Mar 31, 2018
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 Property, Plant & Equipment
Upon first time adoption of Ind AS, the Company has elected to measure all its property, plant & equipment, at the Previous Indian GAAPâs carrying amount as its deemed cost on the date of transition to Ind AS i.e. 1st April, 2016.
Property, Plant & Equipment except those revalued are accounted for on historical cost basis (inclusive of the cost of installation and other incidental costs till commencement of commercial production) net of recoverable taxes, less accumulated depreciation and impairment loss, if any. It also includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Subsequent costs are added to the existing assetâs 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 the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Profit and Loss during the period in which they are incurred.
Depreciation on property, plant & equipment is provided on pro-rata basis, on straight line basis in the case of Plant & Machinery, Buildings and Data Processing Equipment and on written down value basis in the case of other assets, over the useful life of the assets estimated by the management, in the manner prescribed in Schedule II of the Companies Act, 2013.The assetâs residual values, useful lives and method of depreciation are reviewed at the end of each reporting period and necessary adjustments are made accordingly, wherever required. The useful lives in the following cases are different from those prescribed in Schedule II of the Companies Act, 2013.
Based on usage pattern, internal assessment and technical evaluation carried out by the technicians, the management believes that the useful lives as given above best represent the period over which the management expects to use these assets. Hence the useful lives of these assets is different from the lives as prescribed in Schedule II of the Companies Act, 2013.
Depreciation on additions to assets or on sale/disposal of assets, is calculated pro rata from the month of such addition or upto the month prior to date of sale/disposal, as the case may.
Leasehold improvements are amortised over the primary period of lease.
Gains or losses arising on retirement or disposal of property, plant and equipment are recognized in the Statement of Profit and Loss.
Property, plant and equipment which are not ready for intended use as on the date of Balance Sheet are disclosed as âCapital work-in-progressâ.
2.2 Financial Instruments
A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(i) Financial Assets
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instrument.
(a) Initial recognition and measurement
At initial recognition, all financial assets are recognized at its fair value plus, in the case of a financial asset not carried at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
(b) Classification and subsequent measurement
For the purpose of subsequent measurement, financial assets are classified in the following categories:
a. Financial assets measured at amortized cost;
b. Financial assets measured at fair value through other comprehensive income (FVTOCI); and
c. Financial assets measured at fair value through profit and loss (FVTPL)
Where financial assets are measured at fair value, gains and losses are either recognized entirely in the Statement of Profit and Loss (i.e. fair value through profit and loss), or recognized in other comprehensive income (i.e. fair value through Other Comprehensive Income).
The classification of financial assets depends on the Companyâs business model for managing the financial assets and the contractual terms of the cash flows. Management determines the classification of its financial assets at initial recognition.
(1) Financial assets measured at amortized cost:
A financial asset is measured at amortized cost if both the following conditions are met:
- Business Model Test: The objective of the business model is to hold financial asset in order to collect contractual cash flows (rather than to sell the asset prior to its financial maturity to realize its fair value changes); and
- Cash Flow Characteristics Test: Contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
This category is most relevant to the Company. After initial measurement, such financial asset are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of EIR. EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. The EIR amortization is included in interest income is the statement of profit and loss. The losses arising from impairment are recognized in the statement of profit or loss. This category generally applies to trade receivables, deposits with banks, security deposits, investment in debt instruments, cash and cash equivalents and employee loans, etc.
(2) Financial instruments measured at Fair Value Through Other Comprehensive Income (FVTOCI):
A financial instrument shall be measured at fair value through other comprehensive income if both of the following conditions are met:
- Business Model Test: The objective of the business model is achieved by both collecting contractual cash flows and selling financial assets; and
- Cash Flow Characteristics Test: The Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on principal amount outstanding.
Financial instruments included within FVTOCI category are measured initially as well as at each reporting period at fair value. Fair value movements are recognized in Other Comprehensive Income (OCI) except for the recognition of interest income, impairment gains and losses and foreign exchange gain and losses which are recognized in the Statement of Profit and Loss. This category generally applies to non-current investments in un-quoted equity instruments. .
(3) Financial instruments measured at Fair Value Through Profit and Loss (FVTPL)
Fair Value Through Profit and Loss is a residual category. Any financial instrument, which does not meet the criteria for categorization as at amortized cost or fair value through other comprehensive income is classified as FVTPL. Financial instruments included in FVTPL category are measured initially as well as at each reporting period at fair value. Fair value movements i.e. gain or loss and interest income are recorded in Statement of Comprehensive Income.
(c) Impairment of financial assets
The Company assesses impairment based on expected credit losses (ECL) model to the following:
- Financial Assets measured at amortized cost;
- Financial Assets measured at FVTOCI.
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 defaults events over the life of the financial instrument).
The Company follows âsimplified approachâ for recognition of impairment loss allowance on:
- Financial assets that are debt instruments, and are measured at amortized cost i.e. trade receivables, deposits with banks, security deposits and employee loans etc.
- Financial assets that are debt instruments, and are measured at FVTOCI. The Company as at the Balance Sheet date is not having any such instruments.
Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
The trade receivables are initially recognized at the sale/recoverable value and are assessed at each Balance Sheet date for collectability. Trade receivables are classified as current assets, if collection is expected within twelve months as at Balance Sheet date, if not, they are classified under non-current assets.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 months (Expected Credit Loss) ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12-months ECL.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on timely basis.
(d) Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e. removed from the Companyâs Balance Sheet date) when:
a. The rights to receive cash flows from the asset have been expired/transferred, or
b. The Company retains the contractual right to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, it evaluates whether it has substantially transferred all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. When the Company has not transferred substantially all the risks and rewards of ownership of a financial asset, the financial asset is not derecognized.
Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset. When the entity retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.
(ii) Financial Liabilities
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.
(a) Initial recognition and measurement
All financial liabilities are recognized initially at fair value and, in the case of loans, borrowings and payables, net of directly attributable transaction costs. The Companyâs financial liabilities include loans, borrowings, trade payables, security deposits and other payables etc..
(b) Subsequent measurement
All the financial liabilities after initial recognition at fair value, are subsequently measured at amortized cost using EIR method. Amortized cost is calculated by taking into account any discount or premium on acquisition and costs or fee that is an integral part of the EIR. The EIR amortization is included as finance costs in the Statement of Profit and Loss.
(c) Financial Guarantee Contract
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative amortization.
(d) Derecognition
A financial liability is derecognized 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 and Loss.
(iii) Offsetting of financial instruments:
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet it 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.
3.3 Inventories
The Inventories are carried in the Balance Sheet as follows:
a. Raw materials and stores & spares : At lower of cost, on weighted average basis and net realisable Value
b. Finished goods and stock-in-process : At lower of cost, and net realizable value. Cost include cost of inputs, conversion costs and other costs incurred in bringing finished goods and stock-in-process, to their present location and condition.
c. Obsolete, defective and unserviceable : Such stocks are duly provided for, and are valued at net realisable value.
The net-realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated costs necessary to make sale.
3.4 Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand deposits with banks which are short-term (three months or less from the date of acquisition), highly liquid investments that are readily convertible into cash and which are subject to an insignificant risk of changes in value.
3.5 Impairment of Non-Financial Assets
The Company assesses, at each reporting date, using external and internal sources, whether there is an indication that a non-financial asset may be impaired and also whether there is an indication of reversal of impairment loss recognised in the previous period/s.If any indication exists, or when annual impairment testing for an asset is required, the Company determines the recoverable amount and impairment loss is recognised when the carrying value of an asset exceeds its recoverable amount.
The recoverable amount is determined:
- in the case of an individual asset, at the higher of the assetâs fair value less cost of sell and value in use; and
- in the case of cash generating unit (a group of assets that generates identified, independent cash flows) at the higher of the cash generating unitâs fair value less cost to sell and value in use.
In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that effects current market assessments of the time value of money and the risks specific to that 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 for an asset is reversed, if and only if, the reversal can be related objectively to an event occurring after the impairment loss was recognized, the carrying amount of an 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 being recognized for the asset in prior year/s.
3.6 Provisions and Contingent Liabilities
a) Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) 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. Provisions are measured at the best estimate of the expenditure required to settle the present obligation, at the Balance Sheet date.
If the effect of the time value of money is material, provisions are discounted to reflect its present value using a current pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
b) Contingent Liabilities
A disclosure for a contingent liability is made when there is a possible obligation arising from past events, 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 or a present obligation arising as a result of past event that probably will not require an outflow of resources or where a reliable estimate of the obligation cannot be made.
3.7 Revenue Recognition
a) Revenue from sale of goods is recognised when all the significant risks and rewards of ownership of the goods are transferred to the buyer, there is no continuing managerial involvement nor effective control with the goods, the associated costs and the amount of revenue can be measured reliably and it is probable that the economic benefit associated with the transaction will flow to the Company.
It is measured at fair value of the consideration received or receivable, after deduction of sales returns, trade discount, volume rebates and any taxes or duties collected on behalf of the government which are levied on sales such as sales tax, value added tax, goods and service tax etc.
b) Revenue from rendering of services is recognized when the performance of agreed contractual task has been completed.
c) Interest income is recognized on time proportion basis taking into account the amount outstanding and applicable interest rates.
d) Sale of certificates under Renewable Energy Certificates (REC) mechanism is recognized on sale of certificates.
e) Certified Emission Reduction (CER) is recognised as income on the generation of CER and as certified by the relevant authority.
f) Export benefit entitlements under the duty entitlement pass book (DEPB) scheme are recognised in the Statement of Profit and Loss when the right to receive credit as per the terms of the scheme is established in respect of the exports made. Obligation/entitlements on account of advance license scheme for imports of raw materials are accounted for at the time of purchase of raw materials.
3.8 Government Grants / Subsidy
Government grants are recognized when there is a reasonable assurance of compliance with the conditions attached to such grants and where benefits in respect thereof have been earned and it is reasonably certain that the ultimate collection will be made. Government grant received for a specific asset is recognised as income in equal amounts over the expected useful life of the related asset.
3.9 Employee Benefits
a. Short Term Employee Benefits
All Employee benefits payable within twelve months of rendering the services are classified as short term benefits. Such benefits include salaries, wages, bonus, awards, ex-gratia etc. and the same are recognized in the period in which the employee renders the related services.
b. Defined contribution plan:
The Companyâs approved provident fund scheme, pension fund, employeesâ state insurance fund scheme, employeesâ pension scheme and employeesâ superannuation scheme are defined contribution plans. The Company has no obligation, other than the contribution paid/payable under such schemes. The contribution paid/payable under the schemes is recognized during the period in which the employee renders the related service.
c. Defined Benefit Plan
The employeesâ Gratuity fund scheme is the Companyâs defined benefit plan and is managed by a Trust. The liability with respect to gratuity is determined based on the actuarial valuation on projected unit credit method as at the balance sheet date.The difference, if any, between the actuarial valuation and the balance of the funds maintained by the Trust, is provided for as liability / assets in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to Statement of Profit and Loss in subsequent periods.
d. Other Long Term Benefit
The liability towards encashment of the employeesâ long term compensated absences, which are party en-cashable during the service period and balance at the time of retirement / separation of the employees is determined based on the actuarial valuation on projected unit credit method as at the balance sheet date. Re-measurement, comprising of actuarial gains and losses, are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to Statement of Profit and Loss in subsequent periods.
3.10 Operating leases
Operating leases where the lessor effectively retains substantially all the risks and benefits of ownership over the leased term are classified as operating leases. Operating lease rentals are recognized as an expense in the statement of profit and loss on straight line basis over the lease term, unless the payments are structured to increase in line with the expected general inflation to compensate for the lessor in expected inflationary cost increase.
3.11 Foreign Currency Transactions
Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities in foreign currency existing at balance sheet date are translated at the year end exchange rates. Exchange rate differences arising on settlement of transaction and translation of monetary items are recognized as income or expenses in the year in which they arise.
Non- monetary items that are measured in terms of historical cost in foreign currency are translated using the exchange rates at the dates of initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the far value is determined.
Premium or discount on forward exchange contract is amortised as income or expense over the life of the contract. Exchange difference on such contract is recognized in the Statement of Profit and Loss in the reporting period in which the exchange rate changes. Any profit or loss arising on cancellation or renewal of forward contract is recognized as income or expenditure during the period.
3.12 Taxation
Tax expense for the year comprises of Current Tax and Deferred Tax.
a. Current Tax
Current income tax, assets and liabilities are measured at the amount expected to be paid to or recovered from the taxation authorities in accordance with the Income Tax Act, 1961 and the Income Computation and Disclosure Standards (ICDS) enacted in India by using tax rates and the tax laws that are enacted at the reporting date.
b. Deferred Tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets and liabilities are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. 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.
3.13Intangible Assets:
Upon first time adoption of Ind AS, the Company has elected to measure its intangible assets at the Previous GAAPâs carrying amount as its deemed cost on the date of transition to Ind AS i.e. 1st April, 2016.
Intangible assets which consist of computer software, are initially measured at cost and subsequently carried at cost less any accumulated amortization and accumulated impairment losses, if any. It is amortized over a period of 5 years or license period on straight line basis, whichever is lower.
3.14Non-Current assets held for sale and discontinued operations
Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.^ case said criteria is no longer met, the non-current assets and disposal groups classified as held for sale ceases to be to held for sale.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the Statement of Profit and Loss.
Assets and liabilities classified as held for distribution are presented separately from other assets and liabilities in the Balance Sheet.
A disposal group qualifies as discontinued operation if it is a component of the Company that either has been disposed of, or is classified as held for sale, and:
- represents a separate major line of business or geographical area of operations,
- is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations, Or
- is a subsidiary acquired exclusively with a view to resale.
No depreciation / amortization is charged once the non-current asset is classified as held for sale or while it is part of a disposal group classified as held for sale.
In case above criteria is no longer met, the non-current assets and disposal groups classified as held for sale ceases to be to held for sale.
3.15Earnings per Share:
Basic earnings per share is calculated by dividing net profit or loss of the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
3.16 Segment Accounting:
The Operational Head 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 on profit or loss and is measured consistently with profit or loss in the financial statements.
The Operating Segments have been identified on the basis of the nature of products.
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 segments are considered for determining the segments result. Expenses which relate to the Company as a whole and not allocable to segments are included under un-allocable expenditure.
3. Income which relates to the Company as a whole and not allocable to segments is included in un-allocable income.
4. Segment result includes margins on inter - segment sales, which are adjusted while arriving at the results of the Company as a whole.
5. Segment assets and liabilities include those directly identifiable with the respective segments. Un-allocable assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.
Inter-Segment transfer pricing
Inter Segment transfers of goods, as marketable products produced by separate segments, for captive consumption are made as if sales were made to third parties at current market prices and are included in Turnover of the respective Segment.
Mar 31, 2015
1. GENERAL INFORMATION
JCT Limited (the Company) is primarily a manufacturer of cloth and
nylon filament yarn. The Company's manufacturing facilities are located
at Phagwara and Hoshiarpur.
2.1. Basis of preparation of financial statements
The accompanying financial statements have been prepared and presented
under the historical cost convention, on the accrual basis of
accounting and in accordance with accounting principles generally
accepted in India, the provisions of the Companies Act, 2013 (to the
extent notified) and the mandatory accounting standards as per section
133 of the Companies Act, 2013, read with rule 7 of the Companies
(Accounts) Rules, 2014 to the extent applicable and in the manner so
required.
2.2. Use of Estimates
The preparation of financial statements in conformity with GAAP in
India requires the management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent liabilities at the date of financial statements, and the
reported amount of revenues and expenses during the reporting period.
Difference between the actual result and estimates are recognised in
the period in which the results are known/ materialised.
2.3. Fixed Assets
(a) Fixed assets, except those revalued, are accounted for on
historical cost basis (inclusive of the cost of installation and
exchange fluctuations on foreign currency loans obtained for
acquisition of fixed assets) less accumulated depreciation and
impairment loss, if any.
(b) Expenditure during construction period attributable to the fixed
assets incurred upto the date of commercial production are capitalized.
(c) Expenditure on renovation/ modernisation relating to existing fixed
assets is added to the cost of such assets where it increases its
performance/life significantly.
(d) Leasehold improvements are amortised over the primary period of
lease.
2.4. Intangible asset
Intangible asset consists of computer software and is stated at cost of
acquisition/ implementation less accumulated depreciation. It is
amortized over a period of 5 years or license period on straight line
basis , whichever is lower.
2.5. Investments
Investments primarily meant to be held over long term period are valued
at cost. Provision is made when in the management's opinion there is a
decline, other than temporary, in the carrying value of such
investments. Current investments are stated at the lower of cost or
quoted price.
2.6. Inventory Valuation
(a) Inventories are valued at the lower of cost and net realisable
value.
(b) In respect of raw materials and stores & spares, cost is computed
on weighted average basis. Finished goods and stock in process include
cost of inputs, conversion and other costs incurred in bringing the
inventories to their present location and condition.
(c) Obsolete, defective and unserviceable stocks are provided for,
wherever required.
2.7. Cash and cash equivalents
Cash and cash equivalents include cash in hand, cheques, draft on
hand/remittance in transit, bank balances and deposits with original
maturities of three months or less and that are readily convertible to
known amount of cash and cash equivalent and which are subject to an
insignificant risk of changes in value.
2.8. Depreciation
(a) Depreciation on Plant & Machinery, Buildings and Data Processing
Equipments is provided on straight line method and in case of other
assets on written down value method, over the estimated useful life of
the assets, in the manner prescribed in Schedule II of the Companies
Act, 2013.
(b) Pursuant to the notification of Schedule II of the Companies Act,
2013, effective Ist April, 2014, based on the technical advice /
evaluation and internal assessment of usage pattern, the useful lives
of the assets have been re-estimated. Accordingly the carrying amount
as at 1st April, 2014 is being depreciated over the remaining useful
life of the assets. The useful lives in the following cases are
different from those prescribed in Schedule II of the Companies Act,
2013.
Based on usage pattern, internal assessment and independent technical
evaluation carried out by the external valuers/technicians, the
management believes that the useful lives as given above best represent
the period over which the management expects to use these assets. Hence
the useful lives of these assets is different from the lives as
prescribed in Schedule II of the Companies Act, 2013.
(c) Significant improvements / subsequent expenditure related to an
item of fixed assets is added to its carrying amount when it is
probable that such improvement will enable the asset to generate future
economic benefits in excess of its originally assessed standards of
performance or increase in useful life of asset and such expenditure
can be measured and attributed to the asset reliably. Subsequent
expenditures are amortized over the remaining useful life of the asset.
(d) Depreciation on additions to assets or on sale/discardment of
assets, is calculated pro rata from the month of such addition or upto
the month prior to date of sale/discardment, as the case may.
(e) Depreciation on buildings of Textile Unit revalued in earlier years
is calculated on the respective revalued figures spread equally over
the residual life of the concerned buildings as assessed by the valuer.
The difference in depreciation on revalued amount so determined and the
depreciation on the original cost of such assets is transferred from
Revaluation Reserve to the general reserve.
2.9. Impairment of Assets
An asset is treated as impaired when the carrying cost of assets
exceeds recoverable value. An impairment loss is charged to the
Statement of Profit and Loss in the year in which an asset is
identified as impaired. The impaired loss of prior accounting period is
increased/ reversed where there has been change in the estimate of
recoverable amount. The recoverable value is the higher of the assets'
net selling price and value in use.
2.10. Foreign Currency Transactions
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
in foreign currency existing at balance sheet date are translated at
the exchange rate prevailing on that date. Exchange differences in case
of borrowed funds and liabilities in foreign currency for the
acquisition of fixed assets from a country outside India are adjusted
to the cost of fixed asset. All other exchange differences are
recognised in Statement of Profit and Loss. Premium or discount on
forward exchange contract is amortised as expense or income over the
life of the contract. Exchange difference on such contract is
recognized in the Statement of Profit and Loss in the reporting period
in which the exchange rates changes. Any profit or loss arising on
cancellation or renewal of forward contract is recognised as income and
expenditure during the period.
2.11. Revenue Recognition
a) Sales Revenue from sale of products is recognised on transfer of the
significant risks and rewards of ownership of the goods to the buyer
and it is reasonable to expect ultimate collection. Sales revenue are
inclusive of excise duty/sales tax/VAT and net of trade discounts.
Export sales are recognised on the date the Company ships the exported
goods as evidenced by their Bill of Lading/Air-way Bill.
b) Export benefit entitlements under the duty entitlement pass book
(DEPB) scheme are recognised in the Statement of Profit and Loss when
the right to receive credit as per the terms of the scheme is
established in respect of the exports made. Obligation/entitlements on
account of advance license scheme for imports of raw materials are
accounted for at the time of purchase of raw materials.
c) Certified Emission Reduction (CER) is recognised as income on the
generation of CER and as certified by the relevant authority.
d) Other items of revenue are recognised in accordance with the
Accounting Standard (AS-9). Accordingly, wherever there are
uncertainties in the ascertainment/ realisation of income it is not
accounted for as revenue.
e) Profit/loss on sale of revalued fixed assets are stated with
reference to the written down value determined on the basis of their
historical cost.
2.12. Government Grants
Government grants are recognized when there is a reasonable assurance
of compliance with the conditions attached to such grants and where
benefits in respect thereof have been earned and it is reasonably
certain that the ultimate collection will be made. Government subsidy
received for a specific asset is reduced from the cost of the said
asset.
2.13. Employee Benefits
(i) Gratuity to employees is provided for on the basis of actuarial
valuation on projected unit credit method at balance sheet date and is
managed by a Trust. The deficit if any between the actuarial liability
and plan assets is recognised/provided at the year end.
(ii) Earned Leave which is encashable is considered as long term
benefit and is provided on the basis of actuarial valuation on
projected unit credit method at balance sheet date.
(iii) Liability towards Provident Fund is funded through a separate
Trust and contributions thereon are made to the Trust
(iv) The Company has an approved Superannuation Scheme for its Officers
not covered under the Payment of Bonus Act, 1965. Contributions are
made in accordance with the Scheme and the Trust Rules.
Mar 31, 2014
1.1. Basis of preparation of financial Statements
The accompanying financial statements are prepared under the historical
cost convention in accordance with the generally accepted accounting
principles in India ("GAAP") and the provisions of Companies Act, 1956
read together with Companies Act, 2013 to the extent applicable, except
for certain fixed assets which have been revalued in earlier years.
1.2. Use of Estimates
The preparation of financial statements in conformity with GAAP in
India requires the management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent liabilities at the date of financial statements, and the
reported amount of revenues and expenses during the reporting period.
Difference between the actual result and estimates are recognised in
the period in which the results are known/ materialised.
1.3. Fixed Assets
(a) Fixed assets, except those revalued, are accounted for on
historical cost basis (inclusive of the cost of installation and
exchange fluctuations on foreign currency loans obtained for
acquisition of fixed assets) less accumulated depreciation and
impairment loss, if any.
(b) Expenditure during construction period attributable to the fixed
assets incurred upto the date of commercial production are capitalized.
(c) Expenditure on renovation/ modernisation relating to existing fixed
assets is added to the cost of such assets where it increases its
performance/life significantly.
(d) Leasehold improvements are amortised over the primary period of
lease.
1.4. Intangible asset
Intangible asset consists of computer software and is stated at cost of
acquisition/ implementation less accumulated depreciation. It is
amortized over a period of 5 years period on straight line basis.
1.5. Investments
Investments primarily meant to be held over long term period are valued
at cost. Provision is made when in the managementÂs opinion there is
a decline, other than temporary, in the carrying value of such
investments. Current investments are stated at the lower of cost or
quoted price.
1.6. Inventory Valuation
(a) Inventories are valued at the lower of cost and net realisable
value.
(b) In respect of raw materials and stores & spares, cost is computed
on weighted average basis. Finished goods and stock in process include
cost of inputs, conversion and other costs incurred in bringing the
inventories to their present location and condition.
(c) Obsolete, defective and unserviceable stocks are provided for,
wherever required.
1.7. Depreciation
(a) Depreciation is provided as under:
(i) On written down value basis at the applicable rates prescribed
under Schedule XIV of the Companies Act, 1956 on pro-rata basis except
in respect of Plant & Machinery, Buildings and Data processing
equipments which is provided on straight line method at the applicable
rates prescribed under Schedule XIV of the Companies Act, 1956 on
pro-rata basis.
(ii) Depreciation on buildings of Textile Units revalued in earlier
years is calculated on the respective revalued figures spread equally
over the residual life of the concerned buildings as assessed by the
valuer. The difference in depreciation on revalued amount so determined
and the depreciation on the original cost of such assets calculated in
accordance with Section 205(2) of the Companies Act, 1956 is
transferred from Revaluation Reserve to the credit of depreciation
account.
(b) In respect of assets sold/ discarded during the period,
depreciation is provided upto the month prior to the date of sale/
discarding.
1.8. Impairment of Assets
An asset is treated as impaired when the carrying cost of assets
exceeds recoverable value. An impairment loss is charged to the
Statement of Profit & Loss in the year in which an asset is identified
as impaired. The impaired loss of prior accounting period is increased/
reversed where there has been change in the estimate of recoverable
amount. The recoverable value is the higher of the assets net
selling price and value in use.
1.9. Foreign Currency Transactions
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
in foreign currency existing at balance sheet date are translated at
the exchange rate prevailing on that date. Exchange differences in case
of borrowed funds and liabilities in foreign currency for the
acquisition of fixed assets from a country outside India are adjusted
to the cost of fixed asset. All other exchange differences are
recognised in Statement of Profit & Loss. Premium or discount on
forward exchange contract is amortised as expense or income over the
life of the contract. Exchange difference on such contract is
recognized in the Statement of Profit & Loss in the reporting period in
which the exchange rates changes. Any profit or loss arising on
cancellation or renewal of forward contract is recognised as income and
expenditure during the period.
1.10. Revenue Recognition
a) Sales Revenue from sale of products is recognised on transfer of the
significant risks and rewards of ownership of the goods to the buyer
and it is reasonable to expect ultimate collection. Sales revenue are
inclusive of excise duty/sales tax/VAT and net of trade discounts.
Export sales are recognised on the date the Company ships the exported
goods as evidenced by their Bill of Lading/Air-way Bill.
Sale of Certified Emission Reduction (CER) is recognised as income on
the generation of CER.
b) Export benefit entitlements under the duty entitlement pass book
(DEPB) scheme are recognised in the Statement of Profit & Loss when the
right to receive credit as per the terms of the scheme is established
in respect of the exports made. Obligation/entitlements on account of
advance license scheme for imports of raw materials are accounted for
at the time of purchase of raw materials.
c) Other items of revenue are recognised in accordance with the
Accounting Standard (AS-9). Accordingly, wherever there are
uncertainties in the ascertainment/ realisation of income it is not
accounted for as revenue.
d) Profit/loss on sale of revalued fixed assets are stated with
reference to the written down value determined on the basis of their
historical cost.
1.11. Government Grants
Government grants are recognized when there is a reasonable assurance
of compliance with the conditions attached to such grants and where
benefits in respect thereof have been earned and it is reasonably
certain that the ultimate collection will be made. Government subsidy
received for a specific asset is reduced from the cost of the said
asset.
1.12. Employee Benefits
(i) Gratuity to employees is provided for on the basis of actuarial
valuation on projected unit credit method at balance sheet date and is
managed by a Trust. The deficit if any between the actuarial liability
and plan assets is recognised/provided at the year end.
(ii) Earned Leave which is encashable is considered as long term
benefit and is provided on the basis of actuarial valuation on
projected unit credit method at balance sheet date.
(iii) Liability towards Provident Fund is funded through a separate
Trust and contributions thereon are made to the Trust.
(iv) The Company has an approved Superannuation Scheme for its Officers
not covered under the Payment of Bonus Act, 1965. Contributions are
made in accordance with the Scheme and the Trust Rules.
Sep 30, 2013
1.1. Basis of preparation of financial Statements
The accompanying financial statements are prepared under the historical
cost convention in accordance with the generally accepted accounting
principles in India ("GAAP") and the provisions of Companies Act, 1956
read together with Companies Act,2013 to the extent applicable, except
for certain fixed assets which have been revalued.
1.2. Use of Estimates
The preparation of financial statements in conformity with GAAP in
India requires the management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent liabilities at the date of financial statements, and the
reported amount of revenues and expenses during the reporting period.
Difference between the actual result and estimates are recognised in
the period in which the results are known/ materialised.
1.3. Fixed Assets
(a) Fixed assets, except those revalued, are accounted for on
historical cost basis (inclusive of the cost of installation and
exchange fluctuations on foreign currency loans obtained for
acquisition of fixed assets) less accumulated depreciation and
impairment loss, if any.
(b) Expenditure during construction period attributable to the fixed
assets incurred upto the date of commercial production are capitalized.
(c) Expenditure on renovation/ modernisation relating to existing fixed
assets is added to the cost of such assets where it increases its
performance/life significantly.
(d) Leasehold improvements are amortised over the primary period of
lease.
1.4. Intangible asset
Intangible asset consists of computer software and is stated at cost of
acquisition/ implementation less accumulated depreciation. It is
amortized over a period of 5 years period on straight line basis.
1.5. Investments
Investments primarily meant to be held over long term period are valued
at cost. Provision is made when in the management''s opinion there is a
decline, other than temporary, in the carrying value of such
investments. Current investments are stated at the lower of cost or
quoted price.
1.6. Inventory Valuation
(a) Inventories are valued at the lower of cost and net realisable
value.
(b) In respect of raw materials and stores & spares, cost is computed
on weighted average basis. Finished goods and stock in process include
cost of inputs, conversion and other costs incurred in bringing the
inventories to their present location and condition.
(c) Obsolete, defective and unserviceable stocks are provided for,
wherever required.
1.7. Depreciation
(a) Depreciation is provided as under:
(i) On written down value basis at the applicable rates prescribed
under Schedule XIV of the Companies Act, 1956 on pro-rata basis except
in respect of Plant & Machinery, Buildings and Data processing
equipments which is provided on straight line method at the applicable
rates prescribed under Schedule XIV of the Companies Act, 1956 on
pro-rata basis.
(ii) Depreciation on buildings of Textile Units revalued in earlier
years is calculated on the respective revalued figures spread equally
over the residual life of the concerned buildings as assessed by the
valuer. The difference in depreciation on revalued amount so determined
and the depreciation on the original cost of such assets calculated in
accordance with Section 205(2) of the Companies Act, 1956 is
transferred from Revaluation Reserve to the credit of depreciation
account.
(b) In respect of assets sold/ discarded during the year, depreciation
is provided upto the month prior to the date of sale/ discarding.
1.8. Impairment of Assets
An asset is treated as impaired when the carrying cost of assets
exceeds recoverable value. An impairment loss is charged to the
Statement of Profit & Loss in the year in which an asset is identified
as impaired. The impaired loss of prior accounting period is increased/
reversed where there has been change in the estimate of recoverable
amount. The recoverable value is the higher of the assets'' net selling
price and value in use.
1.9. Foreign Currency Transactions
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
in foreign currency existing at balance sheet date are translated at
the exchange rate prevailing on that date. Exchange differences in case
of borrowed funds and liabilities in foreign currency for the
acquisition of fixed assets from a country outside India are adjusted
to the cost of fixed asset. All other exchange differences are
recognised in Statement of Profit & Loss. Premium or discount on
forward exchange contract is amortised as expense or income over the
life of the contract. Exchange difference on such contract is
recognized in the Statement of Profit & Loss in the reporting period in
which the exchange rates changes. Any profit or loss arising on
cancellation or renewal of forward contract is recognised as income and
expenditure during the period.
1.10. Revenue Recognition
a) Sales Revenue from sale of products is recognised on transfer of the
significant risks and rewards of ownership of the goods to the buyer
and it is reasonable to expect ultimate collection. Sales revenue are
inclusive of excise duty/sales tax/VAT and net of trade discounts.
Export sales are recognised on the date the Company ships the exported
goods as evidenced by their Bill of Lading/Air-way Bill.
Sale of Certified Emission Reduction (CER) is recognised as income on
the generation of CER.
b) Export benefit entitlements under the duty entitlement pass book
(DEPB) scheme are recognised in the Statement of Profit & Loss when the
right to receive credit as per the terms of the scheme is established
in respect of the exports made. Obligation/entitlements on account of
advance license scheme for imports of raw materials are accounted for
at the time of purchase of raw materials.
c) Other items of revenue are recognised in accordance with the
Accounting Standard (AS-9). Accordingly, wherever there are
uncertainties in the ascertainment/ realisation of income it is not
accounted for as revenue.
d) Profit/loss on sale of revalued fixed assets are stated with
reference to the written down value determined on the basis of their
historical cost.
1.11. Government Grants
Government grants are recognized when there is a reasonable assurance
of compliance with the conditions attached to such grants and where
benefits in respect thereof have been earned and it is reasonably
certain that the ultimate collection will be made. Government subsidy
received for a specific asset is reduced from the cost of the said
asset.
1.12. Employee Benefits
(i) Gratuity to employees is provided for on the basis of actuarial
valuation on projected unit credit method at balance sheet date and is
managed by a Trust. The deficit if any between the actuarial liability
and plan assets is recognised/provided at the year end.
(ii) Earned Leave which is encashable is considered as long term
benefit and is provided on the basis of actuarial valuation on
projected unit credit method at balance sheet date.
(iii) Liability towards Provident Fund is funded through a separate
Trust and contributions thereon are made to the Trust
(iv) The Company has an approved Superannuation Scheme for its Officers
not covered under the Payment of Bonus Act, 1965. Contributions are
made in accordance with the Scheme and the Trust Rules.
Mar 31, 2012
1.1. Basis of preparation of financial Statements
The accompanying financial statements are prepared under the historical
cost convention in accordance with the generally accepted accounting
principles in India ("GAAP") and the provisions of Companies Act,
1956, except for certain fixed assets which have been revalued.
1.2. Use of Estimates
The preparation of financial statements in conformity with GAAP in
India requires the management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent liabilities at the date of financial statements, and the
reported amount of revenues and expenses during the reporting period.
Difference between the actual result and estimates are recognised in
the period in which the results are known/ materialised.
1.3. Fixed Assets
(a) Fixed assets, except those revalued, are accounted for on
historical cost basis (inclusive of the cost of installation and
exchange fluctuations on foreign currency loans obtained for
acquisition of fixed assets) less accumulated depreciation and
impairment loss, if any.
(b) Expenditure during construction period attributable to the fixed
assets incurred upto the date of commercial production are capitalized.
(c) Expenditure on renovation/ modernisation relating to existing fixed
assets is added to the cost of such assets where it increases its
performance/life significantly.
(d) Leasehold improvements are amortised over the primary period of
lease.
1.4. Intangible asset
Intangible asset consists of computer software and is stated at cost of
acquisition/ implementation less accumulated depreciation. It is
amortized over a period of 5 years on straight line basis.
1.5. Investments
Investments primarily meant to be held over long term period are valued
at cost. Provision is made when in the management's opinion there is
a decline, other than temporary, in the carrying value of such
investments. Current investments are stated at the lower of cost or
quoted price.
1.6. Inventory Valuation
(a) Inventories are valued at the lower of cost and net realisable
value.
(b) In respect of raw materials and stores & spares, cost is computed
on weighted average basis. Finished goods and stock in process include
cost of inputs, conversion and other costs incurred in bringing the
inventories to their present location and condition.
(c) Obsolete, defective and unserviceable stocks are provided for,
wherever required.
1.7. Depreciation
(a) Depreciation is provided as under:
(i) On written down value basis at the applicable rates prescribed
under Schedule XIV of the Companies Act, 1956 on pro-rata basis except
in respect of Plant & Machinery and Buildings, which is provided on
straight line method at the applicable rates prescribed under Schedule
XIV of the Companies Act, 1956 on pro-rata basis.
(ii) Depreciation on buildings of Textile Units revalued in earlier
years is calculated on the respective revalued figures spread equally
over the residual life of the concerned buildings as assessed by the
valuer. The difference in depreciation on revalued amount so determined
and the depreciation on the original cost of such assets calculated in
accordance with Section 205(2) of the Companies Act, 1956 is
transferred from Revaluation Reserve to the credit of depreciation
account.
(b) In respect of assets sold/ discarded during the year, depreciation
is provided upto the month prior to the date of sale/ discarding.
1.8. Impairment of Assets
An asset is treated as impaired when the carrying cost of assets
exceeds recoverable value. An impairment loss is charged to the Profit
& Loss Account in the year in which an asset is identified as impaired.
The impaired loss of prior accounting period is increased/ reversed
where there has been change in the estimate of recoverable amount. The
recoverable value is the higher of the assets' net selling price and
value in use.
1.9. Foreign Currency Transactions
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
in foreign currency existing at balance sheet date are translated at
the exchange rate prevailing on that date. Exchange differences in case
of borrowed funds and liabilities in foreign currency for the
acquisition of fixed assets from a country outside India are adjusted
to the cost of fixed asset. All other exchange differences are
recognised in Profit & Loss account. Premium or discount on forward
exchange contract is amortised as expense or income over the life of
the contract. Exchange difference on such contract is recognized in the
Statement of Profit & Loss account in the reporting period in which the
exchange rates changes. Any profit or loss arising on cancellation or
renewal of forward contract is recognised as income and expenditure
during the period.
1.10. Revenue Recognition
(a) Sales Revenue from sale of products is recognised on transfer of
the significant risks and rewards of ownership of the goods to the
buyer and are inclusive of excise duty/sales tax/VAT and net of trade
discounts. Export sales are recognised on the date the Company ships
the exported goods as evidenced by their Bill of Lading/Air-way Bill.
Sale of Certified Emission Reduction (CER) is recognised as income on
the generation of CER.
(b) Export benefit entitlements under the duty entitlement pass book
(DEPB) scheme are recognised in the Profit & Loss account when the
right to receive credit as per the terms of the scheme is established
in respect of the exports made. Obligation/ entitlements on account of
advance license scheme for imports of raw materials are accounted for
at the time of purchase of raw materials.
(c) Other items of revenue are recognised in accordance with the
Accounting Standard (AS-9). Accordingly, wherever there are
uncertainties in the ascertainment/ realisation of income it is not
accounted for as revenue.
(d) Profit/loss on sale of revalued fixed assets are stated with
reference to the written down value determined on the basis of their
historical cost.
1.11. Government Grants
Government grants are recognized when there is a reasonable assurance
of compliance with the conditions attached to such grants and where
benefits in respect thereof have been earned and it is reasonably
certain that the ultimate collection will be made. Government subsidy
received for a specific asset is reduced from the cost of the said
asset.
1.12. Employee Benefits
(a) Gratuity to employees is provided for on the basis of actuarial
valuation on projected unit credit method at balance sheet date and is
managed by a Trust. The deficit if any between the actuarial liability
and plan assets is recognised/provided at the year end.
(b) Earned Leave which is encashable is considered as long term benefit
and is provided on the basis of actuarial valuation on projected unit
credit method at balance sheet date.
(c) Liability towards Provident Fund is funded through a separate Trust
and contributions thereon are made to the Trust
(d) The Company has an approved Superannuation Scheme for its Officers
not covered under the Payment of Bonus Act, 1965. Contributions are
made in accordance with the Scheme and the Trust Rules.
Mar 31, 2010
1. Basis of preparation of Financial statements
The accompanying financial statements are prepared under the historical
cost convention in accordance with the generally accepted accounting
principles in India ("GAAP") and the provisions of Companies Act, 1956,
except for certain fixed assets which have been revalued.
2. Use of Estimates
The preparation of financial statements in conformity with GAAP in
India requires the management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent liabilities at the date of financial statements, and the
reported amount of revenues and expenses during the reporting period.
Difference between the actual result and estimates are recognised in
the period in which the results are known/ materialised.
3. Fixed Assets
(a) Fixed assets, except those revalued, are accounted for on
historical cost basis (inclusive of the cost of installation and
exchange fluctuations on foreign currency loans obtained for
acquisition of fixed assets) less accumulated depreciation and
impairment loss, if any.
(b) Expenditure during construction period attributable to the fixed
assets incurred upto the date of commercial production are capitalized.
(c) Expenditure on renovation/ modernisation relating to existing fixed
assets is added to the cost of such assets where it increases its
performance/life significantly.
(d) Leasehold improvements are amortised over the primary period of
lease.
4. Intangible assets
Intangible assets consist of computer software and are stated at cost
of acquisition/ implementation less accumulated depreciation. It is
amortized over a period of 5 years on straight line basis.
5. Investments
Investments primarily meant to be held over long term period are valued
at cost. Provision is made when in the managements opinion, there is
decline, other than temporary, in the carrying value of such
investments. Current investments are stated at the lower of cost or
quoted/fair value, computed category wise.
6. Inventory Valuation
(a) Inventories are valued at the lower of cost and net realisable
value.
(b) In respect of raw materials and stores & spares, cost is computed
on weighted average basis. Finished goods and process stock include
cost of inputs, conversion and other costs incurred in bringing the
inventories to their present location and condition.
(c) Obsolete, defective and unserviceable stocks are provided for,
wherever required.
7. Depreciation
(a) Depreciation is provided as under:
(i) On written down value basis at the applicable rates prescribed
under Schedule XIV of the Companies Act, 1956 on pro-rata basis except
in respect of Plant & Machinery and Buildings, which is provided on
straight line method at the applicable rates prescribed under Schedule
XIV of the Companies Act, 1956 on pro-rata basis.
(ii) Depreciation on buildings of Textile Units revalued in earlier
years is calculated on the respective revalued figures spread equally
over the residual life of the concerned buildings as assessed by the
valuer. The difference in depreciation on revalued amount so determined
and the depreciation on the original cost of such assets calculated in
accordance with Section 205(2) of the Companies Act, 1956 is
transferred from Revaluation Reserve to the credit of Depreciation
Account.
(b) In respect of assets sold/ discarded during the year, depreciation
is provided upto the month prior to the date of sale/ discarding.
8. Impairment of Assets
An asset is treated as impaired when the carrying cost of assets
exceeds recoverable value. An impairment loss is charged to the Profit
& Loss Account in the year in which an asset is identified as impaired.
The impaired loss of prior accounting period is increased/ reversed
where there has been change in the estimate of recoverable amount. The
recoverable value is the higher of the assets net selling price and
value in use.
9. Foreign Currency Transactions
Foreign currency transactions are recorded at the exchange rate
prevailing on the date of transaction. Monetary assets and liabilities
in foreign currency existing at balance sheet date are translated at
the exchange rate prevailing on that date.
Exchange differences in case of borrowed funds and liabilities in
foreign currency for the acquisition of fixed assets from a country
outside India are adjusted to the cost of fixed asset. All other
exchange differences are recognised in profit and loss account. Premium
or discount on forward exchange contract is amortised as expense or
income over the life of the contract. Exchange difference on such
contract is recognized in the statement of profit & loss account in the
reporting period in which the exchange rates changes. Any profit or
loss arising on cancellation or renewal of forward contract is
recognised as income and expenditure during the period.
10. Revenue Recognition
(a) Sales revenue is recognised on transfer of the significant risks
and rewards of ownership of the goods to the buyer and are inclusive of
excise duty/sales tax/VAT and net of trade discounts. Export sales are
recognised on the date the company ships the exported goods as
evidenced by their Bill of Lading/Air-way Bill.
(b) Sale of Certified Emission Reduction (CER) is recognised as income
on the generation of CER.
(c) Export benefit entitlements under the duty entitlement pass book
(DEPB) scheme are recognised in the Profit & Loss account when the
right to receive credit as per the terms of the scheme is established
in respect of the exports made. Obligation/entitlements on account of
advance license scheme for imports of raw materials are accounted for
at the time of purchase of raw materials.
(d) Other items of revenue are recognised in accordance with the
Accounting Standard (AS-9). Accordingly, wherever there are
uncertainties in the ascertainment/ realisation of income it is not
accounted for as revenue.
(e) Profit/loss on sale of revalued fixed assets are stated with
reference to the written down value determined on the basis of their
historical cost.
11. Leases
Lease arrangements, where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor, are recognized as an
operating lease. Lease payments under operating lease are recognized as
an expense in the Profit & Loss Account on a straight-line basis over
the lease period.
12. Government Grants
Government grants are recognized when there is a reasonable assurance
of compliance with the conditions attached to such grants and where
benefits in respect thereof have been earned and it is reasonably
certain that the ultimate collection will be made. Government subsidy
received for a specific asset is reduced from the cost of the said
asset.
13. Employee Benefits
(a) Liability towards Provident Fund is funded through a separate Trust
and contributions thereon are made to the Trust.
(b) Gratuity to employees is provided for on the basis of actuarial
valuation reduced by balance available under group gratuity policy with
the Insurance Companies. The deficit between the actual payments and
recoveries against claims are charged to revenue.
(c) Liability towards earned leave which is encashable is provided for
on the basis of actuarial valuation.
(d) The Company has an approved Superannuation Scheme for its Officers
not covered under the Payment of Bonus Act, 1965. Contributions are
made in accordance with the Scheme and the Trust Rules.
14. Borrowing Cost
Borrowing costs that are allocated to the acquisition or construction
of qualifying assets are capitalised as part of cost of such assets. A
qualifying asset is one that necessarily takes substantial period of
time to get ready for intended use. All other borrowing costs are
charged to revenue.