Accounting Policies of Garware Hi-Tech Films Ltd. Company
Mar 31, 2023
Significant Accounting Policies
(a) Basis of Preparation
(i) Compliance with Ind AS
These financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the
Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015, as amended] and other relevant provisions
of the Act.
The Companyâs financial statements are presented in Indian Rupees, which is also its functional currency.
These financial statements have been prepared and presented under the historical cost convention, on accrual basis of accounting
except for certain financial assets and financial liabilities (including derivative instruments) that are measured at fair values at the end
of each reporting period and Defined Benefits Plans - Plan Assets 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) Classification of Assets and Liabilities
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria
set out in the Schedule III of the Companies Act, 2013. Based on the nature of products and services and the time between the
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 and non - current classification of assets and liabilities.
(b) Property, Plant and Equipment
Property, Plant and Equipment are carried at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes
expenditure that is directly attributable to the acquisition of Property, Plant and Equipment, borrowing cost (if capitalisation criteria are met)
and any attributable costs of bringing the asset to its working condition for its intended use.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Company and the cost of the Property, Plant and Equipment can be
measured reliably. If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as
separate items (major components) of Property, Plant and Equipment. The carrying amount of any component accounted for as a separate
asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which
they are incurred.
Depreciation, Estimated Useful Lives and Residual Value
Depreciation on Property, Plant and Equipment is provided on the straight-line method arrived on the basis of the useful life provided as per
the Schedule II of the Companies Act, 2013.
The Company, based on technical assessment made by technical expert and management estimate, depreciates certain items of property
plant and equipment (as mentioned below) over estimated useful lives which are different from the useful lives prescribed under Schedule
II to the Companies Act, 2013.
The Property, Plant and Equipment capitalised under leases is depreciated over the assetâs useful life or over the shorter of the assetâs
useful life and the lease term if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term.
The assetâs residual values, depreciation method and useful lives are reviewed and adjusted if appropriate, at the end of the reporting
period.
An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within
other income / other expenses respectively.
Capital work-in-progress assets in the course of installation for production or/ and supply of goods or services or administrative purposes,
or for purposes not yet determined, are carried at cost, less any recognised impairment loss. At the point when an asset is operating
at managementâs intended use, the cost of construction/ installation is transferred to the appropriate category of Property, Plant and
Equipment. The costs associated with the commissioning of an asset are capitalised where the asset is available for use but incapable of
operating at normal levels until a period of commissioning has been completed.
Intangible assets are stated at acquisition cost net of tax/ duty credits availed, if any, and net of accumulated amortisation. Gains or losses
arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the
carrying amount of the asset and recognised as income or expense in the profit or Loss. Intangible assets are amortised on the straight line
method as follows:
Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their recoverable amount. Recoverable amount is
higher of an assetâs net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise
from the continuing use of an asset and from its disposal at the end of its useful life.
After impairment, depreciation / amortization is provided on the revised carrying amount of the asset over its remaining useful life. A
previously recognised impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after
reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation / amortization if there was no
impairment.
(e) Non Current Assets Held for Sale
Non-Current Assets are classified as Held for Sale if their carrying amount will be recovered principally through a sale transaction rather
than through continuing use and sale is considered highly probable. Also, such assets are classified as held for sale only if the management
expects to complete the sale within one year from the date of classification.
Non-current assets classified as held for sale are measured at the lower of their carrying amount and the fair value less cost to sell. Non¬
current assets are not depreciated or amortized.
(f) Revenue from Contracts with Customers
A. Revenue from Sale of Goods or services
Revenue from sale of goods or services (including scrap sales) are recognised when the control of goods or services are transferred
to the customer at a transaction price that reflects the consideration entitled in exchange for those goods or services allocated to that
contracted performance obligations. The Company also provides volume rebates to certain customers once the quantity of products
purchased during the period exceeds a threshold specified. The discounts are accrued based on customary business practices. The
control of goods refers to the ability to direct the use of and obtain substantially all of the remaining benefits from goods. Generally,
control is transferred upon shipment of goods to the customer or when the goods are made available to the customer, provided that
the transfer of title to the customer occurs and any significant risks of ownership or future obligations with respect to the goods shipped
are not retained by the Company. Sales are recognised net of return/rebates excluding applicable goods and services tax.
The Company collects short-term advances from its customers. Using Ind AS 115 practical expedient, the company recognises
contract liabilities for the consideration received with respect to unsatisfied performance obligations and reports these amounts
as advances received from customer under other head Current liabilities. The Company does not adjust the promised amount of
consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer
of the promised good or service to the customer and when the customer pays for that good or service will be one year or less. Thus,
there is no significant financing component.
B. Contract Balances
Contract Assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs
by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is
recognised for the earned consideration that is conditional.
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration
(or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or
services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier).
Contract liabilities are recognised as revenue when the Company performs under the contract.
A refund liability is the obligation to refund some or all of the consideration received (or receivable) from the customer and is measured
at the amount the Company ultimately expects it will have to return to the customer. The Company updates its estimates of refund
liabilities (and the corresponding change in the transaction price) at the end of each reporting period.
Export Benefits
Export entitlements under the Duty Draw Back Scheme / Other Schemes are recognised as income when the right to receive credit as
per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the
ultimate collection of the relevant export proceeds.
Dividend income is recognised when the right to receive payment is established.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the
amount of income can be measured reliably. Interest income is accrued on a time proportion using effective interest method.
(g) Government Grant
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the
Company will comply with all attached conditions.
Government grants relating to income are recognised in the profit or loss over the period necessary to match them with the costs that they
are intended to compensate and presented within other operating revenue.
Government grants relating to purchase of property, plant and equipment are netted off from acquisition amount of property, plant and
equipment and the grant is recognised in profit or loss over the life of a depreciable asset as a reduced charge of depreciation expense.
(h) Inventories
(1) Raw Materials and Packing Materials are valued at the lower of cost and net realizable value. Cost is determined on a moving
weighted average basis. Cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes
duties & taxes, which are subsequently recoverable from the taxing authorities.
(2) Stores and Spares are valued at cost computed on a moving weighted average basis. Cost includes the cost of purchase and other
expenses directly attributable to their acquisition but excludes duties and taxes that are subsequently recoverable from the taxing
authorities.
(3) Semi-finished goods including those held for captive consumption is valued at factory cost including allocated depreciation.
(4) Finished goods are valued at the lower of cost and net realizable value. Cost includes direct material labour, other direct cost and a
proportion of manufacturing overheads.
(5) Purchases of finished goods are valued at the lower of cost and net realizable value.
(i) 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.
A. Financial Assets
(1) Classification
The Company classifies its financial assets in the following measurement categories:
⢠Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
⢠Those measured at amortised cost.
The classification depends on the entityâs business model for managing the financial assets and the contractual terms of the cash
flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For
investments in debt instruments, this will depend on the business model in which the investment is held. For investments in
equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition
to account for the equity investment at fair value through other comprehensive income.
The Company reclassifies debt investments when and only when its business model for managing those assets changes..
All financial assets are recognized initially at fair value and where financial assets are not recorded at fair value through profit or
loss (FVTPL), transaction costs that are attributable to the acquisition of the financial asset. These includes Trade receivables,
Cash and cash equivalent, other bank balances, Fixed Deposits with bank and Loan.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely
for the payment of principal and interest.
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash
flow characteristics of the asset. The Company classifies its debt instruments as follows:
⢠Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently
measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is
derecognised or impaired. Interest income from these financial assets is included in other income using the effective interest
rate method.
Equity Instruments
The Company subsequently measures equity investment at fair value. The Companyâs Management elects to present fair value
gains and losses on equity investments in other comprehensive income or profit and loss account on an instrument by instrument
basis.
(3) Impairment of Financial Assets
The Company assesses on a forward-looking basis the expected credit losses associated with its assets carried at amortised
cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Refer Note
32 (A) for details of credit risk.
For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which
requires expected lifetime losses to be recognised from initial recognition of the receivables.
(4) Derecognition of Financial Assets
A financial asset is derecognised only when
⢠The Company has transferred the rights to receive cash flows from the financial asset or
⢠Retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay
the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards
of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the entity has not transferred
substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised. Where the entity
has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the
financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control
of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
B. Financial Liability
(1) Initial Recognition and Measurement:
The Company recognizes financial liability in its Balance Sheet when it becomes party to the contractual provisions of the
instrument. All financial liabilities are recognised initially at fair value minus, in the case of financial liabilities not recorded at fair
value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial liability.
Where the fair value of a financial liability at initial recognition is different from its transaction price, the difference between the
fair value and the transaction price is recognised as a gain or loss in the Statement of Profit and Loss at initial recognition if the
fair value is determined through a quoted market price in an active market for an identical asset (i.e. level 1 input) or through a
valuation technique that uses data from observable markets (i.e. level 2 input).
In case the fair value is not determined using a level 1 or level 2 input as mentioned above, the difference between the fair value
and transaction price is deferred appropriately and recognised as a gain or loss in the Statement of Profit and Loss only to the
extent that such gain or loss arises due to a change in factor that market participants take into account when pricing the financial
liability.
(2) Measurement:
All financial liabilities of the Company are subsequently measured at amortised cost using the effective interest method.
Under the effective interest rate method, the future cash payments are exactly discounted to the initial recognition value using
the effective interest rate. The cumulative amortization using the effective interest rate method of the difference between the
initial recognition amount and the maturity amount is added to the initial recognition value (net of principal repayments, if any)
of the financial liability over the relevant period of the financial liability to arrive at the amortised cost at each reporting date. The
corresponding effect of the amortization under effective interest rate method is recognised as interest expense over the relevant
period of the financial liability. The same is included under finance cost in the Statement of Profit and Loss.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing
financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition
of a new liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid is
recognised in the Statement of Profit and Loss.
(j) Derivative Financial Instruments
Derivative financial instruments such as forward contracts to hedge foreign currency risk are initially recognised at fair value and subsequently
remeasured at their fair value with changes in fair value recognised in the Statement of Profit & Loss in the period when they arise.
(k) Foreign Currency Translation
(1) Functional and Presentation Currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in
which the entity operates (âthe functional currencyâ). The financial statements are presented in Indian Rupees which is the Companyâs
functional and presentation currency.
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets
and liabilities denominated in foreign currencies at year end exchange rates are recognised in profit and loss and are presented in the
Statement of Profit or Loss on a net basis. A monetary item for which settlement is neither planned nor likely to occur in the foreseeable
future is considered as a part of the entityâs net investment in that foreign operation.
Foreign exchange gains and losses on foreign currency borrowings is accounted by addition or deduction to the cost of asset so far it
relates to capital asset to the extent that they are regarded as an adjustment to interest cost and in other cases by charging it to the
statement of profit and loss as a gain or loss on account of exchange differences under the head finance costs.
The Companyâs lease asset primarily consists of leases for buildings, and for vehicles. The Company, at the inception of the contract,
assesses whether a contract contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for a consideration. To assess whether a contract conveys the right to control the use of an
identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially
all of the economic benefits from the use of the asset through the period of the lease and (iii) the Company has the right to direct the use
of the asset.
The Company recognizes a right-of-use asset (âROUâ) and a corresponding lease liability at the lease commencement date. The right-of-
use assets initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or
before the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost
less accumulated depreciation and impairment losses.
ROU assets are subsequently depreciated from the commencement date on a straight-line basis over the shorter of the lease term and
useful life of the underlying asset. Right of use assets is evaluated for recoverability whenever events or changes in circumstances indicate
that their carrying amounts may not be recoverable.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted
using Companyâs incremental borrowing rate. Lease liabilities are remeasured with a corresponding adjustment to the related right of use
asset if the Company changes its assessment of whether it exercises an extension or a termination option.
The Company treated the leases with remaining lease term for less than 12 months as if they were âshort term leaseâ.
Lease liability and ROU asset have been separately presented in the Balance Sheet, and lease payments have been classified as financing
cash flows.
Cash and cash equivalents for the purpose of cash flows statement comprise cash at bank, cash in hand, demand deposits with banks and
other deposits with an original maturity of three months or less.
(n) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of
the borrowings using the effective interest rate method. Borrowings are eliminated from the balance sheet when the obligation specified in
the contract is discharged, cancelled or expired.
(o) Borrowing Costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of
the cost of that asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Other
borrowing costs are recognised as an expense in the year in which they are incurred.
Mar 31, 2018
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND KEY ACCOUNTING ESTIMATES AND JUDGEMENTS:
A. Significant Accounting Policies:
(a) Basis of Preparation
(i) Compliance with Ind AS
These Financial Statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015, as amended] and other relevant provisions of the Act.
The Financial Statements up to year ended March 31, 2017 were prepared in accordance with the accounting standards notified under the Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.
These Financial Statements are the first Financial Statements of the Company under Ind AS. Refer note 34 for an explanation of how the transition from previous GAAP to Ind AS has affected the Companyâs financial position, Financial performance and cash flows.
Companyâs Financial Statements are presented in Indian (''), which is also its functional currency.
These Financial Statements have been prepared and presented under the historical cost convention, on accrual basis of accounting except for certain Financial Assets and Financial Liabilities that are measured at fair values 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) Classification of Assets and Liabilities
All Assets and liabilities have been classified as current or Non-Current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013. Based on the nature of products and services and the time between the 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 and Non - Current Classification of Assets and Liabilities.
(b) Property, Plant and Equipment
On transition to Ind AS, the Company has adopted optional exemption under Ind AS 101 to measure Property, Plant and Equipment at fair value. Consequently the fair value has been assumed to be deemed cost of Property, Plant and Equipment on the date of transition. Subsequently Property, Plant and Equipment are carried at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of Property, Plant and Equipment.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the Property, Plant and Equipment can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to Profit or Loss during the reporting period in which they are incurred.
Depreciation, Estimated Useful Lives and Residual Value
Depreciation is provided as per the useful lives of Assets specified in Schedule II to the Companies Act, 2013 (Act).
The Property, Plant and Equipment acquired under finance leases is depreciated over the assetâs useful life or over the shorter of the assetâs useful life and the lease term if there is no reasonable certainty that the Company will obtain ownership at the end of the lease term.
The assetâs residual values and useful lives are reviewed and adjusted if appropriate, at the end of the reporting period.
An asset''s carrying amount is written down immediately to its recoverable amount if the asset''s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in Profit or Loss within other income/ other expenses respectively.
Capital Work-in-Progress
Capital work-in-progress assets in the course of installation for production or/ and supply of goods or services or administrative purposes, or for purposes not yet determined, are carried at cost, less any recognized impairment loss. At the point when an asset is operating at managementâs intended use, the cost of construction/ installation is transferred to the appropriate category of Property, Plant and Equipment. Costs associated with the commissioning of an asset are capitalised where the asset is available for use but incapable of operating at normal levels until a period of commissioning has been completed.
(c) Intangible Assets
Intangible Assets are stated at acquisition cost net of tax/ duty credits availed, if any, and net of accumulated amortisation. Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Profit or Loss. Intangible Assets are amortised on the straight line method as follows:
(d) Impairment of Assets
Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their recoverable amount. Recoverable amount is higher of an assetâs net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.
After impairment, depreciation / amortization is provided on the revised carrying amount of the asset over its remaining useful life. A previously recognised impairment loss is increased or reversed depending on changes in circumstances. However, the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation / amortization if there was no impairment.
(e) Revenue Recognition
(1) Sale of Products
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured and are accounted for inclusive of Excise Duty and net of returns, trade allowances, rebates, value added taxes, goods and service tax (GST).
(2) Export Benefits
Export entitlements under the Duty Draw Back Scheme / Other schemes are recognised as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.
(3) Others
Dividend income is recognised when the right to receive payment is established.
Interest income is recognised on the time proportion basis.
(f) Government Grant
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to income are recognised in the Profit or Loss over the period necessary to match them with the costs that they are intended to compensate and presented within other operating revenue.
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.
(g) Inventories
(1) Raw Materials and Packing Materials are valued at the lower of cost and net realizable value. Cost is determined on a moving weighted average basis. Cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties & taxes, which are subsequently recoverable from the taxing authorities.
(2) Stores and Spares are valued at cost computed on a moving weighted average basis. Cost includes the cost of purchase and other expenses directly attributable to their acquisition but excludes duties and taxes that are subsequently recoverable from the taxing authorities.
(3) Semi-finished goods including those held for captive consumption is valued at factory cost including depreciation.
(4) Finished goods are valued at the lower of cost and net realizable value. Cost includes direct material & labour cost and a proportion of manufacturing overheads.
(5) Purchases of finished goods are valued at the lower of cost and net realizable value.
(h) 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.
A. Financial Assets
(1) Classification
The Company Classifies its Financial Assets in the following Measurement Categories:
- Those to be measured subsequently at fair value (either through Other Comprehensive Income, or through Profit or Loss), and
- Those measured at amortised cost.
The classification depends on the entity''s business model for managing the Financial Assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in Profit or Loss or Other Comprehensive Income. For Investments in debt Instruments, this will depend on the business model in which the investment is held. For Investments in Equity Instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the Equity investment at Fair Value Through Other Comprehensive Income.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
(2) Measurement
At initial recognition, the Company measures a Financial asset at its fair value plus, in the case of a Financial asset not at fair value through Profit or Loss, transaction costs that are directly attributable to the acquisition of the Financial asset. Transaction costs of Financial Assets carried at fair value through Profit or Loss are expensed in Profit or Loss statement.
Financial Assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely for payment of principal and interest.
Debt Instruments
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. The Company classifies its debt instruments as follows:
- Amortised Cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in Profit or Loss when the asset is derecognised or impaired. Interest income from these Financial Assets is included in other income using the effective interest rate method.
Equity Instruments
The Company subsequently measures Equity investment at fair value. The Companyâs Management elects to present fair value gains and losses on Equity Investments in Other Comprehensive Income or Profit and Loss account on an instrument by instrument basis.
(3) Impairment of Financial Assets
The Company assesses on a forward looking basis the expected credit losses associated with its Assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Refer Note 32 (A) for details of credit risk.
For trade receivables, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
(4) Derecognition of Financial Assets
A Financial asset is derecognised only when
- The Company has transferred the rights to receive cash flows from the Financial asset or
- Retains the contractual rights to receive the cash flows of the Financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the Financial asset. In such cases, the Financial asset is derecognised. Where the entity has not transferred substantially all risks and rewards of ownership of the Financial asset, the Financial asset is not derecognised. Where the entity has neither transferred a Financial asset nor retains substantially all risks and rewards of ownership of the Financial asset, the Financial asset is derecognised if the Company has not retained control of the Financial asset. Where the Company retains control of the Financial asset, the asset is continued to be recognised to the extent of continuing involvement in the Financial asset.
B. Financial Liability
(1) Initial Recognition and Measurement:
The Company recognizes a Financial liability in its Balance Sheet when it becomes party to the contractual provisions of the instrument. All Financial Liabilities are recognised initially at fair value minus, in the case of Financial Liabilities not recorded at Fair Value Through Profit or Loss (FVTPL), transaction costs that are attributable to the acquisition of the Financial liability.
Where the fair value of a Financial liability at initial recognition is different from its transaction price, the difference between the fair value and the transaction price is recognised as a gain or loss in the Statement of Profit and Loss at initial recognition if the fair value is determined through a quoted market price in an active market for an identical asset (i.e. level 1 input) or through a valuation technique that uses data from observable markets (i.e. level 2 input).
In case the fair value is not determined using a level 1 or level 2 input as mentioned above, the difference between the fair value and transaction price is deferred appropriately and recognised as a gain or loss in the Statement of Profit and Loss only to the extent that such gain or loss arises due to a change in factor that market participants take into account when pricing the Financial liability.
(2) Measurement:
All Financial Liabilities of the Company are subsequently measured at amortised cost using the effective interest method.
Under the effective interest method, the future cash payments are exactly discounted to the initial recognition value using the effective interest rate. The cumulative amortization using the effective interest method of the difference between the initial recognition amount and the maturity amount is added to the initial recognition value (net of principal repayments, if any) of the Financial liability over the relevant period of the Financial liability to arrive at the amortised cost at each reporting date. The corresponding effect of the amortization under effective interest method is recognised as interest expense over the relevant period of the Financial liability. The same is included under finance cost in the Statement of Profit and Loss.
(3) Derecognition:
A Financial Liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing Financial Liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the Financial liability derecognised and the consideration paid is recognised in the Statement of Profit and Loss.
(i) Derivative Financial Instruments
Derivative Financial Instruments such as forward contracts to hedge foreign currency risk are initially recognised at fair value and subsequently remeasured at their fair value with changes in fair value recognised in the Statement of Profit & Loss in the period when they arise.
(j) Foreign Currency Translation
(1) Functional and Presentation Currency
Items included in the Financial Statements of the Company are measured using the currency of the primary economic environment in which the entity operates (''the functional currencyâ). The Financial Statements are presented in Indian Rupees which is the Companyâs functional and presentation currency.
(2) Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary Assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in Profit and Loss and are presented in the Statement of Profit or Loss on a net basis. A monetary item for which settlement is neither planned nor likely to occur in the foreseeable future is considered as a part of the entityâs net investment in that foreign operation.
Foreign exchange gains and losses on foreign currency borrowings is accounted by addition or deduction to the cost of asset so far it relates to capital asset to the extent that they are regarded as an adjustment to interest cost and in other cases by charging it to the statement of Profit and Loss as a gain or loss on account of exchange differences under the head finance costs.
(k) Leases
As a Lessee
Leases of Property, Plant and Equipment, where the Company, as lessee has substantially all the risks and rewards of ownership are classified as finance leases. Assets acquired under finance leases are recognised at the lower of the fair value of the leased assets at inception of the lease and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to periods during the lease term at a constant periodic rate of interest on the remaining balance of the liability.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to Profit or Loss on a straight-line basis over the period of the lease, unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
(l) Cash and Cash Equivalents
Cash and Cash Equivalents for the purpose of cash flows statement comprise cash at bank, cash in hand, demand deposits with banks and other deposits with an original maturity of three months or less.
(m) Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in Profit or Loss over the period of the borrowings using the effective interest method. Borrowings are removed from the Balance Sheet when the obligation specified in the contract is discharged, cancelled or expired.
(n) Borrowing Costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are recognised as an expense in the year in which they are incurred.
(o) Provisions and Contingent Liabilities & Assets
Provisions involving substantial degree of estimation in measurement are recognised 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 recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the Financial Statements.
(p) Investment in Subsidiaries
Investments in subsidiaries are recognised at cost as per Ind AS 27.
(q) Employee Benefits
(i) Short-Term Obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
(ii) Other Long-Term Employee Benefit Obligations
The liabilities for earned leave that are not expected to be settled wholly within 12 months are measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the Government Securities (G-Sec) at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurement as a result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss.
(iii) Post-Employment Benefits
The Company operates the following post-employment schemes:
(a) Defined benefit plans such as Gratuity and Pension; and
(b) Defined contribution plans such as Provident Fund.
Defined Benefit Plans
The liability or asset recognised in the Balance Sheet in respect of Defined Benefit Pension and Gratuity Plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in Other Comprehensive Income. They are included in retained earnings in the statement of changes in Equity and in the Balance Sheet.
Defined Contribution Plans
Defined Contribution Plans such as Provident Fund etc., are charged to the Statement of Profit and Loss as incurred. Further for certain employees, the monthly contribution for Provident Fund is made to a trust administered by the Company. The interest payable by the trust is notified by the Government. The Company has an obligation to make good the shortfall, if any.
Termination Benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognises termination benefits at the earlier of the following dates: (a) when the Company can no longer withdraw the offer of those benefits; and (b) when the Company recognises costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of terminations benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due for more than 12 months after the end of the reporting period are discounted to present value.
(r) Earnings Per Share
Earnings per share are 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.
(s) Income Taxes
Deferred Tax is provided using the Balance Sheet Liability method, providing for temporary differences between the carrying amounts of Assets and Liabilities for Financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of Assets and liabilities, using tax rates enacted or substantially enacted at the Balance Sheet date. Deferred Tax Assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Current and deferred tax is recognised in Profit or Loss, except to the extent that it relates to items recognised in Other Comprehensive Income or directly in Equity. In this case, the tax is also recognised in Other Comprehensive Income or directly in Equity, respectively. Current tax is determined as the amount of tax payable in respect of taxable income for the period. The credit is taken as per entitlement for the tax liability provided under MAT based on taxable income as per the provisions of Income Tax Act, 1961.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the Balance Sheet date, and any adjustment to tax payable in respect of previous years.
(t) Significant Accounting Judgements, Estimates and Assumptions
The preparation of Financial Statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company''s accounting policies. The management overview the areas that involve a higher degree of judgement or complexity and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed.
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. The Company has based assumptions and estimates on parameters available when the Financial Statements were prepared. However existing circumstances and assumptions about future developments may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions as and when they occur.
i. Taxes
The Company provides for tax considering the applicable tax regulations and based on reasonable estimates, management periodically evaluates positions taken in the tax returns giving due considerations to tax laws and establishes provisions in the event if required as a result of differing interpretation or due to retrospective amendments, if any. The recognition of deferred tax Assets is based on availability of sufficient taxable profits in the Company against which such Assets can be utilised.
ii. Defined Benefit Obligations
The cost of the defined benefit plans and the present value of the obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. The parameters subject to change is the discount rate, escalation rate, expected rate of return and mortality rate. Future salary increases are based on expected future inflation rates.
iii. Recoverability of Trade Receivables
Required judgements are used in assessing the recoverability of overdue trade receivables and for determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate risk of non-payment.
Mar 31, 2015
A. Basis of presentation of Financial Statements
The financial statements are prepared under the historical cost
convention modified by revaluation of fixed assets and in accordance
with notified Accounting Standards by Companies (Accounting Standard)
Rules, 2006 and relevant presentation requirements of the Companies
Act, 2013. The company generally follows the mercantile system of
accounting and recognizes significant items of income and expenditure
on accrual basis.
B. Use Estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known / materialized.
C. Fixed Assets and Depreciation / Amortization
Fixed Assets are stated at cost net of MODVAT / CENVAT and includes
amounts added on revaluation, less accumulated depreciation. Cost
comprises of the purchase price and any directly attributable cost of
bringing the assets to working condition for its intended use including
interest and other incidental and trial run expenses up to the date of
commercial production. Surplus on revaluation of assets is credited to
Capital / Revaluation Reserve.
Depreciation / Amortization:
i) Tangible Assets:
Depreciation on Fixed Assets is provided as per useful life specified
in Part C of Schedule II of the Companies Act, 2013.
No write-off is being made in respect of leasehold land.
ii) Intangible Assets:
Computer software @ 20% p.a.
D. Impairment of Assets
Impairment loss, if any, is provided to the extent, the carrying amount
of assets exceeds their recoverable amount. Recoverable amount is
higher of an asset's net selling price and its value in use. Value in
use is the present value of estimated future cash flows expected to
arise from the continuing use of an asset and from its disposal at the
end of its useful life.
E. Investments
Investments are considered as non-current investments and are stated at
cost of acquisition. Market value of Quoted Investments at the date of
the Balance Sheet is disclosed. 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.
F. Inventories
i) Raw Materials and Packing Materials are valued at the lower of cost
and net realizable value. Cost is determined on a moving weighted
average basis. Cost includes the cost of purchase and other expenses
directly attributable to their acquisition but excludes duties & taxes,
which are subsequently recoverable from the taxing authorities.
ii) Stores and Spares are valued at cost computed on a moving weighted
average basis. Cost includes the cost of purchase and other expenses
directly attributable to their acquisition but excludes duties and
taxes that are subsequently recoverable from the taxing authorities.
iii) Semi-finished goods including those held for captive consumption
is valued at factory cost including depreciation.
iv) Finished goods are valued at the lower of cost and net realizable
value. Cost includes direct material & labour cost and a proportion of
manufacturing overheads.
v) Purchases of finished goods are valued at the lower of cost and net
realizable value.
G. Foreign Currency Transactions
i) Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction or that
approximates the actual rate at the date of the transaction.
ii) Monetary items denominated in foreign currencies at the year-end
are restated at year end rates. In case of items which are covered by
forward exchange contracts, the difference between the year-end rate
and rate on the date of the contract is recognized as exchange
difference and the premium paid on forward contracts is recognized over
the life of the contract.
iii) Non-monetary foreign currency items are carried at cost.
iv) In respect of branch, which is integral foreign operations, all
transactions are translated at rates prevailing on the date of
transactions or that approximates the actual rate at the date of
transactions. Branch monetary assets and liabilities are restated at
the year-end rates.
v) The company has opted for accounting exchange rate differences
arising on reporting of long term Foreign Currency Monetary Items in
line with Companies (Accounting Standard) Amendment Rules, 2009 on
Accounting Standard - 11 (AS-11) notified by Govt. of India on March
31,2009. Accordingly, the effect of exchange differences on Foreign
Currency Loans of the company is accounted by addition or deduction to
the cost of assets so far it relates to depreciable capital assets and
in other cases by charging to statement of profit and loss as gain or
loss on account of exchange difference.
vi) Investments in shares of foreign subsidiary company are expressed
in Indian Currency at the rate of exchange prevailing at the time when
the original investments were made.
H. Duties
Excise duty on finished goods and custom duty on imported materials has
been accounted on the basis of payments made in respect of goods
cleared as also provision made for goods lying in Bonded Warehouse.
I. Employee Benefits
i) Short Term Employee Benefits:
All benefits paid / payable wholly within 12 months of rendering the
service are classified as short term. Benefits such as salaries, wages,
short-term compensated absences, etc. and the expected cost of bonus,
ex-gratia, medical, LTA are recognized undiscounted during the period
in which the employee renders the related service and charged to
statement of Profit and Loss.
ii) Defined Contribution Plans:
Company contributes Provident Fund in accordance with EPF Act, 1952 and
ESIC Schemes in accordance with ESIC Act, 1948 under Government
administered schemes, however certain employees are covered under the
contributory plans with the trust "Garware Polyester Limited Office
Staff & Officers Provident Fund". Contributions are accounted on
accrual / paid basis and charged to statement of Profit & Loss.
iii) Defined Benefit Plans:
a. Liability towards Superannuation and Gratuity are covered by
appropriate schemes with Life Insurance Corporation of India on accrual
basis. Gratuity plans are determined by actuarial valuation by using
the Projected Unit Credit method.
b. Leave encashment benefits are accounted on actuarial valuation
basis.
J. Lease Rentals
Lease Rentals are accounted on accrual basis over the Lease Term as per
the relevant Lease Agreements.
K. Research & Development
Revenue expenditure on Research and Development is charged out in the
accounting year in which it is incurred. Expenditure, which results in
creation of assets, is included in Fixed Assets and depreciation is
provided on such assets as applicable.
L. Revenue Recognition:
i) Sale of Products
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
reliably measured are accounted for inclusive of Excise Duty and VAT /
Sales Tax (wherever not charged separately), and are net of discounts
and returns.
ii) Export Benefits
Export entitlements under the Duty Draw Back Scheme / Other Schemes are
recognized as income when the right to receive credit as per the terms
of the scheme is established in respect of the exports made and where
there is no significant uncertainty regarding the ultimate collection
of the relevant export proceeds.
iii) Others
Revenue from services is recognised on rendering of services.
Dividend income is recognised when the right to receive payment is
established.
Interest income is recognised on the time proportion basis.
M. Taxation
a) Deferred tax is recognized, subject to the consideration of
prudence, on timing differences, being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods.
b) Current tax is determined as the amount of tax payable in respect of
taxable income for the period. The credit is taken as per entitlement
for the tax liability provided under MAT based on taxable income as per
the provisions of Income Tax Act, 1961.
N. 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 its intended use. All other
borrowing costs are charged to Profit and Loss account.
O. Measurement of EBITDA
The company has elected to present Earnings before Interest (Finance
cost), Tax, Depreciation and Amortization (EBITDA) as a separate line
item on the face of the Statement of Profit and Loss for the year. The
company measures EBITDA on the basis of Profit / (Loss) from continuing
operations.
P. Provisions, Contingent Liabilities & Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognised 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.
Q. Earnings Per Share
Earnings per share are calculated by dividing the net profit or loss
for the year attributable to equity shareholders (after deducting
preference dividend and attributable taxes) by the weighted average
number of equity shares outstanding during the year.
Mar 31, 2014
A. Basis of presentation of Financial Statements
The financial statements are prepared under the historical cost
convention modifed by revaluation of fixed assets and in accordance with
notifed Accounting Standards by Companies (Accounting Standard) Rules,
2006 and relevant presentation requirements of the Companies Act, 1956.
The company generally follows the mercantile system of accounting and
recognizes significant items of income and expenditure on accrual basis.
B. Use Estimates
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known / materialized.
C. Fixed Assets and Depreciation / Amortization
Fixed Assets are stated at cost net of MODVAT / CENVAT and includes
amounts added on revaluation, less accumulated depreciation. Cost
comprises of the purchase price and any directly attributable cost of
bringing the assets to working condition for its intended use including
interest and other incidental and trial run expenses up to the date of
commercial production. Surplus on revaluation of assets is credited to
Capital / Revaluation Reserve.
Depreciation / Amortization :
i) Tangible Assets- On Capital Expenditure on R & D and Assets other
than Plant & Machinery on Written Down Value method as per rates
prescribed under Schedule XIV of the Companies Act, 1956.
On Plant & Machinery on Straight Line Method as per rates prescribed
under Schedule XIV of the Companies Act, 1956. No write-off is being
made in respect of leasehold land. Assets costing Rs. 5000/- or less
are depreciated fully in the year of acquisition.
ii) Intangible Assets- Goodwill to be amortized at 1/5th per annum or
as per the decision of Board of Directors. On Technical know-how /
Product Development Expenses @ 1/6th per annum. On Copyright
Expenditure @ 1/5th per annum. Computer Software @20% per annum.
D. Impairment of assets
Impairment loss, if any, is provided to the extent, the carrying amount
of assets exceeds their recoverable amount. Recoverable amount is
higher of an asset''s net selling price and its value in use. Value in
use is the present value of estimated future cash flows expected to
arise from the continuing use of an asset and from its disposal at the
end of its useful life.
E. Investments
Investments are considered as non-current investments and are stated at
cost of acquisition. Market value of Quoted Investments at the date of
the Balance Sheet is disclosed. 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.
F. Inventories:
i) Raw Materials and Packing Materials are valued at the lower of cost
and net realizable value. Cost is determined on a moving weighted
average basis. Cost includes the cost of purchase and other expenses
directly attributable to their acquisition but excludes duties & taxes,
which are subsequently recoverable from the taxing authorities.
ii) Stores and Spares are valued at cost computed on a moving weighted
average basis. Cost includes the cost of purchase and other expenses
directly attributable to their acquisition but excludes duties and
taxes that are subsequently recoverable from the taxing authorities.
iii) Semi-fnished goods including those held for captive consumption is
valued at factory cost including depreciation.
iv) Finished goods are valued at the lower of cost and net realizable
value. Cost includes direct material & labour cost and a proportion of
manufacturing overheads. v) Purchase of fnished goods are valued at
the lower of cost and net realizable value.
G. Foreign Currency Transactions
i) Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction or that
approximates the actual rate at the date of the transaction.
ii) Monetary items denominated in foreign currencies at the year-end
are restated at year end rates. In case of items which are covered by
forward exchange contracts, the difference between the year-end rate
and rate on the date of the contract is recognized as exchange
difference and the premium paid on forward contracts is recognized over
the life of the contract.
iii) Non monetary foreign currency items are carried at cost.
iv) In respect of branch, which is integral foreign operations, all
transactions are translated at rates prevailing on the date of
transactions or that approximates the actual rate at the date of
transactions. Branch monetary assets and liabilities are restated at
the year end rates.
v) The company has opted for accounting exchange rate differences
arising on reporting of Long Term Foreign Currency Monetary Items in
line with Companies (Accounting Standard) Amendment Rules, 2009 on
Accounting Standard 11 (AS-11) notifed by the Government of India on
March 31, 2009. Accordingly, the effect of exchange differences on
Foreign Currency Loans of the company is accounted by addition or
deduction to the cost of assets so far it relates to depreciable
capital assets and in other cases by charging to statement of profit and
loss as gain or loss on account of exchange difference.
vi) Investments in shares of foreign subsidiary company are expressed
in Indian Currency at the rate of exchange prevailing at the time when
the original investments were made.
H. Duties
Excise duty on fnished goods and custom duty on imported materials has
been accounted on the basis of payments made in respect of goods
cleared as also provision made for goods lying in Bonded Warehouse.
I. Employee benefits:
i) Short Term Employee benefits:
All benefits paid / payable wholly within 12 months of rendering the
service are classifed as short term. benefits such as salaries, wages,
short-term compensated absences, etc. and the expected cost of bonus,
ex-gratia, medical, LTA are recognized undiscounted during the period
in which the employee renders the related service and charged to
statement of profit and Loss.
ii) Defined Contribution Plans:
Company contributes Provident Fund in accordance with EPF Act, 1952 and
ESIC Schemes in accordance with ESIC Act, 1948 under Government
administered schemes, however certain employees are covered under the
contributory plans with the trust "Garware Polyester Limited office
Staff & officers Provident Fund". Contributions are accounted on accrual
/ paid basis and charged to statement of profit & Loss.
iii) Defined benefit Plans:
a. Liability towards Superannuation and Gratuity are covered by
appropriate schemes with Life Insurance Corporation of India on accrual
basis. Gratuity plans are determined by actuarial valuation by using
the Projected Unit Credit method.
b. Leave encashment benefits are accounted on actuarial valuation
basis.
J. Lease Rentals
Lease Rentals are accounted on accrual basis over the Lease Term as per
the relevant Lease Agreements.
K. Research & Development
Revenue expenditure on Research and Development is charged out in the
accounting year in which it is incurred. Expenditure, which results in
creation of assets, is included in Fixed Assets and depreciation is
provided on such assets as applicable.
L. Revenue Recognition i) Sale of products
Revenue is recognized to the extent that it is probable that the
economic benefits will fow to the company and the revenue can be
reliably measured are accounted for inclusive of excise duty and VAT /
Sales Tax (wherever not charged separately), and are net of discounts
and returns.
ii) Export benefits
Export entitlements under the Duty Drawback Scheme / other scheme are
recognized as income when the right to receive credit as per the terms
of the scheme is established in respect of the exports made and where
there is no significant uncertainty regarding the ultimate collection of
the relevant export proceeds.
iii) Others
Revenue from services is recognised on rendering of services.
Dividend income is recognised when the right to receive payment is
established.
Interest income is recognised on the time proportion basis.
M. Taxation
a) Deferred tax is recognized, subject to the consideration of
prudence, on timing differences, being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods.
b) Current tax is determined as the amount of tax payable in respect of
taxable income for the period. The credit is taken as per entitlement
for the tax liability provided under MAT based on taxable income as per
the provisions of Income Tax Act, 1961.
N. 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 its intended use. All other
borrowing costs are charged to profit and Loss account.
O. Measurement of EBITDA
The company has elected to present earnings before Interest (Finance
cost), Tax, Depreciation and Amortization (EBITDA) as a separate line
item on the face of the Statement of profit and Loss for the year. The
company measures EBITDA on the basis of profit / (Loss) from continuing
operations.
P. Provisions, Contingent Liabilities & Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognised 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.
Q. Earning per Share
Earnings per Share are calculated by dividing the net profit or loss for
the year attributable to equity shareholders (after deducting
preference dividend and attributable taxes) by the weighted average
number of equity shares outstanding during the year.
Mar 31, 2013
A. Basis of presentation of Financial Statements
The fnancial statements are prepared under the historical cost
convention modifed by revaluation of fxed assets and in accordance with
notifed Accounting Standards by companies (Accounting Standard ) Rules''
2006 and relevant presentation requirements of the Companies Act'' 1956.
The company generally follows the mercantile system of accounting and
recognizes signifcant items of income and expenditure on accrual basis.
B. Use of Estimates
The preparation of fnancial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the fnancial statements and the reported
amount of revenues and expenses during the reporting period. Difference
between the actual results and estimates are recognized in the period
in which the results are known / materialized.
C. Fixed Assets and Depreciation / Amortization
Fixed Assets are stated at cost net of MODVAT / CENVAT and includes
amounts added on revaluation'' less accumulated depreciation. Cost
comprises of the purchase price and any directly attributable cost of
bringing the assets to working condition for its intended use including
interest and other incidental and trial run expenses up to the date of
commercial production. Surplus on revaluation of assets is credited to
Capital / Revaluation Reserve.
Depreciation / Amortization :
i) Tangible Assets- On Capital Expenditure on R&D and Assets other than
Plant & Machinery on Written Down Value method as per rates prescribed
under Schedule XIV of the Companies Act'' 1956.
On Plant & Machinery on Straight Line Method as per rates prescribed
under Schedule XIV of the Companies Act'' 1956. No write-off is being
made in respect of leasehold land. Assets costing Rs.5000/- or Less is
depreciated fully in the year of acquisition. ii) Intangible Assets-
Goodwill to be amortized at 1/5th per annum or as per the decision of
Board of Directors. On Technical Know-how/Product Development Expenses
@ 1/6th per annum. On Copyright Expenditure @ 1/5th per annum.
Computer software @20% per annum.
D. Impairment of assets
Impairment loss'' if any'' is provided to the extent'' the carrying amount
of assets exceeds their recoverable amount. Recoverable amount is
higher of an assetÂs net selling price and its value in use. Value in
use is the present value of estimated future cash fows expected to
arise from the continuing use of an asset and from its disposal at the
end of its useful life.
E. Investments
Investments are considered as non-current investments and are stated at
cost of acquisition. Market value of Quoted Investments at the date of
the Balance Sheet is disclosed. 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.
F. Inventories:
i) Raw materials and packing materials are valued at the lower of cost
and net realizable value. Cost is determined on a moving weighted
average basis. Cost includes the cost of purchase and other expenses
directly attributable to their acquisition but excludes duties & taxes''
which are subsequently recoverable from the taxing authorities.
ii) Stores and Spares are valued at cost computed on a moving weighted
average basis. Cost includes the cost of purchase and other expenses
directly attributable to their acquisition but excludes duties and
taxes that are subsequently recoverable from the taxing authorities.
iii) Semi-fnished goods including those held for captive consumption is
valued at factory cost including depreciation.
iv) Finished goods is valued at the lower of cost and net realizable
value. Cost includes direct material & labour cost and a proportion of
manufacturing overheads.
v) Purchase of fnished goods are valued at the lower of cost and net
realizable value.
G. Foreign Currency Transactions
i) Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction or that
approximates the actual rate at the date of the transaction.
ii) Monetary items denominated in foreign currencies at the year-end
are restated at year end rates. In case of items which are covered by
forward exchange contracts'' the difference between the year-end rate
and rate on the date of the contract is recognized as exchange
difference and the premium paid on forward contracts is recognized over
the life of the contract.
iii) Non monetary foreign currency items are carried at cost.
iv) In respect of branch'' which is integral foreign operations'' all
transactions are translated at rates prevailing on the date of
transactions or that approximates the actual rate at the date of
transactions. Branch monetary assets and liabilities are restated at
the year end rates.
v) The company has opted for accounting exchange rate differences
arising on reporting of long term Foreign Currency Monetary Items in
line with Companies (Accounting Standard) Amendment Rules 2009 on
Accounting Standard 11 (AS-11) notifed by Govt. of India on March 31''
2009. Accordingly'' the effect of exchange differences on Foreign
Currency Loans of the company is accounted by addition or deduction to
the cost of assets so far it relates to depreciable capital assets and
in other cases by charging to statement of proft and loss as gain or
loss on account of exchange difference.
vi) Investments in shares of foreign subsidiary company are expressed
in Indian Currency at the rate of exchange prevailing at the time when
the original investments were made.
H. Duties
Excise duty on fnished goods and custom duty on imported materials has
been accounted on the basis of payments made in respect of goods
cleared as also provision made for goods lying in Bonded Warehouse.
I. Employee Benefts:
i) Short Term Employee Benefts:- All benefts paid / payable wholly
within 12 months of rendering the service are classifed as short term.
Benefts such as salaries'' wages'' short-term compensated absences'' etc
and the expected Cost of Bonus'' Ex-Gratia'' Medical'' LTA are recognized
undiscounted during the period in which the employee renders the
related service and charged to statement of Proft and Loss.
ii) Defned Contribution Plans:
Company contributes Provident Fund in accordance with EPF Act'' 1952 and
ESIC Schemes in accordance with ESIC Act'' 1948 under Government
administered schemes'' however certain employees are covered under the
contributory plans with the trust "Garware Polyester Limited Offce
Staff & Offcers Provident FundÂ. Contributions are accounted on accrual
/ paid basis and charged to statement of Proft & Loss.
iii) Defned Beneft Plans:
a) Liability towards Superannuation and Gratuity are covered by
appropriate schemes with Life Insurance Corporation of India on accrual
basis. Gratuity plans are determined by actuarial valuation by using
the Projected Unit Credit method.
b) Leave encashment benefts are accounted on actuarial valuation basis.
J. Lease Rentals
Lease Rentals are accounted on accrual basis over the Lease Term as per
the relevant Lease Agreements.
K. Research & Development
Revenue expenditure on Research and Development is charged out in the
accounting year in which it is incurred. Expenditure'' which results in
creation of assets'' is included in Fixed Assets and depreciation is
provided on such assets as applicable.
L. Revenue Recognition
i) Sale of products:
Revenue is recognized to the extent that it is probable that the
economic benefts will fow to the company and the revenue can be
reliably measured are accounted for inclusive of excise duty and VAT/
sales tax (wherever not charged separately)'' and are net of discounts
and returns.
ii) Export Benefts:
Export entitlements under the Duty Entitlement Pass Book (DEPB) scheme
and duty drawback scheme / other scheme are recognized as income when
the right to receive credit as per the terms of the scheme is
established in respect of the exports made and where there is no
signifcant uncertainty regarding the ultimate collection of the
relevant export proceeds.
iii) Others
Revenue from services is recognised on rendering of services.
Dividend income is recognised when the right to receive payment is
established.
Interest income is recognised on the time proportion basis.
M. Taxation
a) Deferred tax is recognized'' subject to the consideration of
prudence'' on timing differences'' being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods.
b) Current tax is determined as the amount of tax payable in respect of
taxable income for the period. The credit is taken as per entitlement
for the tax liability provided under MAT based on taxable income as per
the provisions of Income Tax Act'' 1961.
N. 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 its intended use. All other
borrowing costs are charged to Proft and Loss account.
O. Measurement of EBITDA
The company has elected to present earnings before interest (Finance
cost)'' Tax'' Depreciation and amortization (EBITDA) as a separate line
item on the face of the Statement of Proft and Loss for the year. The
company measures EBITDA on the basis of Proft / (Loss) from continuing
operations.
P. Provisions'' Contingent Liabilities & Contingent Assets:
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outfow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
fnancial statements.
Q. Earning per Share
Earnings per share are calculated by dividing the net proft or loss for
the year attributable to equity shareholders (after deducting
preference dividend and attributable taxes) by the weighted average
number of equity shares outstanding during the year.
Mar 31, 2012
1. Basis of presentation of Financial Statements
The financial statements are prepared under the historical cost
convention modified by revaluation of fixed assets and in accordance with
applicable Accounting Standards and relevant presentation requirements
of the Companies Act, 1956.
The company generally follows the mercantile system of accounting and
recognizes significant items of income and expenditure on accrual basis.
2. Fixed assets and Depreciation / amortization
Fixed Assets are stated at cost net of MODVAT / CENVAT and includes
amounts added on revaluation, less accumulated depreciation. Cost
comprises of the purchase price and any directly attributable cost of
bringing the assets to working condition for its intended use including
interest and other incidental and trial run expenses up to the date of
commercial production. When fixed assets were revalued, surplus on
revaluation was credited to Capital / Revaluation Reserve Account.
Depreciation / Amortization is provided as follows:
à on technical know-how / product Development expenses @ 1/6th per
annum.
à on Copyright expenditure @ 1/5th per annum
à on Capital expenditure on R&D and Assets other than plant and
Machinery on Written Down Value method as per rates prescribed under
Schedule XIV of the Companies Act, 1956.
à on plant and Machinery on Straight Line Method as per rates
prescribed under Schedule XIV of the Companies Act, 1956, vide
Notification GSR No.756(e) dated 16.12.1993.
à No write-off is being made in respect of leasehold land.
à Assets costing Rs.5000/- or Less is depreciated fully in the year of
acquisition.
à Goodwill to be amortized at @ 1/5th per annum or as per the decision
of Board of Directors.
3. Investments
Investments are considered as long term investments and are accordingly
stated at cost of acquisition. Market value of Quoted investments at
the date of the Balance Sheet is disclosed. 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.
4. Inventories:
i) Raw materials and packing materials are valued at the lower of cost
and net realizable value. Cost is determined on a moving weighted
average basis. Cost includes the cost of purchase and other expenses
directly attributable to their acquisition but excludes duties and
taxes, which are subsequently recoverable from the taxing authorities.
ii) Stores and Spares are valued at cost computed on a moving weighted
average basis. Cost includes the cost of purchase and other expenses
directly attributable to their acquisition but excludes duties and
taxes that are subsequently recoverable from the taxing authorities.
iii) Semi-finished goods including those held for captive consumption is
valued at factory cost including depreciation.
iv) Finished goods is valued at the lower of cost and net realizable
value. Cost includes direct material and labour cost and a proportion
of manufacturing overheads.
v) purchase of finished goods are valued at the lower of cost and net
realizable value.
5. Foreign Currency Transactions
a) Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction or that
approximates the actual rate at the date of the transaction.
b) Monetary items denominated in foreign currencies at the year-end are
restated at year end rates. in case of items which are covered by
forward exchange contracts, the difference between the year-end rate
and rate on the date of the contract is recognized as exchange
difference and the premium paid on forward contracts is recognized over
the life of the contract.
c) Non monetary foreign currency items are carried at cost.
d) The company has opted for accounting exchange rate differences
arising on reporting of long term Foreign Currency Monetary items in
line with Companies (Accounting Standard) Amendment Rules 2009 on
Accounting Standard 11 (AS-11) notified by Govt. of India on March 31,
2009. Accordingly, the effect of exchange differences on Foreign
Currency Loans of the company is accounted by addition or deduction to
the cost of assets so far it relates to depreciable capital assets and
in other cases by charging to statement of profit and loss as gain or
loss on account of exchange difference.
e) Investments in shares of foreign subsidiary company are expressed in
Indian Currency at the rate of exchange prevailing at the time when the
original investments were made.
6. Duties
Excise duty on finished goods and custom duty on imported materials has
been accounted on the basis of payments made in respect of goods
cleared as also provision made for goods lying in Bonded Warehouse.
7. Employee Benefits:
a) Short term employee Benefits:- All benefits paid / payable wholly
within 12 months of rendering the service are classified as short term.
Benefits such as salaries, wages, short-term compensated absences, etc
and the expected cost of bonus, ex-gratia, medical, LTA are recognized
in the period in which the employee renders the related service and
charged to profit and Loss Account.
b) Defined Contribution plans:
Company contributes provident Fund in accordance with EPF Act, 1952 and
ESIC Schemes in accordance with ESIC Act,1948 under Government
administered schemes, however certain employees are covered under the
contributory plans with the trust "Garware polyester Limited office
Staff and officers provident Fund". Contributions are accounted on
accrual / paid basis and charged to statement of profit and Loss.
c) Defined Benefit plans:
1) Liability towards Superannuation and Gratuity are covered by
appropriate schemes with Life insurance Corporation of India on accrual
basis. Gratuity plans are determined by actuarial valuation by using
the projected unit Credit method.
2) Leave encashment benefits are accounted on actuarial valuation basis.
8. Lease Rentals
Lease Rentals are accounted on accrual basis over the Lease term as per
the relevant Lease Agreements.
9. Provisions, Contingent Liabilities and Contingent assets :
Provisions involving substantial degree of estimation in measurement
are recognised 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.
10. Research and Development
Revenue expenditure on Research and Development is charged out in the
accounting year in which it is incurred. expenditure, which results in
creation of assets, is included in Fixed Assets and depreciation is
provided on such assets as applicable.
11. Revenue Recognition
a) Sales:
Sales are accounted for inclusive of excise duty and VAt/ sales tax
(wherever not charged separately), and are net of discounts and
returns.
b) Export Benefits:
Export entitlements under the Duty entitlement pass Book (DEPB) and
Duty Drawback Scheme / other scheme are recognized as income when the
right to receive credit as per the terms of the scheme is established
in respect of the exports made and where there is no significant
uncertainty regarding the ultimate collection of the relevant export
proceeds.
12. Taxation
a) Deferred tax is recognized, subject to the consideration of
prudence, on timing differences, being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods.
b) Current tax is determined as the amount of tax payable in respect of
taxable income for the period. the credit is taken as per entitlement
for the tax liability provided under MAT based on taxable income as per
the provisions of income tax Act, 1961.
13. Borrowing Cost:
Borrowing costs Specifically relatable to the acquisition of fixed assets
are capitalized as part of the cost of fixed assets, other borrowing
costs are charged to revenue.
14. Impairment of assets
Impairment loss, if any, is provided to the extent, the carrying amount
of assets exceeds their recoverable amount. Recoverable amount is
higher of an asset's net selling price and its value in use. Value in
use is the present value of estimated future cash flows expected to
arise from the continuing use of an asset and from its disposal at the
end of its useful life.
Mar 31, 2010
1. Basis of presentation of Financial Statements
The financial statements are prepared under the historical cost
convention modified by revaluation of fixed assets and in accordance
with applicable Accounting Standards and relevant presentation
requirements of the Companies Act, 1956.
The Company generally follows the mercantile system of accounting and
recognizes significant items of income and expenditure on accrual
basis.
2. Fixed Assets and Depreciation / Amortization
Fixed Assets are stated at cost net of MODVAT / CENVAT and includes
amounts added on revaluation, less accumulated depreciation. Cost
comprises of the purchase price and any directly attributable cost of
bringing the assets to working condition for its intended use including
interest and other incidental and trial run expenses up to the date of
commercial production. When fixed assets were revalued, surplus on
revaluation was credited to Capital / Revaluation Reserve Account.
Depreciation /Amortization is provided as follows:
- On Technical Know-how/Product Development Expenses @ 1/6th per annum.
- On Copyright Expenditure @ 1/5th per annum
- On Capital Expenditure on R&D and Assets other than Plant & Machinery
- on Written Down Value method as per rates prescribed under Schedule XIV
of the Companies Act, 1956.
- On Plant & Machinery acquired before 02.04.1987 on Straight Line method
as per rates prevalent at the time of acquisition of the asset on
single shift basis.
- On Plant & Machinery acquired after 02.04.1987 on Straight Line Method
as per rates prescribed under Schedule XIV of the Companies Act, 1956,
vide Notification GSR No.756(E) dated 16.12.1993.
- No write-off is being made in respect of leasehold land.
- Assets costing Rs.5000/- or Less is depreciated fully in
the year of acquisition.
3. Investments
Investments are considered as long term investments and are accordingly
stated at cost of acquisition. Market value of Quoted Investments at
the date of the Balance Sheet is disclosed. 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.
4. Inventories
Raw Materials, Stores and Spares and Packing Materials are valued at
weighted average cost. Finished goods are valued at lower of the cost
and market value. Semi-finished goods including those held for captive
consumption are valued at factory cost (including depreciation).
5. Foreign Currency Transactions
a) Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of the transaction or that
approximates the actual rate at the date of the transaction.
b) Monetary items denominated in foreign currencies at the year-end are
restated at year-end rates. In case of items which are covered by
forward exchange contracts, the difference between the year-end rate
and rate on the date of the contract is recognised as exchange
difference and the premium paid on forward contracts is recognized over
the life of the contract.
c) Non monetary foreign currency items are carried at cost.
d) 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.
e) The Company has opted for accounting exchange rate differences
arising on reporting of long term Foreign Currency Monetary Items in
line with Companies (Accounting Standard) Amendment Rules 2009 on
Accounting Standard 11 (AS-11) notified by Govt. of India on March 31,
2009. Accordingly, the effect of exchange differences on Foreign
Currency Loans of the Company is accounted by addition or deduction to
the cost of assets so far it relates to depreciable capital assets and
in other cases by transfer to ÃForeign Currency Monetary Items
Translation Difference Accountà to be amortized in subsequent period.
Accordingly, in the previous year the Company has debited Rs. 50.76
lakhs to assets account by adjusting against reserve. The exchange loss
for the year 2007-08 in the year under review the Company has amortized
Rs. 85.23 lakhs from Foreign Currency Monetary Items Translation
Difference due to repayment of the said Loans.
f) Investments in shares of foreign subsidiary Company are expressed in
Indian Currency at the rate of exchange prevailing at the time when the
original investments were made.
6. Inter-divisional Transfers
Inter-divisional transfers of goods for internal use as captive
consumption are shown as contra items in the Profit & Loss Account to
refect the true economic value of the production inter-se the
divisions. This accounting treatment has no impact on the Profit of the
Company.
7. Duties
Excise duty on fnished goods and custom duty on imported materials has
been accounted on the basis of payments made in respect of goods
cleared as also provision made for goods lying in Bonded Warehouse.
8. Employee Benefits:
a) Short Term Employee Benefits:
All benefits paid / payable wholly within 12 months of rendering the
service are classified as short term. Benefits such as salaries, wages,
short-term compensated absences, etc and the expected cost of bonus,
ex-gratia, medical, LTA are recognized in the period in which the
employee renders the related service and charged to Profit and Loss
Account.
b) Defned Contribution Plans:
Company contributes Provident Fund in accordance with EPF Act, 1952 and
ESIC Schemes in accordance with ESIC Act,1948 under Government
administered schemes, however certain employees are covered under the
contributory plans with the trust ÃGarware Polyester Limited Office
Staff & Officers Provident FundÃ. Contributions are accounted on
accrual / paid basis and charged to Profit & Loss Account.
c) Defined Benefit Plans:
1) Liability towards Superannuation and Gratuity are covered by
appropriate schemes with Life Insurance Corporation of India on accrual
basis. Gratuity plans are determined by actuarial valuation by using
the Projected Unit Credit method.
2) Leave encashment benefits are accounted on actuarial valuation
basis.
9. Lease Rentals
Lease Rentals are accounted on accrual basis over the Lease Term as per
the relevant Lease Agreements.
10. Provisions, Contingent Liabilities & Contingent Assets :
Provisions involving substantial degree of estimation in measurement
are recognised 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 recognised but are disclosed in the
notes. Contingent Assets are neither recognised nor disclosed in the
financial statements.
11. Research and Development
Revenue expenditure on Research and Development is charged out in the
accounting year in which it is incurred. Expenditure, which results in
creation of assets, is included in Fixed Assets and depreciation is
provided on such assets as applicable.
12. Revenue Recognition
a) Sales:
Sales are accounted for inclusive of excise duty and VAT/ sales tax
(wherever not charged separately), and are net of discounts and
returns.
b) Export Benefits:
Export entitlements under the Duty Entitlement Pass Book (DEPB) scheme
/ other scheme are recognized as income when the right to receive
credit as per the terms of the scheme is established in respect of the
exports made and where there is no significant uncertainty regarding
the ultimate collection of the relevant export proceeds.
13. Taxation
a) Deferred tax is recognised, subject to the consideration of
prudence, on timing differences, being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods.
b) Current tax is determined as the amount of tax payable in respect of
taxable income for the period. The credit is taken as per entitlement
for the tax liability provided under MAT based on taxable income as per
the provisions of Income Tax Act, 1961.
14. Borrowing Cost:
Borrowing costs specifically relatable to the acquisition of fixed
assets are capitalized as part of the cost of fixed assets, other
borrowing costs are charged to revenue.
15. Impairment of assets
Impairment loss, if any, is provided to the extent, the carrying amount
of assets exceeds their recoverable amount.
Recoverable amount is higher of an assets net selling price and its
value in use. Value in use is the present value of estimated future
cash flows expected to arise from the continuing use of an asset and
from its disposal at the end of its useful life.
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