Accounting Policies of IST Ltd. Company
Mar 31, 2023
1. Corporate information and statement of compliance with Indian Accounting Standards (Ind AS)
1ST Limited (âthe Companyâ) a public limited company domiciled in India and having its registered office at Dharuhera Industrial Complex, Delhi-Jaipur Highway no. 8, Kapriwas, Dharuhera, Rewari 123106, was incorporated under the provisions of Companies Act, 1956. The Company is primarily engaged in the business of manufacturing of high precision engineering components / assemblies including auto components.
The financial statements of the Company have been prepared to comply in all material respects with accounting principles generally accepted in India, including Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015 under Section 133 of the Companies Act, 2013 (the âActâ) and other relevant provisions of the Act.
2. Basis of preparation and significant accounting policies
a. Basis of preparation
The financial statements have been prepared on accrual and going concern basis under historical cost convention except for certain financial instruments which are measured at fair values.
The significant accounting policies and measurement bases have been summarised below.
Current versus non-current classification
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and as per terms of agreements wherever applicable. Deferred tax assets and liabilities are classified as non-current assets and non-current liabilities, as the case may be.
b. Revenue recognition
Revenue arises mainly from the sale of manufactured and traded goods.
To determine whether to recognise revenue, the Company follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied.
Revenue from contracts with customers is recognized on transfer of control of promised good or serices to a customer at an amount that reflects the consideration to which the Company is expected to be entitled to in exchange for those goods or services.
Revenue towards satisfactions of a performance obligation is measured at the amount of transaction price (net or variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract. This variable consideration is estimated based on the expected value of outflow. Revenue (net of variable consideration) is recognized only to the extent that it is highly probable that the amount will be subject to significant reversal when uncertainty relating to its recognition is resolved.
The following specific recognition criteria must also be met before revenue is recognised :
Sale of goods
Revenue from sale of goods is recognised when the control of goods is transferred to the buyer as per the terms of the contract, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. Control of goods refers to the ability to direct the use of and obtain substantially all of the remaining benefits from goods.
Rendering of services
Revenue from services is recognised as and when the services are rendered and on the basis of contractual terms with the parties.
Interest income is recorded on accrual basis using the effective interest rate (EIR) method.
Dividend are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
Rental income is recognized on a straight-line basis over the terms of the lease, except for contingent rental income which is recognized when it arises and where scheduled increase in rent compensates the lessor for expected inflationary costs. In all the leases escalation is less than inflation and hence no Straight lining has been done.
Finished goods, work in progress, raw material, stores, spares and components are valued at lower of cost and net realisable value. Cost of inventory has been arrived at by using the weighted average cost formula. Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) & all other costs incurred to bring the inventories to their present condition and location. Tools and instruments are valued at cost less depletion in value. Stock of scrap is valued at estimated realizable value. 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.
Tax expense recognised in the statement of profit and loss comprises the sum of deferred tax and current tax not recognised in Other Comprehensive Income (OCI) or directly in equity.
Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Current tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit and loss (i.e. in OCI or equity depending upon the treatment of underlying item).
Deferred tax liabilities are generally recognised in full for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilised against future taxable income. This is assessed based on the Company''s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside the statement of profit and loss is recognised outside statement of profit and loss (in OCI or equity depending upon the treatment of underlying item).
e. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
f. Foreign currency transactions
The financial statements are presented in Indian Rupee (âINR'' or âRs.'') which is also the functional currency of the Company.
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other income/expenses, as the case maybe.
g. Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below:
Non-derivative financial assets
Subsequent measurement
i. Financial assets carried at amortised cost - A financial asset is measured at the amortised cost, if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
ii Fair value through OCI-A financial asset is measured at FVTOCI if both of the following conditions are met:
- The Company''s business model objective for managing the financial asset is achieved both by collecting contractual cash flows and selling the financial assets, and
- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely paymentsof principal and interest on the principal amount outstanding.
iii. Fair value through profit or loss - Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets. ECL is the weighted-average of difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate, with the respective risks of default occurring as the weights. When estimating the cash flows, the Company is required to consider:
- All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables: In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
Other financial assets: In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.
When making this assessment, the Company uses the change in the risk of a default occurring over the expected life of the financial asset. To make that assessment, the Company compares the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.
De-recognition of financial assets
A financial asset is primarily de-recognised when the contractual rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Non-derivative financial liabilities
Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortised cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
Offsetting of 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 on a net basis, to realise the assets and settle the liabilities simultaneously.
h. Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realized. For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to the short maturity of these instruments.
i. Property, plant and equipment (âPPEâ)
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, taxes(non recoverable) borrowing cost if capitalisation criteria are met and other expenses directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are
deducted in arriving at the purchase price. Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and definition of asset is met. All other repair and maintenance costs are recognised in the statement of profit or loss as incurred.
In case an item of property, plant and equipment is acquired on deferred payment basis, interest expenses included in deferred payment is recognised as interest expense and not included in cost of asset.
Subsequent measurement (depreciation and useful lives)
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
De-recognition
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 de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
j. Investment properties
Recognition and initial measurement
Investment properties are properties held to earn rentals or for capital appreciation, or both. Investment properties are measured initially at their cost of acquisition. The cost comprises purchase price, borrowing cost, if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognized in statement of profit or loss as incurred.
Subsequent measurement (depreciation and useful lives)
Investment properties are subsequently measured at cost less accumulated depreciation and impairment losses. Depreciation on investment properties is provided on the straight-line method, computed on the basis of useful lives (as set-out below) prescribed in Schedule II to the Act:
Asset Category Useful Life (in years)Buildings and related equipments 60
The residual values, useful lives and method of depreciation are reviewed at the end of each financial year. De-recognition
Investment properties are de-recognized either when they have been disposed off or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of de-recognition.
k. Intangible assets
Recognition and initial measurement
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.
Subsequent measurement (depreciation and useful lives)
Amortisation on intangible assets has been provided on the straight-line method on useful life of 6 years. âThe estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization period is revised to reflect the changed pattern, if any.
De-recognition
An item of intangible assets 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 statement of profit and loss when the asset is derecognised.
l. Capital work-in progress
Cost of material consumed and erection charges thereon along with other direct cost incurred by the Company for the projects are shown as capital work-in-progress until capitalisation. Claims for price variation / exchange rate variation in case of contracts are accounted for on acceptance / receipt of claim.
m. Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on internal/external factors, that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount is higher of an asset''s fair value less costs of disposal and value in use. For this purpose, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or group of assets (cash generating units). If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the balance sheet date, there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost and the same is accordingly reversed in the statement of profit and loss.
n. Borrowing costs
Borrowing costs directly attributable to the acquisitions, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs.
A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Capitalisation of borrowing costs is suspended in the period during which the active development is delayed due to, other than temporary, interruption.
o. Provisions, contingent liabilities and contingent assets
Provisions are recognised when present obligations as a result of a past event will probably lead to an outflow of economic resources and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises when there is a presence of a legal or constructive commitment that has resulted from past events, for example, legal disputes or onerous contracts. Provisions are not recognised for future operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted to their present values, where the time value of money is material.
Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
In those cases where the outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognised.
Contingent liability is disclosed for:
- Possible obligations which will be confirmed only by future events not wholly within the control of the Company or
- Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognised. However, when inflow of economic benefits is probable, related asset is disclosed.
p. Employee benefits
Expenses and liabilities in respect of employee benefits are recorded in accordance with Indian Accounting Standard 19- Employee Benefits.
Defined benefit plans
Gratuity
The Company operates one defined benefit plan for its employees, viz. gratuity. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year-end using the projected unit credit method. Actuarial gain and loss for the defined benefit plan is recognized in full in the period in which they occur in other comprehensive income.
Other long term benefits
Accumulated leave expected to be carried forward beyond twelve months, is treated as long term employee benefit. Such long term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year end. Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short term employee benefit.
Liability under continuity linked key resource and deferred salary schemes is provided for on actuarial valuation basis, which is done as per the projected unit credit method at the end of each financial period.
Defined contribution plans
The Company makes contribution to statutory provident fund in accordance with Employees Provident Fund and Miscellaneous Provisions Act, 1952. The plan 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.
Short-term employee 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.
q. Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
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.
r. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting done to the chief operating decision maker. The Company operates in a single operating segment and geographical segment.
s. Investment in Subsidiary and Associate Companies
The Company has elected to recognize its investments in subsidiary and associate companies at cost in accordance with the option available in Ind AS 27, âSeparate Financial Statements''.
t. Leases
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
b) Lease liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments or a change in the assessment of an option to purchase the underlying asset.
Recent accounting pronouncement
Ministry of Corporate Affairs (MCA), on March 31,2023, through the Companies (Indian Accounting Standards (Ind AS) Amendment Rules, 2023. Following are few key amendments relevant to the Company :
1. Ind AS 16 - Presentation of Financial Statements & Ind AS 34 - Interim Financial Reporting: - Material accounting policy information (including focus on how an entity applied the requirements of Ind AS) shall be disclosed instead of significant accounting policies as part of financial statements.
2. Ind As 107 - Financial Instruments : Disclosures :- Information about the measurement basic for financial instruments shall be disclosed as part of material accounting policy information.
3. Ind AS 8 - Accounting Policies, changes in accounting estimate and errors:- Clarification on what constitues an accounting extimate provided.
4- Ind AS 12 - Income Taxes:- In case of a transaction which give rise to equal taxable and deductible temporary differences, the initial recognition exception from deferred tax is no longer applicable and deferred tax liability and deferred tax asset shall be recognized on gross basis for such cases.
c) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption that are considered to be low value. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
3. Significant accounting judgements, estimates and assumptions
When preparing the financial statements management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses.
The actual results are likely to differ from the judgments, estimates and assumptions made by management, and will seldom equal the estimated results.
Information about significant judgments, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below:
Significant judgements:
(i) Evaluation of indicators for impairment of non-financial assets
The evaluation of applicability of indicators of impairment of non-financial assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
(ii) Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilised. The recognition of deferred tax assets and reversal thereof is also dependent upon management decision relating to timing of availment of tax holiday benefits available under the Income Tax Act, 1961 which in turn is based on estimates of future taxable profits.
Sources of estimation uncertainty:
(i) Provisions
At each balance sheet date, basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However, the actual future outcome may be different from management''s estimates.
(ii) Fair valuation of financial instruments
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument.
Mar 31, 2018
Summary of significant accounting policies and other explanatory information for the year ended 31st March 2018
1. Corporate information and statement of compliance with Indian Accounting Standards (Ind AS)
IST Limited (âthe Companyâ) a public limited company domiciled in India and having its registered office at Dharuhera Industrial Complex, Delhi-Jaipur Highway no. 8, Kapriwas, Dharuhera, Rewari 123106, was incorporated under the provisions of Companies Act, 1956. The Company is primarily engaged in the business of manufacturing of high precision engineering components / assemblies including auto components.
The financial statements of the Company have been prepared to comply in all material respects with accounting principles generally accepted in India, including Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015 under Section 133 of the Companies Act, 2013 (the âActâ) and other relevant provisions of the Act. The financial statements up to year ended 31 March 2017 were prepared in accordance with the accounting standards prescribed under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules, 2014 (as amended) (âPrevious GAAPâ) and other relevant provisions of the Act.
These financial statements for the year ended 31 March 2018 are the first financial statements which the Company has prepared under Ind AS. For purpose of comparatives, financial statements for year ended 31 March 2017 and opening Balance Sheet as at 1 April 2016 are also prepared under Ind AS. Refer note 53 for an explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.
2. Basis of preparation and significant accounting policies
a. Basis of preparation
The financial statements have been prepared on accrual and going concern basis under historical cost convention except for certain financial instruments which are measured at fair values. The accounting policies are applied consistently to all the periods presented in the financial statements, including the preparation of the opening Ind AS Balance Sheet as at 1 April 2016 being the date of transition to Ind AS, except where the Company has applied certain exemptions upon transition to Ind AS.
The significant accounting policies and measurement bases have been summarized below.
Current versus non-current classification
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and as per terms of agreements wherever applicable. Deferred tax assets and liabilities are classified as non-current assets and non-current liabilities, as the case may be.
b. Revenue recognition
Revenue is recognized to the extent it is probable that future economic benefits will flow to the Company and the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable net of related rebates. The following specific recognition criteria must also be met before revenue is recognized:
Sale of goods
A sale of goods is recognized when the goods has transferred to the buyer the significant risks and rewards of ownership, generally when the customer has taken undisputed delivery of the goods
Interest income
Interest income is recognized on time proportion basis taking into account the amount outstanding and rate applicable. For all financial assets measured at amortized cost, interest income is recorded using the effective interest rate (EIR) i.e. the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial assets.
Dividend income
Dividend are recognized in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
Rental income
Rental income is recognized on a straight-line basis over the terms of the lease, except for contingent rental income which is recognized when it arises and where scheduled increase in rent compensates the lessor for expected inflationary costs.
c. Inventories
Finished goods, work in progress, raw material, stores, spares and components are valued at lower of cost and net realizable value. Cost of inventory has been arrived at by using the weighted average cost formula. Cost of inventory comprises all costs of purchase, duties, taxes(other than those subsequently recoverable from tax authorities) & all other costs incurred to bring the inventories to their present condition and location. Tools and instruments are valued at cost less depletion in value. Stock of scrap is valued at estimated realizable value. 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.
d. Income Taxes
Tax expense recognized in the statement of profit and loss comprises the sum of deferred tax and current tax not recognized in Other Comprehensive Income (OCI) or directly in equity.
Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961. Current tax relating to items recognized outside statement of profit and loss is recognized outside statement of profit and loss (i.e. in OCI or equity depending upon the treatment of underlying item).
Deferred tax liabilities are generally recognized in full for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that the underlying tax loss, unused tax credits or deductible temporary difference will be utilized against future taxable income. This is assessed based on the Company''s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized outside the statement of profit and loss is recognized outside statement of profit and loss (in OCI or equity depending upon the treatment of underlying item).
e. Cash and cash equivalents
Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
f. Foreign currency transactions
The financial statements are presented in Indian Rupee (âINR'' or âRs.'') which is also the functional currency of the Company.
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in profit or loss.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other income/expenses, as the case maybe.
g. Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below:
Non-derivative financial assets
Subsequent measurement
i. Financial assets carried at amortized cost - a financial asset is measured at the amortized cost, if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method.
ii. Fair value through OCI-A financial asset is measured at FVTOCI if both of the following conditions are met:
- The Company''s business model objective for managing the financial asset is achieved both by collecting contractual cash flows and selling the 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.
iii. Fair value through profit or loss - Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognized in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss for financial assets. ECL is the weighted-average of difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate, with the respective risks of default occurring as the weights. When estimating the cash flows, the Company is required to consider:
- All contractual terms of the financial assets (including prepayment and extension) over the expected life of the assets.
- Cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables: In respect of trade receivables, the Company applies the simplified approach of Ind AS 109, which requires measurement of loss allowance at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument.
Other financial assets: In respect of its other financial assets, the Company assesses if the credit risk on those financial assets has increased significantly since initial recognition. If the credit risk has not increased significantly since initial recognition, the Company measures the loss allowance at an amount equal to 12-month expected credit losses, else at an amount equal to the lifetime expected credit losses.
When making this assessment, the Company uses the change in the risk of a default occurring over the expected life of the financial asset. To make that assessment, the Company compares the risk of a default occurring on the financial asset as at the balance sheet date with the risk of a default occurring on the financial asset as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition. The Company assumes that the credit risk on a financial asset has not increased significantly since initial recognition if the financial asset is determined to have low credit risk at the balance sheet date.
De-recognition of financial assets
A financial asset is primarily de-recognized when the contractual rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset.
Non-derivative financial liabilities
Subsequent measurement
Subsequent to initial recognition, all non-derivative financial liabilities are measured at amortized cost using the effective interest method.
De-recognition of financial liabilities
A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
Offsetting of 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 recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
h. Fair value of financial instruments
In determining the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realized. For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to the short maturity of these instruments.
i. Property, plant and equipment (âPPEâ)
Recognition and initial measurement
Property, plant and equipment are stated at their cost of acquisition. The cost comprises purchase price, taxes(non recoverable) borrowing cost if capitalization criteria are met and other expenses directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price. Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and definition of asset is met. All other repair and maintenance costs are recognized in the statement of profit or loss as incurred.
In case an item of property, plant and equipment is acquired on deferred payment basis, interest expenses included in deferred payment is recognized as interest expense and not included in cost of asset.
Subsequent measurement (depreciation and useful lives)
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013.
De-recognition
An item of property, plant and equipment and any significant part initially recognized is derecognized 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 statement of profit and loss when the asset is derecognized.
j. Investment properties
Recognition and initial measurement
Investment properties are properties held to earn rentals or for capital appreciation, or both. Investment properties are measured initially at their cost of acquisition. The cost comprises purchase price, borrowing cost, if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discount and rebates are deducted in arriving at the purchase price.
Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company. All other repair and maintenance costs are recognized in statement of profit or loss as incurred.
Subsequent measurement (depreciation and useful lives)
Investment properties are subsequently measured at cost less accumulated depreciation and impairment losses. Depreciation on investment properties is provided on the straight-line method, computed on the basis of useful lives (as set-outbelow) prescribed in Schedule II to the Act:
The residual values, useful lives and method of depreciation are reviewed at the end of each financial year. De-recognition
Investment properties are de-recognized either when they have been disposed off or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of de-recognition.
k. Intangible assets
Recognition and initial measurement
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.
Subsequent measurement (depreciation and useful lives)
Amortization of intangible assets has been provided on the straight-line method on useful life of 6 years. âThe estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization period is revised to reflect the changed pattern, if any.
De-recognition
An item of intangible assets and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognized.
l. Capital work-in progress
Cost of material consumed and erection charges thereon along with other direct cost incurred by the Company for the projects are shown as capital work-in-progress until capitalization. Claims for price variation / exchange rate variation in case of contracts are accounted for on acceptance / receipt of claim.
m. Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication based on internal/external factors, that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount is higher of an asset''s fair value less costs of disposal and value in use. For this purpose, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or group of assets (cash generating units). If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount and the reduction is treated as an impairment loss and is recognized in the statement of profit and loss. If at the balance sheet date, there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciated historical cost and the same is accordingly reversed in the statement of profit and loss.
n. Operating leases as a lessee
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease, unless the increase in rent is to compensate the lessor for the effects of inflation.
o. Borrowing costs
Borrowing costs directly attributable to the acquisitions, construction or production of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs.
A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Capitalization of borrowing costs is suspended in the period during which the active development is delayed due to, other than temporary, interruption.
p. Provisions, contingent liabilities and contingent assets
Provisions are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises when there is a presence of a legal or constructive commitment that has resulted from past events, for example, legal disputes or onerous contracts. Provisions are not recognized for future operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted to their present values, where the time value of money is material.
Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provision.
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
In those cases where the outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognized.
Contingent liability is disclosed for:
- Possible obligations which will be confirmed only by future events not wholly within the control of the Company or
- Present obligations arising from past events where it is not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.
Contingent assets are not recognized. However, when inflow of economic benefits is probable, related asset is disclosed.
q. Employee benefits
Expenses and liabilities in respect of employee benefits are recorded in accordance with Indian Accounting Standard 19- Employee Benefits.
Defined benefit plans
Gratuity
The Company operates one defined benefit plan for its employees, viz. gratuity. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year-end using the projected unit credit method. Actuarial gain and loss for the defined benefit plan is recognized in full in the period in which they occur in other comprehensive income.
Other long term benefits
Accumulated leave expected to be carried forward beyond twelve months, is treated as long term employee benefit. Such long term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year end. Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short term employee benefit.
Liability under continuity linked key resource and deferred salary schemes is provided for on actuarial valuation basis, which is done as per the projected unit credit method at the end of each financial period.
Defined contribution plans
Provident Fund
The Company makes contribution to statutory provident fund in accordance with Employees Provident Fund and Miscellaneous Provisions Act, 1952. The plan 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.
Short-term employee 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.
r. Earnings per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue.
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.
s. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting done to the chief operating decision maker. The Company operates in a single operating segment and geographical segment.
t. Investment in Subsidiary and Associate Companies
The Company has elected to recognize its investments in subsidiary and associate companies at cost in accordance with the option available in Ind AS 27, âSeparate Financial Statements''.
3. Recent accounting pronouncement
In March 2018, the Ministry of Corporate Affairs (MCA) issued the Companies (Indian Accounting Standards) Amendment Rules, 2018, notifying Ind AS 115, Revenue from contract with customers, Appendix B to Ind-AS 21, Foreign currency transactions and advance consideration and amendments to certain other standards. These amendments are applicable to the Company from 1st April, 2018. The Company will be adopting the amendments from their effective date.
Ind AS 115: Revenue from Contracts with Customers
Ind AS 115 supersedes Ind AS 11, Construction contracts and Ind AS 18, Revenue. Ind AS 115 requires an entity to report information regarding nature, amount, timing and uncertainty of revenue and cash flows arising from contract with customers. The principle of Ind AS 115 is that an entity should recognize revenue that demonstrates the transfer of promised goods and services to customers at an amount that reflect the consideration to which the entity expects to be entitled in exchange for those goods and services. The standards can be applied either retrospectively to each prior reporting period presented or can be applied retrospectively with recognition of cumulative effect of contracts that are not completed contracts at the date of initial application of the standard.
Based on the preliminary assessment performed by the company, the impact of application of standard is not expected to be material.
Appendix B to Ind AS 21, Foreign currency transaction and advance consideration
The appendix clarifies that the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the asset, expense or income ( or part of it ) is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment of receipt of advance consideration towards such asset , expenses or income . If there are multiple payments or receipt in advance, then an entity must determine an transaction date for each payments or receipts of advance consideration.
Based on the preliminary assessment performed by the company, the impact of application of appendix is not expected to be material.
4. Significant accounting judgments, estimates and assumptions
When preparing the financial statements management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses.
The actual results are likely to differ from the judgments, estimates and assumptions made by management, and will seldom equal the estimated results.
Information about significant judgments, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below:
Significant judgments:
(i) Evaluation of indicators for impairment of non-financial assets
The evaluation of applicability of indicators of impairment of non-financial assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.
(ii) Recognition of deferred tax assets
The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the future taxable income against which the deferred tax assets can be utilized. The recognition of deferred tax assets and reversal thereof is also dependent upon management decision relating to timing of ailment of tax holiday benefits available under the Income Tax Act, 1961 which in turn is based on estimates of future taxable profits.
Sources of estimation uncertainty:
(i) Provisions
At each balance sheet date, basis the management judgment, changes in facts and legal aspects, the Company assesses the requirement of provisions against the outstanding warranties and guarantees. However, the actual future outcome may be different from management''s estimates.
(ii) Fair valuation of financial instruments
Management applies valuation techniques to determine the fair value of financial instruments (where active market quotes are not available). This involves developing estimates and assumptions consistent with how market participants would price the instrument.
Summary of significant accounting policies and other explanatory information for the year ended 31st March 2018
(All amounts in rupees lakhs unless otherwise stated)
A) Credit risk
Credit risk is the risk that a counterparty fails to discharge an obligation to the company. The company is exposed to this risk for various financial instruments, for example by granting loans and receivables to customers, placing deposits, etc. The company''s maximum exposure to credit risk is limited to the carrying amount of following types of financial assets.
- cash and cash equivalents,
- trade receivables,
- loans & receivables carried at amortized cost, and
- deposits with banks
a) Credit risk management
The Company assesses and manages credit risk based on internal credit rating system, continuously monitoring defaults of customers and other counterparties, identified either individually or by the company, and incorporates this information into its credit risk controls. Internal credit rating is performed for each class of financial instruments with different characteristics. The Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets.
A: Low
B: Medium
C: High
Cash & cash equivalents and bank deposits
Credit risk related to cash and cash equivalents and bank deposits is managed by only accepting highly rated banks and diversifying bank deposits and accounts in different banks.
Trade receivables
Company''s trade receivables are considered of high quality and accordingly no life time expected credit losses are recognized on such receivables.
Other financial assets measured at amortized cost
Other financial assets measured at amortized cost includes advances to employees. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously, while at the same time internal control system in place ensure the amounts are within defined limits.
B) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the business, the Company maintains flexibility in funding by maintaining availability under committed facilities. Management monitors rolling forecasts of the Company''s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates. In addition, the Company''s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.
*The details of amounts outstanding to micro enterprises and small enterprises under the Micro, Small and Medium Enterprises Development Act (MSMED), 2006 are as per available information with the Company.
48. Segment information
The Company''s primary business segment is reflected based on principal business activities carried on by the Company i.e. precision engineering components / assemblies, which as per Ind AS 108 on âSegment Reportingâ as specified under Section 133 of Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) is considered to be the only operating segment. The Company is primarily operating in India which is considered as a single geographical segment.
C. Provident fund
The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs. 27.12 lakhs, (31 March 2017: Rs.25.80 lakhs and 1 April 2016 Rs. 23.67 lakhs) for Provident Fund contributions and Rs. 12.79 lakhs, (31 March 2017 Rs.11.75 lakhs and 1 April 2016 Rs. 10.74 lakhs) for Employee State Insurance Scheme contributions in the Statement of Profit and Loss.
Mar 31, 2015
'The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of the
Companies Act, 2013 ("the 2013 Act"), as applicable. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year.
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out in the Schedule III to the Companies Act,2013.
The significant accounting policies adopted in the presentation of the
Accounts are as under:-
a) Valuation of Inventories :
i) Raw Material, Stores, Spares and purchased components, Finished
Goods, and Goods under process are valued at cost on weighted average
basis or net realisable value which ever is lower.
ii) Tools and Instruments are valued at cost less depletion in value.
iii) Stock of Scrap is valued at estimated realisable value.
b) Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
c) Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
d) Revenue Recognition:-
i) Sales are recognized when goods are supplied
ii) Processing Income: Processing income is recognized after services
are rendered.
e) Other Income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established
f) Foreign Exchange Transactions:-
Foreign Exchange transactions are recorded at the exchange rate
prevailing on the date of transaction. The difference in realized gains
and losses on foreign exchange transactions other than those relating
to the fixed assets are recognized in the profit and loss account.
g) Excise Duty :
The Excise Duty is accounted for at the time of dispatch of goods from
the Factory.
h) Tangible and Intangible fixed assets
Tangible fixed assets are stated at cost less accumulated depreciation
/ amortization and impairment losses, if any. Cost includes expenses
incidental to the acquisition/installation of assets. Intangible assets
are recorded at the consideration paid for acquisition of such assets
and are carried at cost less accumulated amortization and impairment.
Interest on loans to acquire qualifying assets is added to the cost of
fixed assets in accordance with Accounting Standard 16 on "Borrowing
Costs"
i) Depreciation / Amortization
'Depreciable amount for assets is the cost of an asset, or other
amount substituted for cost, less its estimated residual value.
Depreciation on tangible fixed assets has been provided on the
straight-line method as per the useful life prescribed in Schedule II
to the Companies Act, 2013.
Depreciation on intangible assets has been provided on the
straight-line method on useful life of 6 years.
'The estimated useful life of the intangible assets and the
amortization period are reviewed at the end of each financial year and
the amortization period is revised to reflect the changed pattern, if
any.
j) Employees Retirement Benefits :
Company's Contribution towards Provident Fund is charged to Profit &
Loss Account. The amount of gratuity & leave encashment benefits on the
basis of actuarial valuation is charged to Profit & Loss Account.
k) In determining earnings per share, the company considers the net
profit after tax and includes the post-tax effect of any extraordinary
items. The number of shares used in computing basic earnings per share
is the number of shares outstanding during the period.
l) Claims :
Credits for certain claims such as interest on Telephone Deposits,
Insurance, and Customs Duty Drawback etc. are taken as and when
determined or received.
m) The liability for reimbursement of Medical Expenses and Leave Travel
Allowance is provided for at the time when the same is due and the
claim is made irrespective of the time of expenditure incurred by the
employees.
n) Liquidated damages on Defence Sales are accounted for as and when
ascertained.
o) Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the applicable tax rates and the
provisions of the Income Tax Act, 1961 and other applicable tax laws.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses and items
relating to capital losses, deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that there
will be sufficient future taxable income available to realise the
assets. Deferred tax assets and liabilities are offset if such items
relate to taxes on income levied by the same governing tax laws and the
Company has a legally enforceable right for such set off. Deferred tax
assets are reviewed at each balance sheet date for their realisability.
Current and deferred tax relating to items directly recognised in
reserves are recognised in reserves and not in the Statement of Profit
and Loss.
p) Investments
Investments that are readily realisable and are intended to be held for
not more than one year from the date, on which such investments are
made, are classified as current investments. All other investments are
classified as long term investments. Current investments are carried at
cost or fair value, whichever is lower. Long-term investments are
carried at cost. However, provision for diminution is made to recognise
a decline, other than temporary, in the value of the investments, such
reduction being determined and made for each investment individually
q) Provisions, Contingent Liabilities and Contingent Assets
i Provisions are recognized in terms of Accounting Standard 29 -
'Provisions, Contingent Liabilities and Contingent Assets' as
mandated by Rule 3 of the Companies (Accounting Standards) Rules, 2006,
when there is a present obligation as a result of past events where it
is probable that there will be outflow of resources to settle the
obligation and a reliable estimate of the amount of the obligation can
be made.
ii. Contingent Liabilities are recognized and disclosed only when there
is a possible obligation arising from past events due to occurrence or
non-occurrence of one or more uncertain future events not wholly within
the control of the Company or where any present obligation cannot be
measured in terms of future outflow of resources or where a reliable
estimate of the obligation cannot be made. Obligations are assessed on
an ongoing basis and only those having a largely probable outflow of
resources are provided for.
iii. Contingent assets are not recognized in the financial statements.
r) Impairment of Assets
The Company reviews the carrying value of its fixed assets for any
possible impairment at each Balance Sheet date. An impairment loss is
recognized when the carrying amount of an asset exceeds its recoverable
amount. The recoverable amount is the greater of net selling price and
value in use. In assessing the value in use, the estimated future cash
flows are discounted to their present value at an appropriate discount
rate.
Mar 31, 2014
(i) Basis of Accounting :
The financial statements are prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India and the provisions of the Companies Act, 1956.
(ii) Fixed Assets :
a) Fixed Assets are stated at Cost less Depreciation.
b) Plant & Machinery manufactured within the plant is stated at Cost
(less Depreciation wherever applicable). The over head expenses are,
however, allocated on estimates given by Technical Personnel.
(iii) Depreciation :
Depreciation is calculated on Straight Line Method at the rates
prescribed in schedule XIV of the Companies Act.1956
(iv) Valuation of Inventories :
a) Raw Material, Stores,Spares and purchased components, Finished
Goods, and Goods under process are valued at cost on weighted average
basis or net realisable value which ever is lower.
b) Tools and Instruments are valued at cost less depletion in value.
c) Stock of Scrap is valued at estimated realisable value.
(v) Revenue Recognition
a) Sales are recognized when goods are supplied .
b) Processing Income : Processing income is recognized after services
are rendered.
(vi) Foreign Exchange Transactions
Foreign Exchange transactions are recorded at the exchange rate
prevailing on the date of transaction. The difference in realized gains
and losses on foreign exchange transactions other than those relating
to the fixed assets are recognized in the profit and loss account.
(vii) Investments:
Investments are stated at cost and dimunition in value is provide for.
(viii) Employees Retirement Benefits :
Company''s Contribution towards Provident Fund is charged to Profit &
Loss Account. The amount of gratuity & leave encashment benefits on the
basis of acturial valuation is charged to Profit & Loss Account.
(ix) Excise Duty :
The Excise Duty is accounted for at the time of despatch of goods from
the Factory.
(x) Claims :
Credits for certain claims such as interest on Telephone Deposits,
Insurance, Customs Duty Drawback etc. are taken as and when determined
or received.
(xi) The liability for reimbursement of Medical Expenses and Leave
Travel Allowance is provided for at the time when the same is due and
the claim is made irrespective of the time of expenditure incurred by
the employees.
(xii) Liquidated damages on Defence Sales are accounted for as and when
ascertained.
(xiii) In determinig earnings per share, the company considers the net
profit after tax and includes the post-tax effect of any extraordinary
items. The number of shares used in computing basic earnings per share
is the number of shares outstanding during the period.
(xiv) Income Tax
Provision is made for income tax annually based on the tax liability
computed after considering tax allowances and exemptions. The
differences that result between the profit offered for income tax and
the profit as per the financial statement are identified and thereafter
a deferred tax assets or deferred tax liability is recorded for timing
differ- ences, namely the differences that originate in one accounting
period and reverse in another, based on the tax effect of the aggregate
being considered.
(xv) Impairment of Assets
The management assesses the performance of its unit to arrive at the
value in use to check for impairment, if any, in Fixed Assets, as
required under AS 28 of the ICAI and provides for any impairment therof
in Profit & Loss Account.
(xvi) Provision,Contingent Liabilites and Contingent Assets
The Company creates a provision when there is a present obligation as a
result of a past event where the out flow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made. The disclousure is made for possible or present obligation that
may, but probably will not, require out flow of resources as contengent
liabilities in the financial statements. Contengent assets are not
recognized in the financial statements.
Mar 31, 2012
(i) Basis of Accounting :
The financial statements are prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India and the provisions of the Companies Act, 1956.
(ii) Fixed Assets :
a) Fixed Assets are stated at Cost less Depreciation.
b) Plant & Machinery manufactured within the plant is stated at Cost
(less Depreciation wherever applicable). The over head expenses are,
however, allocated on estimates given by Technical Personnel.
(iii) Depreciation:
Depreciation is calculated on Straight Line Method at the rates
prescribed in schedule XIV of the Companies Act, 1956.
(iv) Valuation of Inventories :
a) Raw Material, Stores,Spares and purchased components, Finished
Goods, and Goods under process are valued at cost on weighted average
basis or net realisable value which ever is lower.
b) Tools and Instruments are valued at cost less depletion in value.
c) Stock of Scrap is valued at estimated realisable value.
(v) Revenue Recognition
a) Sales are recognized when goods are supplied.
b) Processing Income : Processing income is recognized after services
are rendered.
(vi) Foreign Exchange Transactions
Foreign Exchange transactions are recorded at the exchange rate
prevailing on the date of transaction. The difference in realized
gains and losses on foreign exchange transactions other than those
relating to the fixed assets are recognized in the profit and loss
account.
(vii) Investments:
Investments are stated at cost and dimunition in value is provided for.
(viii) Employees Retirement Benefits :
Company's Contribution towards Provident Fund is charged to Profit &
Loss Account. The amount of gratuity & leave encashment benefits on the
basis of acturial valuation is charged to Profit & Loss Account.
(ix) Excise Duty :
The Excise Duty is accounted for at the time of despatch of goods from
the Factory.
(x) Claims :
Credits for certain claims such as interest on Telephone Deposits,
Insurance, Custom Duty Drawback etc. are taken as and when determined
or received.
(xi) The liability for reimbursement of Medical Expenses and Leave
Travel Allowance is provided for at the time when the same is due and
the claim is made irrespective of the time of expenditure incurred by
the employees.
(xii) Liquidated damages on Defence Sales are accounted for as and when
ascertained.
(xiii) In determining earnings per share, the company considers the net
profit after tax and includes the post- tax effect of any extraordinary
items. The number of shares used in computing basic earnings per share
is the number of shares outstanding during the period.
(xiv) Income Tax
Provision is made for income tax annually based on the tax liability
computed after considering tax allowances and exemptions.
The differences that result between the profit offered for income tax
and the profit as per the financial statement are identified and
thereafter a deferred tax assets or deferred tax liability is recorded
for timing differences, namely the differences that originate in one
accounting period and reverse in another, based on the tax effect of
the aggregate being considered.
(xv) Impairment of Assets
The management assesses the performance of its unit to arrive at the
value in use to check for impairment, if any, in Fixed Assets, as
required under AS 28 of the ICAI and provides for any impairment
thereof in Profit & Loss Account.
(xvi) Provision,Contingent Liabilities and Contingent Assets
The Company creates a provision when there is a present obligation as a
result of a past event where the out flow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made. The disclosure is made for possible or present obligation that
may, but probably will not, require out flow of resources as contingent
liabilities in the financial statements. Contingent assets are not
recognized in the financial statements.
Mar 31, 2011
(i) Basis of Accounting :
The financial statements are prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India and the provisions of the Companies Act, 1956.
(ii) Fixed Assets :
a) Fixed Assets are stated at Cost less Depreciation.
b) Plant & Machinery manufactured within the plant is stated at Cost
(less Depreciation wherever applicable). The over head expenses are,
however, allocated on estimates given by Technical Personnel.
(iii) Depreciation :
Depreciation is calculated on Straight Line Method at the rates
prescribed in schedule XIV of the Companies Act,1956.
(iv) Valuation of Inventories :
a) Raw Material, Stores, Spares and purchased components, Finished
Goods, and Goods under process are valued at cost on weighted average
basis or net realisable value which ever is lower.
b) Tools and Instruments are valued at cost less depletion in value.
c) Stock of Scrap is valued at estimated realisable value.
(v) Revenue Recognition
a) Sales are recognized when goods are supplied and are inclusive of
excise duty and sales tax.
b) Processing Income : Processing income is recognized after services
are rendered.
(vi) Foreign Exchange Transactions
Foreign Exchange transactions are recorded at the exchange rate
prevailing on the date of transaction. The difference in realized
gains and losses on foreign exchange transactions other than those
relating to the fixed assets are recognized in the profit and loss
account.
(vii) Investments:
Investments are stated at cost and dimunition in value is provide for.
(viii) Employees Retirement Benefits :
CompanyÃs Contribution towards Provident Fund is charged to Profit &
Loss Account. The amount of gratuity & leave encashment benefits on the
basis of acturial valuation is charged to Profit & Loss Account.
(ix) Excise Duty :
The Excise Duty is accounted for at the time of despatch of goods from
the Factory.
(x) Claims :
Credits for certain claims such as interest on Telephone Deposits,
Insurance, Custom Duty Drawback etc. are taken as and when determined
or received.
(xi) The liability for reimbursement of Medical Expenses and Leave
Travel Allowance is provided for at the time when the same is due and
the claim is made irrespective of the time of expenditure incurred by
the employees.
(xii) Liquidated damages on Defence Sales are accounted for as and when
ascertained.
(xiii) In determining earnings per share, the company considers the net
profit after tax and includes the post-tax effect of any extraordinary
items. The number of shares used in computing basic earnings per share
is the number of shares outstanding during the period.
(xiv) Income Tax
Provision is made for income tax annually based on the tax liability
computed after considering tax allowances and exemptions.
The differences that result between the profit offered for income tax
and the profit as per the financial statement are identified and
thereafter a deferred tax assets or deferred tax liability is recorded
for timing differences,
namely the differences that originate in one accounting period and
reverse in another, based on the tax effect of the aggregate being
considered.
(xv) Impairment of Assets
The management assesses the performance of its unit to arrive at the
value in use to check for impairment, if any, in Fixed Assets, as
required under AS 28 of the ICAI and provides for any impairment therof
in Profit & Loss Account.
(xvi) Provision,Contingent Liabilities and Contingent Assets
The Company creates a provision when there is a present obligation as a
result of a past event where the out flow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made. The disclousure is made for possible or present obligation that
may, but probably will not, require out flow of resources as contingent
liabilities in the financial statements. Contingent assets are not
recognized in the financial statements.
Mar 31, 2010
(i) Basis of Accounting :
The financial statements are prepared under the historical cost
convention in accordance with the generally accepted accounting
principles in India and the provisions of the Companies Act, 1956.
(ii) Fixed Assets :
a) Fixed Assets are stated at Cost less Depreciation.
b) Plant & Machinery manufactured within the plant is stated at Cost
(less Depreciation wherever applicable). The over head expenses are,
however, allocated on estimates given by Technical Personnel.
(iii) Depreciation:
Depreciation is calculated on Straight Line Method at the rates
prescribed in schedule XIV of the Companies Act,1956
(Iv) Valuation of Inventories :
a) Raw Material, Stores, Spares and purchased components, Finished
Goods, and Goods under process are valued at cost on weighted average
basis or net realisable value which ever is lower.
b) Tools and Instruments are valued at cost less depletion in value.
c) Stock of Scrap is valued at estimated realisable value.
(v) Revenue Recognition
a) Sales are recognized when goods are supplied and are inclusive of
excise duty and sales tax.
b) Processing income : Processing income is recognized after services
are rendered.
(vi) Foreign Exchange Transactions
Foreign Exchange transactions are recorded at the exchange rate
prevailing on the date of transaction. The difference in realized
gains and losses on foreign exchange transactions other than those
relating to the fixed assets are recognized in the profit and loss
account.
(vli) Investments:
Investments are stated at cost and dimunition in value is provide for.
(viii) Employees Retirement Benefits :
Companys Contribution towards Provident Fund is charged to Profit &
Loss Account. The amount of gratuity & leave encashment benefits on the
basis of acturial valuation is charged to Profit & Loss Account.
(ix) Excise Duty:
The Excise Duty is accounted for at the time of despatch of goods from
the Factory.
(x) Claims:
Credits for certain claims such as interest on Telephone Deposits,
Insurance, Customs Duty Drawback etc. are taken as and when determined
or received.
(xi) The liability for reimbursement of Medical Expenses and Leave
Travel Allowance is provided for at the time when the same is due and
the claim is made irrespective of the time of expenditure incurred by
the employees.
(xii) Liquidated damages on Defence Sales are accounted for as and when
ascertained.
(xiii) In determinig earnings per share, the company considers the net
profit after tax and includes the post- tax effect of any extraordinary
items. The number of shares used in computing basic earnings per share
is the number of shares outstanding during the period.
(xiv) Income Tax
Provision is made for income tax annually based on the tax liability
computed after considering tax allowances and exemptions.
The differences that result between the profit offered for income tax
and the profit as per the financial statement are identified and
thereafter a deferred tax assets or deferred tax liability is recorded
for timing differences, namely the differences that originate in one
accounting period and reverse in another, based on the tax effect of
the aggregate being considered.
(xv) Impairment of Assets
The management assesses the performance of its unit to arrive at the
value in use to check for impairment, if any, in Fixed Assets, as
required under AS 28 of the ICAI and provides for any impairment therof
in Profit & Loss Account.
(xvi) Provision, Contingent Liabilites and Contingent Assets
The Company creates a provision when there is a present obligation as a
result of a past event where the out flow of economic resources is
probable and a reliable estimate of the amount of obligation can be
made. The disclousure is made for possible or present obligation that
may, but probably will not, require out flow of resources as contingent
liabilities in the financial statements. Contingent assets are not rec-
ognized in the financial statements.
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