan is performed annually by a qualified actuary using the projected
unit credit method, which recognizes each period of service as giving
rise to additional unit of employee benefit entitlement and measures
each unit separately to build up the final obligation. The discount
rates used for determining the present value of the obligation under
defined benefit plan, are based on the market yields on Government
securities as at the Balance sheet date.
The Company recognizes all actuarial gains and losses arising from
defined benefit plans immediately in the Statement of Profit and Loss.
All expenses related to defined benefit plans are recognized in
employee benefits expense in the Statement of Profit and Loss. The
Company recognizes gains and losses on the curtailment or settlement of
a defined benefit plan when the curtailment or settlement occurs.
The Company has funded its gratuity liability with Life Insurance
Corporation of India (LIC) under the Group Gratuity Cash Accumulation
Plan.
c) Compensated Absences
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The Company measures
the expected cost of such absences as the additional amount that it
expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
1.8 Borrowing Cost
Borrowing costs attributable to the acquisition, construction or
production of qualifying assets, are added to the cost of those assets,
upto the date when the assets are ready for their intended use. All
other borrowing costs are expensed in the period they occur.
1.9 Provisions and Contingencies
A provision is recognised if, as a result of a past event, the Company
has a present obligation that can be estimated reliably and it is
probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are recognised at the best estimate
of the expenditure required to settle the present obligation at the
balance sheet date. The provisions are measured on an undiscounted
basis.
A contingent liability exists when there is a possible but not probable
obligation or a present obligation that may, but probably will not,
require an outflow of resources, or a present obligation whose amount
cannot be estimated reliably. Contingent liabilities do not warrant
provisions, but are disclosed unless the possibility of outflow of
resources is remote. Contingent assets are neither recognised nor
disclosed in the financial statements. However, contingent assets are
assessed continually and if it is virtually certain that an inflow of
economic benefits will arise, the asset and related income are
recognised in the period in which the change occurs.
1.10 Taxes on Income
Income tax expenses comprise current and deferred taxes. Current tax is
determined on income for the year chargeable to tax in accordance with
the applicable tax rates and the provisions of the Income Tax Act, 1961
and other applicable tax laws and after considering credit for Minimum
Alternate Tax (MAT) available under the said Act. MAT paid in
accordance with the tax laws which
gives future economic benefits in the form of adjustments to future tax
liability, is considered as an asset if there is convincing evidence
that the future economic benefit associated with it will flow to the
Company resulting in payment of normal income tax.
Deferred tax is recognized on timing differences; being the difference
between taxable income and accounting income that originate in one
period and are capable of reversing in one or more subsequent periods.
Deferred tax is measured using the tax rates and the tax laws enacted or
substantively enacted as at the reporting date. Deferred tax liabilities
are recognized for all timing differences. Deferred tax assets are
recognized for timing differences of items other than unabsorbed
depreciation and carry forward losses only to the extent that there is a
reasonable certainty that there will be sufficient future taxable income
will be available against which these can be realized. However if there
are unabsorbed depreciation and carry forward of losses and items
relating to capital losses, deferred tax assets are recognized only if
there is virtual certainty supported by convincing evidence that there
will be sufficient future taxable income available to realize the
assets. Deferred tax assets and liabilities are offset if such items
relate to taxes on income levied by the same governing tax laws and the
Company has a legally enforceable right for such set off. Deferred tax
assets are reviewed at each balance sheet date for their realizability.
1.11 Research and Development Expenditure
Revenue expenditure on research and development is charged under
respective heads of account in the year in which it is incurred.
Capital expenditure on research and development is included as part
of fixed assets and depreciated on the same basis as other fixed
assets.
1.12 Segment Accounting
Segment accounting policies are in line with the accounting policies of
the Company. In addition, the following specific accounting policies
have been followed for segment reporting:
a) Segment revenue includes sales and other income directly
identifiable with/ allocable to the segment.
b) Expenses that are directly identifiable with/ allocable to segments
are considered for determining the segment result. Expenses which
relate to the Company as a whole and not allocable to segments are
included under "Un-allocable Corporate Expenditure".
c) Income which relates to the Company as a whole and not allocable to
segments is included in "Un-allocable Corporate Income".
d) Segment assets and liabilities include those directly identifiable
with the respective segments. Un-allocable Corporate Assets and
Liabilities represent the assets and liabilities that relate to the
Company as whole and not allocable to any segment.
1.13 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders after deducting
preference dividends and attributable taxes by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted earning per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares, if
any.
1.14 Cash and Cash Equivalents
The Company considers all highly liquid financial instruments, which
are readily convertible into known amount of cash that are subject to
an insignificant risk of change in value and having original maturities
of three months or less from the date of purchase, to be cash
equivalents.
1.15 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.
Mar 31, 2014
1.1 Basis of Preparation of Financial Statements
a) Basis of Accounting
The financial statements of the Company are prepared under the
historical cost convention as a going concern on accrual basis and to
comply in all material aspects with the Accounting Standards prescribed
in the Companies (Accounting Standards) Rules, 2006 issued by the
Central Government, the relevant provisions of the Companies Act, 1956
("the Act") which as per clarification issued by the Ministry of
Corporate Affairs continue to apply under Section 133 of the Companies
Act, 2013 (which has superseded Section 211(3C) of the Act w.e.f 12th
September 2013) and other accounting principles generally accepted in
India, to the extent applicable.
b) Use of Estimates
The preparation of financial statements in confirmity with Generally
Accepted Accounting Principles requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenue and expenses and disclosure of contingent assets
and liabilities. The estimates and assumptions used in the accompanying
financial statements are based upon management evaluation of the
relevant facts and circumstances as on the date of the financial
statements. Actual results may differ from the estimates and
assumptions used in preparing the accompanying financial statements.
Any revisions to accounting estimates are recognised prospectively in
current and future periods.
c) Current / Non Current Classification
All assets and liabilities have been classified as current and
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule VI of the Companies Act, 1956. Based
on the nature of products and services and their realization in cash
and cash equivalents. The Company has ascertained its operating cycle
as 12 months for the purpose of current and non- current classification
of asset and liabilities.
d) Change In Accounting Policy
Government grants related to depreciable fixed assets was treated as
deferred income which was recognised in the statement of profit and
loss on a systematic and rational basis over the useful life of the
asset. During the year the Company has changed the method of
recognizing the government grant. Grants related to specific fixed
assets are presented in balance sheet by showing the grant as a
deduction from the gross value of the assets concerned in arriving at
their book value. Thus grant is recognised in the statement of profit
and loss over the useful life of a depreciable asset by way of a
reduced depreciation charge. This change results in more appropriate
preparation and presentation financial statement of the Company.
Accordingly, Gross Block of Fixed Assets was reduced by Rs.
8,97,01,000/- being grant received by the company. Out of which grant
of Rs.1,71,03,774/- was written off as deferred Government grant in
proportion of depreciation in earlier years & which is adjusted in
respective assets & depreciation fund accounts. The change is revenue
neutral in the statement of profit and loss account.
1.2 Fixed Assets and Depreciation / Amortization
a) Tangible Fixed Assets
Fixed Assets are stated at cost of acquisition/construction (net of
recoverable taxes) less Accumulated Depreciation and impairment loss if
any. Cost of acquisition includes non refundable taxes, duties, freight
and other costs that are directly attributable to bringing assets to
their working condition for their intended use. All costs, including
financing costs till the asset is put to use and adjustments arising
from exchange rate variations attributable to the fixed assets are
capitalized.
Depreciation on tangible fixed assets is provided on Staright line
method on pro-rata basis at rates and in manner specified in Schedule
XIV of the Companies Act, 1956.
b) Intangible Assets
Intangible assets are recognized when it is probable that the future
economic benefits that are attributable to the assets will flow to
enterprise and the cost of the assets can be measured reliably. The
intangible assets are recorded at the consideration paid for the
acquisition of such assets and are carried at cost less accumulated
amortization and accumulated impairment loss, if any.
Costs incurred on acquisition of intangible assets are capitalized and
amortized on a straight-line basis over their technically assessed
useful lives, as mentioned below :
Intangible Assets Estimated Useful Lives (Years)
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c) Capital Work in Progress & Capital Advances
Cost of Assets not ready for intended use, as on the balance sheet
date, is shown as capital work in progress. Advances given towards
acquisition of fixed assets outstanding at each balance sheet date are
disclosed as Long Term Loans & Advances.
d) Impairment
At each balance sheet date, the management reviews the carrying amounts
of its assets included in each cash generating unit to determine
whether there is any indication that those assets were impaired. If any
such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of impairment. Recoverable
amount is the higher of an asset''s net selling price and value in use.
In assessing value in use, the estimated future cash flows expected
from the continuing use of the asset and from its disposal are
discounted to their present value using a pre-tax discount rate that
reflects the current market assessments of time value of money and the
risks specific to the asset.
Reversal of impairment loss is recognised as income in the statement of
profit and loss.
1.3 Investments
Investments are classified into current and long-term investments.
Investments that are readily realizable and intended to be held for not
more than a year from the date of acquisition are classified as current
investments. All other investments are classified as long-term
investments. However, that part of long term investments which are
expected to be realized within twelve months from Balance Sheet date is
also presented under "Current Assets" under "Current portion of long
term investments" in consonance with the current / non-current
classification of revised Schedule VI to the Companies Act, 1956.
Current investments are stated at the lower of cost and fair value. The
comparison of cost and fair value is done separately in respect of each
category of investments.
Long-term investments are stated at cost. A provision for diminution in
the value of long-term investments is made only if such a decline is
other than temporary in the opinion of the management.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is recognised in the Statement of
Profit and Loss.
1.4 Inventories
Inventories which comprise raw materials, work-in-progress; finished
goods, and stores and spares are carried at the lower of cost and net
realizable value. Cost of inventories comprises all costs of purchase,
costs of conversion and other costs incurred in bringing the
inventories to their present location and condition. Cost is determined
on First-in-First-out (FIFO) basis. In the case of manufactured
inventories and work in progress, cost includes direct material and
labour cost and a proportion of manufacturing overheads. Net realizable
value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and the estimated
costs necessary to make the sale. The net realizable value of
work-in-progress is determined with reference to the selling prices of
related finished products. Raw materials and other supplies held for
use in the production of finished products are not written down below
cost except in cases where material prices have declined and it is
estimated that the cost of the finished products will exceed their net
realizable value. The comparison of cost and net realizable value is
made on class of item. Excise duty is included in the value of Finished
Products, wherever applicable. Materials-in-transit are valued at
cost-to-date.
1.5 Transactions in Foreign Currency:
a) Initial recognition:
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date of the
transaction. Exchange differences arising on foreign exchange
transactions settled during the year are recognized in the statement of
profit and loss.
b) Measurement of foreign currency items at the Balance Sheet date:
Foreign currency monetary items of the Company are restated at the
closing exchange rates. Non- monetary items are recorded at the
exchange rate prevailing on the date of the transaction. Exchange
differences arising out of these translations are recognized in the
Statement of Profit and Loss.
c) Forward exchange contracts:
The Company enters into forward exchange contracts to hedge against its
foreign currency exposures relating to the underlying transactions and
firm commitments. The Company does not enter into any derivative
instruments for trading or speculative purposes.
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/income over the life
of the contract. Exchange differences on such contracts are recognized
in the Statement of Profit and Loss in the period in which the exchange
rates change. Any Profit or Loss arising on cancellation or renewal of
such forward exchange contract is also recognized as income or expense
for the period.
1.6 Revenue Recognition
a) Export Sales
i) Consignment Sales
Sale of goods in case of goods exported on consignment basis is
recognized on acknowledgment of sale by the consignee.
ii) Sales by Fixed Price Contract
Sales against fixed price contract are recognized when the significant
risks and rewards of ownership are transferred to the buyer.
b) Domestic Sales
Revenue from sale of goods is recognised on transfer of all significant
risks and rewards of ownership to the buyer. The amount recognised as
sale is exclusive of sales tax/VAT and is net of returns & discounts.
Sales are stated gross of excise duty as well as net of excise duty;
excise duty being the amount included in the amount of gross turnover.
The excise duty related to the difference between the closing stock and
opening stock is recognised separately as part of changes in
inventories of finished goods, work in progress and stock in trade.
c) Job Work Sales
Job Work Sales are recognized as and when the processing of specific
products is completed and related costs are incurred in accordance with
the terms of the specific contracts.
d) Export Incentive
Export Incentives are recognised when the right to receive credit as
per the terms of Incentives is established in respect of the exports
made and when there is no significant uncertainty regarding the
ultimate collection of the relevant export proceeds.
e) Other Income
Interest income is recognised on the time proportion basis.
1.7 Employee Benefits
a) Short Term Employees Benefit
Employee benefits payable wholly within twelve months of receiving
employee services are classified as short-term employee benefits. These
benefits include salaries and wages, bonus, short term compensated
absences, ex-gratia, etc. The undiscounted amount of short-term
employee benefits to be paid in exchange for employee services is
recognised as an expense as the related service is rendered by
employees.
b) Post Employment Benefit Defined Contribution Plans :
A defined contribution plan is a post-employment benefit plan under
which an entity pays specified contributions to a separate entity and
has no obligation to pay any further amounts. The Company makes
specified monthly contributions towards employee provident fund to
Government administered provident fund scheme and Employees'' State
Insurance Corporation (ESIC) which are a defined contribution plan. The
Company''s contribution is recognised as an expense in the Statement of
Profit and Loss during the period in which the employee renders the
related service.
Defined Benefit Plans :
The Company''s gratuity benefit scheme is a defined benefit plan. The
Company''s net obligation in respect of a defined benefit plan is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value. Any
unrecognized past service costs and the fair value of any plan assets
are deducted. The calculation of the Company''s obligation under the
plan is performed annually by a qualified actuary using the projected
unit credit method, which recognizes each period of service as giving
rise to additional unit of employee benefit entitlement and measures
each unit separately to build up the final obligation. The discount
rates used for determining the present value of the obligation under
defined benefit plan, are based on the market yields on Government
securities as at the Balance sheet date.
The Company recognizes all actuarial gains and losses arising from
defined benefit plans immediately in the Statement of Profit and Loss.
All expenses related to defined benefit plans are recognised in
employee benefits expense in the Statement of Profit and Loss. The
Company recognizes gains and losses on the curtailment or settlement of
a defined benefit plan when the curtailment or settlement occurs.
The Company has funded its gratuity liability with Life Insurance
Corporation of India (LIC) under the Group Gratuity Cash Accumulation
Plan.
c) Compensated Absences
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short- term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
1.8 Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use are capitalized as part of
the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds.
1.9 Provisions and Contingencies
A provision is recognised if, as a result of a past event, the Company
has a present obligation that can be estimated reliably and it is
probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are recognised at the best estimate
of the expenditure required to settle the present obligation at the
balance sheet date. The provisions are measured on an undiscounted
basis.
A contingent liability exists when there is a possible but not probable
obligation or a present obligation that may, but probably will not,
require an outflow of resources, or a present obligation whose amount
cannot be estimated reliably. Contingent liabilities do not warrant
provisions, but are disclosed unless the possibility of outflow of
resources is remote. Contingent assets are neither recognised nor
disclosed in the financial statements. However, contingent assets are
assessed continually and if it is virtually certain that an inflow of
economic benefits will arise, the asset and related income are
recognised in the period in which the change occurs.
1.10 Taxes on Income
Income tax expense comprises current tax (i.e. amount of tax for the
year determined in accordance with the income-tax law) and deferred tax
charge or credit (reflecting the tax effects of timing differences
between accounting income and taxable income for the year).
Provision for current tax is based on the results for the year ended
31st March, in accordance with the provisions of the Income Tax Act,
1961.
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognised using the tax rates and tax laws
that have been enacted or substantively enacted by the balance sheet
date. Deferred tax assets are recognised only to the extent there is
reasonable certainty that the assets can be realized in future, however
when there is unabsorbed depreciation or carry forward loss under
taxation laws, deferred tax assets are recognised only if there is a
virtual certainty supported by convincing evidence that sufficient
future taxable income will be available against which such deferred tax
assets can be realized.
Deferred tax assets are reviewed as at each balance sheet date and
written down or written-up to reflect the amount that is reasonably /
virtually certain (as the case may be) to be realized.
Minimum Alternative Tax (MAT) under the provisions of the Income Tax
Act, 1961 is recognized as current tax. The credit available under the
said act in respect of MAT is recognized as an asset only when there is
certainty that the company will pay income tax in future periods and
MAT credit can be carried forward to set-off against the normal tax
liability. MAT credit recognized as an asset is reviewed at each
Balance sheet date and written down to the extent the aforesaid
certainty no longer exists.
1.11 Governments Grants/Subsidy
Government Grants is recognized when there is a reasonable assurance
that the company will comply with the conditions attached to them and
grants will be received.
Grants related to specific fixed assets are presented in balance sheet
by showing the grant as a deduction from the gross value of the assets
concerned in arriving at their book value.
Government Grants which is in the nature of promoters contribution are
credited to Capital Reserve. When the grant or subsidy relates to an
expense item, it is recognized as income over the periods necessary to
match them on a systematic basis to the costs, which it is intended to
compensate.
1.12 Research and Development Expenditure
Revenue expenditure on research and development is charged under
respective heads of account in the year in which it is incurred.
Capital expenditure on research and development is included as part of
fixed assets and depreciated on the same basis as other fixed assets.
1.13 Segment Accounting
Segment accounting policies are in line with the accounting policies of
the Company. In addition, the following specific accounting policies
have been followed for segment reporting:
a) Segment revenue includes sales and other income directly
identifiable with/ allocable to the segment.
b) Expenses that are directly identifiable with/ allocable to segments
are considered for determining the segment result. Expenses which
relate to the Company as a whole and not allocable to segments are
included under "Un-allocable Corporate Expenditure".
c) Income which relates to the Company as a whole and not allocable to
segments is included in "Un- allocable Corporate Income".
d) Segment assets and liabilities include those directly identifiable
with the respective segments. Un- allocable Corporate Assets and
Liabilities represent the assets and liabilities that relate to the
Company as whole and not allocable to any segment.
1.14 Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders after deducting
preference dividends and attributable taxes by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted earning per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares, if
any.
1.15 Cash and Cash Equivalents
The Company considers all highly liquid financial instruments, which
are readily convertible into known amount of cash that are subject to
an insignificant risk of change in value and having original maturities
of three months or less from the date of purchase, to be cash
equivalents.
1.16 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash
receipts or payments and item of income or expenses associated with
investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated.
Mar 31, 2013
(A) ACCOUNTING CONVENTIONS
(i) Basis Of Accounting
The financial statements of the Company are prepared under the
historical cost convention on accrual basis of accounting in all
material respects in accordance with the notified Accounting Standards
by Companies (Accounting Standards) Rules 2006 (as amended) and the
relevant Provisions of the Companies Act,1956. The accounting policies
have been consistently applied by the Company during the year.
The presentation of the accounts is based on the revised Schedule VI of
the Companies Act, 1956. All assets and liabilities are classified in
to current and non-current generally based on criteria of realization /
settlement within twelve months period from the balance sheet date.
(ii) Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
(B) FIXED ASSETS
(i) Tangible Assets
Fixed Assets are stated at cost of acquisition / construction (Less:
accumulated Depreciation, impairment loss, CENVAT Credit and Value
Added Tax). Cost of acquisition includes non refundable taxes, duties,
freight and other costs that are directly attributable to bringing
assets to their working condition for its intended use. All costs,
including financing costs till commencement of commercial production
and adjustments arising from exchange rate variations attributable to
the fixed assets are capitalized.
(ii) Intangible Assets
Intangible assets are recognized when it is probable that the future
economic benefits that are attributable to the assets will flow to
enterprise and the cost of the assets can be measured reliably. The
intangible assets are recorded at the consideration paid for the
acquisition of such assets and are carried at cost less accumulated
amortization and accumulated impairment loss, if any.
(C) DEPRECIATION/ AMORTIZATION
(i) Tangible Assets
Depreciation on Fixed Assets is provided by Straight Line Method on
Pro-rata basis at rates and in manner specified in Schedule XIV of the
Companies Act, 1956.
(ii) Intangible Assets
Web site development cost is amortized over a period of five years.
(D) CAPITAL WORK-IN-PROGRESS
Projects under commissioning and other Capital Work-in-Progress are
carried at cost, comprising direct cost, related incidental expenses
and attributable interest.
(E) IMPAIRMENT
At each balance sheet date, the management reviews the carrying amounts
of each cash generating unit to determine whether there is any
indication that those assets were impaired. If any such indication
exists, the recoverable amount of the asset is estimated in order to
determine the extent of impairment loss. Recoverable amount is the
higher of an asset''s net selling price and value in use. In assessing
value in use, the estimated future cash flows expected from the
continuing use of the assets and from its disposal are discounted to
their present value using a pre-tax discount rate that reflects the
current market assessments of time value of money and the risks
specific to the asset. Cash flows used to determine the value in use
are derived from the annual budgets and strategic plans of the cash
generating units. For certain cash generating units, variable growth
has been considered even beyond five years, given the maturity of the
business and scope for geographical expansion.
Reversal of impairment loss is recognized as income in the statement of
profit and loss.
(F) BORROWING COST
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
(G) INVENTORIES
Inventories of Raw materials, Packing Materials, Consumables, Stores &
Spares and Finished goods (including for Trade) are stated at cost or
net realizable value whichever is lower. Cost is computed on FIFO
basis, in case of Raw Materials, Packing Materials, Consumables and
Stores & Spares. Finished goods (including the consignment stock)
include cost of conversion and other costs incurred in bringing the
inventories to their present location and condition. Cost is computed
by Standard Cost Method in case of finished goods.
(H) INVESTMENTS
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. Current
Investments are valued at cost or Net Realizable Value, whichever is
lower. All other investments are classified as long term investments.
Long term investments are stated at cost of acquisition. Provision for
diminution in value of long term investments is made, only if such
decline is other than temporary.
(I) REVENUE RECOGNITION
(i) Export Sales
Consignment Sales
Sale of goods in case of goods exported on consignment basis is
recognized on acknowledgment of sale by the consignee.
Sales by Fixed Price Contract
Sales against fixed price contract are recognized when the significant
risks and rewards of ownership are transferred to the buyer.
(ii) Domestic Sales
The Company recognizes sale of goods when the significant risks and
rewards of ownership are transferred to the buyer and is stated net of
discounts and sales tax but inclusive of excise duty.
Excise duty on turnover is reduced from turnover
(iii) Job Work Sales
Job Work Sales are recognized as and when the processing of specific
products is completed and related costs are incurred in accordance with
the terms of the specific contracts.
(iv) Export Incentives
Export incentives are accounted for on export of goods if the
entitlements can be estimated with reasonable accuracy and conditions
precedents to claim are fulfilled.
(v) Other Income
Interest Income
Interest income is recognized on accrual basis.
(J) FOREIGN CURRENCY TRANSACTIONS
(i) All Transactions in foreign currency are recorded at the rates of
exchange prevailing as at the date of the transaction.
(ii) Monetary assets and liabilities in foreign currency, outstanding
at the close of the year, are converted in Indian currency at the
appropriate rates of exchange prevailing at the close of the year. Any
income or expense on account of exchange difference either on
settlement or on translation is recognized in the Profit and Loss
account except in case of long term liabilities, where they relate to
acquisition of fixed assets, in which case they are adjusted to the
carrying cost of such assets.
(iii) In respect of forward exchange contracts entered into towards
hedge of foreign currency risks, the difference between the forward
rate and the exchange rate at the inception of the contract is
recognized as income or expenditure over the life of the contract.
Further, the exchange difference arising on such contracts are
recognized as income or expenditure along with the exchange differences
on the underlying assets/liabilities except in case where they relate
to the acquisition or construction of fixed assets, in which case, they
are adjusted to the carrying cost of fixed assets. Profit or Loss on
cancellations/renewals of forward contracts is accounted for during the
year.
(iv) Premium or discount on forward contract, that are not intended for
trading or speculation purposes, are amortized over the life of such
contract and is recognized as an expense or income.
(K) DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING
The Company uses foreign exchange forward contracts and options to
hedge its exposure to movements in foreign exchange rates. The use of
these foreign exchange forward contracts and options reduces the risk
or cost to the Company and the Company does not use the foreign
exchange forward contracts or options for trading or speculation
purposes.
Outstanding derivative contracts at the balance sheet date are marked
to market. While anticipated losses on outstanding derivative contracts
at the balance sheet date are provided for fully, anticipated gains on
such contracts are ignored on grounds of prudence.
(L) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
(M) GOVERNMENT GRANTS / SUBSIDY
Government Grants is recognized when there is a reasonable assurance
that the company will comply with the conditions attached to them and
grants will be received.
Grants related to depreciable assets are treated as deferred income
which is recognized in Profit & Loss Account over the period and in the
proportions in which depreciation on related assets is charged.
Government Grants which is in the nature of promoters contribution are
credited to Capital Reserve.
When the grant or subsidy relates to an expense item, it is recognized
as income over the periods necessary to match them on a systematic
basis to the costs, which it is intended to compensate.
(N) RESEARCH AND DEVELOPMENT EXPENDITURE
Revenue expenditure on research and development is charged under
respective heads of account in the year in which it is incurred.
Capital expenditure on research and development is included as part of
fixed assets and depreciated on the same basis as other fixed assets.
(O) EMPLOYEE BENEFITS
a. Short Term Employees Benefit
Short Term Benefits are recognized as expenditure at the undiscounted
value in the Profit & Loss Account of the year in which the related
services are rendered.
b. Post Employment Benefit
(i) Defined Contribution Plans:-
Monthly contributions to the Provident Fund which are defined
contribution schemes are charged to Profit & Loss Account and deposited
with the Provident Fund Authorities on monthly basis.
(ii) Defined Benefit Plans:-
Gratuity to Employees are covered under the Employees Group Gratuity
Scheme with LIC and the premium is paid on the basis of their actuarial
valuation using the Projected Unit Credit Method. Actuarial gain and
losses arising on such valuation are recognized immediately in the
Profit & Loss Account. Any shortfall in case of premature termination /
resignation to the extent not reimbursed by LIC is being absorbed in
the year of payment. The amount funded by the trust administered by the
Company under the aforesaid policy is reduced from the gross obligation
under the defined benefit plan, to recognize the obligation on net
basis.
c. Termination Benefits
Termination Benefits are charged to Profit & Loss Account in the year
of accrual.
(P) SEGMENT ACCOUNTING
Segment accounting policies are in line with the accounting policies of
the Company. In addition, the following specific accounting policies
have been followed for segment reporting:
(i) Segment revenue includes sales and other income directly
identifiable with/ allocable to the segment.
(ii) Expenses that are directly identifiable with/ allocable to
segments are considered for determining the segment result. Expenses
which relate to the Company as a whole and not allocable to segments
are included under "Un-allocable Corporate Expenditure".
(iii) Income which relates to the Company as a whole and not allocable
to segments is included in "Un-allocable Corporate Income".
(iv) Segment assets and liabilities include those directly identifiable
with the respective segments. Un-allocable Corporate Assets and
Liabilities represent the assets and liabilities that relate to the
Company as whole and not allocable to any segment.
(Q) TAXES ON INCOME
Tax expense for a year comprises of current tax and deferred tax.
Current tax are measured at the amount expected to be paid to the tax
authorities, after taking into consideration, the applicable deductions
and exemptions admissible under the provisions of the Income tax Act,
1961.
Deferred tax reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing difference of earlier years. Deferred tax is measured based
on the tax rates and the tax laws enacted or substantively enacted at
the balance sheet date. Deferred tax assets are recognized only to the
extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized. If there is unabsorbed depreciation or carry forward
of losses under tax laws, deferred tax assets are recognized only to
the extent that there is virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
Minimum Alternative Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the Company
will pay income tax higher than that computed under MAT, during the
period that MAT is permitted to be set off under the Income Tax Act,
1961 (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 the guidance note issued by the Institute
of Chartered Accountants of India (ICAI), 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 the
Company will pay income tax higher than MAT during the specified
period.
(R) MISCELLANEOUS EXPENDITURE
Share Issue Expense and Deferred Revenue Expenditure are being written
off over a period of five years.
(S) EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. The
weighted average number of equity shares outstanding during the year
are adjusted for events such as bonus shares, other than the conversion
of potential equity shares, that have changed the number of equity
shares outstanding without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(T) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in hand, demand deposits with
banks, other short-term highly liquid investments with original
maturities of three months or less.
(U) OPERATING CYCLE
Based on the nature of product and the time between the acquisition of
assets for processing and the realization in Cash and cash equivalent,
the company has ascertained its operating cycle to be less than twelve
months.
Mar 31, 2012
(A) ACCOUNTING CONVENTIONS
(i) Basis of Accounting
The financial statements of the Company are prepared under the
historical cost convention on accrual basis of accounting in all
material respects in accordance with the notified Accounting Standards
by Companies (Accounting Standards) Rules 2006 (as amended) and the
relevant Provisions of the Companies Act, 1956. The accounting policies
have been consistently applied by the Company during the year.
(ii) Presentation And Disclosure of Financial Statements
During the year ended 31st March, 2012, the revised Schedule-VI
notified under 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
disclosure made in financial statements. The company has also restated
the previous year figures in accordance with the requirements
applicable for the current year.
(ii) Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
(B) FIXED ASSETS
(i) Tangible Assets
Fixed Assets are stated at cost of acquisition / construction (Less:
accumulated Depreciation, impairment loss, CENVAT Credit and Value
Added Tax). Cost of acquisition includes non refundable taxes, duties,
freight and other costs that are directly attributable to bringing
assets to their working condition for its intended use. All costs,
including financing costs till commencement of commercial production
and adjustments arising from exchange rate variations attributable to
the fixed assets are capitalized.
(ii) Intangible Assets
Intangible assets are recognized when it is probable that the future
economic benefits that are attributable to the assets will flow to
enterprise and the cost of the assets can be measured reliably. The
intangible assets are recorded at the consideration paid for the
acquisition of such assets and are carried at cost less accumulated
amortization and accumulated impairment loss, if any.
(C) DEPRECIATION/ AMORTIZATION
(i) Tangible Assets
Depreciation on Fixed Assets is provided by Straight Line Method on
Pro-rata basis at rates and in manner spec fied in Schedule XIV of the
Companies Act, 1956.
(ii) Intangible Asset';
Web site development cost is amortized over a period of five years.
(D) CAPITAL WORK-IN-PROGRESS
Projects under commissioning and other Capital Work-in-Progress are
carried at cost, comprising direct cost, related incidental expenses
and attributable interest.
(E) BORROWING COST
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
(F) INVENTORIES
Inventories of Raw materials. Packing Materials, Consumables, Stores &
Spares and Finished goods (including for Trade) are stated at cost or
net realizable value whichever is lower. Cost is computed on FIFO
basis, in case of Raw Materials, Packing Materials, Consumables and
Stores & Spares. Finished goods (including the consignment stock)
include cost of conversion and other costs incurred in bringing the
inventories to their present location and condition. Cost is computed
by Standard Cost Method in case of finished goods.
(G) IN-VESTMENTS
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. Current
Investments are valued at cost or Net Realizable Value, whichever is
lower. All other investments are classified as long term investments.
Long term investments are stated at cost of acquisition. Provision for
diminution in value of long term investments is made, only if such
decline is other than temporary.
(H) REVENUE RECOGNITION
(i) Export Sales Consignment Sales
Sale of goods in case of goods exported on consignment basis is
recognized on acknowledgment of sale by the consignee.
Sales by Fixed Price Contract
Sales against fixed price contract are recognized when the significant
risks and rewards of ownership are transferred to the buyer.
(ii) Domestic Sales
The Company recognizes sale of goods when the significant risks and
rewards of ownership are transferred to the buyer and is stated net of
discounts and sales tax but inclusive of excise duty.
Excise duty on turnover is reduced from turnover.
(iii) Job Work Sales
Job Work Sales are recognized as and when the processing of specific
products is completed and related costs are incurred in accordance with
the terms of the specific contracts.
(iv) Export Incentives
Export incentives are accounted for on export of goods if the
entitlements can be estimated with reasonable accuracy and conditions
precedents to claim are fulfilled.
(v) Other Income
1) Dividend on investment
Dividend on investment Income is recognized when the right to receive
payment is established.
2) Interest Income
Interest income is recognized on accrual basis.
3) Gain/ Loss on Sale of Investment
Gain/Loss on sale of investment is accounted for in the year in which
the sale contracts are entered into. The cost is calculated on the
basis of Weighted Average cost of Investments.
(I) FOREIGN CURRENCY TRANSACTIONS
(i) All Transactions in foreign currency are recorded at the rates of
exchange prevailing as at the date of the transaction.
(ii) Monetary assets and liabilities in foreign currency, outstanding
at the close of the year, are converted in Indian currency at the
appropriate rates of exchange prevailing at the close of the year. Any
income or expense on account of exchange difference either on
settlement or on translation is recognized in the Profit and Loss
account except in case of long term liabilities, where they relate to
acquisition of fixed assets, in which case they are adjusted to the
carrying cost of such assets.
(iii) In respect of forward exchange contracts entered into towards
hedge of foreign currency risks, the difference between the forward
rate and the exchange rate at the inception of the contract is
recognized as income or expenditure over the life of the contract.
Further, the exchange difference arising on such contracts are
recognized as income or expenditure along with the exchange differences
on the underlying assets/liabilities except in case where they relate
to the acquisition or construction of fixed assets, in which case, they
are adjusted to the carrying cost of fixed assets. Profit or Loss on
cancellations/renewals of forward contracts is accounted for during the
year.
(iv) Premium or discount on forward contract, that are not intended for
trading or speculation purposes, are amortized over the life of such
contract and is recognized as an expense or income.
(J) DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING
The Company uses foreign exchange forward contracts and options to
hedge its exposure to movements in foreign exchange rates. The use of
these foreign exchange forward contracts and options reduces the risk
or cost to the Company and the Company does not use the foreign
exchange forward contracts or options for trading or speculation
purposes.
Outstanding derivative contracts at the balance sheet date are marked
to market. While anticipated losses on outstanding derivative contracts
at the balance sheet date are provided for fully, anticipated gains on
such contracts are ignored on grounds of prudence.
(K) PROVISIONS. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
(L) GOVERNMENT GRANTS / SUBSIDY
Government Grants is recognized when there is a reasonable assurance
that the company will comply with the conditions attached to them and
grants will be received.
Grants related to depreciable assets are treated as deferred income
which is recognized in Profit & Loss Account over the period and in
the proportions in which depreciation on related assets is charged.
Government Grants which is in the nature of promoters contribution are
credited to Capital Reserve.
When the grant or subsidy relates to an expense item, it is recognized
as income over the periods necessary to match them on a systematic
basis to the costs, which it is intended to compensate.
(M) RESEARCH AND DEVELOPMENT EXPENDITURE
Revenue expenditure on research and development is charged under
respective heads of account in the year in which it is incurred.
Capital expenditure on research and development is included as part of
fixed assets and depreciated on the same basis as other fixed assets.
(N) EMPLOYEE BENEFITS
a. Short Term Employees Benefit
Short Term Benefits are recognized as expenditure at the undiscounted
value in the Profit & Loss Account of the year in which the related
services are rendered.
b. Post Employment Benefit
(i) Defined Contribution Plans:-
Monthly contributions to the Provident Fund which are defined
contribution schemes are charged to Profit & Loss Account and deposited
with the Provident Fund Authorities on monthly basis.
(ii) Defined Benefit Plans:-
Gratuity to Employees are covered under the Employees Group Gratuity
Scheme with LIC and the premium is paid on the basis of their actuarial
valuation using the Projected Unit Credit Method. Actuarial gain and
losses arising on such valuation are recognized immediately in the
Profit & Loss Account. Any shortfall in case of premature termination /
resignation to the extent not reimbursed by LIC is being absorbed in
the year of payment. The amount funded by the trust administered by the
Company under the aforesaid policy is reduced from the gross obligation
under the defined benefit plan, to recognize the obligation on net
basis.
c. Termination Benefits
Termination Benefits are charged to Profit & Loss Account in the year
of accrual.
(O) SEGMENT ACCOUNTING
Segment accounting policies are in line with the accounting policies of
the Company. In addition, the following specific accounting policies
have been followed for segment reporting:
(i) Segment revenue includes sales and other income directly
identifiable with/ allocable to the segment.
(ii) Expenses that are directly identifiable with/ allocable to
segments are considered for determining the segment result. Expenses
which relate to the Company as a whole and not allocable to segments
are included under "Un-allocable Corporate Expenditure".
(iii) Income which relates to the Company as a whole and not allocable
to segments is included in "Un-allocable Corporate Income".
(iv) Segment assets and liabilities include those directly identifiable
with the respective segments. Un-allocable Corporate Assets and
Liabilities represent the assets and liabilities that relate to the
Company as whole and not allocable to any segment.
(P) TAXES ON INCOME
Tax expense for a year comprises of current tax and deferred tax.
Current tax are measured at the amount expected to be paid to the tax
authorities, after taking into consideration, the applicable deductions
and exemptions admissible under the provisions of the Income tax Act,
1961.
Deferred tax reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing difference of earlier years. Deferred tax is measured based
on the tax rates and the tax laws enacted or substantively enacted at
the balance sheet date. Deferred tax assets are recognized only to the
extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized. If there is unabsorbed depreciation or carry forward
of losses under tax laws, deferred tax assets are recognized only to
the extent that there is virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
Minimum Alternative Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the Company
will pay income tax higher than that computed under MAT, during the
period that MAT is permitted to be set off under the Income Tax Act,
1961 (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 the guidance note issued by the Institute
of Chartered Accountants of India (ICAI), 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 the
Company will pay income tax higher than MAT during the specified
period.
(Q) IMEAIRMEMT-QF ASSETS
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is impaired when the carrying amount of the asset
exceeds the recoverable amount. An impairment loss is charged to the
Profit and Loss Account in the year in which an asset is identified as
impaired. An impairment loss recognized in prior accounting periods is
reversed if there has been change in the estimate of the recoverable
amount.
(R) MISCELLANEOUS EXPENDITURE
Share Issue Expense and Deferred Revenue Expenditure are being written
off over a period of five years.
(S) EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. The
weighted average number of equity shares outstanding during the year
are adjusted for events such as bonus shares, other than the conversion
of potential equity shares, that have changed the number of equity
shares outstanding without a corresponding change in resources
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(T) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash in hand, demand deposits with
banks, other short-term highly liquid investments with original
maturities of three months or less.
(U) OPERATING CYCLE
Based on the nature of product and the time between the acquisition of
assets for processing and the realization in Cash and cash equivalent,
the company has ascertained its operating cycle to be less than twelve
months.
Mar 31, 2010
(A) ACCOUNTING CONVENTIONS
(i) Basis of Preparation of Financial Statements
The financial statements of the Company are prepared under the
historical cost convention on accrual basis of accounting in all
material respects in accordance with the notified Accounting Standards
by Companies (Accounting Standards) Rules 2006 (as amended) and the
relevant Provisions of the Companies Act,1956. The accounting policies
have been consistently applied by the Company during the year.
(ii) Use of Estimates
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Any revision to
accounting estimates is recognized prospectively in current and future
periods.
(B) FIXED ASSETS
(i) Tangible Assets
Fixed Assets are stated at cost of acquisition / construction (Less:
accumulated Depreciation, impairment loss, CENVAT Credit and Value
Added Tax). Cost of acquisition includes non refundable taxes, duties,
freight and other costs that are directly attributable to bringing
assets to their working condition for its intended use. All costs,
including financing costs till commencement of commercial production
and adjustments arising from exchange rate variations attributable to
the fixed assets are capitalized.
(ii) Intangible Assets
Intangible assets are recognized when it is probable that the future
economic benefits that are attributable to the assets will flow to
enterprise and the cost of the assets can be measured reliably. The
intangible assets are recorded at the consideration paid for the
acquisition of such assets and are carried at cost less accumulated
amortization and accumulated impairment loss, if any.
(C) DEPRECIATION/ AMORTIZATION
(i) Tangible Assets
Depreciation on Fixed Assets is provided by Straight Line Method on
Pro-rata basis at rates and in manner specified in Schedule XIV of the
Companies Act, 1956.
(ii) Intangible Assets
Web site development cost is amortized over a period of five years.
(D) CAPITAL WORK-IN-PROGRESS
Projects under commissioning and other Capital Work-in-Progress are
carried at cost, comprising direct cost, related incidental expenses
and attributable interest.
(E) BORROWING COST
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets are capitalized as part of the cost
of such assets. A qualifying asset is one that necessarily takes
substantial period of time to get ready for intended use. All other
borrowing costs are charged to revenue.
(F) INVENTORIES
Inventories of Raw materials, Packing Materials, Consumables, Stores &
Spares and Finished goods (including for Trade) are stated at cost or
net realizable value whichever is lower. Cost is computed on FIFO
basis, in case of Raw Materials, Packing Materials, Consumables and
Stores & Spares. Finished goods (including the consignment stock)
include cost of conversion and other costs incurred in bringing the
inventories to their present location and condition. Cost is computed
by Standard Cost Method in case of finished goods.
(G) INVESTMENTS
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. Current
Investments are valued at cost or Net Realizable Value, whichever is
lower. All other investments are classified as long term investments.
Long term investments are stated at cost of acquisition. Provision for
diminution in value of long term investments is made, only if such
decline is other than temporary.
(H) REVENUE RECOGNITION
(i) Export Sales
Consignment Sales
Sale of goods in case of goods exported on consignment basis is
recognized on acknowledgment of sale by the consignee.
Sales by Fixed Price Contract
Sales against fixed price contract are recognized when the significant
risks and rewards of ownership are transferred to the buyer.
(ii) Domestic Sales
The Company recognizes sale of goods when the significant risks and
rewards of ownership are transferred to the buyer.
(iii) Job Work Sales
Job Work Sales are recognized as and when the processing of specific
products is completed and related costs are incurred in accordance with
the terms of the specific contracts.
(iv) Export Incentives
Export incentives are accounted for on export of goods if the
entitlements can be estimated with reasonable accuracy and conditions
precedents to claim are fulfilled.
(v) Other Income
1) Dividend on investment
Dividend on investment Income is recognized when the right to receive
payment is established.
2) Interest Income
Interest income is recognized on accrual basis.
3) Gain/ Loss on Sale of Investment
Gain/Loss on sale of investment is accounted for in the year in which
the sale contracts are entered into. The cost is calculated on the
basis of Weighted Average cost of Investments.
(I) FOREIGN CURRENCY TRANSACTIONS
(i) All Transactions in foreign currency are recorded at the rates of
exchange prevailing as at the date of the transaction.
(ii) Monetary assets and liabilities in foreign currency, outstanding
at the close of the year, are converted in Indian currency at the
appropriate rates of exchange prevailing at the close of the year. Any
income or expense on account of exchange difference either on
settlement or on translation is recognized in the Profit and Loss
account except in case of long term liabilities, where they relate to
acquisition of fixed assets, in which case they are adjusted to the
carrying cost of such assets.
(iii) In respect of forward exchange contracts entered into towards
hedge of foreign currency risks, the difference between the forward
rate and the exchange rate at the inception of the contract is
recognized as income or expenditure over the life of the contract.
Further, the exchange difference arising on such contracts are
recognized as income or expenditure along with the exchange differences
on the underlying assets/liabilities except in case where they relate
to the acquisition or construction of fixed assets, in which case, they
are adjusted to the carrying cost of fixed assets. Profit or Loss on
cancellations/renewals of forward contracts is accounted for during the
year.
(J) DERIVATIVE INSTRUMENTS AND HEDGE ACCOUNTING
The Company uses foreign exchange forward contracts and options to
hedge its exposure to movements in foreign exchange rates. The use of
these foreign exchange forward contracts and options reduces the risk
or cost to the Company and the Company does not use the foreign
exchange forward contracts or options for trading or speculation
purposes.
Outstanding derivative contracts at the balance sheet date are marked
to market. While anticipated losses on outstanding derivative contracts
at the balance sheet date are provided for fully, anticipated gains on
such contracts are ignored on grounds of prudence.
(K) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
(L) GOVERNMENT GRANTS / SUBSIDY
Government Grants is recognized when there is a reasonable assurance
that the Company will comply with the conditions attached to them and
grants will be received.
Grants related to depreciable assets are treated as deferred income
which is recognized in Profit & Loss Account over the period and in the
proportions in which depreciation on related assets is charged.
Government Grants which is in the nature of promoters contribution are
credited to Capital Reserve.
When the grant or subsidy relates to an expense item, it is recognized
as income over the periods necessary to match them on a systematic
basis to the costs, which it is intended to compensate.
(M) RESEARCH AND DEVELOPMENT EXPENDITURE
Revenue expenditure on research and development is charged under
respective heads of account in the year in which it is incurred.
Capital expenditure on research and development is included as part of
fixed assets and depreciated on the same basis as other fixed assets.
(N) EMPLOYEE BENEFITS
a. SHORT TERM EMPLOYEES BENEFIT
Short Term Benefits are recognized as expenditure at the undiscounted
value in the Profit & Loss Account of the year in which the related
services are rendered.
b. POST EMPLOYMENT BENEFIT
(i) Defined Contribution Plans:-
Monthly contributions to the Provident Fund which are defined
contribution schemes are charged to Profit & Loss Account and deposited
with the Provident Fund Authorities on monthly basis.
(ii) Defined Benefit Plans:-
Gratuity to Employees are covered under the Employees Group Gratuity
Scheme and the premium is paid on the basis of their actuarial
valuation using the Projected Unit Credit Method. Actuarial gain and
losses arising on such valuation are recognized immediately in the
Profit & Loss Account. Any shortfall in case of premature termination /
resignation to the extent not reimbursed by LIC is being absorbed in
the year of payment. The amount funded by the trust administered
by the Company under the aforesaid policy is reduced from the gross
obligation under the defined benefit plan, to recognize the obligation
on net basis.
c. TERMINATION BENEFITS
Termination Benefits are charged to Profit & Loss Account in the year
of accrual.
(O) SEGMENT ACCOUNTING
Segment accounting policies are in line with the accounting policies of
the Company. In addition, the following specific accounting policies
have been followed for segment reporting:
(i) Segment revenue includes sales and other income directly
identifiable with/ allocable to the segment.
(ii) Expenses that are directly identifiable with/ allocable to
segments are considered for determining the segment result. Expenses
which relate to the Company as a whole and not allocable to segments
are included under ÃUn-allocable Corporate ExpenditureÃ.
(iii) Income which relates to the Company as a whole and not allocable
to segments is included in ÃUnallocable Corporate IncomeÃ.
(iv) Segment assets and liabilities include those directly identifiable
with the respective segments. Unallocable Corporate Assets and
Liabilities represent the assets and liabilities that relate to the
Company as whole and not allocable to any segment.
(P) TAXES ON INCOME
Tax expense for a year comprises of current tax and deferred tax.
Current tax are measured at the amount expected to be paid to the tax
authorities, after taking into consideration, the applicable deductions
and exemptions admissible under the provisions of the Income tax Act,
1961.
Deferred tax reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing difference of earlier years. Deferred tax is measured based
on the tax rates and the tax laws enacted or substantively enacted at
the balance sheet date. Deferred tax assets are recognized only to the
extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets
can be realized. If there is unabsorbed depreciation or carry forward
of losses under tax laws, deferred tax assets are recognized only to
the extent that there is virtual certainty supported by convincing
evidence that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
Minimum Alternative Tax (MAT) credit is recognized as an asset only
when and to the extent there is convincing evidence that the Company
will pay income tax higher than that computed under MAT, during the
period that MAT is permitted to be set off under the Income Tax Act,
1961 (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 the guidance note issued by the Institute
of Chartered Accountants of India (ICAI), 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 the
Company will pay income tax higher than MAT during the specified
period.
(Q) IMPAIRMENT OF ASSETS
The carrying amounts of assets are reviewed at each Balance Sheet date
if there is any indication of impairment based on internal/external
factors. An asset is impaired when the carrying amount of the asset
exceeds the recoverable amount. An impairment loss is charged to the
Profit and Loss Account in the year in which an asset is identified as
impaired. An impairment loss recognized in prior accounting periods is
reversed if there has been change in the estimate of the recoverable
amount.
(R) MISCELLANEOUS EXPENDITURE
Share Issue Expense and Deferred Revenue Expenditure are being written
off over a period of five years.