Mar 31, 2023
1. Company Information
HEG Limited (referred to as ''the Company" hereinafter), incorporated in 1972, is a leading manufacturer and exporter of graphite electrodes in India and operates world''s largest single-site integrated graphite electrodes plant. The Company also operates three power generation facilities with a total capacity of about 76.5 MW.
The Company is a public limited company incorporated and domiciled in India, has its registered office at Mandideep, Bhopal, Madhya Pradesh and is listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
The standalone Ind AS financial statements are approved for issue by the Company''s Board of directors in their meeting held on 22nd May, 2023.
2.1 Statement of Compliance
The Standalone financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section 133 of the companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and other relevant provisions of the Act.
2.2 Basis of Measurement
(i) The standalone financial statements have been prepared on historical cost convention on accrual basis except for certain financial instruments (including derivative instruments) which are measured at fair value at the end of each reporting period as required under Ind AS.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for
measurement and/ or disclosure purposes in these standalone financial statements is determined on such a basis, except for measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
(ii) 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.
(iii) The functional and presentation currency of the Company is Indian rupees (INR) and all values are rounded to the nearest lakhs and two decimals thereof, except otherwise stated.
2.3 Significant accounting policies(i) Revenue Recognition
(a) Sale of products
The Company derives revenue primarily from sale of Graphite Electrodes.
Revenue from the sale of goods is recognized at the point in time when control is transferred to the customer which is usually on dispatch/ delivery.
Revenue is measured based on the transaction price (net of variable consideration) which is consideration, adjusted for volume discounts, rebates, scheme allowances,
price concessions, incentives, and returns, if any, as specified in the contracts with the customers. Revenue excludes taxes collected from customers on behalf of the government. Due to short nature of credit period given to customers, there is no financing component in the contract.
(b) Power
Revenue from power generation is recognized on transmission of electricity to State Electricity Board (SEB) or third parties at rate stipulated by SEB''s and/or IEX at market rate equivalent.
(c) Interest Income
(i) Interest Income from customers is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.
(ii) Interest Income from financial asset is recognized when it is probable that economic benefits will flow to the company and amount of income can be measured reliably. Interest income is accrued on time basis, by reference to principal outstanding and at effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of financial asset to that asset''s net carrying amount on initial recognition.
(d) Other Income
(i) Entitlements to Renewal Energy Certificates owing to generation of power at Tawa hydel plant are recognized to the extent sold at actual rate of net realization.
(ii) Dividend income is recognized when the right to receive payment is established and the amount of dividend can be measured reliably.
(iii) Other income is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.
Inventories are valued at cost or net realizable value, whichever is lower except by products which are valued at net realizable value. The raw materials and other supplies held for use in the production are valued at net realisable value only if the finished products in which they are to be incorporated are expected to be sold below cost. The cost in respect of the various items of inventory is computed as under:
(i) In case of finished goods and work-in-progress, cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition.
(ii) In case of stores, spares and raw material at weighted average cost. The cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
(iii) Obsolete stocks are identified at each reporting date on the basis of technical evaluation and are charged off to revenue.
Net Realisable Value is the estimated selling price in ordinary course of business less estimated cost of completion and estimated cost necessary to make the sales.
(iii) Property, Plant and Equipment
The cost of an item of property, plant and equipment is recognised as an asset when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably.
Freehold Land is carried at historical cost. All other items of property, plant and equipment are stated at cost or deemed cost applied on transition to Ind AS, less accumulated depreciation and impairment, if any. Cost includes its purchase price (net of taxes and duty recoverable), after deducting trade discounts and rebates. It includes other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the borrowing costs for qualifying assets and the initial estimate of restoration cost if the recognition criteria are met.
When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
Subsequent cost relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with the item will flow to the company and the costs of the item can be measured reliably. Repairs and maintenance costs are charged to the standalone statement of profit and loss when incurred.
An item of Property, Plant and Equipment and any significant part initially recognized is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset measured as the difference between the net disposal proceeds and the carrying amount of the asset is included in the income statement when the asset is derecognized.
Advances paid towards the acquisition of Property Plant and Equipment outstanding at each balance sheet date is classified as Capital advance under Non-current asset and the cost of asset not put to use before balance sheet date are disclosed under Capital work in progress.
Investment Properties comprises freehold land and building (including property under construction) that are held for long-term rental yields or for capital appreciation and both are classified as investment property. Investment properties are measured initially at cost, comprising the purchase price and directly attributable transaction cost. Subsequently investment property is carried at cost model, which is cost less accumulated depreciation and impairment losses if any in similar lines of Ind AS 16.
An investment property is derecognized on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. Gains or losses arising on derecognition of investment property are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised
in standalone statement of profit and loss in the period of the retirement or disposal.
An Intangible asset is recognized when it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and the cost of the asset can be measured reliably.
Intangible assets are stated at cost or deemed cost applied on transition to Ind AS, less accumulated amortization and impairment, if any. The cost of intangible asset comprises of its purchase price, net of recoverable taxes and any directly attributable cost of preparing the asset for its intended use.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in standalone statement of profit and loss as incurred.
The cost and related accumulated amortization are eliminated from standalone financial statements upon disposal or retirement of the assets and the resulted gain or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the standalone statement of profit and loss when the asset is derecognized.
(vi) Depreciation
(A) Property, Plant and Equipment
Based on internal assessment and independent technical evaluation carried out by external valuer, The Management believes that the useful life of the assets as stated below best represents the life over which the management expects to use the assets. Hence the useful life for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.
The method of depreciation and useful life considered on different assets is as below:
(i) Depreciation on all the assets at Hydel Power Project at Tawa is provided on Straight Line Method. The useful life of assets determined is as below:
Sr. No. |
Description of Asset |
Useful Life (Approx) |
1 |
Factory Building |
33 |
2 |
Non Factory Building |
33 |
3 |
Plant and Machinery |
|
i) Dams, Spillways weirs, canals, reinforced concrete Flumes and symphons |
51 |
|
ii) Hydraulic control valves and other hydraulic works |
30 |
|
iii) Transformers having a rating of 100 KVA and over |
13 |
|
4 |
Electrical Installation |
|
i) Batteries |
3 |
|
ii) Lines on Fabricated steel operating at normal voltages higher than 66 kv |
19 |
|
iii) Residual |
13 |
|
5 |
Furniture and Fixtures |
8 |
6 |
Office Equipment and other assets |
8 |
7 |
Vehicles |
3 |
(ii) On the assets other than those mentioned at (i) above, depreciation is provided on following basis:
In case of Plant and machinery, depreciation is provided on Straight Line Method and in case of other assets on written Down Method. The useful life of assets determined is as below:
Description of Asset |
Useful Life |
Building |
20 - 60 Years |
Plant and Machinery |
1-24 Years |
Railway Siding |
9 Years |
Office Equipment(Includes Computers and data processing units) |
5-20 Years |
Electrical Installation |
5-20 Years |
Furniture and Fixtures |
15 Years |
Vehicle |
5-10 Years |
(iii) Assets costing upto D 5,000 are fully depreciated in the year of purchase.
(iv) Depreciation methods, estimated useful lives and residual values are reviewed at the end of each reporting period with the effect of any changes in estimate accounted for on a prospective basis.
Investment property is depreciated using written down value method over their estimated useful life. Investment property has a useful life of 58 years as prescribed in Schedule II to the Companies Act, 2013.
Other Intangible Assets
Other Intangible assets are amortized over their respective individual useful lives on a straight line basis from date they are available. The estimated useful life is based on number of factors including effect of obsolescence and other economic factors and is as under:
Description of Asset Useful Life
Computer Software 05 Years
Amortisation method, useful lives and residual value are reviewed at the end of each financial year with the effect of any changes in estimate accounted for on a prospective basis.
(viii) Impairment of Non-Financial Assets
Intangible assets, Investment property and Property, Plant and Equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in the standalone statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset.
An impairment loss is reversed in the standalone statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
Impairment is reviewed periodically, including at each financial year end.
No impairment was identified in FY 2022-23 (FY 2021-22: Nil).
(ix) Foreign Currency Translations
Transactions in currencies other than the Company''s functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at that date. Exchange differences arising on the settlement of monetary items or on re-translated monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognised in standalone statement of profit and loss in the period in which they arise.
Non-monetary items denominated in foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction, Non-monetary items that are measured in term of historical cost in foreign currency are not reinstated.
(x) Employee Benefits(A) Post Employment Benefits (a) Defined contribution Plan(i) Provident Fund
The Company makes contribution to statutory Provident Fund in accordance with Employees Provident Fund and Miscellaneous Provisions Act, 1952 which is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.
(ii) Superannuation
The Company makes contribution to Hindustan Electro Graphites Ltd Senior Executive
Superannuation Fund Trust and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.
(b) Defined Benefit Plan Gratuity
The Company provides for gratuity, a defined benefit retirement plan "The gratuity plan" covering eligible employees. The gratuity plan provides for lump sum payment to vested employee at retirement, death, incapacitation or termination of employee of an amount based on the respective employees salary and the tenure of employment with the company.
Liability with regard to Gratuity is determined by actuarial valuation, performed by an independent actuary at each Balance sheet date using the project unit credit method.
The company fully contributes all ascertained liabilities to the Hindustan Electro Graphite''s Staff Gratuity Fund Trust (The Trust) managed by the trustees. The trustees administer the contributions made to the Trust and contribution are invested in a scheme with Life Corporation of India or any other insurer as permitted by Indian Law.
Re-measurements comprising of actuarial gains and losses, and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability) are recognised in Other Comprehensive Income which are not reclassified to profit or loss in subsequent periods. All other expenses related to defined benefit plans are recognised in employee benefits expense in the Statement of profit and loss.
The company recognizes the net obligation in the balance sheet as an asset or liability.
(B) Short term employee benefits
Short term employee benefits including non-accumulated absences are charged to standalone statement of profit and loss on an undiscounted, accrual basis for the period during which services are rendered by the employee.
(C) Other long term employee benefits-Compensated Absences
The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each balance sheet date using projected unit credit method on the additional amount expected to be paid/ availed as a result of the unused entitlement that has accumulated at the balance sheet date.
The expense related to such benefits is recognised in employee benefits expense in the Statement of profit and loss.
(xi) Leases
The Company''s lease asset classes primarily consist of leases for land and Building. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and of low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a systematic basis over the term of the lease.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the lessee''s incremental borrowing rate. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease Liability and Right-of-Use Asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
Leases for which the company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
For operating leases, rental income is recognized on systematic basis over the term of the relevant lease.
(xii) Segment Reporting
Segments are identified based on the manner in which the Company''s Chief Operating Decision Maker (''CODM'') decides about resource allocation and reviews performance.
(1) Segment Revenue includes sales and other income directly identifiable with/ allocable to the segment including inter- segment revenue.
(2) Expenses that are directly identifiable with/ allocable to the segments are considered for determining the segment result. Expenses not allocable to segments are included under unallocable expenditure.
(3) Income not allocable to the segments is included in unallocable income.
(4) Segment results includes margin on inter segment and sales which are reduced in arriving at the profit before tax of the company.
(5) Segment assets and Liabilities include those directly identifiable with the respective segments. Assets and liabilities not allocable to any segment are classified under unallocable category.
Income Tax expense comprises of current and deferred tax. Income tax expense is recognised in statement of Profit and Loss except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, as the case may be.
Current income tax for current and prior period is recognized at the amount expected to be paid to the tax authorities using tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Income tax expense is recognized in the standalone statement of profit and loss except to the extent that it relates to the items recognized directly in equity and other comprehensive income.
Deferred Income Tax assets and liabilities are recognized using the balance sheet approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts in financial statement.
Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date.
A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized.
Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that related tax benefits will be realized to allow all or part of the deferred tax assets to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow deferred tax assets to be recovered.
Deferred tax assets and deferred tax liabilities have been set off as it relates to income taxes levied by the same taxation authority.
(xiv) Government grants
Government grants are not recognized until there is reasonable assurance that all attached conditions will be complied with and the grant will be received.
When the grants relates to an expense item, it is recognised in the Statement of profit and loss by way of reduction from the related cost, which the grants are intended to compensate.
Government grants that become receivable as compensation for expenses or losses already incurred or for the purpose of giving financial support to the Company with no related costs is recognised in the Statement of profit or loss of the period in which it becomes receivable under ''Other operating income''/''Other income'' based on the nature of grant.
Government grants relating to the purchase of property, plant and equipment are deducted from
its gross value and are recognised in profit or loss on a systematic over the expected useful lives of the related assets by way of reduced depreciation.
Borrowing costs directly attributable to the acquisition or construction of items of qualifying assets, which are the assets that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the asset until such time as the assets are not ready for their intended use. All other borrowing costs are charged to the standalone statement of profit and loss in the period in which they are incurred.
(xvi) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when the company has a present obligation (legal or constructive) as a result of a past event, for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and are reliable estimate can be made of the amount of the obligation. As the timing of outflow of resources is uncertain, being dependent upon the outcome of the future proceedings, these provisions are not discounted to their present value.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.
Contingent assets are neither recognised nor disclosed in the standalone financial statements since this may result in the recognition of income that may never be realised.
(xvii) Earnings Per Share
Basic earnings per equity share is computed by dividing the profit or loss for the period attributable to the equity holders of the company by the weighted average number of equity shares outstanding during the period.
Diluted earnings per share is computed by adjusting the net profit or loss for the period attributable to equity shareholders is divided by the weighted
average number of shares outstanding during the period after adjusting for the effects of all dilutive potential equity shares if any.
(xviii) 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.
(i) Initial recognition
The company recognises the financial assets and financial liabilities when it becomes party to the contractual provision of the instruments. All financial assets and liabilities are recognised at fair value on initial recognition except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition of financial assets and or issue of financial liabilities that are not recognized at fair value through profit or loss, are added to or reduced from the fair value of the financial assets or financial liabilities, as appropriate.
Transaction cost directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognised immediately in the statement of profit and loss.
For the purposes of subsequent measurement, financial instruments are classified as follows:
A. Non-derivative financial instruments(a) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Interest income for such instruments is recognised in profit or loss using the effective interest rate (EIR) method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s gross carrying amount.
The carrying amounts of financial assets that are subsequently measured at amortised cost are determined based on the effective interest method less any impairment losses.
(b) Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Interest income for such instruments is recognised in profit or loss using the effective interest rate (EIR) method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s gross carrying amount.
Fair value movements are recognised in the other comprehensive income (OCI) until the financial asset is derecognised. On de-recognition, cumulative gain or loss previously recognised in OCI is reclassified from the equity to the profit or loss.
(c) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently measured at fair valued through profit or loss.
Dividend and interest income from such instruments is recognized in the statement of profit and loss, when the right to receive the payment is established.
Fair value changes on such assets are recognised in the statement of profit and loss.
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination or is held for trading or it is designated as at FVTPL which is subsequently measured at fair value through profit and loss. For trade and other payables maturing within one year from the balance sheet date, the carrying amount approximates fair value due to the short maturity of these instruments.
All changes in fair value in respect of liabilities measured at fair value through profit and loss are recognised in the statement of profit and loss.
(e) Investment in Subsidiaries, Associates and Joint Ventures
Investment in subsidiaries, associates and joint ventures is carried at cost in the standalone financial statements.
B. Derivative financial instruments
The company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank.
Although the company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments. Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss.
Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in the statement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are charged to Statement of Profit and Loss.
(iii) Impairment of Financial Assets
Financial assets that are carried at amortised cost and fair value through other comprehensive income (FVOCI) are assessed for possible impairments basis expected credit losses taking into account the past history of recovery, risk of default of the counterparty, existing market conditions etc. The impairment methodology applied depends on whether there has been a significant increase in credit risk since initial recognition.
Expected Credit Losses are measured through a loss allowance at an amount equal to:
⢠The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
⢠Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of financial instruments).
For trade receivables or any contractual right to receive cash or another financial asset that result from transaction that are within the scope of Ind AS 115 and Ind AS 116, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the company has used a practical expedient as permitted under Ind AS 109. The company follows simplified approach does not require the company to track changes in credit risk. Rather it recognizes impairment loss allowance based on lifetime ECL''s at each reporting date, right from its initial recognition. For other assets, the company uses 12 months ECL to provide for impairment loss where no significant increase in credit risk is. If there is significant increase in credit risk full lifetime ECL is used.
A financial asset (or, a part of a financial asset) is primarily derecognized when:
(i) The contractual right to receive cash flows from the financial assets expire, or
(ii) The company transfers the financial assets or its right to receive cash flow from the financial assets and substantially all the
risks and rewards of ownership of the asset to another party.
On de-recognition of a financial asset, the difference between the asset''s carrying amount and the sum of the consideration received/ receivable is recognised in the profit or loss.
A financial liability (or, a part of financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expires.
On de-recognition of a financial liability, the difference between the carrying amount of the financial liability de-recognised and the consideration paid/payable is recognised in profit or loss.
(v) Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle them on a net basis or to realise the assets and settle the liabilities simultaneously.
The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering the financial asset in its entirety or a portion thereof.
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received. Incremental costs directly attributable to the issuance of equity instruments and buy back of equity instruments are recognized as a deduction from equity, net of any tax effects.
The statement of cash flows is prepared in accordance with the Indian Accounting Standard (Ind AS) - 7 "Statement of Cash flows" using the indirect method for operating activities whereby profit for the period is adjusted for the
effects of transaction of a non-cash nature, and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.
(xx) Cash and cash equivalents
The Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with original maturity period of three months or less from the acquisition date, which are subject to an insignificant risk of changes in value.
Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the company''s Board of Directors.
2.4 Significant accounting judgements, estimates and assumptions
In the application of the Company''s accounting policies, which are described as stated above, the directors of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only the period of the revision and future periods if the revision affects both current and future periods.
The following are the areas of estimation uncertainty and critical judgements that the management has made in the process of applying the Company''s accounting policies and that have the most significant effect on the amounts recognised in the standalone financial statements:
Useful lives of property, plant and equipment
The estimated useful lives of property, plant and equipment are based on a number of factors
including the effects of obsolescence, internal assessment of user experience and other economic factors (such as the stability of the industry, and known technological advances) and the level of maintenance expenditure required to obtain the expected future cash flows from the asset.
The Company reviews the useful life of property, plant and equipment at the end of each reporting date.
Defined benefit plans and other post-employment benefits
The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future, salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date
Provisions/Contingencies
Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/claims/litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy. The Company annually assesses such claims and monitors the legal environment on an ongoing basis, with the assistance of external legal counsel, wherever necessary.
Fair Value measurements
Some of the Company''s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or liability, the Company uses market-observable data to the extent is available.
Significant judgement is required in determination of provision for current tax and deferred tax e.g. determination of taxability of certain incomes and deductibility of certain expenses etc. The carrying
amount of income tax assets/liabilities is reviewed at each reporting date. The factors used in estimates may differ from actual outcome which could lead to signification adjustment to the amounts reported in financial statements
Management estimates the net realizable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realization of these inventories may be affected by market driven changes.
2.5 Applicability of new and revised Ind AS
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below.
(i) Ind AS 12 - Income Taxes - This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The Company has evaluated the amendment and there is no impact on its standalone financial statements.
(ii) Ind AS 1 - Presentation of Financial Statements - This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023.
(iii) Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - This amendment has introduced a definition of ''accounting estimates'' and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023.
3. Current - non-current classification
All assets and liabilities have been classified as current and non-current on the basis of the following criteria:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the company''s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or use to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets.
All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the company''s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) The Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterpart, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities.
All other liabilities are classified as non-current
Operating cycle is the time between the acquisition of assets for processing/servicing and their realization in cash or cash equivalents.
Mar 31, 2022
1. Company Information
"HEG Limited (the ''Company''), incorporated in 1972, is a leading manufacturer and exporter of graphite electrodes in India and operates world''s largest singlesite integrated graphite electrodes plant. The Company also operates three power generation facilities with a total capacity of about 76.5 MW.
The Company is a public limited company incorporated and domiciled in India, has its registered office at Mandideep, Bhopal, Madhya Pradesh and is listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
The standalone Ind AS financial statements are approved for issue by the Company''s Board of directors in their meeting held on 25th May, 2022.
2.1 Statement of Compliance
The standalone financial statement comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the companies Act, 2013 read with Rule 3 of the Companies(Indian Accounting Standards) Rules, 2015 as amended from time to time and other relevant provisions of the Act.
2.2 Basis of Measurement
(i) The standalone financial statements have been prepared on historical cost convention on accrual basis except for certain financial instruments (including derivative instruments) are measured at fair value at the end of each reporting period.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/ or disclosure purposes in these standalone financial statements is determined on such a basis, except for measurements that have
some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
The Accounting policies have been consistently applied to all the years presented unless otherwise stated.
(ii) The functional and presentation currency of the Company is Indian rupees (INR) and all values are rounded to the nearest Lakhs and two decimals thereof, except otherwise stated.
2.3 Significant accounting policies(i) Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Amount disclosed as revenue are net of returns, rebates, goods & services tax.
The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Company''s activities, as described below.
Revenue recognized from major business activities:
(a) Sale of products
The Company derives revenue primarily from sale of Graphite Electrodes.
Revenue from contracts with customers is recognised as and when the company satisfies performance obligation by transfer of control of goods at an amount that reflects the consideration entitled in exchange for those goods. Revenue is only recognised to the extent that it is highly probable a significant reversal will not occur.
Generally control is transferred upon shipment of goods to the customer or when the goods is made available to the customer, provided transfer of title to the customer occurs and the company has not retained any significant risk of ownership or future obligations with respect to the goods shipped.
Revenue is measured at the amount of consideration which the company expects to be entitled to in exchange for transferring distinct goods to a customer as specified in the contract, excluding amount collected on behalf of third parties (For example taxes and duties collected on the behalf of government). Consideration is generally due upon satisfaction of performance obligation and receivable is recognized when it becomes unconditional.
The company does not adjust short term advances received from the customer for the effects of significant financing component if it is expected at the contract inception that the promised goods will be transferred to the customer within a period of one year.
Revenue from power generation is
recognized on transmission of electricity to State Electricity Board (SEB) or third parties at rate stipulated by SEB''s and/or IEX at market rate equivalent.
(c) Other Income
(i) Entitlements to Renewal Energy
Certificates owing to generation of power at Tawa hydel plant are recognized to the extent sold at actual rate of net realization.
(ii) Revenue in respect of interest from customers is recognized when no
significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.
(iii) Interest income is recognised using when it is probable that economic benefit will flow to the company and the amount of income can be measured reliably and is accrued on a time basis by reference to the principal amount outstanding and at effective interest rate applicable.
(iv) Dividend income is recognized when the right to receive payment is established and the amount of dividend can be measured reliably.
(v) Revenue in respect of other income is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof
Inventories are valued at cost or net realizable value, whichever is lower except by products which are valued at net realizable value. The cost in respect of the various items of inventory is computed as under:
(i) In case of finished goods and work-inprogress, cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition.
(ii) In case of stores, spares and raw material at weighted average cost. The cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
(iii) Obsolete stocks are identified at each reporting date on the basis of technical evaluation and are charged off to revenue.
Net Realisable Value is the estimated selling price in ordinary course of business less estimated cost of completion and estimated cost necessary to make the sales.
(iii) Property, Plant and Equipment
Freehold Land is carried at historical cost. AH other items of property, plant and equipment are stated at historical cost less accumulated depreciation and impairment, if any. Historical cost includes its purchase price (net of taxes and duty recoverable), after deducting trade discounts and rebates. It includes other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by manag ement and the borrowi ng costs for qualifying assets and the initial estimate of restoration cost if the recognition criteria are met.
When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
Subsequent cost relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with the item will flow to the company and the costs of the item can be measured reliably. Repairs and maintenance costs are charged to the standalone statement of profit and loss when incurred.
An item of Property, Plant and Equipment and any significant part initially recognized is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset measured as the difference between the net disposal proceeds and the carrying amount of the asset is included in the income statement when the asset is derecognized.
Advances paid towards the acquisition of Property Plant and Equipment outstanding at each balance sheet date is classified as Capital advance under Non-current asset and the cost of asset not put to use before balance sheet date are disclosed under Capital work in progress.
On transition to Ind As, the company has elected to continue with the carrying value of all its property, plant and equipment recognized as at 1st April, 2016 measured as per previous GAAP and use that carrying value as its deemed cost of the property, plant and equipment.
Investment Properties comprises freehold land and building (including property under construction) that are held for long-term rental yields or for capital appreciation and both are classified as investment property. Investment properties are measured initially at cost, comprising the purchase price and directly attributable transaction cost. Subsequently investment property is carried at cost model, which is cost less accumulated depreciation and impairment losses if any in similar lines of Ind AS 16.
An investment property is derecognized on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. Gains or losses arising on derecognition of investment property are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in standalone statement of profit and loss in the period of the retirement or disposal.
An Intangible asset is recognized when it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and the cost of the asset can be measured reliably.
Intangible assets are measured on initial recognition at cost. Intangible assets are stated at cost less accumulated amortization and impairment, if any.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in standalone statement of profit and loss as incurred.
The cost and related accumulated amortization are eliminated from standalone financial statements upon disposal or retirement of the assets and the resulted gain or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the standalone statement of profit and loss when the asset is derecognized.
On transition to Ind AS, the company has elected to continue with the carrying value of all intangible asset recognized as at 1st April,2016, measured as per previous GAAP and use that carrying value as the deemed cost of intangible assets.
(A) Property, Plant and Equipment
Based on internal assessment and independent technical evaluation carried out
by external valuer, the Management believes that the useful life of the assets as stated below best represents the life over which the management expects to use the assets. Hence the useful life for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.
The method of depreciation and useful life considered on different assets is as below:
(i) |
Depreciation on all the assets at Hydel Power Project at Tawa is provided on Straight Line Method. The useful life of assets determined is as below: |
||
Sr. No. |
Description of Asset |
Useful Life (Approx) |
|
1 |
Factory Building |
33 |
|
2 |
Non Factory Building |
33 |
|
3 |
Plant and Machinery |
||
i) Dams, Spillways weirs, canals, reinforced concrete Flumes and symphons |
51 |
||
ii) Hydraulic control valves and other hydraulic works |
30 |
||
iii) Transformers having a rating of 100 KVA and over |
13 |
||
4 |
Electrical Installation |
||
i) Batteries |
3 |
||
ii) Lines on Fabricated steel operating at normal voltages higher than 66 kv |
19 |
||
iii) Residual |
13 |
||
5 |
Furniture and Fixtures |
8 |
|
6 |
Office Equipment and other assets |
8 |
|
7 |
Vehicles |
3 |
|
(ii) |
On the assets other than those mentioned at (i) above, depreciation is provided on following basis: In case of Plant and machinery, depreciation is provided on Straight Line Method and in case of other assets on Written Down Method. The useful life of assets determined is as below: |
||
Assets description |
Useful Life |
||
Build |
ng |
20 - 60 Years |
|
Plant and Machinery |
1-24 Years |
||
Railway Siding |
9 Years |
||
Office Equipment(Includes Computers and data processing units) |
5-20 Years |
||
Electrical Installation |
5-20 Years |
||
Furniture and Fixtures |
15 Years |
||
Vehicle |
5-10 Years |
||
(iii) |
Assets costing upto B5,000 are fully depreciated in the year of purchase. |
||
(iv) |
Depreciation methods, estimated useful lives and residual values are reviewed at the end of each reporting period with the effect of any changes in estimate accounted for on a prospective basis. |
(ii) Superannuation
The Company makes contribution to Hindustan Electro Graphites Ltd. Senior Executive Superannuation Fund Trust and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.
(b) Defined Benefit Plan Gratuity
The Company provides for gratuity, a defined benefit retirement plan "The gratuity plan" covering eligible employees. The gratuity plan provides for lump sum payment to vested employee at retirement, death, incapacitation or termination of employee of an amount based on the respective employees salary and the tenure of employment with the company.
Liability with regard to Gratuity is determined by actuarial valuation, performed by an independent actuary at each Balance sheet date using the project unit credit method.
The company fully contributes all ascertained liabilities to the Hindustan Electro Graphite''s Staff Gratuity Fund Trust (The Trust), trustees administers the contributions made to the Trust and contribution are invested in a scheme with Life Corporation of India as permitted by Indian Law.
Gains and losses through remeasurements of the net defined benefit liability/(asset) are recognized in other comprehensive income. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligations is recognized in Other Comprehensive Income. The effect of any plan amendments are recognized in the standalone Statement of Profit and Loss.
Investment property is depreciated using written down value method over their estimated useful life. Investment property has a useful life of 58 years as prescribed in Schedule II to the Companies Act, 2013.
Other Intangible Assets
Other Intangible assets are amortized over their respective individual useful lives on a straight line basis from date they are available. The estimated useful life is based on number of factors including effect of obsolescence and other economic factors and are as under
Assets description Useful Life
Computer Software 05 Years
Amortisation method, useful lives and residual value are reviewed at the end of each financial year with the effect of any changes in estimate accounted for on a prospective basis.
(viii) Impairment of Non-Financial Assets
Intangible assets, Investment property and Property, Plant and Equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i .e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in the standalone statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset.
An impairment loss is reversed in the standalone statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of
the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
Impairment is reviewed periodically, including at each financial year end.
No impairment was identified in FY 2021-22 (FY 2020-21: Nil).
Transactions in currencies other than the entity''s functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are re-translated at the rates prevailing at that date. Exchange differences arising on the settlement of monetary items or on re-translated monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognised in standalone statement of profit and loss in the period in which they arise.
Non-monetary items denominated in foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction, Non-monetary items that are measured in term of historical cost in foreign currency are not reinstated.
(x) Employee Benefits
(A) Post Employment Benefits (a) Defined contribution Plan
(i) Provident Fund
The Company makes contribution to statutory Provident Fund in accordance with Employees Provident Fund and Miscellaneous Provisions Act, 1952 which is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.
The company recognizes the net obligation in the balance sheet as an asset or liability.
(B) Short term employee benefits
Short term employee benefits including non-accumulated absences are charged to standalone statement of profit and loss on an undiscounted, accrual basis for the period during which services are rendered by the employee.
(C) Other long term employee benefits-Compensated Absences
The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each balance sheet date using projected unit credit method on the additional amount expected to be paid/ availed as a result of the unused entitlement that has accumulated at the balance sheet date.
The Company as a lessee
The Company''s lease asset classes primarily consist of leases for land and Building. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (shortterm leases) and of low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating
expense on a systematic basis over the term of the lease.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the lessee''s incremental borrowing rate. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease Liability and Right-of-Use Asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
For short-term leases i.e. leases of 12 months or below:
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). Lease payments on
short-term leases are recognised as expense on systematic basis over the lease term.
Leases for which the company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
For operating leases, rental income is recognized on systematic basis over the term of the relevant lease.
Segments are identified based on the manner in which the Company''s Chief Operating Decision Maker (''CODM'') decides about resource allocation and reviews performance.
(1) Segment Revenue includes sales and other income directly identifiable with/ allocable to the segment including inter- segment revenue.
(2) Expenses that are directly identifiable with/ allocable to the segments are considered for determining the segment result. Expenses not allocable to segments are included under unallocable expenditure.
(3) Income not allocable to the segments is included in unallocable income.
(4) Segment results includes margin on inter segment and sales which are reduced in arriving at the profit before tax of the company.
(5) Segment assets and Liabilities include those directly identifiable with the respective segments. Assets and liabilities not allocable to any segment are classified under unallocable category.
Income Tax expense comprises of current and deferred income tax.
Current income tax for current and prior period is recognized at the amount expected
to be paid to the tax authorities using tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Income tax expense is recognized in the standalone statement of profit and loss except to the extent that it relates to the items recognized directly in equity and other comprehensive income.
Deferred Income Tax assets and liabilities are recognized using the balance sheet approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts in financial statement.
Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date.
A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized.
Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that related tax benefits will be realized to allow all or part of the deferred tax assets to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow deferred tax assets to be recovered.
Deferred tax assets and deferred tax liabilities have been set off as it relates to income taxes levied by the same taxation authority.
The government grants are recognized only when there is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received.
Government grants related to revenue are recognized on a systematic basis in the standalone statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate.
Borrowing costs directly attributable to the acquisition or construction of items of qualifying assets, which are the assets that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the asset until such time as the assets are not ready for their intended use. All other borrowing costs are charged to the standalone statement of profit and loss in the period in which they are incurred.
(xvi) Provisions and Contingent Liabilities
Provisions are recognized when the company has a present obligation (legal or constructive) as a result of a past event, for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and are reliable estimate can be made of the amount of the obligation. As the timing of outflow of resources is uncertain, being dependent upon the outcome of the future proceedings, these provisions are not discounted to their present value.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.
Contingent assets are neither recognised nor disclosed in the standalone financial statements since this may result in the recognition of income that may never be accrued/ realised.
Basic earnings per equity share is computed
(b) Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Interest income is recognised in the standalone statement of profit and loss if instrument measured at fair value through other comprehensive income (FVOCI)
Investment in equity instruments at fair value through other comprehensive income. The Company can make an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model. These elected investments are initially measured at fair value plus transaction cost, subsequently in cases where the company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income and accumulated in reserve for equity instruments through other comprehensive income. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investment. This election is not permitted if the equity investment is held for trading. Dividends on their investment in equity instrument are recognised in profit or loss, when the Company''s right to receive the dividend is established.
(c) Financial assets at fair value through profit or loss
A financial asset which is not classified
by dividing the profit or loss for the period attributable to the equity holders of the company by the weighted average number of equity shares outstanding during the period.
Diluted earnings per share is computed by adjusting the net profit or loss for the period attributable to equity shareholders is divided by the weighted average number of shares outstanding during the period after adjusting for the effects of all dilutive potential equity shares if any.
(xviii)Financial instruments(i) Initial recognition
The company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through profit or loss, are added to or deducted from the fair value of the financial assets or financial liabilities on initial recognition.
Transaction cost directly attributable to the acquisition of financial assets and financial liabilities at value through Profit or Loss are recognised immediately in the standalone statement of Profit and Loss.
For the purpose of subsequent measurement financial assets are classified in three broad categories:-
A. Non-derivative financial instruments
(a) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
in any of the above categories are subsequently measured at fair valued through profit or loss.
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through profit and loss. For trade and other payables maturing within one year from the balance sheet date, the carrying amount approximates fair value due to the short maturity of these instruments.
(e) Investment in Subsidiaries, Associates and Joint Ventures
Investment in subsidiaries, associates and joint ventures is carried at cost in the standalone financial statements.
B. Derivative financial instruments
The company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank.
Although the company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments. Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss.
(iii) Impairment of Financial Assets
The company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets,
expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL.
A financial asset (or, a part of a financial asset) is primarily derecognized when:
(i) The contractual right to receive cash flows from the financial assets expire, or
(ii) The company transfers the financial assets or its right to receive cash flow from the financial assets and substantially all the risks and rewards of ownership of the asset to another party.
A financial liability (or, a part of financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expires.
(v) Reclassification of financial assets
The company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The company''s senior management determines change in the business model as a result of external or internal changes which are significant to the Company''s operations. Such changes are evident to external parties. A change in the business model occurs when the company either begins or ceases to perform an activity that is significant to its operations. If the company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The company does not restate any previously recognised gains,
losses (including impairment gains or losses) or interest.
The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering the financial asset in its entirety or a portion thereof.
C. Share capital Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares and buy back of equity shares and share options are recognized as a deduction from equity, net of any tax effects.
The cash flow statement is prepared in accordance with the Indian Accounting Standard (Ind AS) - 7 "Statement of Cash flows" using the indirect method for operating activities.
(xx) Cash and cash equivalents
The Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and shortterm deposits with original maturity period of three months or less from the acquisition date, which are subject to an insignificant risk of changes in value.
Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the company''s Board of Directors.
2.4 Significant accounting judgements, estimates and assumptions
In the application of the Company''s accounting policies, which are described as stated above, the directors of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only the period of the revision and future periods if the revision affects both current and future periods.
The following are the areas of estimation uncertainty and critical judgements that the management has made in the process of applying the Company''s accounting policies and that have the most significant effect on the amounts recognised in the standalone financial statements:
Useful lives of property, plant and equipment
The estimated useful lives of property, plant and equipment are based on a number of factors including the effects of obsolescence, internal assessment of user experience and other economic factors (such as the stability of the industry, and known technological advances) and the level of maintenance expenditure required to obtain the expected future cash flows from the asset.
The Company reviews the useful life of property, plant and equipment at the end of each reporting date.
Defined benefit plans
The cost of the defined benefit plan and other postemployment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future, salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date
Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/claims/litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy. The Company annually assesses such claims and monitors the legal environment on an ongoing basis, with the assistance of external legal counsel, wherever necessary.
Some of the Company''s assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or liability, the Company uses market-observable data to the extent is available. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities are disclosed in note 46B.
Recognition of deferred tax assets
Management judgement is required for the calculation of provision for current income taxes and deferred tax assets and liabilities. The company reviews at each balance sheet date the carrying amount of deferred tax assets. The factors used in estimates may differ from actual outcome which could lead to significant adjustment to the amounts reported in financial statement.
2.5 Applicability of new and revised Ind AS
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, as below.
(i) Ind AS 16 - Property Plant and equipment - The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognized in the standalone statement of profit and loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2022. The Company has evaluated the amendment and there is no significant impact on its standalone financial statements.
(ii) Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets - The amendment specifies that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2022, although early adoption is permitted. The Company has evaluated the amendment and there is no significant impact on its standalone financial statements.
(iii) Ind AS 109 - Financial Instruments - The amendment clarifies which fees an entity includes when it applies the ''10 percent'' test of Ind AS 109 in assessing whether to derecognise a financial liability. The Company has evaluated the amendment and there is no significant impact on its standalone financial statements.
3. Current - non-current classification
All assets and liabilities have been classified as current and non-current on the basis of the following criteria:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the company''s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or use to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of noncurrent financial assets.
All other assets are classified as non-current.
A liability is classified as current when it satisfies any of
the following criteria:
a) it is expected to be settled in the company''s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) The Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability
that could, at the option of the counterpart, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities.
All other liabilities are classified as non-current Operating cycle
Operating cycle is the time between the acquisition of assets for processing/servicing and their realization in cash or cash equivalents.
Mar 31, 2018
1.1 Use of Estimates
The preparation of financial statements in conformity with Indian Accounting Standards (Ind AS) requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the reporting period and reported amounts of revenues and expenses during the period. Although these estimates are based upon managementâs best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.
1.2 Revenue Recognition Sale of Goods
(i) Graphite Electrodes (Including other carbon products)
Revenue from the sale of goods is recognized when all the following conditions have been satisfied:
(a) The entity has transferred to the buyer the significant risks and rewards of ownership of the goods;
(b) The entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
(c) The amount of revenue can be measured reliably;
(d) It is probable that the economic benefits associated with the transaction will flow to the entity;
(e) The costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
(f) In accordance with Ind AS 18 âRevenue Recognitionâ and Schedule III to the Companies Act, 2013, Sales for the previous year ended 31 March 2017 and for the period 1 April to 30 June 2017 were reported gross of Excise Duty and net of VAT/CST. Excise Duty was reported as a separate expense line item. Consequent to the introduction of Goods and Services Tax (GST) with effect from 1 July 2017, VAT/CST, Excise Duty etc. have been subsumed into GST and accordingly the same is not recognised as part of sales as per the requirements of Ind AS 18.
(ii) Power
Revenue from power generation is recognized on transmission of electricity to SEB or third parties
(i) Power generated at the power plants is primarily consumed by the manufacturing units and excess power is sold to SEBs or third parties which are included in the sales as below:
- Power transferred to Graphite unit at MPEB rate.
- Excess power generated is sold to SEBâs at rate stipulated by SEBâs and/or third parties at market rate equivalent.
(ii) Inter-divisional sales comprising of sale of power from power plants to Graphite unit is reduced from revenue from operations in deriving net revenue.
Other Income
(i) Revenue in respect of Export Incentives is accounted on post export basis.
(ii) Entitlements to Renewal Energy Certificates owing to generation of power at tawa hydel plant are recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof.
(iii) Revenue in respect of interest from customers is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof. Other Interest income is recognized using the effective interest rate (EIR).
(iv) Revenue in respect of other income is recognized when no significant uncertainty exists with regard to the amount to be realized and the ultimate collection thereof
Dividends
Dividend income is recognized when the right to receive payment is established.
1.3 Inventories
Inventories are valued at cost or net realizable value, whichever is lower except by products which are valued at net realizable value. The cost in respect of the various items of inventory is computed as under:
(i) In case of finished goods and work-in-progress, cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition.
(ii) In case of stores, spares and raw material at weighted average cost. The cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
(iii) Obsolete stocks are identified at each reporting date on the basis of technical evaluation and are charged off to revenue.
1.4 Property, Plant and Equipment
Property, Plant and Equipment are stated at Historical cost less accumulated depreciation and impairment, if any. Historical Cost includes its purchase price (net of CENVAT/ GST or any duty credits wherever applicable), after deducting trade discounts and rebates. It includes other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the borrowing costs for qualifying assets and the initial estimate of restoration cost if the recognition criteria are met.
When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
Subsequent expenditures relating to Property, Plant and Equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the company and the costs of the item can be measured reliably. Repairs and maintenance costs are charged to the statement of profit and loss when incurred.
An item of Property, Plant and Equipment and any significant part initially recognized is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset measured as the difference between the net disposal proceeds and the carrying amount of the asset is included in the income statement when the asset is derecognized.
1.5 Investment property
Investment Properties comprises freehold land and building (including property under construction) that are held for longterm rental yields and/or for capital appreciation. Investment properties are measured initially at cost, comprising the purchase price and directly attributable transaction cost. Subsequently investment property is carried at cost model, which is cost less accumulated depreciation and impairment losses if any in similar lines of Ind AS 16.
An investment property is derecognized on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. Gains or losses arising on derecognition of investment property are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss in the period of the retirement or disposal.
1.6 Intangible Assets
Intangible Assets are recognized when it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and the cost of the asset can be measured reliably.
Intangible assets acquired separately are measured on initial recognition at cost. Following Initial recognition, intangible assets are stated at cost less accumulated amortization and impairment, if any.
The cost and related accumulated amortization are eliminated from financial statement upon disposal or retirement of the assets and the resulted gain or losses are recognized in the statement of profit and loss.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
1.7 Depreciation
(A) Property, Plant and Equipments
Based on internal assessment and independent technical evaluation carried out by external valuer, The Management believes that the useful life of the assets as stated below best represents the life over which the management expects to use the assets. Hence the useful life for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.
The method of depreciation and useful life considered on different assets is as below:
(i) Depreciation on all the assets at Hydel Power Plant at Tawa is provided on Straight line method. The useful life of assets determined is as below:
(ii) On the assets other than those mentioned at (i)above, depreciation is provided on following basis:
In case of Plant and machinery, depreciation is provided on Straight Line Method and in case of other assets on written down method. The useful life of assets determined is as below
(iii) Cost of acquisition and improvement of lease hold land is amortized over the lease period.
(iv) Assets costing upto ^ 5,000 are fully depreciated in the year of purchase.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
(B) Investment property
On assets classified as investment property, on written down value method, over the useful life prescribed in Schedule II.
1.8 Amortization Intangible Assets
Intangible assets are amortized over their respective individual useful lives on a straight line basis from date they are available. The estimated useful life is based on number of factors including effect of obsolesce and other economic factors.
Amortization method and useful lives of intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
1.9 Impairment of Non-Financial Assets
Intangible assets, Investment property and Property, Plant and Equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset.
An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
Impairment is reviewed periodically, including at each financial year end.
1.10 Foreign Exchange Transactions/Translation Functional Currency
The Financial statements are presented in INR, which is companyâs functional currency.
Transactions in currencies other than the entityâs functional currency are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date. Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognized in profit or loss in the period in which they arise.
Non monetary items denominated in foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction.
The exchange differences arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded, in so far as they relate to the acquisition of depreciable capital assets, are shown by addition to/deduction from the cost of the assets as per exemption provided under Ind AS-101.
1.11 Employee Benefits
A) Post Employment Benefits
Company operates the following post-employment scheme:
i) Defined Contribution Plans Provident Fund
The Company makes contribution to statutory Provident Fund in accordance with Employees Provident Fund and Miscellaneous Provisions Act, 1952 which is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.
Superannuation
The Company makes contribution to Hindustan Electro Graphites Ltd Senior Executive Superannuation Fund Trust and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.
ii) Defined Benefit Plans Gratuity
The Company provides for gratuity a defined benefit retirement plan âThe gratuity planâ covering eligible employees. The gratuity plan provides for lump sum payment to vested employee at retirement, death, incapacitation or termination of employee of an amount based on the salary of respective employees and the tenure of employment with the company.
Liability with regard to Gratuity Plan is determined by actuarial valuation, performed by an independent actuary at each Balance sheet date using the project unit credit method.
The company fully contributes all ascertained liabilities to the Hindustan Electro Graphites Staff Gratuity Fund Trust( The Trust), trustees administer contributions made to the Trust and contribution are invested in a scheme with Life Corporation of India, ICICI Prudential Life Insurance Company Ltd and Reliance Insurance Company Ltd as permitted by Indian Law
Gains and losses through re-measurements of the net defined benefit liability/ (asset) are recognized in other comprehensive income. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligations is recognized in Other Comprehensive Income. The effects of any plan amendments are recognized in the Statement of Profit and Loss.
The company recognizes the net obligation in the balance sheet as an asset or liability
B) Other Long term Employee Benefits
The liabilities for earned leave which are not expected to be settled wholly within 12 months after the end of the period in which the employee render the related services. They are therefore measured as the present value of expected future payments to be made in respect of service provided by employees upto the end of the period using project credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurement as a result of experience adjustment and changes in actuarial assumption are recognized in profit and loss.
1.12 Leases Where the Company is a lessee
(i) Leases under which the company assumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalized at fair value or present value of the minimum lease payments at the inception of the lease, whichever is lower.
(ii) Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Where the Company is a lessor
Rental Income from operating leases is recognized on a straight-line basis over the term of the relevant lease, Costs including depreciation are recognized as an expense in the statement of profit and loss. Initial direct costs incurred in negotiating and arranging an operating lease is recognized immediately in the Statement of Profit and Loss.
1.13 Taxes on Income
Tax expense comprises of current and deferred income tax.
Current income tax
Current income tax for current and prior period is recognized at the amount expected to be paid to the tax authorities using tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Income tax expense is recognized in the statement of profit and loss except to the extent that it relates to the items recognized directly in equity and other comprehensive income.
Deferred Income Tax
Deferred Income Tax assets and liabilities are recognized using the balance sheet approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts in financial statement.
Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date.
A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized.
Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that related tax benefits will be realized to allow all or part of the deferred tax assets to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow deferred tax assets to be recovered.
The company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognized as an asset. The said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement grouped with deferred tax assets (net) in the financial statement.
1.14 Government grants
The government grants are recognized only when there is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received.
Government grants related to assets are treated as deferred income and are recognized in the statement of profit and loss on a systematic and rational basis over the useful life of the asset.
Government grants related to revenue are recognized on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate.
1.15 Borrowing Cost
Borrowing costs directly attributable to the acquisition or construction of items of Property plant and equipment that necessarily takes a substantial period of time to get ready for its intended use are capitalized as part of the cost of the asset. All other borrowing costs are charged to the statement of profit and loss in the period in which they are incurred.
1.16 Provisions, Contingent Liabilities
Provisions are recognized when the company has a present obligation (legal or constructive) as a result of a past event, for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and reliable estimate can be made of the amount of the obligation.
As the timing of outflow of resources is uncertain, being dependent upon the outcome of the future proceedings, these provisions are not discounted to their present value.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.
1.17 Earnings per Share
Basic earnings per equity share is computed by dividing the net profit for the period attributable to the equity holders of the company by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit for the period attributable to equity shareholders is divided by the weighted average number of shares outstanding during the period after adjusting for the effects of all dilutive potential equity shares if any.
1.18 Financial instruments
(i) Initial recognition
The company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition except for trade receivable which is initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities that are not at fair value through profit or loss are added to the fair value on initial recognition.
(ii) Subsequent measurement
For the purpose of subsequent measurement financial assets are classified in three broad categories:-
A. Non-derivative financial instruments
(a) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(b) Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model. Further, in cases where the company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.
(c) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently measured at fair value through profit or loss.
(d) Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through profit and loss. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
(e) Investment in Subsidiaries, Associates and Joint Ventures
Investment in subsidiaries, associates and joint ventures is carried at cost in the separate financial statements.
B. Derivative financial instruments
The company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank.
(a) Financial assets or financial liabilities, at fair value through profit or loss.
This category has derivative financial assets or liabilities which are not designated as hedges. Although the company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments. Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss.
(b) Cash flow hedge
Company designates certain foreign exchange forward contracts and option contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions.
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and accumulated in the cash flow hedging reserve.
Any ineffective portion of changes in the fair value of the derivative is recognized immediately in the net profit in the statement of profit and loss. If the hedging instrument no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the forecasted transaction occurs. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the net profit in the statement of profit and loss upon the occurrence of the related forecasted transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified to net profit in the statement of profit and loss.
(iii) Impairment of Financial Assets
The company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in the statement of profit or loss.
(iv) Derecognition
A financial asset (or, a part of a financial asset) is primarily derecognized when:
(i) The contractual right to receive cash flows from the financial assets expire, or
(ii) The company transfers the financial assets or its right to receive cash flow from the financial assets and substantially all the risks and rewards of ownership of the asset to another party.
A financial liability (or, a part of financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expires.
(v) Reclassification of financial assets
The company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The companyâs senior management determines change in the business model as a result of external or internal changes which are significant to the Companyâs operations. Such changes are evident to external parties. A change in the business model occurs when the company either begins or ceases to perform an activity that is significant to its operations. If the company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The company does not restate any previously recognized gains, losses (including impairment gains or losses) or interest.
C. Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.
1.19 Fair Value Measurement
The Company measures financial instruments such as derivatives and certain investments, at the fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
(i) In the principal market for the asset or liability. Or
(ii) In the absence of a principal market, in the most advantageous market for the assets 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.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the assets 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 whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized in the balance sheet on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.20 Cash flow statement
The cash flow statement is prepared in accordance with the Indian Accounting Standard (Ind AS) - 7 âStatement of Cash flowsâ using the indirect method for operating activities.
1.21 Cash and cash equivalents
The Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with a maturity period of three months or less from the balance sheet date, which are subject to an insignificant risk of changes in value.
1.22 Dividends
Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Companyâs Board of Directors.
Mar 31, 2017
a) Revenue Recognition Sale of Goods
(i) Graphite Electrodes
Revenue from the sale of goods shall be recognized when all the following conditions have been satisfied:
(a) the entity has transferred to the buyer the significant risks and rewards of ownership of the goods;
(b) the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
(c) the amount of revenue can be measured reliably;
(d) it is probable that the economic benefits associated with the transaction will flow to the entity; and
(e) The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Excise duty is the liability of the manufacturer which forms part of cost of production. Recovery of excise duty flows to the entity on its own account and the same has been included in the amount of domestic sales.
(ii) Power
Revenue from power generation has been recognized on transmission of electricity to SEB or third parties
(i) Power generated at the power plants is primarily consumed by the manufacturing units and excess power is sold to SEBs/IEX which is included in the sales as below:
- Power transferred to Graphite unit at MPEB rate.
- Excess power generated is sold to SEBâs at rate stipulated by SEBâs and/or IEX at market rate equivalent.
(ii) Inter-divisional sales comprising of sale of power from power plants to Graphite unit is reduced from revenue from operations in deriving net revenue.
Other Income
(i) Income and Export Incentives / benefits are accounted for on accrual basis and as per principles given under IndAS-18 - Revenue Recognition.
(ii) Entitlement to Renewal Energy Certificates owing to generation of power at TAWA Hydel Plant are recognized to the extent sold at actual rate of net realization.
Dividends
Dividend income is recognized when the shareholdersâ right to receive payment is established.
b) Inventories
(i) Finished goods and work-in-progress are valued at lower of cost or net realizable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. By products are valued at net realizable value.
(ii) Stores, spares and raw materials are valued at lower of cost or net realizable value. However materials and other items held for use in the production of inventories are not written below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
(iii) Cost of finished goods, work-in-process and stores, spares and raw material are determined on the basis of weighted average method.
(iv) Obsolete stocks are identified every year on the basis of technical evaluation and are charged off to revenue.
(v) Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
c) Property, Plant and Equipment
On transition to Ind AS, the Company has adopted optional exemption under Ind AS-101 and elected to continue with the carrying value of all its property, plant and equipment as recognized in the financial statement at the date of transition i.e. at 1st April, 2015, measured as per the previous GAAP and use that as its deemed cost as at the transition date, refer note no. 54(a). Subsequently property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes its purchase price (net of CENVAT / duty credits wherever applicable), after deducting trade discounts and rebates. It includes other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the borrowing costs for qualifying assets and the initial estimate of restoration cost if the recognition criteria is met.
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the company and the costs of the item can be measured reliably. Repairs and maintenance costs are charged to the statement of profit and loss when incurred.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively.
d) Investment property
Investment Properties comprises freehold land and building (including property under construction) that are held for long term rental yields and/or for capital appreciation. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured in accordance with Ind AS 16âs requirements for cost model.
An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognized.
e) Intangible Assets
An Intangible Assets is recognised when it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and the cost of the asset can be measured reliably.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized on a straight line basis over the estimated useful economic life of 3 to 5 years.
The intangible assets are assessed for impairment whenever there is indication that the intangible asset may be impaired. The amortization period and the amortization method are reviewed at least at each financial year end.
Gains or losses arising from recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
f) Research and Development
Revenue expenditure on research and development including salaries, consumables and power & fuel is charged to Statement of Profit and Loss under respective heads of expenditure. Capital expenditure is shown as addition to property, plant and equipment.
g) Expenses Incurred During Construction Period
Preliminary project expenditure, capital expenditure, indirect expenditure incidental and related to construction / implementation, interest on borrowings to finance fixed assets and expenditure on start-up / commissioning of assets forming part of a composite project are capitalized upto the date of commissioning of the project as the cost of respective assets.
h) Depreciation
Based on internal assessment and independent technical evaluation carried out by external valuer, the management believes that the useful lives as given below best represent the period over which management expects to use these assets. The useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.
And depreciation is charged on the following basis:-
(i) On Plant and Machinery and other assets of Hydel Power Project at Tawa, depreciation rates are as follows:
(ii) (a) On Plant and Machinery other than those mentioned at (i) above, on straight line method;
(b) On other fixed assets, on written down value method, in the manner as prescribed in Companies Act 2013 and rate as per prescribed useful life above;
(c) On assets classified as investment property, on written down value method, over the useful life prescribed in Schedule II. However, if the managementâs estimate (based on technical evaluation) of useful life is different from that envisaged in Schedule II, then the assets are depreciated over the useful life estimated by the management.
(iii) Cost of acquisition and improvement of lease hold land is amortized over the lease period.
(iv) Assets costing upto Rs.5,000 are fully depreciated in the year of purchase.
(v) Intangible assets are amortized over a period of 3-5 years on a straight line basis.
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end.
i) Impairment of Non Financial Assets
Intangible assets, investment property and property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs. If such assets are considered to be impaired, the impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
The company has the policy to assess at each reporting date for impairment required for each of its non-financial assets.
j) Foreign Exchange Transactions/Translation
(i) Functional Currency
Financial statements are presented in INR, which is companyâs functional currency.
Transactions in currencies other than the entityâs functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non monetary items are measured in terms of historical cost in foreign currencies and are therefore not retranslated.
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) except the exchange differences arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded, in so far as they relate to the acquisition of depreciable capital assets, are shown by addition to/deduction from the cost of the assets as per exemption provided under Ind AS 21 read along with Clause-D13AA, Appendix âDâ of IndAS-101.
(ii) Company designates certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions.
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and accumulated in the cash flow hedging reserve. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in the net profit in the statement of profit and loss. If the hedging instrument no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the forecasted transaction occurs. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the net profit in the statement of profit and loss upon the occurrence of the related forecasted transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified to net profit in the statement of profit and loss.
k) Employee Benefits
Expenses and liabilities in respect of employee benefits are recorded in accordance with Indian Accounting Standard 19 - Employee Benefits.
(i) Provident Fund and ESI
The Company makes contribution to statutory Provident Fund and Employee State Insurance in accordance with
Employees Provident Fund and Miscellaneous Provisions Act, 1952 and Employee State Insurance Act, 1948 which is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.
(ii) Gratuity
Gratuity is a post employment benefit and is in the nature of a defined benefit plan. The liability recognised in the balance sheet in respect of gratuity is the present value of the defined benefit/obligation at the balance sheet date less the fair value of plan assets, together with adjustment for unrecognized actuarial gains or losses and past service costs. The defined benefit/obligation is calculated at or near the balance sheet date by an independent actuary using the projected unit credit method.
Gains and losses through re-measurements of the net defined benefit liability/(asset) are recognized in other comprehensive income. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligations recognized in Other Comprehensive Income. The effect of any plan amendments are recognized in net profits in the Statement of Profit and Loss.
(iii) Compensated Absences
The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each balance sheet date using projected unit credit method on the additional amount expected to be paid/ availed as a result of the unused entitlement that has accumulated at the balance sheet date. Gains and losses through re-measurements of the net defined benefit liability/(asset) are recognized in other comprehensive income.
(iv) Superannuation Benefit
The Company makes contribution to superannuation fund which is a post employment benefit in the nature of a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.
(v) Other Short Term Benefits
Expense in respect of other short term benefits is recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee.
l) Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
For arrangements entered into prior to 1 April 2015, the company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.
Where the Company is the lessee
Finance leases are capitalized as assets at the commencement of the lease, at an amount equal to the fair value of leased asset or present value of the minimum lease payments, whichever is lower, valued at the inception date. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized as finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the companyâs general policy on borrowing cost. A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.
Operating lease payments are recognized as an operating expense in the statement of profit and loss on a straight-line basis over the lease term.
Where the Company is the lessor
Rental Income from operating leases is recognized on a straight-line basis over the term of the relevant lease, Costs including depreciation are recognized as an expense in the statement of profit and loss. Initial direct costs incurred in negotiating and arranging an operating lease are recognized immediately in the Statement of Profit and Loss.
m) Segment Accounting and Reporting
The chief operational decision maker monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit and loss and is measured consistently with profit and loss in the financial statements.
The Operating Segments have been identified on the basis of the nature of products/ services.
(1) Segment Revenue includes sales and other income directly identifiable with/ allocable to the segment including inter- segment revenue.
(2) Expenses that are directly identifiable with/ allocable to the segments are considered for determining the segment result. Expenses not allocable to segments are included under unallocable expenditure.
(3) Income not allocable to the segments is included in unallocable income
(4) Segment results includes margin on inter segment and sales which are reduced in arriving at the profit before tax of the company.
(5) Segment assets and Liabilities include those directly identifiable with the respective segments. Assets and liabilities not allocable to any segment are classified under unallocable category.
n) Taxes on Income
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of profit and loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the Minimum Alternative tax (MAT) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.
Deferred Tax
Deferred tax is provided using the balance sheet approach on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose at reporting date.
Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized.
The carrying amount of deferred tax assets are 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 assets to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow deferred tax assets to be recovered.
The company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
o) Government grants and subsidies
Government grants are recognized where there is reasonable assurance that the company will comply with the conditions attaching to them and the grants will be received.
Government grants shall be recognized in profit or loss on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognized as income in equal amounts over the expected useful life of the related asset.
When the company receives grants of non-monetary assets, the asset and the grant are recorded at fair value and recognize to statement of profit and loss on a systematic basis over the useful life of the asset.
The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.
p) Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized 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.
Interest bearing loans and borrowings has been restated to amortized cost using effective interest rate method with the discount accreted through the statement of profit and loss.
q) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and are liable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
r) Earning Per Share
Basic earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.
s) Financial instruments Initial recognition
The company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through profit or loss, are added to the fair value on initial recognition.
Subsequent measurement
For the purpose of subsequent measurement financial assets are classifies in three broad categories:
A. Non-derivative financial instruments
(i) Debt instrument carried at amortized cost
A debt instrument is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(ii) Financial assets at fair value through other comprehensive income
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model. Further, in cases where the company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.
(iii) Financial assets at fair value through profit or loss
A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss.
(iv) Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through profit and loss. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
(v) Investment in Subsidiaries, Associates and Joint Ventures
Investment in subsidiaries, associates and joint ventures is carried at cost in the separate financial statements.
(vi) Cash and cash equivalents
Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value. Cash and cash equivalents consist of balances with banks which are unrestricted for withdrawal and usage.
(vii) Impairment of Financial Assets
The company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognized as an impairment gain or loss in profit or loss.
B. Derivative financial instruments
The company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank.
(i) Financial assets or financial liabilities, at fair value through profit or loss.
This category has derivative financial assets or liabilities which are not designated as hedges. Although the company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments. Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss.
ii) Cash flow hedge
The company designates certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions. When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and accumulated in the cash flow hedging reserve. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in the net profit in the statement of profit and loss. If the hedging instrument no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the forecasted transaction occurs. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the net profit in the statement of profit and loss upon the occurrence of the related forecasted transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified to net profit in the statement of profit and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset) is primarily derecognized when:
(i) The contractual right to receive cash flows from the assets have expired, or
(ii) The company has transferred its right to receive cash flow from the financial assets and substantially all the risks and rewards of ownership of the asset to another party.
Reclassification of financial assets
The company determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are equity instruments and financial liabilities. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be infrequent. The companyâs senior management determines change in the business model as a result of external or internal changes which are significant to the Companyâs operations. Such changes are evident to external parties. A change in the business model occurs when the company either begins or ceases to perform an activity that is significant to its operations. If the company reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The company does not restate any previously recognised gains, losses (including impairment gains or losses) or interest.
t) Fair Value Measurement
The Company measures financial instruments such as derivatives and certain investments, at the fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
(i) In the principal market for the asset or liability. Or
(ii) In the absence of a principal market, in the most advantageous market for the assets 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.
A fair value measurement of a non-financial assets takes into account a market participantâs ability to generate economic benefits by using the assets 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 whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized in the balance sheet on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. Use of Estimates
Mar 31, 2016
The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAp).The financial statements have been prepared to comply in all material respects with the accounting standards prescribed under the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules, 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention.
The accounting policies adopted in the preparation of financial statements are consistent with those of the previous year.
2.1 Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. difference between the actual results and estimates are recognized in the period in which the results are known / materialized.
2.2 Revenue Recognition Sale of goods
Revenue is recognized to the extent that it is probable, that the economic benefits will flow to the Company and the revenue can be reliably measured.
(i) Revenue is recognized in respect of export sales on the basis of shipment of goods to customer and in respect of domestic sales on dispatch from factory. Quality rebates, claims and other discounts are disclosed separately.
(ii) domestic sales includes excise duty. However, excise duty on sales is reduced from gross turnover for disclosing net turnover.
(iii) power generated at the power plants is primarily consumed by the manufacturing units and excess power is sold to SEBs/IEx which is included in the sales as below:
i) power transferred to Graphite unit at MpEB rate.
ii) Excess power generated is sold to SEB''s at rate stipulated by SEB''s and/or IEX at market rate.
iv) Inter-divisional sales comprising of sale of power from power plants to Graphite unit is reduced from gross turnover in deriving net turnover.
v) Income and export incentives / benefits are accounted for on accrual basis and as per principles given under AS-9 - Revenue Recognition.
vi) Entitlement to Renewal Energy Certificates owing to generation of power at hydel plant are recognized to the extent sold at actual rate of net realization.
Dividends
Revenue in respect of dividends is recognized when the shareholders'' right to receive payment is established by the balance sheet date. Interest Income
Interest income is recognized on time proportion basis taking into account the amount outstanding and the applicable interest rate.
2.3 Inventories
i) Finished goods and work-in-progress are valued at lower of historical cost or net realizable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. By products are valued at net realizable value. Cost is determined on a weighted average basis.
ii) Stores, spares and raw materials are valued at lower of historical cost or net realizable value. However materials & other items held for use in the production of inventories are not written below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
iii) Cost is determined on the basis of weighted average method.
iv) Obsolete stocks are identified every year on the basis of technical evaluation and are charged off to revenue.
v) Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
2.4 Investments
Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value. Long-term investments are carried at cost individually. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments in case of long term investments.
2.5 Fixed & Intangible Assets Fixed Assets
Fixed assets are stated at historical cost less accumulated depreciation and impairment loss if any. Historical cost comprises the purchase price (net of CENVAT / duty credits wherever applicable) and all direct costs attributable to bringing the asset to its working condition for intended use.
Intangible Assets
Capital expenditure on purchase and development of identifiable assets without physical substance is recognized as intangible assets in accordance with principles given under AS-26 Intangible Assets. These are grouped and separately shown under the schedule of fixed assets.
2.6 Expenses Incurred During Construction Period
Preliminary project expenditure, capital expenditure, indirect expenditure incidental and related to construction / implementation, interest on borrowings to finance fixed assets and expenditure on start-up / commissioning of assets forming part of a composite project are capitalized up to the date of commissioning of the project as the cost of respective assets.
2.7 Depreciation & Amortization
Based on internal assessment and independent technical evaluation carried out by external valuers the management believes that the useful lives as given below best represent the period over which management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.
(iv) Assets costing up to Rs. 5,000 are fully depreciated in the year of purchase.
(v) Intangible assets are amortized over a period of 3-5 years on a straight line basis.
2.8 Impairment of Assets
Assets are grouped at the lowest levels for which there are separately identifiable cash flows (i.e. cash generating units), for the purpose of assessing impairment at each balance sheet date. Assets within a Cash Generating Unit (CGU) are reviewed for impairment wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount at which the assets under individual CGu are carried in the books exceeds its recoverable amount being the higher of the assets net selling price and its value in use. Value in use is based on the present value of the estimated future cash flows relating to the assets.
Previously recognized impairment losses, relating to assets other than goodwill, are reversed where the recoverable amount increases because of favorable changes in the estimates used to determine the recoverable amount since the last impairment was recognized. A reversal of an asset impairment loss is limited to its carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized in prior years.
2.9 Foreign Exchange Transactions/Translation
a) 1. Export and import transactions are accounted for at the prevailing conversion rates.
2. Monetary items denominated in foreign currencies (except financial instruments designated as Hedging Instruments) and outstanding at the yearend are translated at year end conversion rates.
3. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the statement of profit and loss.
4. The Company has opted to avail the choice provided under paragraph 46A of AS11: The Effects of Changes in Foreign Exchange Rates inserted vide notification No GSR 914(E) dated December 29,2011 issued by the Ministry of Corporate Affairs. Consequently, the exchange differences on long term foreign currency monetary items are being dealt with in the following manner:
- Foreign exchange difference on acquisition of a depreciable asset, is adjusted in the cost of the depreciable asset, which would be depreciated over the balance life of the asset.
- In other cases, the foreign exchange difference is accumulated in Foreign Currency Monetary Item Translation Difference Account, and amortized over the balance period of such long term assets/ liability.
b) Pursuant to The Institute of Chartered Accountants of India (ICAI) announcement "Accounting for Derivatives" on the early adoption of Accounting Standard AS 30 "Financial Instruments: Recognition and Measurement", the Company had early adopted the AS-30 in earlier financial years, to the extent that such adoption does not conflict with existing mandatory Accounting Standards and other authoritative pronouncements, Company Law and other regulatory requirements.
The Company uses various financial instruments to hedge its exposure to movements in foreign exchange rates. A financial instrument is designated as an effective hedge after the management objectively evaluates at the inception of each contract as to whether the instrument is effective in offsetting the cash flows attributable to the hedged risk. The same evaluation is carried out at the end of each reporting period. In the absence of such hedge being identified or being continued to be identified as an effective hedge, the value thereof is taken to statement of profit & loss.
Exchange differences relating to cash flow hedge are accumulated in a hedging reserve account. Amounts from hedging reserve account are transferred to statement of profit & loss when :
(a) the forecast transaction materializes,
(b) the hedging instrument expires or is sold, terminated or exercised (except for the replacement or rollover of a hedging instrument into another hedging instrument where such replacement or rollover is part of the Company''s hedging strategy),
(c) The hedge no longer meets the criteria for Hedge accounting in AS-30,
(d) The Company revokes the designation.
Hedge effectiveness of financial instruments designated as hedging instruments is evaluated at the end of each financial reporting period.
2.10 Research and Development
Revenue expenditure on research and development including salaries, consumables and power & fuel is charged to statement of profit and loss under respective heads of expenditure. Capital expenditure is shown as addition to fixed assets.
2.11 Employee Benefits
Expenses and liabilities in respect of employee benefits are recorded in accordance with Accounting Standard 15 - Employee Benefits.
(i) Provident Fund & ESI
The Company makes contribution to statutory Provident Fund and Employee State Insurance in accordance with Employees Provident Fund and Miscellaneous Provisions Act, 1952 and Employee State Insurance Act, 1948 which is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.
(ii) Gratuity
Gratuity is a post employment benefit and is in the nature of a defined benefit plan. The liability recognized in the balance sheet in respect of gratuity is the present value of the defined benefit/obligation at the balance sheet date less the fair value of plan assets, together with adjustment for unrecognized actuarial gains or losses and past service costs. The defined benefit/obligation is calculated at or near the balance sheet date by an independent actuary using the projected unit credit method. Actuarial gains and losses arising from past experience and changes in actuarial assumptions are charged or credited to the statement of profit and loss in the year to which they occur.
(iii) Compensated Absences
Liability in respect of compensated absence becoming due or expected after the balance date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method.
(iv) Superannuation Benefit
The Company makes contribution to superannuation fund which is a post employment benefit in the nature of a defined contribution plan & contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.
(v) Other Short Term Benefits
Expense in respect of other short term benefits is recognized on the basis of the amount paid or payable for the period during which services are rendered by the employee.
2.12 Leases
Where the Company is the lessee
Leases where the less or effectively retains substantially all the risks and benefits of the ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.
Where the company is the less or
Assets subject to operating leases are included in fixed assets. Lease income is recognized in the statement of profit and loss on a straight-line basis over the lease term. Costs, including depreciation are recognized as an expense in the statement of profit and loss. Initial direct costs such as legal costs, brokerage costs, etc. are recognized immediately in the statement of profit and loss.
2.13 Segment Accounting & Reporting Identification of Segments
The Company''s operating businesses are organized and managed separately according to the nature of products manufactured and services provided, with each segment representing a strategic business unit that offers different products.
Allocation of Common Costs
Common allocable costs are allocated to each segment on reasonable basis.
Unallocated Items
Unallowable assets and liabilities represent the assets and liabilities not allocable to any segment as identified as per the Accounting Standard.
Segment Policies
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.
2.14 Taxes on Income
Tax expense comprises of current and deferred tax. Provision for current tax is made in accordance with the provisions of income tax act, 1961.
In accordance with Accounting Standard AS-22 ''Accounting for Taxes on Income'' as notified by Companies (Accounting Standards) Rules, 2006 deferred Tax Liability/ Asset arising from timing differences between book and income tax profits is accounted for at the current rate of tax to the extent these differences are expected to crystallize in later years. However, deferred tax assets are recognized only if there is a reasonable/ virtual certainty of realization thereof. deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date.
MAT credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the minimum alternative tax (mat) credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the institute of chartered accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as mat credit entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal income tax during the specified period.
2.15 Government Grants & Subsidies
Grants and subsidies from the Government are recognized when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with.
When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate.
Where the grant or subsidy relates to an asset, its value is deducted from the gross value of the asset concerned in arriving at the carrying amount of the related asset.
2.16 Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
2.17 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when there is a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. A contingent liability is recognized for:
(i) a present obligation that arises from past events but is not recognized as a provision because either the possibility that an outflow of resources embodying economic benefits will be required to settle the obligation is remote or a reliable estimate of the amount of the obligation cannot be made; and
(ii) a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Company.
Contingent assets are neither accounted for nor disclosed in the financial statements.
2.18 Earning Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. partly paid equity shares are treated as a fraction of an equity share to the extent that they were entitled to participate in dividends relative to a fully paid equity share during the reporting period. The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
2.19 Cash and Cash equivalents
Cash and cash equivalents include cash in hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less.
Of the above
Mar 31, 2015
1.1 Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities as at the date of
the financial statements and the results of operations during the
reporting period. Although these estimates are based upon management's
best knowledge of current events and actions, actual results could
differ from these estimates. Difference between the actual results and
estimates are recognized in the period in which the results are known /
materialized.
1.2 Revenue Recognition
Sale of Goods
Revenue is recognized to the extent it is probable, that the economic
benefits will flow to the Company and the revenue can be reliably
measured.
(i) Revenue is recognized in respect of export sales on the basis of
shipment of goods to customer and in respect of domestic sales on
dispatch from factory. Quality rebates, claims and other discounts are
disclosed separately.
(ii) Domestic Sales includes excise duty. However, excise duty on sales
is reduced from gross turnover for disclosing net turnover.
(iii) Power generated at the power plants is primarily consumed by the
manufacturing units and excess power is sold to SEBs/IEX which is
included in the sales as below:
i) Power generated at Thermal Power unit at Mandideep is transferred to
Graphite unit at MPEB rate.
ii) Excess power generated is sold to SEB's at rate stipulated by SEB's
and/or IEX at Market Rate.
iv) Inter-divisional sales comprising of sale of power from power
plants to Graphite unit is reduced from revenue from operations in
deriving net revenue.
v) Income and Export Incentives / benefits are accounted for on accrual
basis and as per principles given under AS-9 - Revenue Recognition.
vi) Power generated from Hydel Plant at TAWA is sold to SEB/ IEX at the
prevailing rates. Entitlement to Renewal Energy Certificates owing to
generation of power are recognized to the extent sold at actual rate of
net realization.
Dividends
Revenue in respect of dividends is recognised when the shareholders'
right to receive payment is established by the balance sheet date.
1.3 Inventories
i) Finished goods and work-in-progress are valued at lower of
historical cost or net realizable value. Cost of inventories comprises
of cost of purchase, cost of conversion and other costs incurred in
bringing them to their respective present location and condition.
By-products are valued at net realisable value. Cost is determined on a
weighted average basis.
ii) Stores, Spares and Raw Materials are valued at lower of historical
cost or net realisable value. However materials & other items held for
use in the production of inventories are not written below cost if the
finished products in which they will be incorporated are expected to be
sold at or above cost.
iii) Cost is determined on the basis of weighted average method.
iv) Obsolete stocks are identified every year on the basis of technical
evaluation and are charged off to revenue.
v) Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
1.4 Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current investments
are carried at lower of cost and fair value. Long-term investments are
carried at cost individually. However, provision for diminution in value
is made to recognise a decline other than temporary in the value of the
investments in case of long term investments.
1.5 Fixed & Intangible Assets Fixed Assets
Fixed assets are stated at historical cost less accumulated
depreciation and impairment loss if any. Historical cost comprises the
purchase price (net of CENVAT / duty credits wherever applicable) and
all direct costs attributable to bringing the asset to its working
condition for intended use.
Intangible Assets
Capital expenditure on purchase and development of identifiable assets
without physical substance is recognized as Intangible Assets in
accordance with principles given under AS-26 - Intangible Assets. These
are grouped and separately shown under the schedule of Fixed Assets.
1.6 Expenses Incurred During Construction Period
Preliminary project expenditure, capital expenditure, indirect
expenditure incidental and related to construction / implementation,
interest on borrowings to finance fixed assets and expenditure on
start-up / commissioning of assets forming part of a composite project
are capitalized upto the date of commissioning of the project as the
cost of respective assets.
1.7 Depreciation & Amortisation
Based on internal assessment and independent technical evaluation
carried out by external valuers the management believes that the useful
lives as given below best represent the period over which management
expects to use these assets.Hence the useful lives for these assets is
different from the useful lives as prescribed under Part C of Schedule
II of the Companies Act, 2013.
Assets description Useful Life
Building 30-60 Years
Plant & Machinary 9-20 Years
Railway Siding 9 Years
Office Equipment(Includes Computers &
data proccessing units) 6-20 Years
Electrical Installation 20 Years
Furniture & Fixtures 15 Years
Vehicle 10 Years
And Depreciation is charged on the following basis:-
(i) On Plant & Machinery and other assets of Hydel Power Project at
Tawa, at the rates notified under the Electricity Act as per approval
of Ministry of Corporate Affairs, which are as follows:
Sl. No. Description of Asset Rate of Depreciation
(%)
1 Land 5.00
2 Factory Building 3.02
3 Non Factory Building 3.02
4 Plant & Machinery
i) Dams, Spillways weirs, canals, reinforced
concrete Flumes and symphons 1.95
ii) Hydraulic control valves and other
hydraulic works 3.40
iii) Transformers having a rating of
100 KVA and over 7.81
5 Electrical Installation
i) Batteries 33.40
ii) Lines on Fabricated steel operating at
normal voltages higher than 66 kv 5.27
iii) Residual 7.84
6 Furniture and Fixtures 12.77
7 Office Equipment and other assets 12.77
8 Vehicles 33.40
(ii) a) On Plant & Machinery other than those mentioned at (i) above,
on straight line method,
b) On other fixed assets, on written down value method, in the manner
as prescribed in Companies Act, 2013 and rate as per prescribed useful
life above.
(iii) Cost of acquisition & improvement of lease hold land is amortized
over the lease period.
(iv) Assets costing upto Rs.5,000 are fully depreciated in the year of
purchase.
(v) Intangible assets are amortised over a period of 3-5 years on a
straight line basis.
1.8 Impairment of Assets
Assets are grouped at the lowest levels for which there are separately
identifiable cash flows (i.e. cash generating units). For the purpose
of assessing impairment at each Balance Sheet date, Assets within a
Cash Generating Unit are reviewed for impairment wherever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognized for the amount at which
the assets under individual Cash Generating Unit are carried in the
books exceeds its recoverable amount being the higher of the assets net
selling price and its value in use. Value in use is based on the
present value of the estimated future cash flows relating to the
assets.
Previously recognized impairment losses, relating to assets other than
goodwill, are reversed where the recoverable amount increases because
of favourable changes in the estimates used to determine the
recoverable amount since the last impairment was recognized. A
reversal of an asset impairment loss is limited to its carrying amount
that would have been determined (net of depreciation or amortization)
had no impairment loss been recognized in prior years.
1.9 Foreign Exchange Transactions/Translation
a) 1. Export and Import transactions are accounted for at the
prevailing conversion rates.
2. Monetary items denominated in foreign currencies (except financial
instruments designated as Hedging Instruments) and outstanding at the
year end are translated at year end conversion rates.
3. Any income or expense on account of exchange difference either on
settlement or on translation is recognized in the Statement of Profit
and Loss.
4. The Company has opted to avail the choice provided under paragarph
46A of AS11: The Effects of Changes in Foreign Exchange Rates inserted
vide notification No GSR 914(E) dated December 29,2011 issued by the
Ministry of Corporate affairs. Consequently,the following exchange
differences on long term foreign currency monetary items,which were
until now being recognised in the Statement of Profit and Loss are now
being dealt with in the following manner:
* Foreign exchange difference on acquisition of a depreciable asset, is
adjusted in the cost of the depreciable asset, which would be
depreciated over the balance life of the asset.
* In other cases, the foreign exchange difference is accumulated in a
Foreign Currency Monetary Item Translation Difference Account, and
amortised over the balance period of such long term asset/ liability.
b) Pursuant to The Institute of Chartered Accountants of India (ICAI)
announcement "Accounting for Derivatives" on the early adoption of
Accounting Standard AS 30 "Financial Instruments: Recognition and
Measurement", the Company had early adopted the AS-30 in earlier
financial years, to the extent that such adoption does not conflict
with existing mandatory Accounting Standards and other authoritative
pronouncements, Company law and other regulatory requirements.
The Company uses various financial instruments to hedge its exposure to
movements in foreign exchange rates. A financial instrument is
designated as an effective hedge after the management objectively
evaluates at the inception of each contract as to whether the
instrument is effective in offsetting the cash flows attributable to
the hedged risk. The same evaluation is carried out at the end of each
reporting period. In the absence of such hedge being identified or
being continued to be identified as an effective hedge, the value
thereof is taken to Statement of Profit & Loss.
Exchange differences relating to cash flow hedge are accumulated in a
hedging reserve account. Amounts from hedging reserve account are
transferred to Statement of Profit & Loss when
(a) the forecast transaction materializes,
(b) the hedging instrument expires or is sold, terminated or exercised
(except for the replacement or rollover of a hedging instrument into
another hedging instrument where such replacement or rollover is part
of the Company's hedging strategy),
(c) the hedge no longer meets the criteria for hedge accounting in
AS-30,
(d) the Company revokes the designation.
Hedge effectiveness of financial instruments designated as Hedging
instruments is evaluated at the end of each financial reporting Period.
1.10 Research and Development
Revenue expenditure on research and development including salaries,
consumables and power & fuel is charged to Statement of Profit and Loss
under respective heads of expenditure. Capital expenditure is shown as
addition to fixed assets.
1.11 Employee Benefits
Expenses and liabilities in respect of employee benefits are recorded
in accordance with Accounting Standard 15 - Employee Benefits.
(i) Provident Fund & ESI
The Company makes contribution to Statutory Provident Fund and Employee
State Insurance in accordance with Employees Provident Fund and
Miscellaneous Provisions Act, 1952 and Employee State Insurance Act,
1948 which is a defined contribution plan and contribution paid or
payable is recognized as an expense in the period in which services are
rendered by the employee.
(ii) Gratuity
Gratuity is a post employment benefit and is in the nature of a defined
benefit plan. The liability recognised in the balanc e sheet in respect
of gratuity is the present value of the defined benefit/obligation at
the balance sheet date less the fair value of plan assets, together
with adjustment for unrecognized actuarial gains or losses and past
service costs. The defined benefit/obligation is calculated at or near
the balance sheet date by an independent actuary using the projected
unit credit method. Actuarial gains and losses arising from past
experience and changes in actuarial assumptions are charged or credited
to the Statement of Profit and Loss for the period in which they occur.
(iii) Compensated Absences
Liability in respect of compensated absence becoming due or expected
after the balance sheet date is estimated on the basis of an actuarial
valuation performed by an independent actuary using the projected unit
credit method.
(iv) Superannuation Benefit
The Company makes contribution to superannuation fund which is a post
employment benefit in the nature of a defined contribution plan &
contribution paid or payable is recognized as an expense in the period
in which services are rendered by the employee.
(v) Other Short Term Benefits
Expense in respect of other short term benefits is recognised on the
basis of the amount paid or payable for the period during which
services are rendered by the employee.
1.12 Leases
Where the Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of the ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term.
Where the Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Statement of Profit and Loss on a
straight-line basis over the lease term. Costs, including depreciation
are recognized as an expense in the Statement of Profit and Loss.
Initial direct costs such as legal costs, brokerage costs, etc. are
recognized immediately in the Statement of Profit and Loss.
1.13 Segment accounting & reporting Identification of Segments
The Company's operating businesses are organized and managed separately
according to the nature of products manufactured and services provided,
with each segment representing a strategic business unit that offers
different products.
Allocation of Common Costs
Common allocable costs are allocated to each segment on reasonable
basis.
Unallocated Items
Unallocable assets and liabilities represent the assets and liabilities
not allocable to any segment as identified as per the Accounting
Standard.
Segment Policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
1.14 Taxes On Income
Tax expense comprises of current and deferred tax. Provision for Current
Tax is made in accordance with the provisions of Income Tax Act, 1961.
In accordance with Accounting Standard AS-22 'Accounting for Taxes on
Income' as notified by Companies (Accounting Standards) Rules, 2006
Deferred Tax Liability/ Asset arising from timing differences between
book and income tax profits is accounted for at the current rate of tax
to the extent these differences are expected to crystallize in later
years. However, deferred tax assets are recognized only if there is a
reasonable/ virtual certainty of realization thereof. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date.
MAT credit is recognized as an asset only when and to the extent there
is convincing evidence that the Company will pay normal income tax
during the specified period. In the year in which the Minimum
Alternative tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in Guidance Note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of a credit to the Statement of Profit and Loss
and shown as MAT Credit Entitlement. The Company reviews the same at
each balance sheet date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the effect that Company will pay normal Income Tax during the
specified period.
1.15 Government grants & subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that the grant/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expense item, it is recognized
as income over the periods necessary to match them on a systematic
basis to the costs, which it is intended to compensate.
Where the grant or subsidy relates to an asset, its value is deducted
from the gross value of the asset concerned in arriving at the carrying
amount of the related asset.
1.16 Borrowing Cost
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds.
1.17 Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when there is a present obligation as a
result of a past event and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of obligation. A
contingent liability is recognized for:
(i) a present obligation that arises from past events but is not
recognized as a provision because either the possibility that an
outflow of resources embodying economic benefits will be required to
settle the obligation is remote or a reliable estimate of the amount of
the obligation cannot be made; and
(ii) a possible obligation that arises from past events and the
existence of which will be confirmed only by the occurrence or non-
occurrence of one or more uncertain future events not wholly within the
control of the Company.
Contingent assets are neither accounted for nor disclosed in the
financial statements.
1.18 Earning Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events of bonus issue, bonus element in a rights issue to
existing shareholders, share split and reverse share split
(consolidation of shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
1.19 Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits with
banks, other short-term highly liquid investments with original
maturities of three months or less.
Mar 31, 2013
1.1 Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates. Difference between the actual results and
estimates are recognized in the period in which the results are known /
materialized.
1.2 Revenue recognition Sale of Goods
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
i) Revenue is recognized in respect of export sales on the basis of
shipment of goods to customer and in respect of domestic sales on
dispatch from factory. Quality rebates, claims and other discounts are
disclosed separately.
ii) Domestic Sales includes excise duty. However, excise duty on sales
is reduced from gross turnover for disclosing net turnover.
iii) Power generated at the power plants is primarily consumed by the
manufacturing units and excess power is sold to SEBs which is included
in the sales as below:
i) Power generated at Thermal Power unit at Mandideep is transferred to
Graphite unit at MPEB rate.
ii) Excess power generated is sold to SEB''s at rate stipulated by
SEB''s.
iv) Inter-divisional sales comprising of sale of power from power
plants to Graphite unit is reduced from gross turnover in deriving net
turnover.
v) Income and Export Incentives / benefits are accounted for on accrual
basis and as per principles given under AS-9 - Revenue Recognition.
vi) Power generated from Hydel Plant at TAWA is sold to SEB/ IEX at the
prevailing rates. Entitlement to Renewal Energy Certificates owing to
generation of power are recognized to the extent sold at actual rate of
net realization and on accrual basis.
Dividends
Revenue in respect of dividends is recognised when the shareholders''
right to receive payment is established by the balance sheet date.
1.3 Inventories
i. Finished goods and work in progress are valued at lower of
historical cost or net realizable value. Cost of inventories comprises
of cost of purchase, cost of conversion and other costs incurred in
bringing them to their respective present location and condition. By
products are valued at net realisable value. Cost is determined on a
weighted average basis.
ii. Stores, Spares and Raw Materials are valued at lower of historical
cost or net realisable value. However materials & other items held for
use in the production of inventories are not written below cost if the
finished products in which they will be incorporated are expected to be
sold at or above cost.
iii. Cost is determined on the basis of weighted average method.
iv. Obsolete stocks are identified every year on the basis of
technical evaluation and are charged off to revenue.
v. Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
1.4 Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value. Long-term
investments are carried at cost individually. However, provision for
diminution in value is made to recognise a decline other than temporary
in the value of the investments in case of long term investments.
1.5 Fixed & intangible assets Fixed Assets
Fixed assets are stated at historical cost less accumulated
depreciation and impairment loss if any. Historical cost comprises the
purchase price (net of CENVAT / duty credits wherever applicable) and
all direct costs attributable to bringing the asset to its working
condition for intended use.
Intangible Assets
Capital expenditure on purchase and development of identifiable assets
without physical substance is recognized as Intangible Assets in
accordance with principles given under AS-26 - Intangible Assets. These
are grouped and separately shown under the schedule of Fixed Assets.
1.6 Expenses incurred during construction period
Preliminary project expenditure, capital expenditure, indirect
expenditure incidental and related to construction / implementation,
interest on borrowings to finance fixed assets and expenditure on
start-up / commissioning of assets forming part of a composite project
are capitalized upto the date of commissioning of the project as the
cost of respective assets.
1.7 Depreciation & Amortisation
Depreciation is charged on the following basis:
i) On Plant & Machinery and other assets of Hydel Power Project at
Tawa, at the rates notified under the Electricity Act as per approval
of Ministry of Corporate Affairs, which are as follows:
ii) a) On Plant & Machinery other than those mentioned at (i) above, on
straight line method,
b) On other fixed assets, on written down value method, in the manner
and as per rates prescribed in Schedule XIV of the Companies Act, 1956.
iii) Cost of acquisition & improvement of lease hold land is amortized
over the lease period.
iv) The Thermal Power Plant and certain Plant & Machinery of Graphite
Unit of the Company have been considered as Continuous Process Plant
based on technical opinion and depreciation has been provided for
accordingly.
v) Assets costing upto Rs. 5,000 are fully depreciated in the year of
purchase.
vi) Intangible assets are amortised over a period of 3-5 years on a
straight line basis.
1.8 Impairment of assets
Assets are grouped at the lowest levels for which there are separately
identifiable cash flows (i.e. cash generating units). For the purpose
of assessing impairment at each Balance Sheet date, Assets within a
Cash Generating Unit are reviewed for impairment wherever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognized for the amount at which
the assets under individual Cash Generating Unit are carried in the
books exceeds its recoverable amount being the higher of the assets net
selling price and its value in use. Value in use is based on the
present value of the estimated future cash flows relating to the
assets.
Previously recognized impairment losses, relating to assets other than
goodwill, are reversed where the recoverable amount increases because
of favourable changes in the estimates used to determine the
recoverable amount since the last impairment was recognized. A
reversal of an asset impairment loss is limited to its carrying amount
that would have been determined (net of depreciation or amortization)
had no impairment loss been recognized in prior years.
1.9 Foreign exchange transactions/translation
a) 1. Export and Import transactions are accounted for at the
prevailing conversion rates.
2. Monetary items denominated in foreign currencies (except financial
instruments designated as Hedging Instruments) and outstanding at the
year end are translated at year end conversion rates.
3. Any income or expense on account of exchange difference either on
settlement or on translation is recognized in the Statement of Profit
and Loss.
b) Pursuant to The Institute of Chartered Accountants of India (ICAI)
announcement "Accounting for Derivatives" on the early adoption of
Accounting Standard AS 30 "Financial Instruments: Recognition and
Measurement", the Company had early adopted the AS-30 in earlier
financial years, to the extent that such adoption does not conflict
with existing mandatory Accounting Standards and other authoritative
pronouncements, Company law and other regulatory requirements.
The Company uses various financial instruments to hedge its exposure to
movements in foreign exchange rates. A financial instrument is
designated as an effective hedge after the management objectively
evaluates at the inception of each contract as to whether the
instrument is effective in offsetting the cash flows attributable to
the hedged risk. The same evaluation is carried out at the end of each
reporting period. In the absence of such hedge being identified or
being continued to be identified as an effective hedge, the value
thereof is taken to Statement of Profit & Loss.
Exchange differences relating to cash flow hedge are accumulated in a
hedging reserve account. Amounts from hedging reserve account are
transferred to Statement of Profit & Loss when
a) the forecast transaction materializes,
b) the hedging instrument expires or is sold, terminated or exercised
(except for the replacement or rollover of a hedging instrument into
another hedging instrument where such replacement or rollover is part
of the Company''s hedging strategy),
c) the hedge no longer meets the criteria for hedge accounting in
AS-30,
d) the Company revokes the designation.
Hedge effectiveness of financial instruments designated as Hedging
instruments is evaluated at the end of each financial reporting period.
1.10 Research and development
Revenue Expenditure on research and development including salaries,
consumables and power & fuel is charged to Statement of Profit and Loss
under respective heads of expenditure. Capital expenditure is shown as
addition to fixed assets.
1.11 Employee benefits
Expenses and liabilities in respect of employee benefits are recorded
in accordance with Accounting Standard 15 - Employee Benefits.
i) Provident Fund & ESI
The Company makes contribution to statutory provident fund and Employee
State Insurance in accordance with Employees Provident Fund and
Miscellaneous Provisions Act, 1952 and Employee State Insurance Act,
1948 which is a defined contribution plan and contribution paid or
payable is recognized as an expense in the period in which services are
rendered by the employee.
ii) Gratuity
Gratuity is a post employment benefit and is in the nature of a defined
benefit plan. The liability recognised in the balance sheet in respect
of gratuity is the present value of the defined benefit/obligation at
the balance sheet date less the fair value of plan assets, together
with adjustment for unrecognized actuarial gains or losses and past
service costs. The defined benefit/obligation is calculated at or near
the balance sheet date by an independent actuary using the projected
unit credit method. Actuarial gains and losses arising form past
experience and changes in actuarial assumptions are charged or credited
to the Statement of Profit and Loss in the year to which such gains or
losses relate.
iii) Compensated Absence
Liability in respect of compensated absence becoming due or expected
after the balance date is estimated on the basis of an actuarial
valuation performed by an independent actuary using the projected unit
credit method.
iv) Superannuation Benefit
The Company makes contribution to superannuation fund which is a post
employment benefit in the nature of a defined contribution plan &
contribution paid or payable is recognized as an expense in the period
in which services are rendered by the employee.
v) Other Short Term Benefits
Expense in respect of other short term benefits is recognised on the
basis of the amount paid or payable for the period during which
services are rendered by the employee.
1.12 Leases
Where the Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of the ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term.
Where the Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Statement of Profit and Loss on a
straight-line basis over the lease term. Costs, including depreciation
are recognized as an expense in the Statement of Profit and Loss.
Initial direct costs such as legal costs, brokerage costs, etc. are
recognized immediately in the Statement of Profit and Loss.
1.13 Segment accounting & reporting Identification of Segments
The Company''s operating businesses are organized and managed separately
according to the nature of products manufactured and services provided,
with each segment representing a strategic business unit that offers
different products.
Allocation of Common Costs
Common allocable costs are allocated to each segment on reasonable
basis.
Unallocated Items
Unallocable assets and liabilities represent the assets and liabilities
not allocable to any segment as identified as per the Accounting
Standard.
Segment Policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
1.14 Taxes on income
Tax expense comprises of current and deferred. Provision for Current
Tax is made in accordance with the provisions of Income Tax Act, 1961.
In accordance with Accounting Standard AS-22 ''Accounting for Taxes on
Income'' as notified by Companies (Accounting Standards) Rules, 2006
Deferred Tax Liability/ Asset arising from timing differences between
book and income tax profits is accounted for at the current rate of tax
to the extent these differences are expected to crystallize in later
years. However, deferred tax assets are recognized only if there is a
reasonable/ virtual certainty of realization thereof. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date.
MAT credit is recognized as an asset only when and to the extent there
is convincing evidence that the Company will pay normal income tax
during the specified period. In the year in which the Minimum
Alternative tax (MAT) credit becomes eligible to be recognized as an
asset in accordance with the recommendations contained in Guidance Note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of a credit to the Statement of Profit and Loss
and shown as MAT Credit Entitlement. The Company reviews the same at
each balance sheet date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the effect that Company will pay normal Income Tax during the
specified period.
1.15 Government grant''s & subsidies
Grants and subsidies from the government are recognized when there is
reasonable assurance that the grant/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expense item, it is recognized
as income over the periods necessary to match them on a systematic
basis to the costs, which it is intended to compensate.
Where the grant or subsidy relates to an asset, its value is deducted
from the gross value of the asset concerned in arriving at the carrying
amount of the related asset.
1.16 Borrowing cost
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds
1.17 Provisions, contingent liabilities and contingent assets
A provision is recognized when there is a present obligation as a
result of a past event and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of obligation. A
contingent liability is recognized for:
i) a present obligation that arises from past events but is not
recognized as a provision because either the possibility that an
outflow of resources embodying economic benefits will be required to
settle the obligation is remote or a reliable estimate of the amount of
the obligation cannot be made; and
ii) a possible obligation that arises from past events and the
existence of which will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within
the control of the Company.
Contingent assets are neither accounted for nor disclosed in the
financial statements.
1.18 Miscellaneous expenditure
Expenditure incurred on issuance of foreign currency convertible bonds
are being amortized over a period of five years from the date of the
issue of said bonds being the tenor of such bonds.
1.19 Earning per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events of bonus issue, bonus element in a rights issue to
existing shareholders, share split, and reverse share split
(consolidation of shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
1.20 Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits with
banks, other short-term highly liquid investments with original
maturities of three months or less.
Mar 31, 2012
1.1 a) Presentation and disclosure of financial statements
During the year ended 31 March 2012, the revised Schedule VI notified
under the Companies Act, 1956, has become applicable to the Company,
for preparation and presentation of its financial statements. The
adoption of revised Schedule VI does not impact recognition and
measurement principles followed for preparation of these financial
statements. However, it has significant impact on presentation and
disclosures made in the financial statements. The Company has also
reclassified the previous year figures in accordance with the
requirements applicable in the current year.
b) Change in Accounting Policy
The Company has opted to avail the choice provided under paragraph 46A
of AS 11: The Effects of Changes in Foreign Exchange Rates inserted
vide Notification No GSR 914(E) dated December 29, 2011 issued by the
Ministry of Corporate affairs. Consequently, the following exchange
differences on long term foreign currency monetary items, which were
until now being recognised in the Statement of Profit and Loss are now
being dealt with in the following manner:
- Foreign exchange difference on acquisition of a depreciable asset, is
adjusted in the cost of the depreciable asset, which would be
depreciated over the balance life of the asset.
- In other cases, the foreign exchange difference is accumulated in a
Foreign Currency Monetary Item Translation Difference Account, and
amortised over the balance period of such long term asset/ liability.
1.2 Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
period. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates. Difference between the actual results and
estimates are recognised in the period in which the results are known /
materialised.
1.3 Revenue recognition Sale of Goods
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.
i) Revenue is recognised in respect of export sales on the basis of
shipment of goods to customer and in respect of domestic sales on
dispatch from factory. Quality rebates, claims and other discounts are
disclosed separately.
ii) Domestic Sales includes excise duty. However, excise duty on sales
is reduced from gross turnover for disclosing net turnover.
iii) Power generated at the power plants is primarily consumed by the
manufacturing units and excess power is sold to SEBs which is included
in the sales as below: i) Power generated at Hydel Power unit at Tawa
and Thermal Power unit at Mandideep are transferred to Graphite unit at
MPEB rate.
ii) Excess power generated is sold to SEB's at rate stipulated by
SEB's.
iv) Inter-divisional sales comprising of sale of power from power
plants to Graphite unit is reduced from gross turnover in deriving net
turnover.
v) Income and Export Incentives / benefits are accounted for on accrual
basis and as per principles given under AS-9 Ã Revenue Recognition.
Dividends
Revenue in respect of dividends is recognised when the shareholders'
right to receive payment is established by the balance sheet date.
1.4 Inventories
Finished goods and work in progress are valued at lower of historical
cost or net realisable value. Cost of inventories comprises of cost of
purchase, cost of conversion and other costs incurred in bringing them
to their respective present location and condition By products are
valued at net realisable value. Cost of finished goods and by- products
includes excise duty. Cost is determined on a weighted average basis.
i. Stores, Spares and Raw Materials are valued at lower of historical
cost or net realisable value. However materials & other items held for
use in the production of inventories are not written below cost if the
finished products in which they will be incorporated are expected to be
sold at or above cost. Cost is determined on a weighted average basis.
iii. Historical cost is determined on the basis of weighted average
method
iv. Obsolete stocks are identified once every year on the basis of
technical evaluation and are charged off to revenue.
v. Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
1.5 Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value. Long-term
investments are carried at cost individually. However, provision for
diminution in value is made to recognise a decline other than temporary
in the value of the investments in case of long term investments.
1.6 Fixed & intangible assets Fixed Assets
Fixed assets are stated at historical cost less accumulated
depreciation and impairment loss if any. Historical cost comprises the
purchase price (net of CENVAT / duty credits wherever applicable) and
all direct costs attributable to bringing the asset to its working
condition for intended use.
Intangible Assets
Capital Expenditure on purchase and development of identifiable
non-monetary assets without physical substance is recognised as
Intangible Assets in accordance with principles given under AS-26 -
Intangible Assets. These are grouped and separately shown under the
schedule of Fixed Assets. These are amortised over their respective
expected useful lives.
1.7 Expenses incurred during construction period
Preliminary project expenditure, capital expenditure, indirect
expenditure incidental and related to construction / implementation,
interest on borrowings to finance fixed assets and expenditure on
start-up / commissioning of assets forming part of a composite project
are capitalised upto the date of commissioning of the project as the
cost of respective assets.
1.8 Depreciation & amortisation
Depreciation is charged on the following basis:
ii) i) On Plant & Machinery other than those mentioned at (i) above, on
straight line method,
ii) On other fixed assets, on written down value method, in the manner
and as per rates prescribed in Schedule XIV of the Companies Act, 1956.
iii) Cost of acquisition & improvement of lease hold land is amortised
over the lease period.
iv) The Thermal Power Plant and certain Plant & Machinery of Graphite
Unit of the Company have been considered as Continuous Process Plant
based on technical opinion and depreciation has been provided for
accordingly.
v) Assets costing upto Rs. 5,000 are fully depreciated in the year of
purchase.
vi) Intangible assets are amortised over a period of 3-5 Years on a
straight line basis.
1.9 Impairment of assets
Assets are grouped at the lowest levels for which there are separately
identifiable cash flows (i.e. cash generating units). For the purpose
of assessing impairment at each Balance Sheet date, Assets within a
Cash Generating Unit are reviewed for impairment wherever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount at which
the assets under individual Cash Generating Unit are carried in the
books exceeds its recoverable amount being the higher of the assets net
selling price and its value in use. Value in use is based on the
present value of the estimated future cash flows relating to the
assets.
Previously recognised impairment losses, relating to assets other than
goodwill, are reversed where the recoverable amount increases because
of favourable changes in the estimates used to determine the
recoverable amount since the last impairment was recognised. A
reversal of an asset impairment loss is limited to its carrying amount
that would have been determined (net of depreciation or amortization)
had no impairment loss been recognised in prior years.
1.10 Foreign exchange transactions/Translation
a) 1. Export and Import transactions are accounted for at the
prevailing conversion rates.
2. Monetary items denominated in foreign currencies (except financial
instruments designated as Hedging Instruments) and outstanding at the
year end are translated at year end conversion rates.
3. Any income or expense on account of exchange difference either on
settlement or on translation is recognised in the Statement of Profit
and Loss.
b) Pursuant to The Institute of Chartered Accountants of India (ICAI)
announcement "Accounting for Derivatives" on the early adoption of
Accounting Standard AS 30 "Financial Instruments: Recognition and
Measurement", the Company had early adopted the AS-30 in earlier
financial years, to the extent that such adoption does not conflict
with existing mandatory accounting standards and other authoritative
pronouncements, Company law and other regulatory requirements.
The Company uses various financial instruments to hedge its exposure to
movements in foreign exchange rates. A financial instrument is
designated as an effective hedge after the management objectively
evaluates at the inception of each contract as to whether the
instrument is effective in offsetting the cash flows attributable to
the hedged risk. The same evaluation is carried out at the end of each
reporting period. In the absence of such hedge being identified or
being continued to be identified as an effective hedge, the value
thereof is taken to Statement of Profit and Loss.
Exchange differences relating to cash flow hedge are accumulated in a
hedging reserve account. Amounts from hedging reserve account are
transferred to Statement of Profit and Loss when
a) the forecast transaction materialises,
b) the hedging instrument expires or is sold, terminated or exercised
(except for the replacement or rollover of a hedging instrument into
another hedging instrument where such replacement or rollover is part
of the Company's hedging strategy),
c) the hedge no longer meets the criteria for hedge accounting in AS
30,
d) the Company revokes the designation.
Hedge effectiveness of financial instruments designated as Hedging
instruments is evaluated at the end of each financial reporting period.
1.11 Research and development
Revenue Expenditure on research and development including salaries,
consumables and power & fuel is charged to Statement of Profit and Loss
under respective heads of expenditure. Capital expenditure is shown as
addition to fixed assets.
1.12 Employees benefits
Expenses and liabilities in respect of employee benefits are recorded
in accordance with Accounting Standard 15 Ã Employee Benefits.
i) Provident Fund & ESI
The Company makes contribution to statutory provident fund and Employee
State Insurance in accordance with Employees Provident Fund and
Miscellaneous Provisions Act, 1952 and Employee State Insurance Act,
1948 which is a defined contribution plan and contribution paid or
payable is recognised as an expense in the period in which services are
rendered by the employee.
ii) Gratuity
Gratuity is a post employment benefit and is in the nature of a defined
benefit plan. The liability recognised in the balance sheet in respect
of gratuity is the present value of the defined benefit/obligation at
the balance sheet date less the fair value of plan assets, together
with adjustment for unrecognised actuarial gains or losses and past
service costs. The defined benefit/obligation is calculated at or near
the balance sheet date by an independent actuary using the projected
unit credit method. Actuarial gains and losses arising form past
experience and changes in actuarial assumptions are charged or credited
to the Statement of Profit and Loss in the year to which such gains or
losses relate.
iii) Leave Encashment
Liability in respect of leave encashment becoming due or expected after
the balance date is estimated on the basis of an actuarial valuation
performed by an independent Actuary using the projected unit credit
method.
iv) Superannuation Benefit
The Company makes contribution to superannuation fund which is a post
employment benefit in the nature of a defined contribution plan &
contribution paid or payable is recognised as an expense in the period
in which services are rendered by the employee.
v) Other Short Term Benefits
Expense in respect of other short term benefits is recognised on the
basis of the amount paid or payable for the period during which
services are rendered by the employee.
1.13 Leases
Where the Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of the ownership of the leased item, are classified as
operating leases. Operating lease payments are recognised as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term.
Where the Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognised in the Statement of Profit and Loss on a
straight-line basis over the lease term. Costs, including depreciation
are recognised as an expense in the Statement of Profit and Loss.
Initial direct costs such as legal costs, brokerage costs, etc. are
recognised immediately in the Statement of Profit and Loss.
1.14 Segment accounting & reporting Identification of segments
The Company's operating businesses are organised and managed separately
according to the nature of products manufactured and services provided,
with each segment representing a strategic business unit that offers
different products.
Allocation of common costs
Common allocable costs are allocated to each segment on reasonable
basis.
Unallocated items
Unallocable assets and liabilities represents the assets and
liabilities not allocable to any segment as identified as per the
Accounting Standard.
Segment policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
1.15 Taxes on income
Tax expense comprises of current and deferred. Provision for Current
Tax is made in accordance with the provisions of Income Tax Act, 1961.
In accordance with Accounting Standard AS-22 'Accounting for Taxes on
Income' as notified by Companies Accounting Standard Rules, 2006.
Deferred Tax Liability/ Asset arising from timing differences between
book and income tax profits is accounted for at the current rate of tax
to the extent these differences are expected to crystallise in later
years. However, deferred Tax Assets are recognised only if there is a
reasonable/ virtual certainty of realization thereof. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date.
1.16 Government grant & subsidies
Grants and subsidies from the government are recognised when there is
reasonable assurance that the grant/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expense item, it is recognised
as income over the periods necessary to match them on a systematic
basis to the costs, which it is intended to compensate.
Where the grant or subsidy relates to an asset, its value is deducted
from the gross value of the asset concerned in arriving at the carrying
amount of the related asset.
1.17 Borrowing cost
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalised as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds
1.18 Provisions, contingent liabilities and contingent assets
A provision is recognised when there is a present obligation as a
result of a past event and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of obligation. A
contingent liability is recognised for:
i) a present obligation that arises from past events but is not
recognised as a provision because either the possibility that an
outflow of resources embodying economic benefits will be required to
settle the obligation is remote or a reliable estimate of the amount of
the obligation cannot be made.
ii) a possible obligation that arises from past events and the
existence of which will be confirmed only by the occurrence or non-
occurrence of one or more uncertain future events not wholly within the
control of the Company.
iii) Contingent assets are neither accounted for nor disclosed in the
financial statements.
1.19 Miscellaneous expenditure
Expenditure incurred on issuance of foreign currency convertible bonds
are being amortised over a period of five years from the date of the
issue of said bonds being the tenor of such bonds.
1.20 Earning per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events of bonus issue, bonus element in a rights issue to
existing shareholders, share split, and reverse share split
(consolidation of shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
1.21 Cash and cash equivalents
In the cash flow statement, cash and cash equivalents include cash in
hand, demand deposits with banks, other short-term highly liquid
investments with original maturities of three months or less.
Mar 31, 2011
1. Basis of preparation of financial statements The financial
statements have been prepared to comply in all material respects with
the Accounting Standards notified by Companies (Accounting Standards)
Rules, 2006, (as amended and as applicable from time to time) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared under the historical cost convention on
going concern basis. The accounting policies have been consistently
applied by the Company and are consistent with those used in the
previous year. Accounting policies not specifically referred to
otherwise are consistent and in consonance with the generally accepted
accounting principles in India.
2. Use of estimates The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
liabilities at the date of the financial statements that are based upon
management's best knowledge of current events and actions. Difference
between the actual result and estimates are recognised in the period in
which the results are known/ materialised.
3. Revenue recognition Sale of goods
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.
a) Revenue is recognised in respect of export sales on the basis of
shipment of goods to customer and in respect of domestic sales on
dispatch from factory. Quality rebates, claims and other discounts are
disclosed separately.
b) Domestic Sales includes excise duty. However, excise duty on sales
is reduced from gross turnover for disclosing net turnover.
c) Power generated at the power plants is primarily consumed by the
manufacturing units and excess power is sold to SEBs which is included
in the sales as below:
i) Power generated at Hydel Power unit at Tawa and Thermal Power unit
at Mandideep are transferred to Graphite unit at MPEB rate.
ii) Excess power generated is sold to SEB's at rate stipulated by
SEB's.
d) Inter-divisional sales comprising of sale of power from power plants
to Graphite unit is reduced from gross turnover in deriving net
turnover.
e) Income and Export Incentives / benefits are accounted for on accrual
basis and as per principles given under AS-9 Ã Revenue Recognition.
Dividends
Revenue in respect of dividends is recognised when the shareholders'
right to receive payment is established by the balance sheet
date.
4. Valuation of inventories a) Finished goods and work in progress are
valued at lower of historical cost or net realisable value. Cost of
inventories comprises
of cost of purchase, cost of conversion and other costs incurred in
bringing them to their respective present location and condition. By
products are valued at net realisable value. Cost of finished goods and
by- products includes excise duty. Cost is determined on a weighted
average basis.
b) Stores, Spares and Raw Materials are valued at lower of historical
cost or net realisable value. However materials & other items held for
use in the production of inventories are not written below cost if the
finished products in which they will be incorporated are expected to be
sold at or above cost. Cost is determined on a weighted average basis.
c) Historical cost is determined on the basis of weighted average
method.
d) Obsolete stocks are identified once every year on the basis of
technical evaluation and are charged off to revenue.
e) Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
5. Investments Investments that are readily realisable and intended to
be held for not more than a year are classified as current investments.
All other investments are classified as long-term investments. Current
investments are carried at lower of cost and fair value. Long- term
investments are carried at cost individually. However, provision for
diminution in value is made to recognise a decline other than temporary
in the value of the investments in case of long term investments.
6. Fixed assets Fixed assets are stated at historical cost less
accumulated depreciation and impairment loss if any. Historical cost
comprises the purchase price (net of CENVAT / duty credits wherever
applicable) and all direct costs attributable to bringing the asset to
its working condition for intended use.
7. Intangible assets Capital Expenditure on purchase and development
of identifiable non-monetary assets without physical substance is
recognised as Intangible Assets in accordance with principles given
under AS-26 Ã Intangible Assets. These are grouped and separately shown
under the schedule of Fixed Assets. These are amortised over their
respective expected useful lives.
8. Expenses incurred during construction period Preliminary project
expenditure, capital expenditure, indirect expenditure incidental and
related to construction / implementation, interest on borrowings to
finance fixed assets and expenditure on start-up / commissioning of
assets forming part of a composite project are capitalised upto the
date of commissioning of the project as the cost of respective assets.
b) i) On Plant & Machinery other than those mentioned at (a) above, on
straight line method,
ii) On other fixed assets, on written down value method, in the manner
and as per rates prescribed in Schedule XIV of the Companies Act, 1956.
c) Cost of acquisition & improvement of lease hold land is amortised
over the lease period.
d) The Thermal Power Plant and certain Plant & Machinery of Graphite
Unit of the Company have been considered as Continuous Process Plant
based on technical opinion and depreciation has been provided for
accordingly.
e) Assets costing upto Rs.5,000 are fully depreciated in the year of
purchase.
10. Impairment of assets
Assets are grouped at the lowest levels for which there are separately
identifiable cash flows (i.e. cash generating units). For the purpose
of assessing impairment at each Balance Sheet date, Assets within a
Cash Generating Unit are reviewed for impairment wherever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount at which
the assets under individual Cash Generating Unit are carried in the
books exceeds its recoverable amount being the higher of the assets net
selling price and its value in use. Value in use is based on the
present value of the estimated future cash flows relating to the
assets.
Previously recognised impairment losses, relating to assets other than
goodwill, are reversed where the recoverable amount increases because
of favourable changes in the estimates used to determine the
recoverable amount since the last impairment was recognised. A reversal
of an asset impairment loss is limited to its carrying amount that
would have been determined (net of depreciation or amortisation) had no
impairment loss been recognised in prior years.
11. Foreign exchange transactions / translation
a) 1. Export and Import transactions are accounted for at the
prevailing conversion rates.
2. Monetary items denominated in foreign currencies (except financial
instruments designated as Hedging Instruments) and outstanding at the
year end are translated at year end conversion rates.
3. Any income or expense on account of exchange difference either on
settlement or on translation is recognised in the profit and loss
account.
b) Pursuant to The Institute of Chartered Accountants of India (ICAI)
announcement "Accounting for Derivativesà on the early adoption of
Accounting Standard AS 30 "Financial Instruments: Recognition and
MeasurementÃ, the Company had early adopted the AS-30 in earlier
financial years, to the extent that such adoption does not conflict
with existing mandatory accounting standards and other authoritative
pronouncements, Company law and other regulatory requirements.
The Company uses various financial instruments to hedge its exposure to
movements in foreign exchange rates. A financial instrument is
designated as an effective hedge after the management objectively
evaluates at the inception of each contract as to whether the
instrument is effective in offsetting the cash flows attributable to
the hedged risk. The same evaluation is carried out at the end of each
reporting period. In the absence of such hedge being identified or
being continued to be identified as an effective hedge, the value
thereof is taken to profit & loss Account.
Exchange differences relating to cash flow hedge are accumulated in a
hedging reserve account. Amounts from hedging reserve account are
transferred to profit & loss account when
i) the forecast transaction materialises,
ii) the hedging instrument expires or is sold, terminated or exercised
(except for the replacement or rollover of a hedging instrument into
another hedging instrument where such replacement or rollover is part
of the Company's hedging strategy),
iii) the hedge no longer meets the criteria for hedge accounting in AS
30,
iv) the Company revokes the designation.
Hedge effectiveness of financial instruments designated as Hedging
instruments is evaluated at the end of each financial reporting period.
12. Research and development
Revenue Expenditure on research and development including salaries,
consumables and power & fuel is charged to Profit and Loss Account
under respective heads of expenditure. Capital expenditure is shown as
addition to fixed assets.
13. Employees benefits Expenses and liabilities in respect of employee
benefits are recorded in accordance with Accounting Standard 15 Ã
Employee Benefits.
a) Provident fund & ESI The Company makes contribution to statutory
provident fund and Employee State Insurance in accordance with
Employees Provident Fund and Miscellaneous Provisions Act, 1952 and
Employee State Insurance Act, 1948 which is a defined contribution plan
and contribution paid or payable is recognised as an expense in the
period in which services are rendered by the employee.
b) Gratuity Gratuity is a post employment benefit and is in the nature
of a defined benefit plan. The liability recognised in the balance
sheet in respect of gratuity is the present value of the defined
benefit/obligation at the balance sheet date less the fair value of
plan assets, together with adjustment for unrecognised actuarial gains
or losses and past service costs. The defined benefit/obligation is
calculated at or near the balance sheet date by an independent actuary
using the projected unit credit method. Actuarial gains and losses
arising form past experience and changes in actuarial assumptions are
charged or credited to the Profit and Loss Account in the year to which
such gains or losses relate.
c) Leave Encashment Liability in respect of leave encashment becoming
due or expected after the balance sheet date is estimated on the basis
of an actuarial valuation performed by an independent Actuary using the
projected unit credit method.
d) Superannuation Benefit The Company makes contribution to
superannuation fund which is a post employment benefit in the nature of
a defined contribution plan & contribution paid or payable is
recognised as an expense in the period in which services are rendered
by the employee.
e) Other Short Term Benefits Expense in respect of other short term
benefits is recognised on the basis of the amount paid or payable for
the period during which services are rendered by the employee.
14. Leases Where the Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of the ownership of the leased item, are classified as
operating leases. Operating lease payments are recognised as an expense
in the Profit and Loss account on a straight line basis over the lease
term.
Where the Company is the lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognised in the Profit and Loss Account on a straight-line
basis over the lease term. Costs, including depreciation are recognised
as an expense in the Profit and Loss Account. Initial direct costs
such as legal costs, brokerage costs, etc. are recognised immediately
in the Profit and Loss Account.
15. Segment accounting & reporting Identification of segments
The Company's operating businesses are organised and managed separately
according to the nature of products manufactured and services provided,
with each segment representing a strategic business unit that offers
different products.
Allocation of common costs
Common allocable costs are allocated to each segment on reasonable
basis.
Unallocated items
Unallocable assets and liabilities represents the assets and
liabilities not allocable to any segment as identified as per the
Accounting Standard.
Segment policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting
the financial statements of the Company as a whole.
16. Taxes on income
Tax expense comprises of current and deferred. Provision for Current
Tax is made in accordance with the provisions of Income Tax Act, 1961.
In accordance with Accounting Standard AS-22 'Accounting for Taxes on
Income' as notified by Companies Accounting Standard Rules, 2006
Deferred Tax Liability/ Asset arising from timing differences between
book and income tax profits is accounted for at the current rate of tax
to the extent these differences are expected to crystallise in later
years. However, deferred Tax Assets are recognised only if there is a
reasonable/ virtual certainty of realisation thereof. Deferred tax is
measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date.
17. Government grant & subsidies
Grants and subsidies from the government are recognised when there is
reasonable assurance that the grant/subsidy will be received and all
attaching conditions will be complied with.
When the grant or subsidy relates to an expense item, it is recognised
as income over the periods necessary to match them on a systematic
basis to the costs, which it is intended to compensate.
Where the grant or subsidy relates to an asset, its value is deducted
from the gross value of the asset concerned in arriving at the carrying
amount of the related asset.
18. Borrowing cost
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalised as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing
of funds.
19. Provisions, contingent liabilities and contingent assets
A provision is recognised when there is a present obligation as a
result of a past event and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of obligation. A
contingent liability is recognised for:
a) a present obligation that arises from past events but is not
recognised as a provision because either the possibility that an
outflow of resources embodying economic benefits will be required to
settle the obligation is remote or a reliable estimate of the amount of
the obligation cannot be made.
b) a possible obligation that arises from past events and the existence
of which will be confirmed only by the occurrence or non- occurrence of
one or more uncertain future events not wholly within the control of
the Company.
c) Contingent assets are neither accounted for nor disclosed in the
financial statements.
20. Miscellaneous expenditure
Expenditure incurred on issuance of foreign currency convertible bonds
are being amortised over a period of five years from the date of the
issue of said bonds being the tenor of such bonds.
21. Earning per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. Partly
paid equity shares are treated as a fraction of an equity share to the
extent that they were entitled to participate in dividends relative to
a fully paid equity share during the reporting period. The weighted
average number of equity shares outstanding during the period is
adjusted for events of bonus issue, bonus element in a rights issue to
existing shareholders, share split, and reverse share split
(consolidation of shares).
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
22. Cash and cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and cheques in hand.
Mar 31, 2010
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements are prepared under the historical cost
convention, on going concern basis, in terms of the Accounting
Standards issued by the Institute of Chartered Accountants of India and
in compliance with Section 211(3C) of the Companies Act, 1956. The
Company follows the mercantile system of accounting and recognizes
income and expenditure on accrual basis to the extent measurable and
where there is certainty of ultimate realisation in respect of incomes.
Accounting policies not specifically referred to otherwise are
consistent and in consonance with the generally accepted accounting
principles in India.
2. USE OF ESTIMATES
The preparation of financial statements requires estimates and
assumptions that affect the reported amounts of income and expenses for
the period, the reported amounts of assets and liabilities and
disclosures relating to contingent liabilities as on the date of
financial statements. Difference between the actual results and
estimates are recognized in the period in which the results are known /
materialized.
3. REVENUE RECOGNITION
(a) Revenue is recognized in respect of export sales on the basis of
shipment of goods to customer and in respect of domestic sales on
dispatch from factory. Quality rebates, claims and other discounts are
disclosed separately.
(b) Domestic Sales includes excise duty. However, excise duty on sales
is reduced from gross turnover for disclosing net turnover.
(c) Power generated at the power plants is primarily consumed by the
manufacturing units and excess power is sold to SEBs which is included
in the sales as below:
i) Power generated at Hydel Power unit at Tawa is transferred to
Graphite unit at MPEB rate including wheeling charges. Power generated
at Thermal Power unit at Mandideep is transferred to Graphite unit at
MPEB rate.
ii) Excess power generated is sold to SEBs at rate stipulated by
SEBs.
(d) Inter-divisional sales comprising of sale of power from power
plants to Graphite unit is reduced from gross turnover in deriving net
turnover.
(e) Income and Export Incentives / benefits are accounted for on
accrual basis and as per principles given under AS-9 - Revenue
Recognition.
4. VALUATION OF INVENTORIES
(a) Inventories are valued at lower of historical cost or net
realizable value. Cost of inventories comprises of cost of purchase,
cost of conversion and other costs incurred in bringing them to their
respective present location and condition. Materials and other supplies
held for use in the production of inventories are not written down
below cost if the finished products in which they will be incorporated
are expected to be sold at or above cost. However, when there has been
a decline in the price of materials and it is estimated that the cost
of the finished products will exceed net realizable value, the
materials are written down to net realizable value. In such
circumstances, the replacement cost of the material may be the best
available measure of their net realizable value.
(b) Historical cost is determined on the basis of weighted average
method.
(c) Excise duty is included in the valuation of finished goods and
by-product inventory.
(d) Obsolete stocks are identified once every year on the basis of
technical evaluation and are charged off to revenue.
5. INVESTMENTS
Long Term Investments are stated at cost. Provision for diminution in
the value is made in accordance with AS-13 - Accounting for Investments
if the decline/ diminution is other than temporary. Current investments
are stated at lower of cost or market value.
6. CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the cash flow statement comprise cash at
bank and cash/ cheques in hand and short term deposits with Banks less
short term advances from Banks.
7. FIXED ASSETS
(a) Fixed assets are stated at historical cost less accumulated
depreciation. Historical cost comprises the purchase price (net of
CENVAT / duty credits wherever applicable) and all direct costs
attributable to bringing the asset to its working condition for
intended use.
(b) Borrowing costs eligible for capitalization incurred, in respect of
acquisition / construction of a qualifying asset, till the asset is
substantially ready for use, are capitalized as part of the cost of
that asset in accordance with AS-16 - Borrowing Costs.
8. EXPENSES INCURRED DURING CONSTRUCTION PERIOD
Preliminary project expenditure, capital expenditure, indirect
expenditure incidental and related to construction / implementation,
interest on borrowings to finance fixed assets and expenditure on
start-up / commissioning of assets forming part of a composite project
are capitalized upto the date of commissioning of the project as the
cost of respective assets.
10. FOREIGN EXCHANGE TRANSACTIONS / TRANSLATION
(a) 1. Export and Import transactions are accounted for at the
prevailing conversion rates.
2. Monetary items denominated in foreign currencies (except financial
instruments designated as Hedging Instruments) and outstanding at the
year end are translated at year end conversion rates.
3. Any income or expense on account of exchange difference either on
settlement or on translation is recognized in the profit and loss
account.
(b) Pursuant to The Institute of Chartered Accountants of India (ICAI)
announcement "Accounting for Derivatives" on the early adoption of
Accounting Standard AS 30 "Financial Instruments: Recognition and
Measurement", the Company had early adopted the AS-30 in earlier
financial years, to the extent that such adoption does not conflict
with existing mandatory accounting standards and other authoritative
pronouncements, Company law and other regulatory requirements.
The Company uses various financial instruments to hedge its exposure to
movements in foreign exchange rates. A financial instrument is
designated as an effective hedge after the management objectively
evaluates at the inception of each contract as to whether the
instrument is effective in offsetting the cash flows attributable to
the hedged risk. The same evaluation is carried out at the end of each
reporting period. In the absence of such hedge being identified or
being continued to be identified as an effective hedge, the value
thereof is taken to profit & loss Account.
Exchange differences relating to cash flow hedge are accumulated in a
hedging reserve account. Amounts from hedging reserve account are
transferred to profit & loss account when
(i) the forecast transaction materializes,
(ii) the hedging instrument expires or is sold, terminated or exercised
(except for the replacement or rollover of a hedging instrument into
another hedging instrument where such replacement or rollover is part
of the companys hedging strategy),
(iii) the hedge no longer meets the criteria for hedge accounting in AS
30,
(iv) the company revokes the designation.
Hedge effectiveness of financial instruments designated as Hedging
instruments is evaluated at the end of each financial reporting period.
11.RESEARCH AND DEVELOPMENT
Revenue expenditure on Research and Development including salaries,
consumables and power & fuel is charged to Profit and Loss Account
under respective heads of expenditure. Capital expenditure is shown as
addition to fixed assets.
12.RETIREMENT BENEFITS
Expenses and liabilities in respect of employee benefits are recorded
in accordance with Accounting Standard 15 - Employee Benefits (Revised
2005) issued by the ICAI.
(a)Provident Fund
The Company makes contribution to statutory provident fund in
accordance with Employees Provident Fund and Miscellaneous Provisions
Act, 1952 which is a defined contribution plan and contribution paid or
payable is recognized as an expense in the period in which services are
rendered by the employee.
(b)Gratuity
Gratuity is a post employment benefit and is in the nature of a defined
benefit plan.The liability recognised in the balance sheet in respect
of gratuity is the present value of the defined benefit/obligation at
the balance sheet date less the fair value of plan assets, together
with adjustment for unrecognized actuarial gains or losses and past
service costs. The defined benefit/obligation is calculated at or near
the balance sheet date by an independent actuary using the projected
unit credit method. Actuarial gains and losses arising form past
experience and changes in actuarial assumptions are charged or credited
to the Profit and Loss Account in the year to which such gains or
losses relate.
(c)Leave Encashment
Liability in respect of leave encashment becoming due or expected after
the balance sheet date is estimated on the basis of an actuarial
valuation performed by an independent Actuary using the projected unit
credit method.
(d)Superannuation Benefit
The Company makes contribution to superannuation fund which is a post
employment benefit in the nature of a defined contribution plan &
contribution paid or payable is recognized as an expense in the period
in which services are rendered by the employee.
(e)Other Short Term Benefits
Expense in respect of other short term benefits is recognised on the
basis of the amount paid or payable for the period during which
services are rendered by the employee.
13.SEGMENT ACCOUNTING & REPORTING
Segmental accounting policies are in line with the accounting policies
of the Company. However, the following specific accounting policies
have been followed for segment reporting:
(a) Segment revenue includes sales and other income directly
identifiable with / allocable to the segment including inter-segment
revenue.
(b) Expenses that are directly identifiable with / allocable to
segments are considered for determining the segment results. The
expenses / incomes, not allocable to any segments, are included under
"Unallocable items / others".
(c) Segment assets and liabilities include those directly identifiable
with the respective segments. Unallocable assets and liabilities
represent the assets and liabilities not allocable to any segment.
14.TAXES ON INCOME
(a) Provision for Current Tax is made in accordance with the provisions
of Income Tax Act, 1961.
(b) In accordance with the Accounting Standard AS-22 Accounting for
Taxes on Income issued by the Institute of Chartered Accountants of
India, Deferred Tax Liability / Asset arising from timing differences
between book and income tax profits is accounted for at the current
rate of tax to the extent these differences are expected to crystallize
in later years. However, Deferred Tax Assets are recognized only if
there is a reasonable / virtual certainty of realization thereof.
15.INTANGIBLE ASSETS
Capital Expenditure on purchase and development of identifiable
non-monetary assets without physical substance is recognized as
Intangible Assets in accordance with principles given under AS-26 -
Intangible Assets. These are grouped and separately shown under the
schedule of Fixed Assets. These are amortized over their respective
expected useful lives.
16.IMPAIRMENT OF ASSETS
Assets are grouped at the lowest levels for which there are separately
identifiable cash flows (i.e. cash generating units). For the purpose
of assessing impairment at each Balance Sheet date, Assets within a
Cash Generating Unit are reviewed for impairment wherever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognized for the amount at which
the assets under individual Cash Generating Unit are carried in the
books exceeds its recoverable amount being the higher of the assets net
selling price and its value in use. Value in use is based on the
present value of the estimated future cash flows relating to the
assets.
Previously recognized impairment losses, relating to assets other than
goodwill, are reversed where the recoverable amount increases because
of favourable changes in the estimates used to determine the
recoverable amount since the last impairment was recognized. A reversal
of an asset impairment loss is limited to its carrying amount that
would have been determined (net of depreciation or amortization) had no
impairment loss been recognized in prior years.
17.PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
A provision is recognized when there is a present obligation as a
result of a past event and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of obligation. A
contingent liability is recognized for:
(a) a present obligation that arises from past events but is not
recognized as a provision because either the possibility that an
outflow of resources embodying economic benefits will be required to
settle the obligation is remote or a reliable estimate of the amount of
the obligation cannot be made.
(b) a possible obligation that arises from past events and the
existence of which will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within
the control of the company.
(c) contingent assets are neither accounted for nor disclosed in the
financial statements.
18.MISCELLANEOUS EXPENDITURE
Expenditure incurred on issuance of foreign currency convertible bonds
are being amortized over a period of five years from the date of the
issue of said bonds being the tenor of such bonds.