Accounting Policies of Gulshan Polyols Ltd. Company
Mar 31, 2023
1. DESCRIPTION OF THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES1.1 Basis of Preparation of Standalone Financial Statements
(i) Corporate Information
Gulshan Polyols Limited ("GPL" or "the Company") with a CIN number L24231UP2000PLC034918 is a domestic public limited company, listed in India with registered office situated at 9th K.M., Jansath Road, Muzaffarnagar (U.P.) - 251001. GPL is a multi-location, multiproduct manufacturing company and has become a market leader in most of its products in India with global presence in 42 countries, across 3 continents and its business portfolio covers Starch, Starch Sugars, Calcium Carbonate, Alcohol & Ethanol business, Agro based Animal Feed & On-site PCC plants with production facilities at Muzaffarnagar in Uttar Pradesh, Bharuch in Gujarat, Dhaula Kuan in Himachal Pradesh, Abu Road in Rajasthan, Patiala in Punjab, Tribeni in West Bengal, Amlai & Borgaon in Madhya Pradesh. It caters to wide range of industry & niche markets in core sector encompassing pharmaceuticals, personal care products, footwear, tyres, rubber & plastics, paints, alcohol, value added paper, agrochemicals, food and agro products. Since inception, GPL is a dividend paying company and listed on National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange ("BSE").
(ii) Statement of compliance
The Standalone Financial Statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III).
The Standalone Financial Statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair values or amortised cost depending upon classification. Historical cost is generally based on the fair value of the consideration given in exchange of goods or services.
1.2 Use of estimates and judgements
The preparation of the Standalone Financial Statements in conformity with Ind AS requires the management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the Standalone Financial Statements and reported amounts of revenues and expenses during the period. The application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these Standalone Financial Statements have been disclosed in Note No.1.5. Accounting estimates could change from period to period. Revision to accounting estimates are recognized in the period in which the estimates are revised and in any future period affected. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of the changes in circumstances surrounding the estimates.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date.
1.3 Current versus non-current classification
The Company presents assets and liabilities in the Standalone balance sheet based on current/ non-current classification. An asset is treated as current when it is:
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
⢠It is expected to be settled in normal operating cycle
⢠It is held primarily for the purpose of trading
⢠It is due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
All assets and liabilities have been classified as current or noncurrent according to the Company''s operating cycle and other criteria set out in the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current non-current classification of assets and liabilities.
These Standalone Financial Statements are presented in INR, which is also the functional currency of the Company. All financial information presented in INR has been rounded to the nearest lakhs.
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 standalone profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).
1.5 Critical estimates and judgments
The preparation of Standalone Financial Statements requires the use of accounting estimates which by definition will seldom equal the actual results. Management also needs to exercise judgment in applying the Company''s accounting policies.
This note provides an overview of the areas that involved a higher degree of judgment or complexity, and items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The areas involving critical estimates or judgment are:
⢠Estimation of Defined benefit obligation
⢠Estimation of current tax expenses
⢠Useful life of Property, plant and equipment
⢠Valuation of Inventory
⢠Provisions and Accruals
⢠Contingencies
The Company measures financial instruments at fair value as per Ind AS 113 at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1- Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2- Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Level 3- Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs)
For assets and liabilities that are recognized in the Standalone Financial Statements on a recurring basis, the company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
1.7 Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
(i) Sale of goods
Revenue from the sale of goods is recognised at the point in time when control of the asset is transferred to the customer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, sales tax and applicable trade discounts and volume rebates. Revenue includes shipping and handling costs billed to the customer.
Interest income primarily comprises of interest from term deposits. Interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. Interest income is included in other income in the standalone statement of profit and loss.
(iii) Dividend
Dividend income from investment is accounted for when the right to receive is established, which is generally when shareholders approve the dividend.
(iv) Other Income
Other income is recognised when no significant uncertainty as to its determination or realisation exists.
(v) Export Incentives
Export incentives are recognised when the incentives are received from the government authorities.
Export entitlement from government authorities under Duty Draw Back scheme is recognised in the standalone statement of profit and loss based on receipt from the government authorities.
Tax expenses comprise of current and deferred tax:
Current income tax
a. Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
b. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
a. Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
b. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
c. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
d. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
e. The Company recognizes tax credits in the nature of MAT credit as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which tax credit is allowed to be carried forward. In the year in which the Company recognizes tax credits as an asset, the said asset is created by way of tax credit to the Standalone Statement of Profit and Loss. The Company reviews such tax credit asset at each reporting date and writes down the asset to the extent, the Company does not have convincing evidence that it will pay normal tax during the specified period.
f. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
g. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
The Company presents basic and diluted earnings per share ("EPS") data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.
1.10 Property, Plant and Equipment Recognition and measurement
Construction in progress is stated at cost, net of accumulated impairment losses, if any. Property, plant and equipment are initially recognized at cost after deducting refundable purchase taxes and including the cost directly attributable to bring the asset to the location and conditions necessary for it to be capable of operating in the manner intended by the management, borrowing cost in accordance with the established accounting policy, cost of restoring and dismantling, if any, initially estimated by the management.
After the initial recognition the property, plant and equipment other than freehold land are carried at cost less accumulated depreciation and impairment losses. Cost of Self-constructed asset is determined using the same principles as for acquired assets after eliminating the component of internal profits.
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 attributable to such subsequent cost associated with the item will flow to the Company. All other repair and maintenance costs are recognised in Standalone statement of profit or loss as incurred.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of repairs and maintenance are recognised in the Standalone statement of profit and loss as incurred.
Advances paid towards the acquisition of property, plant and equipment outstanding at each reporting date is disclosed as capital advances under non-current assets.
Capital work-in-progress included in property, plant and equipment are not depreciated as these assets are not yet available for use.Any gain or loss on disposal of an item of property, plant and equipment is recognized in Standalone profit or loss.
Depreciation has been provided on written down value method in terms of expected life span of assets specified in Schedule - II of the Companies Act, 2013 or as determined by management. The company, based on technical assessment made by technical expert and management estimate, depreciates certain items of building, plant and equipment over estimated useful lives which are different from the useful life prescribed in Schedule II to the Companies Act, 2013. The management believes that these estimated useful lives are realistic and reflect fair approximation of the period over which the assets are likely to be used. The residual value and useful life are reviewed annually, and any deviation is accounted for as a change in estimate.
The estimated useful lives, residual values and depreciation method are reviewed at each financial year end and the effect of any change is accounted for on prospective basis.
The carrying amount of the all property, plant and equipment are derecognized on its disposal or when no future economic benefits are expected from its use or disposal and the gain or loss on de-recognition is recognized in the Standalone statement of profit & loss.
Acquired intangible assets are initially recognized at cost after deducting refundable purchase taxes and including the transaction cost, if any. After initial recognition, intangibles are carried at cost less accumulated amortization and impairment losses.
Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Computer software development costs for in-house developed software is recognised as assets are amortised on a written down value basis over their estimated useful life.
The estimated useful lives, residual values and amortization method are reviewed at each financial year end and the effect of any change is accounted for on prospective basis.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased Asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the statement of profit and loss. Contingent rentals are recognised as expenses in the periods in which they are incurred. Lease management fees, legal charges and other initial direct costs are capitalised.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the useful life of the asset and the lease term.
Operating lease payments are recognised as an expense in the Standalone statement of profit and loss on a straight-line basis over the lease term, except in case where lease rentals are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost.
Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of- use assets are also subject to impairment.
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in- substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. The Company''s lease liabilities are included in Interest-bearing loans and borrowings (see Note 40)
Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms.
Inventories consist of raw materials, packing materials, stores and spares, work-in-progress and finished goods and stock of traded goods, which are measured at the lower of cost and net realisable value.
Cost includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of finished goods and work-in- progress, cost includes an appropriate share of overheads based on normal operating capacity. Stores and spares, that do not qualify to be recognised as property, plant and equipment, consists of packing materials, engineering spares (such as machinery spare parts) and consumables, which are used in operating machines or consumed as indirect materials in the manufacturing process. The basis of measurement of cost is as follows:
(i) Raw Materials, Packing Materials and Stores & Spares: FIFO basis
(ii) Finished Goods: Cost of input plus appropriate overhead.
(iii) Work in Progress: Cost of input plus overhead up-to the stage of completion.
(iv) By- Products: At net realizable value
(v) Stock-In-Trade: FIFO Basis
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
1.15 Impairment of non-financial assets
The carrying amounts of the Company''s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or the cash-generating unit.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit").
An impairment loss is recognised in the standalone statement of profit and loss if the estimated recoverable amount of an asset or its cash-generating unit is lower than it is carrying amount.
Impairment losses, other than those recognized on goodwill, that have been recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
1.16 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent Liabilities
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Disputes, liabilities and claims against the company including claims raised by fiscal authorities (e.g. VAT, Income Tax, GST etc.) pending in appeal / court for which no reliable estimated can be made and or involves uncertainty of the outcome of the amount of the obligation or which are remotely poised for crystallization are not provided for in accounts but disclosed in notes to accounts.
Contingent Assets
Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.
Business combinations involving entities under common control are accounted for using the pooling of interest''s method. The net assets of the transferor entity or business are accounted at their carrying amounts on the date of the acquisition subject to necessary adjustments required to harmonize accounting policies. Any excess or shortfall of the consideration paid over the share capital of transferor entity or business is recognized as capital reserve under equity (refer note 46).
a. Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages, short term compensated absences etc., and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.
b. Post-Employment Benefits:
i) Defined Contribution Plans:
State governed Provident Fund Scheme and Employees State Insurance Scheme are defined contribution plans. The contribution paid / payable under the schemes is recognised during the period in which the employees render the related services.
ii) Defined Benefit Plans:
The Company has Defined Benefit Plan for post-employment benefit in the form of Gratuity for eligible Employees, which is administered through a Gratuity Policy with Life Insurance Corporation of India (L.I.C). Gratuity Liability based on actuarial valuation as per Ind AS 19. Liability recognized in the balance sheet in respect of gratuity is the present value of the defined benefit obligation at the end of each reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuary using the projected unit credit method. The present value of defined benefit is determined by discounting the estimated future cash outflows by reference to market yield at the end of each reporting period on government bonds that
have terms approximate to the terms of the related obligation. The 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. The cost is included in employee benefit expense in the standalone statement of profit and loss. Actuarial gain / loss arising from experience adjustments and changes in actuarial assumptions are credited / debited to "other comprehensive Income" forming part of other equity.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Initial Recognition and Measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit and loss, transaction costs that are attributable to the acquisition of the financial assets.
Financial assets are classified, at initial recognition, as financial assets measured at fair value or as financial assets measured at amortized cost.
Subsequent Measurement
For purpose of subsequent measurement financial assets are classified in two broad categories:
⢠Financial Assets at fair value
⢠Financial assets at amortized cost
Where assets that measured at fair value, gains and losses are either recognized entirely in the standalone statement of profit and loss or recognized in other comprehensive income.
A financial asset that meets the following two conditions is measured at amortized cost:
⢠Business Model Test: The objective of the company''s business model is to hold the financial asset to collect the contractual cash flows.
⢠Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.
A financial asset that meets the following two conditions is measured at fair value through OCI:
⢠Business Model Test: The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.
⢠Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.
All other financial asset is measured at fair value through profit and loss.
All equity investments are measured at fair value in the standalone balance sheet, with value changes recognized in the standalone statement of profit and loss, except for those equity investments for which the entity has elected irrevocable option to present value changes in OCI.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Company''s balance sheet) when:
⢠The rights to receive cash flows from the asset have expired, or
⢠The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass- through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115.
For this purpose, the Company follows ''simplified approach'' for recognition of impairment loss allowance on the trade receivable balances. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
All financial liabilities are initially recognized at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Financial liabilities are classified as measured at amortized cost or fair value through profit and loss (FVTPL). A financial liability is classified as FVTPL if it is classified as held for trading, or it is derivative or is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gain or losses, including any interest expense, are recognized in standalone statement of profit and loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in standalone statement of profit and loss.
The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the standalone statement of profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the net amount is reported in the standalonefinancial statements if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.20 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business and reflects Company''s unconditional right to consideration (that is, payment is due only on the passage of time). Trade receivables are recognised initially at the transaction price as they do not contain significant financing components. The Company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance.
1.22 Investment in subsidiaries
The investment in subsidiaries are carried in the standalone financial statements at historical cost except when the investment is classified as held for sale in which case it is accounted for as non -current assets held for sale and discontinued operations.
Investments in subsidiaries carried at cost are tested for impairment in accordance with Ind AS 36. Any impairment loss reduces the carrying value of the investment.
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts which are unsecured are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.
Borrowings are initially recognized at fair value, net of transaction cost incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in standalone statement of profit or loss.
Mar 31, 2018
1.1 Basis of Preparation of Financial Statements
(i) Corporate Information
Gulshan Polyols Limited (âGPLâ or âthe Companyâ) with a CIN number L24231UP2000PLC034918 is a domestic public limited company, listed in India with registered office situated at 9th K.M., Jansath Road, Muzaffarnagar -251001. GPL is a multi-location, multi-product manufacturing company and has become a market leader in most of its products in India with global presence in 42 countries, across 3 continents and having its registered office in Muzaffarnagar, Uttar Pradesh, India. Its business portfolio covers Starch, Starch Sugars, Calcium Carbonate, Alcohol business, Agro based Animal Feed & On-site PCC plants with production facilities at Muzaffarnagar in Uttar Pradesh, Bharuch in Gujarat, Dhaula Kuan in Himachal Pradesh, Abu Road in Rajasthan, Patiala in Punjab, Tribeni in West Bengal and Amlai in Madhya Pradesh. It caters to wide range of industry & niche markets in core sector encompassing pharmaceuticals, personal care products, footwear, tyres, rubber & plastics, paints, alcohol, value added paper, agrochemicals, food and agro products. Since inception, GPL is a dividend paying company and listed on National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange (âBSEâ).
(ii) Compliance with Ind-AS
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended).
For all periods up to and including the year ended 31st March, 2017, the Company prepared its financial statements in accordance with accounting standards notified under the Section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules 2014 (Indian GAAP). These financial statements for the year ended 31st March, 2018 are the first the Company has prepared in accordance with Ind AS. Refer Note No. 1.20 for information on how the Company has adopted Ind AS.
The financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair values or amortised cost depending upon classification
Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
1.2 Use of Estimates
The preparation of the financial statements in conformity with Ind AS requires the management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. The application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note No.1.5. Accounting estimates could change from period to period. Revision to accounting estimates are recognized in the period in which the estimates are revised and in any future period affected. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of the changes in circumstances surrounding the estimates.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date.
1.3 Current versus non-current classification
All assets and liabilities are classified into current and non-current based on the operating cycle of less than twelve months or based on the criteria of realisation/settlement within twelve months period from the balance sheet date.
1.4 Assessment of functional currency
These financial statements are presented in Indian rupees, which is also the functional currency of the Company. All financial information presented in Indian rupees has been rounded to the nearest lakhs.
1.5 Critical estimates and judgments
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 judgment in applying the Companyâs accounting policies.
This note provides an overview of the areas that involved a higher degree of judgment or complexity, and items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.
The areas involving critical estimates or judgment are:
- Estimation of Defined benefit obligation - refer Note No. 1.17
- Estimation of current tax expenses - refer Note No. 1.8
- Useful life of Property, plant and equipment - refer Note No. 1.10
- Valuation of Inventory - refer Note No. 1.14
- Provisions and Accruals - refer Note No. 1.16
- Contingencies - refer Note No. 1.16
1.6 Fair value measurement
The Company measures financial instruments at fair value as per Ind AS 113 at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1- Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2- Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
Level 3- Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs)
For assets and liabilities that are recognized in the financial statement on a recurring basis, the company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
1.7 Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Consequent to the introduction of Goods and Service Tax (GST) with effect from 1st July, 2017 Central Excise, Value added Tax (VAT) etc. have been subsumed into GST. In accordance with Indian Accounting Standard- 18 on Revenue and Schedule -III of the Companies Act, 2013, unlike Excise duties, levies like GST, VAT etc. are not part of Revenue.
(i) Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, sales tax and applicable trade discounts and volume rebates. Revenue includes shipping and handling costs billed to the customer.
(ii) Interest income
Interest income primarily comprises of interest from term deposits. Interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. Interest income is included in other income in the statement of profit and loss.
(iii) Dividend
Dividend income from investment is accounted for when the right to receive is established, which is generally when shareholders approve the dividend.
(iv) Other Income
Other income is recognised when no significant uncertainty as to its determination or realisation exists.
(v) Export Incentives
Export incentives are recognised when the incentives are be received from the government authorities.
Export entitlements from government authorities under the Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS), Duty Draw Back scheme are recognised in the statement of profit and loss based on receipt of the scrip from the government authorities.
1.8 Taxes
Tax expenses comprise of current and deferred tax:
Current income tax
a. Current tax is measured at the amount expected to be paid on the basis of reliefs and deductions available in accordance with the provisions of the Income Tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
b. Current tax items are recognised in correlation to the underlying transaction either in P&L, OCI or directly in equity.
Deferred tax
a. Deferred tax is provided using the balance sheet approach on differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
b. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible differences, and the carry forward of unused tax credits and unused tax losses can be utilised.
c. The tax rates and tax laws used to compute the tax are those that are enacted or substantively enacted at the reporting date.
d. Current and Deferred Tax are recognised in the Statement of Profit and Loss except to items recognised directly in Other Comprehensive income or equity, in which case the deferred tax is recognised in Other Comprehensive Income and equity respectively.
e. The Company recognizes tax credits in the nature of MAT credit as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which tax credit is allowed to be carried forward. In the year in which the Company recognizes tax credits as an asset, the said asset is created by way of tax credit to the Statement of Profit and Loss. The Company reviews such tax credit asset at each reporting date and writes down the asset to the extent, the Company does not have convincing evidence that it will pay normal tax during the specified period.
1.9 Earnings per share
The Company presents basic and diluted earnings per share (âEPSâ) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.
1.10 Property, Plant and Equipment Recognition and measurement
Property, plant and equipment are initially recognized at cost after deducting refundable purchase taxes and including the cost directly attributable to bring the asset to the location and conditions necessary for it to be capable of operating in the manner intended by the management, borrowing cost in accordance with the established accounting policy, cost of restoring and dismantling, if any, initially estimated by the management.
After the initial recognition the property, plant and equipment are carried at cost less accumulated depreciation and impairment losses. Cost of Self-constructed assets is determined using the same principles as for acquired assets after eliminating the component of internal profits.
Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.
On transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as at 1st April 2016, measured as per the previous GAAP, and use that carrying value as the deemed cost of such property, plant and equipment.
Depreciation has been provided on written down value method in terms of expected life span of assets specified in Schedule - II of the Companies Act, 2013 or as determined by management. The residual value and useful life is reviewed annually and any deviation is accounted for as a change in estimate.
Cost of leasehold land are written off over the primary lease period of the land except of the leasehold land, held by the company on the date of transition, which is amortized over the remaining useful lives of the assets. Freehold land is not depreciated.
The estimated useful lives, residual values and depreciation method are reviewed at each financial year end and the effect of any change is accounted for on prospective basis.
The carrying amount of the all property, plant and equipment are derecognized on its disposal or when no future economic benefits are expected from its use or disposal and the gain or loss on de-recognition is recognized in the statement of profit & loss.
1.11 Intangible Assets
Acquired Intangible assets are initially recognized at cost after deducting refundable purchase taxes and including the transaction cost, if any. After initial recognition, intangibles are carried at cost less accumulated amortization and impairment losses.
Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Computer software development costs for in-house developed software is recognised as assets are amortised on a written down value basis over their estimated useful life.
The estimated useful lives, residual values and amortization method are reviewed at each financial year end and the effect of any change is accounted for on prospective basis.
1.12 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
1.13 Leases
At the inception of each lease, the lease arrangement is classified as either a finance lease or an operating lease, based on the substance of the lease arrangement. An arrangement that does not take legal form of lease rent but conveys right to use an asset in return for payment or series of payment, is also accounted for as either finance lease or an operating lease.
Finance Leases
A finance lease is recognised as an asset and a liability at the commencement of the lease, at the lower of the fair value of the asset and the present value of the minimum lease payments. Initial direct costs, if any, are also capitalised and, subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability.
Depreciation on leasehold assets is provided on straight line method over the period of lease.
Operating Leases
Leases other than finance leases are operating leases, and the leased assets are not recognised on the Companyâs balance sheet. Payments made under operating leases are recognised in the statement of profit and loss on a straight-line basis over the term of the lease, in case the lease increments are not in line with the general inflation rate.
1.14 Inventories
Inventories consist of raw materials, packing materials, stores and spares, work-in-progress and finished goods and stock of traded goods, which are measured at the lower of cost and net realisable value.
Cost includes expenditures incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of finished goods and work-in-progress, cost includes an appropriate share of overheads based on normal operating capacity. Stores and spares, that do not qualify to be recognised as property, plant and equipment, consists of packing materials, engineering spares (such as machinery spare parts) and consumables, which are used in operating machines or consumed as indirect materials in the manufacturing process. The basis of measurement of cost is as follows:
(i) Raw Materials, Packing Materials And Stores & Spares : FIFO basis
(ii) Finished Goods: Cost of input plus appropriate overhead.
(iii) Work In Progress : Cost of input plus overhead up-to the stage of completion.
(iv) By- Products : At net realizable value
(v) Stock-In-Trade : FIFO Basis
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
1.15 Impairment of non-financial assets
The carrying amounts of the Companyâs non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assetâs recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or the cash-generating unit.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ).
An impairment loss is recognised in the statement of profit and loss if the estimated recoverable amount of an asset or its cash-generating unit is lower than its carrying amount.
Impairment losses, other than those recognized on goodwill, that have been recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
1.16 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent Liabilities
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Disputes, liabilities and claims against the company including claims raised by fiscal authorities (e.g. Sales Tax, Income Tax Excise etc.) pending in appeal / court for which no reliable estimated can be made and or involves uncertainty of the outcome of the amount of the obligation or which are remotely poised for crystallization are not provided for in accounts but disclosed in notes to accounts.
Contingent Assets
Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an inflow of economic benefits will arise, the asset and related income are recognised in the period in which the change occurs.
1.17 Employee benefits
a. Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, short term compensated absences etc., and the expected cost of bonus, ex-gratia are recognized in the period in which the employee renders the related service.
b. Post-Employment Benefits:
i) Defined Contribution Plans:
State governed Provident Fund Scheme and Employees State Insurance Scheme are defined contribution plans. The contribution paid / payable under the schemes is recognised during the period in which the employees render the related services.
ii) Defined Benefit Plans:
The Company has Defined Benefit Plan for post-employment benefit in the form of Gratuity for eligible Employees, which is administered through a Gratuity Policy with Life Insurance Corporation of India (L.I.C). Gratuity Liability on the basis of actuarial valuation as per Ind AS 19. Liability recognized in the balance sheet in respect of gratuity is the present value of the defined benefit obligation at the end of each reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuary using the projected unit credit method. The present value of defined benefit is determined by discounting the estimated future cash outflows by reference to market yield at the end of each reporting period on government bonds that have terms approximate to the terms of the related obligation. The 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. The cost is included in employee benefit expense in the statement of profit and loss. Actuarial gain / loss arising from experience adjustments and changes in actuarial assumptions are credited / debited to âother comprehensive Incomeâ forming part of other equity.
1.18 Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial Assets
Initial Recognition and Measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit and loss, transaction costs that are attributable to the acquisition of the financial assets.
Financial assets are classified, at initial recognition, as financial assets measured at fair value or as financial assets measured at amortized cost.
Subsequent Measurement
For purpose of subsequent measurement financial assets are classified in two broad categories:
- Financial Assets at fair value
- Financial assets at amortized cost
Where assets that measured at fair value, gains and losses are either recognized entirely in the statement of profit and loss, or recognized in other comprehensive income.
A financial asset that meets the following two conditions is measured at amortized cost:
- Business Model Test: The objective of the companyâs business model is to hold the financial asset to collect the contractual cash flows.
- Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.
A financial asset that meets the following two conditions is measured at fair value through OCI:
- Business Model Test: The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.
- Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.
All other financial asset is measured at fair value through profit and loss.
All equity investments are measured at fair value in the balance sheet, with value changes recognized in the statement of profit and loss, except for those equity investment for which the entity has elected irrevocable option to present value changes in OCI.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Companyâs balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 18.
For this purpose, the Company follows âsimplified approachâ for recognition of impairment loss allowance on the trade receivable balances. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
Financial Liabilities:
All financial liabilities are initially recognized at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
Financial liabilities are classified as measured at amortized cost or fair value through profit and loss (FVTPL). A financial liability is classified as FVTPL if it is classified as held for trading, or it is derivative or is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gain or losses, including any interest expense, are recognized in statement of profit and loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in statement of profit and loss.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
1.19 Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Companyâs cash management.
1.20 Note on First Time Adoption of Ind AS
These financial statements, for the year ended 31st March 2018, are the first time the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31st March 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).
Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on 31st March 2018, together with the comparative period data as at and for the year ended 31st March 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Companyâs opening balance sheet was prepared as at 1st April 2016, the Companyâs date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1st April 2016 and the financial statements as at and for the year ended 31st March 2017.
Exemptions availed:
Set out below are the applicable Ind AS 101 optional exemptions applied in the transition from Indian GAAP to Ind AS.
Optional exemptions
a) Deemed cost
Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the Indian GAAP and use that as its deemed cost as at the date of transition. Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their Indian GAAP carrying values.
b) Leases
The Company does not have any arrangements containing a lease as defined under Appendix C to Ind AS 17, âDetermining whether an arrangement contains a leaseâ. Consequently, this exemption is not applicable to the Company.
c) Business Combinations
Ind AS 103, Business Combinations has not been applied to acquisitions, which are considered businesses under Ind AS that occurred before 1st April 2016. Use of this exemption means that the Indian GAAP carrying amounts of assets and liabilities, that are required to be recognized under Ind AS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with respective Ind AS. The Company recognises all assets acquired and liabilities assumed in a past business combination, except (i) certain financial assets and liabilities that were derecognised and that fall under the derecognition exception, and (ii) assets (including goodwill) and liabilities that were not recognised in the acquirerâs balance sheet under its previous GAAP and that would not qualify for recognition under Ind AS in the individual balance sheet of the acquiree. Assets and liabilities that do not qualify for recognition under Ind AS are excluded from the opening Ind AS balance sheet. The Company did not recognise or exclude any previously recognised amounts as a result of Ind AS recognition requirements.
d) Long term foreign currency monetary items
The Company continues the policy of capitalising exchange difference arising on translation of long term foreign currency monetary items.
The outstanding Foreign Currency Term Loan (FCTL) availed for acquisition of fixed assets has been revalued as per the foreign exchange rate as on 31-3-2018 and derivatives booked to hedge these loans. The revaluation has resulted in foreign exchange difference of Rs.26.98 lakhs, the same has been capitalized to fixed assets and FCTL increased by the same amount.
Mandatory exceptions
e) Estimates
An entityâs estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with Indian GAAP [after adjustments to reflect any difference in accounting policies], unless there is objective evidence that those estimates were in error.
Ind AS estimates as at 1st April, 2016 and 31st March, 2017 are consistent with the estimates as at the same date made in conformity with Indian GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under Indian GAAP:
a) Investment in equity instruments carried at Fair Value.
b) Classification and measurement of financial assets
Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.
c) De-recognition of financial assets and liabilities
Ind AS 101 requires at first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entityâs choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.
The Company has prepared a reconciliation of the amounts of net profit as reported under the Indian GAAP to those computed as per Ind AS and the same is given in note below. The Company has also prepared a reconciliation of the amounts of total equity as reported under the Indian GAAP to those computed as per lnd AS and the same is given in note below.
Mar 31, 2015
1.1 Basis of Preparation of Financial Statements
The Financial Statements have been prepared in accordance with the
applicable Accounting Standards issued by the Institute of Chartered
Accountants of India and the relevant disclosure requirements of the
Companies Act, 2013 under historical cost convention and on the basis
of going concern.
Accounting policies not specifically referred to otherwise are
consistent and are in consonance with generally accepted accounting
principles followed by the company.
1.2 Fixed Assets
Fixed Assets are stated at acquisition cost (net of modvat/cenvat if
any) including directly attributable cost of bringing them to their
respective working conditions for the intended use less accumulated
depreciation. Assets acquired on Hire Purchase are stated at their cash
values. The cost of acquisition in respect of fixed assets pertaining
to amalgamated company (Gulshan Sugars & Chemicals Ltd) as on appointed
date i.e. April 1,2007 is the value at which these were standing in the
books of transferor (GSCL) Company.
1.3 Depreciation
Depreciation on fixed Assets is provided to the extent of depreciable
amount on Written Down Value Method as specified in Part C of Schedule
II of Companies Act 2013. Depreciation is provided on useful life of
the assets as technically assessed.
1.4 Impairment
The Management periodically assesses, using external and internal
sources, whether there is an indication that an asset may be impaired.
An impairment loss is recognized wherever the carrying value of an
asset exceeds its recoverable amount. The recoverable amount is higher
of the asset's net selling price and value in use, which means the
present value of future cash flows expected to arise from the
continuing use of the asset and its eventual disposal.
1.5 Inventory Valuation
The company has valued its inventory on "cost or net realizable value
whichever is lower" basis and is in compliance with the Accounting
Standard-2 issued by ICAI . However, stock-in-process has been valued
on estimated cost. Further, the valuation of inventory is inclusive of
Excise Duty component wherever applicable as required u/s 145A of the
Income Tax Act, 1961.
1.6 Consumption of Raw Materials, Stores, Fuels, Chemicals, Consumables
& Packing are accounted for after reckoning the Closing Stock of
respective items as ascertained by the Company's experts at the end of
the year from the total of the Opening Stock and purchases.
1.7 Revenue Recognition
The Company follows mercantile system of accounting where all the
Income and Expenditure items having material bearing on the financial
statements are recognized on accrual basis.
1.8 Foreign Currency Transactions
(i) Transactions denominated in foreign currencies are normally
recorded at the exchange rate prevailing at the time of the
transaction.
(ii) Any income or expense on account of exchange difference either on
settlement or on transaction is recognized in the Profit & Loss Account
except in the case of long term liabilities, where they related to
acquisition of fixed assets in which case they are adjusted to the
carrying cost of such assets and corresponding effect of long term
liabilities.
1.9 Retirement Benefits
The retirement benefits such as Contribution to Provident Fund, Leave
encashment etc. are accounted for on accrual basis and the payment and
provision for Gratuity is made on the basis of actuarial valuation done
by life Insurance Corporation of India.
1.10 Excise Duty
Excise Duty is recognized at the point of Production and the value of
finished goods lying in the factory as well as at depots are inclusive
of Excise Duty. Other inventories are also inclusive of Excise Duty
Component wherever applicable.
1.11 Turnover
Turnover include sale of goods, excise duty, trade/sales tax and other
recoverable expenses.
1.12 Borrowing Costs
Borrowing cost that is attributable to the acquisition or construction
of qualifying asset is capitalized as part of the cost of such asset. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to revenue.
1.13 Provision for Current & Deferred Tax
The provision for Current Tax is made after taking into consideration
benefits admissible under the provisions of Income Tax Act, 1961. The
deferred tax liability as per Accounting Standard (AS-22) resulting
from "timing difference" between book and taxable profit is accounted
for using the tax rates and laws that have been enacted or subsequently
enacted as on the Balance Sheet date. The deferred tax Asset/credit is
recognized and carried forward only to the extent that there is a
reasonable certainty that the asset will be realized in future.
1.14 Investments
The Investments being long-term investments are valued at cost, after
providing for any diminution in value, if such diminution is of a
permanent nature.
1.15 The interest accrued and due on secured and unsecured loans have
been paid on due dates. Therefore, the amount outstanding is Nil and
has not been disclosed under respective heads.
Mar 31, 2014
1.1 Basis of Preparation
The Financial Statements have been prepared in accordance with the
applicable Accounting Standards issued by the Institute of Chartered
Accountants of India and the relevant disclosure requirements of the
Companies Act, 1956 under historical cost convention and on the basis
of going concern.
Accounting policies not specifically referred to otherwise are
consistent and are in consonance with generally accepted accounting
principles followed by the company.
1.2 Fixed Assets
Fixed Assets are stated at acquisition cost (net of modvat/cenvat if
any) including directly attributable cost of bringing them to their
respective working conditions for the intended use less accumulated
depreciation. Assets acquired on Hire Purchase are stated at their cash
values. The cost of acquisition in respect of fixed assets pertaining
to amalgamated company (Gulshan Sugars & Chemicals Ltd) as on appointed
date i.e. April 1, 2007 is the value at which these were standing in
the books of transferor (GSCL) Company.
1.3 Depreciation
Depreciation on fixed Assets have been Provided on Written Down Method
basis in accordance with the provisions of schedule XIV of the
Companies Act 1956.
1.4 Inventory Valuation
The company has valued its inventory on "cost or net realizable value
whichever is lower" basis and is in compliance with the Accounting
Standard-2 issued by ICAI . However, stock-in-process has been valued
on estimated cost. Further, the valuation of inventory is inclusive of
Excise Duty component wherever applicable as required u/s 145A of the
Income Tax Act, 1961.
1.5 Consumption of Raw Materials, Stores, Fuels, Chemicals, Consumables
& Packing are accounted for after reckoning the Closing Stock of
respective items as ascertained by the Company''s experts at the end of
the year from the total of the Opening Stock and purchases.
1.6 Revenue Recognition
The Company follows mercantile system of accounting where all the
Income and Expenditure items having material bearing on the financial
statements are recognized on accrual basis.
1.7 Foreign Currency Transactions
(i) Transactions denominated in foreign currencies are normally
recorded at the exchange rate prevailing at the time of the
transaction.
(ii) Any income or expense on account of exchange difference either on
settlement or on transaction is recognized in the Profit & Loss Account
except in the case of long term liabilities, where they related to
acquisition of fixed assets in which case they are adjusted to the
carrying cost of such assets and corresponding effect of long term
liabilities.
1.8 Retirement Benefits
The retirement benefits such as Contribution to Provident Fund, Leave
encashment etc. are accounted for on accrual basis and the payment and
provision for Gratuity is made on the basis of actuarial valuation done
by life Insurance Corporation of India.
1.9 Excise Duty
Excise Duty is recognized at the point of Production and the value of
finished goods lying in the factory as well as at depots are inclusive
of Excise Duty. Other inventories are also inclusive of Excise Duty
Component wherever applicable.
1.10 Turnover
Turnover include sale of goods, excise duty, trade/sales tax and other
recoverable expenses.
1.11 Borrowing Costs
Borrowing cost that is attributable to the acquisition or construction
of qualifying asset is capitalized as part of the cost of such asset. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to revenue.
1.12 Provision for Current & Deferred Tax
The provision for Current Tax is made after taking into consideration
benefits admissible under the provisions of Income Tax Act, 1961. The
deferred tax liability as per Accounting Standard (AS-22) resulting
from "timing difference" between book and taxable profit is accounted
for using the tax rates and laws that have been enacted or subsequently
enacted as on the Balance Sheet date. The deferred tax Asset/credit is
recognized and carried forward only to the extent that there is a
reasonable certainty that the asset will be realized in future.
1.13 Investments
The Investments being long-term investments are valued at cost, after
providing for any diminution in value, if such diminution is of a
permanent nature.
1.14 The interest accrued and due on secured and unsecured loans fall
due on 31st March, 2014 and have been paid/ provided on that date.
Therefore, the amount outstanding is Nil and has not been disclosed
under respective heads.
(a). During the year ended 31st March, 2009, the Company has allotted
21,35,407 Equity Shares of Rs. 5 each fully paid-up to the share
holders of erstwhile Gulshan Sugars and Chemicals Limited pursuant
to the Scheme of Amalgamation without payment being received in cash.
(b). During the year ended 31st March, 2011, the Company has allotted
1,00,697 Equity Shares of Rs. 5 each fully paid-up to the share
holders of erstwhile Salil Industries Limited pursuant to the Scheme
of Amalgamation without payment being received in cash.
(c). Terms of Authorised Preference Share Capital has been changed
in last annual general meeting i.e. 25-09-2010 in which dividend
rate varying from 0% to 10% and redemption period varing from 3rd
year to maximum 15th year from the date of the issue.
(d). Terms of redemption of 10,25,000 issued Preference Share
Rs. 100/- each has been fixed, the period of redemption will be
12th year from the date of its issue on 8% dividend rate effective
from 1st April, 2011.
(a). The Working Capital Loan is secured by the Hypothecation of
Present and Future stock of Raw Materials, Stores, Stock in Process ,
Chemicals and Consumables , Fuels, Packing , Finished Goods etc. and
Book Debts of the Compnay.
The Loan is further secured by way of a Second Charge on Fixed Assets
of the Company, persona gurantee of Promoter Director of the Company.
The aforesaid loan is also secured by the Corporate gurantee of M/s
Gulshan Holdings Pvt. Ltd.
(a). Other loans and advances mainly include prepaid expenses,
advances to suppliers and service providers, advance and loans to
employees, CENVAT/ VAT/ Service Tax credit receivable, etc.
Mar 31, 2013
1.1 Basis of Preparation
The Financial Statements have been prepared in accordance with the
applicable Accounting Standards issued by the Institute of Chartered
Accountants of India and the relevant disclosure requirements of the
Companies Act, 1956 under historical cost convention and on the basis
of going concern.
Accounting policies not specifically referred to otherwise are
consistent and are in consonance with generally accepted accounting
principles followed by the company.
1.2 Fixed Assets
Fixed Assets are stated at acquisition cost (net of modvat/cenvat if
any) including directly attributable cost of bringing them to their
respective working conditions for the intended use less accumulated
depreciation. Assets acquired on Hire Purchase are stated at their cash
values. The cost of acquisition in respect of fixed assets pertaining
to amalgamated company (Gulshan Sugars & Chemicals Ltd) as on appointed
date i.e. April 1, 2007 is the value at which these were standing in
the books of transferor (GSCL) Company. These include certain assets
which were earlier revalued and the cost of such assets includes the
resultant surplus.
1.3 Depreciation
Depreciation on fixed Assets have been Provided on Written Down Method
basis in accordance with the provisions of schedule XIV of the
Companies Act 1956.
1.4 Inventory Valuation
The company has valued its inventory on "cost or net realizable value
whichever is lower" basis and is in compliance with the Accounting
Standard-2 issued by ICAI . However, stock-in-process has been valued
on estimated cost. Further, the valuation of inventory is inclusive of
Excise Duty component wherever applicable as required u/s 145A of the
Income Tax Act, 1961.
1.5 Consumption of Raw Materials, Stores, Fuels, Chemicals, Consumables
& Packing are accounted for after reckoning the Closing Stock of
respective items as ascertained by the Company''s experts at the end of
the year from the total of the Opening Stock and purchases.
1.6 Revenue Recognition
The Company follows mercantile system of accounting where all the
Income and Expenditure items having material bearing on the financial
statements are recognized on accrual basis.
1.7 Foreign Currency Transactions
(i) Transactions denominated in foreign currencies are normally
recorded at the exchange rate prevailing at the time of the
transaction.
(ii) Any income or expense on account of exchange difference either on
settlement or on transaction is recognized in the Profit & Loss Account
except in the case of long term liabilities, where they related to
acquisition of fixed assets in which case they are adjusted to the
carrying cost of such assets and corresponding effect of long term
liabilities.
1.8 Retirement Benefits
The retirement benefits such as Contribution to Provident Fund, Leave
encashment etc. are accounted for on accrual basis and the payment and
provision for Gratuity is made on the basis of actuarial valuation done
by life Insurance Corporation of India.
1.9 Excise Duty
Excise Duty is recognized at the point of Production and the value of
finished goods lying in the factory as well as at depots are inclusive
of Excise Duty. Other inventories are also inclusive of Excise Duty
Component wherever applicable.
1.10 Turnover
Turnover include sale of goods, excise duty, trade/sales tax and other
recoverable expenses.
1.11 Borrowing Costs
Borrowing cost that is attributable to the acquisition or construction
of qualifying asset is capitalized as part of the cost of such asset. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to revenue.
1.12 Provision for Current & Deferred Tax
The provision for Current Tax is made after taking into consideration
benefits admissible under the provisions of Income Tax Act, 1961. The
deferred tax liability as per Accounting Standard (AS-22) resulting
from "timing difference" between book and taxable profit is accounted
for using the tax rates and laws that have been enacted or subsequently
enacted as on the Balance Sheet date. The deferred tax Asset/credit is
recognized and carried forward only to the extent that there is a
reasonable certainty that the asset will be realized in future.
1.13 Investments
The Investments being long-term investments are valued at cost, after
providing for any diminution in value, if such diminution is of a
permanent nature.
1.14 The interest accrued and due on secured and unsecured loans fall
due on 31st March, 2013 and have been paid/ provided on that date.
Therefore, the amount outstanding is Nil and has not been disclosed
under respective heads.
Mar 31, 2012
1.1 Basis of Preparation
The Financial Statements have been prepared in accordance with the
applicable Accounting Standards issued by the Institute of Chartered
Accountants of India and the relevant disclosure requirements of the
Companies Act, 1956 under historical cost convention and on the basis
of going concern.
Accounting policies not specifically referred to otherwise are
consistent and are in consonance with generally accepted accounting
principles followed by the company.
1.2 Fixed Assets
Fixed Assets are stated at acquisition cost (net of modvat/cenvat if
any) including directly attributable cost of bringing them to their
respective working conditions for the intended use less accumulated
depreciation. Assets acquired on Hire Purchase are stated at their cash
values. The cost of acquisition in respect of fixed assets pertaining
to amalgamated company (Gulshan Sugars & Chemicals Ltd) as on appointed
date i.e. April 1, 2007 is the value at which these were standing in
the books of transferor (GSCL) Company. These include certain assets
which were earlier revalued and the cost of such assets includes the
resultant surplus.
1.3 Depreciation
Depreciation on fixed Assets have been Provided on Written Down Method
basis in accordance with the provisions of schedule XIV of the
Companies Act 1956.
1.4 Inventory Valuation
The company has valued its inventory on "cost or net realizable value
whichever is lower" basis and is in compliance with the Accounting
Standard-2 issued by ICAI . However, stock-in-process has been valued
on estimated cost. Further, the valuation of inventory is inclusive of
Excise Duty component wherever applicable as required u/s 145A of the
Income Tax Act, 1961.
1.5 Consumption of Raw Materials, Stores, Fuels, Chemicals, Consumables
& Packing are accounted for after reckoning the Closing Stock of
respective items as ascertained by the Company's experts at the end of
the year from the total of the Opening Stock and purchases.
1.6 Revenue Recognition
The Company follows mercantile system of accounting where all the
Income and Expenditure items having material bearing on the financial
statements are recognized on accrual basis.
1.7 Foreign Currency Transactions
(i) Transactions denominated in foreign currencies are normally
recorded at the exchange rate prevailing at the time of the
transaction.
(ii) Any income or expense on account of exchange difference either on
settlement or on transaction is recognized in the Profit & Loss Account
except in the case of long term liabilities where they related to
acquisition of fixed assets in which case they are adjusted to the
carrying cost of such assets and corresponding effect of long term
liabilities.
1.8 Retirement Benefits
The retirement benefits such as Contribution to Provident Fund, Leave
encashment etc. are accounted for on accrual basis and the payment and
provision for Gratuity is made on the basis of actuarial valuation done
by life Insurance Corporation of India.
1.9 Excise Duty
Excise Duty is recognized at the point of Production and the value of
finished goods lying in the factory as well as at depots are inclusive
of Excise Duty. Other inventories are also inclusive of Excise Duty
Component wherever applicable.
1.10 Turnover
Turnover include sale of goods, excise duty, trade/sales tax and other
recoverable expenses.
1.11 Borrowing Costs
Borrowing cost that is attributable to the acquisition or construction
of qualifying asset is capitalized as part of the cost of such asset. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to revenue.
1.12 Provision for Current & Deferred Tax
The provision for Current Tax is made after taking into consideration
benefits admissible under the provisions of Income Tax Act, 1961. The
deferred tax liability as per Accounting Standard (AS-22) resulting
from "timing difference" between book and taxable profit is
accounted for using the tax rates and laws that have been enacted or
subsequently enacted as on the Balance Sheet date. The deferred tax
Asset/credit is recognized and carried forward only to the extent that
there is a reasonable certainty that the asset will be realized in
future.
1.13 Investments
The Investments being long-term investments are valued at cost, after
providing for any diminution in value, if such diminution is of a
permanent nature.
1.14 The interest accrued and due on secured and unsecured loans fall
due on 31st March, 2011 and have been paid/ provided on that date.
Therefore, the amount outstanding is Nil and has not been disclosed
under respective heads.
Mar 31, 2011
1. Basis of Preparation
The Financial Statements have been prepared in accordance with the
applicable Accounting Standards issued by the Institute of Chartered
Accountants of India and the relevant disclosure requirements of the
Companies Act, 1956 under historical cost convention and on the basis
of going concern.
Accounting policies not specifically referred to otherwise are
consistent and are in consonance with generally accepted accounting
principles followed by the company.
2. Fixed Assets
Fixed Assets are stated at acquisition cost (net of modvat/cenvat if
any) including directly attributable cost of bringing them to their
respective working conditions for the intended use less accumulated
depreciation. Assets acquired on Hire Purchase are stated at their cash
values. The cost of acquisition in respect of fixed assets pertaining to
amalgamated company (Gulshan Sugars & Chemicals Ltd) as on appointed
date i.e. April 1st, 2007 is the value at which these were standing in
the books of transferor (GSCL) Company. These include certain assets
which were earlier revalued and the cost of such assets includes the
resultant surplus.
3. Depreciation
Depreciation on fixed Assets have been Provided on Written Down Method
basis in accordance with the provisions of schedule XIV of the
Companies Act 1956.
4. Inventory Valuation
The company has valued its inventory on "cost or net realizable value
whichever is lower" basis and is in compliance with the Accounting
Standard-2 issued by ICAI . However, stock-in-process has been valued
on estimated cost. Further, the valuation of inventory is inclusive of
Excise Duty component wherever applicable as required u/s 145A of the
Income Tax Act, 1961.
5. Consumption of Raw Materials, Stores, Fuels, Chemicals, Consumables
& Packing are accounted for after reckoning the Closing Stock of
respective items as ascertained by the Company''s experts at the end of
the year from the total of the Opening Stock and purchases.
6. Revenue Recognition
The Company follows mercantile system of accounting where all the
Income and Expenditure items having material bearing on the financial
statements are recognized on accrual basis.
7. Foreign Currency Transactions
(i) Transactions denominated in foreign currencies are normally
recorded at the exchange rate prevailing at the time of the
transaction.
(ii) Any income or expense on account of exchange difference either on
settlement or on transaction is recognized in the Profit & Loss Account.
8. Retirement Benefits
The retirement benefits such as Contribution to Provident Fund, Leave
encashment etc. are accounted for on accrual basis and the payment and
provision for Gratuity is made on the basis of actuarial valuation done
by life Insurance Corporation of India.
9. Excise Duty
Excise Duty is recognized at the point of Production and the value of
finished goods lying in the factory as well as at depots are inclusive
of Excise Duty. Other inventories are also inclusive of Excise Duty
Component wherever applicable.
10. Miscellaneous Expenditure
(a) Expenditure being in the nature of preliminary expenses are
amortized over the period as prescribed u/s 35-D of the Income Tax Act,
1961.
(b) Expenditure incurred on various heads against which the benefit is
to flow into future period is treated as deferred revenue expenditure
and are charged to revenue account over the expended duration of
benefit.
11. Turnover
Turnover include sale of goods, excise duty, trade/sales tax and other
recoverable expenses.
12. Borrowing Costs
Borrowing cost that is attributable to the acquisition or construction
of qualifying asset is capitalized as part of the cost of such asset. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to revenue.
13. Provision for Current & Deferred Tax
The provision for Current Tax is made after taking into consideration
benefits admissible under the provisions of Income Tax Act, 1961. The
deferred tax liability as per Accounting Standard (AS-22) resulting
from "timing difference" between book and taxable profit is accounted
for using the tax rates and laws that have been enacted or subsequently
enacted as on the Balance Sheet date. The deferred tax Asset/credit is
recognized and carried forward only to the extent that there is a
reasonable certainty that the asset will be realized in future.
14. Investments
The Investments being long-term investments are valued at cost, after
providing for any diminution in value, if such diminution is of a
permanent nature.
15. The interest accrued and due on secured and unsecured loans fall
due on 31st March, 2011 and have been paid/ provided on that date.
Therefore, the amount outstanding is Nil and has not been disclosed
under respective heads.
Mar 31, 2010
1. Basis of Preparation
The Financial Statements have been prepared in accordance with the
applicable Accounting Standards issued by the Institute of Chartered
Accountants of India and the relevant disclosure requirements of the
Companies Act, 1956 under historical cost convention and on the basis
of going concern.
Accounting policies not specifically referred to otherwise are
consistent and are in consonance with generally accepted accounting
principles followed by the company.
2. Fixed Assets
Fixed Assets are stated at acquisition cost (net of modvat/cenvat if
any) including directly attributable cost of bringing them to their
respective working conditions for the intended use less accumulated
depreciation. Assets acquired on Hire Purchase are stated at their cash
values. The cost of acquisition in respect of fixed assets pertaining
to amalgamated company (Gulshan Sugars & Chemicals Ltd) as on appointed
date i.e. April 1, 2007 is the value at which these were standing in
the books of transferor (GSCL) Company. These include certain assets
which were earlier revalued and the cost of such assets includes the
resultant surplus.
3. Depreciation
Depreciation on fixed Assets have been Provided on Written Down Method
basis in accordance with the provisions of schedule XIV of the
Companies Act 1956.Company have Changed the Method of Charging
Depreciation from Straight Line Method to Written Down Method from this
Year.
4. Inventory Valuation
The company has valued its inventory on "cost or net realizable value
whichever is lower" basis and is in compliance with the Accounting
Standard-2 issued by ICAI . However, stock-in-process has been valued
on estimated cost. Further, the valuation of inventory is inclusive of
Excise Duty component wherever applicable as required u/s 145A of the
Income Tax Act, 1961.
5. Consumption of Raw Materials, Stores, Fuels, Chemicals, Consumables
& Packing are accounted for after reckoning the Closing Stock of
respective items as ascertained by the Companys experts at the end of
the year from the total of the Opening Stock and purchases.
6. Revenue Recognition
The Company follows mercantile system of accounting where all the
Income and Expenditure items having material bearing on the financial
statements are recognized on accrual basis.
7. Foreign Currency Transactions
(i) Transactions denominated in foreign currencies are normally
recorded at the exchange rate prevailing at the time of the
transaction.
(ii) Any income or expense on account of exchange difference either
on settlement or on transaction is recognized in the Profit & Loss
Account.
8. Retirement Benefits
The retirement benefits such as Contribution to Provident Fund, Leave
encashment etc. are accounted for on accrual basis and the payment and
provision for Gratuity is made on the basis of actuarial valuation done
by life Insurance Corporation of India.
9. Excise Duty
Excise Duty is recognized at the point of Production and the value of
finished goods lying in the factory as well as at depots are inclusive
of Excise Duty. Other inventories are also inclusive of Excise Duty
Component wherever applicable.
10. Miscellaneous Expenditure
(a) Expenditure being in the nature of preliminary expenses are
amortized over the period as prescribed u/s 35-D of the Income Tax Act,
1961.
(b) Expenditure incurred on various heads against which the benefit is
to flow into future period is treated as deferred revenue expenditure
and are charged to revenue account over the expended duration of
benefit.
11. Turnover
Turnover include sale of goods, excise duty, trade/sales tax and other
recoverable expenses.
12. Borrowing Costs
Borrowing cost that is attributable to the acquisition or construction
of qualifying asset is capitalized-as part of the cost of such asset. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to revenue.
13. Provision for Current & Deferred Tax
The provision for Current Tax is made after taking into consideration
benefits admissible under the provisions of Income Tax Act, 1961. The
deferred tax liability as per Accounting Standard (AS-22) resulting
from "timing difference" between book and taxable profit is accounted
for using the tax rates and laws that have been enacted or subsequently
enacted as on the Balance Sheet date. The deferred tax Asset/credit is
recognized and carried forward only to the extent that there is a
reasonable certainty that the asset will be realized in future.
14. Investments
The Investments being long-term investments are valued at cost, after
providing for any diminution in value, if such diminution is of a
permanent nature.
15. The interest accrued and due on secured and unsecured loans fall
due on 31st March, 2010 and have been paid/ provided on that date.
Therefore, the amount outstanding is Nil and has not been disclosed
under respective heads.
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