Mar 31, 2018
1.1 Significant Accounting Policies
Basis of Preparation of Financial Statements
i. Statement of Compliance with Indian Accounting Standards (Ind AS)
These financial statements comply, in all material respects, with Ind AS notified under section 133 of the Companies Act, 2013 (âthe Actâ), Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other relevant provisions of the Act.
The financial statements up to year ended 31st March 2017 were prepared in accordance with the accounting standards notified under the Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Companies Act, 1956.
These financial statements are the Companyâs first Ind AS financial statements and are complied with Ind AS 101 âFirst Time Adoption of Indian Accounting Standardsâ (Ind AS 101). The transition to Ind AS has been carried out from the accounting principles generally accepted in India (âIndian GAAPâ) which is considered as the âPrevious GAAPâ for purposes of Ind AS 101.
The date of transition to Ind AS is 1st April, 2016. Refer Note no. 43 for an explanation of how the transition from Previous GAAP to Ind AS has affected the Companyâs financial position, financial performance and cash flows.
ii. Historical Cost Convention
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities:
a) Certain financial assets and liabilities that are measured at fair value Functional and Presentation Currency
These financial statements are presented in Indian Rupees, which is also the functional currency of the Company. All financial information presented in Indian Rupees has been rounded off to two decimals in lakhs.
iii. Current and Non-current Classification
All assets and liabilities have been classified as current and non-current as per the Companyâs normal operating cycle (Twelve months) and other criteria set out in Schedule III to the Act
1.2 Summary of significant accounting policies
I. Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of the entity are measured using the currency of the primary economic environment in which the entity operates (âthe functional currencyâ). The financial statements are presented in Indian rupee (INR), which is entityâs functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are 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 gains/(losses).
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
II. Property, plant and equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of property, plant and equipment is added to its book value only if it increases the future benefits from its previously assessed standard of performance. All other expenses on existing property, plant and equipment, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.
Borrowing costs directly attributable to acquisition of property, plant and equipment which take substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
Advances paid towards the acquisition of Property, plant and equipment are disclosed as âCapital advancesâ under Other NonCurrent Assets and the cost of assets not ready to be put to use as at the balance sheet date are disclosed as âCapital work-in-progressâ.
An item of property, plant and equipment and any significant part initially recognized is de-recognized 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 income statement when the Property, plant and equipment is de-recognized.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated on straight line basis using the useful lives estimated by the management, which are equal to those prescribed under Schedule II to the Companies Act, 2013.
The residual values are not more than 5% of the original cost of the asset.
The assetsâ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated recoverable amount.
III. Investment property
Investment property are stated at cost less accumulated depreciation and impairment loss, if any.
Cost of acquisition or construction is inclusive of duties, taxes and incidental expenses and interest on loans attributable to the acquisition/construction of properties up to the date of Commissioning.
The Company is following straight line method of depreciation in respect of residential flat. Depreciation on flat is provided on the basis of useful life and residual value estimated by the management based on a technical evaluation considering nature of asset, past experience, estimated usage of the asset etc. The estimated useful life of flat is 60 years and estimated residual value is 5%.
IV. Intangible assets and Amortisation
Intangible Assets are stated at acquisition cost, net of accumulated amortisation and accumulated impairment losses, if any. Gains or losses arising from the retirement or disposal of an intangible asset are determined as the difference between the net disposal proceeds and the carrying amount of the asset and recognised as income or expense in the Statement of Profit and Loss.
Amortisation methods and periods
Intangible assets comprising of software is amortized on a straight-line basis over the useful life of three years which is estimated by the management.
V. Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. 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.
Impairment losses are recognized in the statement of profit and loss. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
VI. Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
(i) As a lessee
A lease is classified at the inception date as a finance lease or an operating lease. Leases of property, plant and equipment where the company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases.
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 payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
(i) As a lessor
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Companyâs net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Lease income from operating leases where the company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
VII. Inventories
- Raw Materials (Including goods in transit) are valued at lower of cost and Net Realisable Value. However, materials and other items held for use in production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
- Stores and Spares are valued at cost.
- Work in process is valued at cost which includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.
- Finished Stocks are valued at lower of cost or net realizable value. Cost for this purpose includes direct cost and attributable overheads.
- Cost is ascertained on the FIFO basis as applicable.
- 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.
VIII. Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
The Company collects taxes such as sales tax/value added tax, service tax, etc on behalf of the Government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from the aforesaid revenue/ income.
The following are the specific revenue recognition criteria:
I. Revenue from sale of goods is recognized when all the significant risk and rewards of ownership of the goods have been passed to the buyer.
II. Revenue from services are recognised as they are rendered based on agreements/ arrangements with the concerned parties.
III. Interest income
Interest income, including income arising from other financial instruments measured at amortized cost, is recognized using the effective interest rate method.
IV. Dividend income
Revenue is recognised when the companyâs right to receive the payment is established, which is generally when shareholders approve the dividend.
IX. Financial Instruments
Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments.
Initial Recognition
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss and ancillary costs related to borrowings) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in Statement of Profit and Loss.
Classification and Subsequent Measurement: Financial Assets
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (âFVOCIâ) or fair value through profit or loss (âFVTPLâ) on the basis of following:
- The entityâs business model for managing the financial assets and
- The contractual cash flow characteristics of the financial asset.
a) Amortised Cost
A financial asset shall be classified and measured at amortised cost if both of the following conditions are met:
- The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
b) Fair Value through other comprehensive income
A financial asset shall be classified and measured at fair value through OCI if both of the following conditions are met:
- The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
c) Fair Value through Profit or Loss
A financial asset shall be classified and measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through OCI.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Classification and Subsequent Measurement: Financial liabilities
Financial liabilities are classified as either financial liabilities at FVTPL or âother financial liabilitiesâ.
d) Financial Liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or are designated upon initial recognition as FVTPL. Gains or Losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
e) Other Financial Liabilities:
Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
f) Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. The Company recognises a loss allowance for expected credit losses on financial asset. In case of trade receivables, the Company follows the simplified approach permitted by Ind AS 109 - Financial Instruments for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risk. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.
g) Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset.
h) Derecognition of financial liabilities
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 derecognition 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.
Equity investment in subsidiaries, joint ventures and associates
The Company does not have investment in subsidiaries, joint ventures and associates.
i) 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.
j) Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
k) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company are recognised at the proceeds received.
l) Convertible financial instrument
Convertible instruments are separated into liability and equity components based on the terms of the contract.
On issuance of the convertible instruments, the fair value of the liability component is determined using a market rate for an equivalent non-convertible instrument. This amount is classified as a financial liability measured at amortised cost (net of transaction costs) until it is extinguished on conversion or redemption.
The remainder of the proceeds is allocated to the conversion option that is recognised and included in equity since conversion option meets Ind AS 32 criteria for fixed to fixed classification. Transaction costs are deducted from equity, net of associated income tax. The carrying amount of the conversion option is not remeasured in subsequent years.
Transaction costs are apportioned between the liability and equity components of the convertible instrument based on the allocation of proceeds to the liability and equity components when the instruments are initially recognised.
m) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 â Quoted prices in active markets for identical assets or liabilities
- Level 2 â Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
- Level 3 â Inputs for the asset or liability that are not based on observable market data.
X. Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
(ii) Other long-term employee benefit obligations
The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
(iii) Post-employment obligations
The company operates the following post-employment schemes:
a. defined benefit plans viz. gratuity,
b. defined contribution plans viz. provident fund.
Defined benefit plans
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.
Defined contribution plans
The company pays provident fund contributions to publicly administered provident funds as per local regulations. The company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
iv. Termination benefits
Termination benefits are payable when employment is terminated by the company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits.
(XI) Income Tax
The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The Companyâs liability for current tax is calculated using the Indian tax rates and laws that have been enacted by the reporting date. The Company periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretations and provisions where appropriate.
Deferred income tax is provided in full, using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amount in the financial statements.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax assets is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, only if, it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and current tax liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Minimum Alternate Tax (MAT) credit is recognised as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.
(XII)Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised 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, that can be reliably estimated, will be required to settle such an obligation.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Unwinding of the discount is recognised in the Statement of Profit and Loss as a finance cost. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate.
A present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent liabilities are also disclosed 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.
Claims against the Company where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities.
Contingent assets are not recognised in financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognised.
(XIII)Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Other borrowing costs are expensed in the period in which they are incurred.
(XIV) Segment Reporting - Identification of Segments
An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the companyâs chief operating decision maker (CODM) to make decisions for which discrete financial information is available. Based on the management approach as defined in Ind AS 108, the chief operating decision maker evaluates the Companyâs performance and allocates resources based on an analysis of various performance indicators by geographic segments.
(XV) Government Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the company will comply with all attached conditions. Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within other income.
Government grants relating to an expense item are recognised in the Statement of Profit and Loss by way of a deduction to the related expense on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
(XVI) Earnings per share Basic earnings per share
Basic earnings per share is calculated by dividing:
- the profit attributable to owners of the company
- by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
- the after-income tax effect of interest and other financing costs associated with dilutive potential equity
- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
(XVII) Current/non current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period The company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The company has identified twelve months as its operating cycle.
(XVIII) Cash and cash equivalents
Cash and cash equivalents in the Balance Sheet comprise cash at bank and in hand and short-term deposits with banks having original maturity of three months or less which are subject to insignificant risk of changes in value.
(XIX) Cash Flow Statement
Cash Flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a noncash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.
(XX) Dividends
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
(XXI) Rounding of amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest Rupee as per the requirement of Schedule III, unless otherwise stated.
(XXII) Significant accounting judgements, estimates and assumptions
The preparation of these financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expense for the periods presented.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.
Key sources of estimation of uncertainty at the date of the financial statements, which may cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are in respect of impairment of non-current assets, useful lives of property, plant and equipment, valuation of deferred tax assets, provisions and contingent liabilities and fair value measurement.
a) Impairment of financial assets
Trade receivables are stated at their normal value as reduced by appropriate allowances for estimated irrecoverable amounts. Individual trade receivables are written off when management deems them not collectable. Impairment is made on the expected credit loss model, which is the present value of the cash shortfall over the expected life of the financial assets. The impairment provisions for financial assets are based on assumption about the risk of default and expected loss rates. Judgement in making these assumptions and selecting the inputs to the impairment calculation are based on past history, existing market condition as well as forward looking estimates at the end of each reporting period.
b) Impairment of non - financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at armâs length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the assetâs performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to disclosure of fair value of investment property recorded by the Company.
c) Useful lives of property, plant and equipment
The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods.
d) Valuation of deferred tax assets
The Company reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy for the same has been explained under Note (i) above.
e) Defined benefit plans
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
f) Provisions
Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability require the application of judgement to existing facts and circumstances, which can be subject to change. Since the cash outflows can take place many years in the future, the carrying amounts of provisions and liabilities are reviewed regularly and adjusted to take account of changing facts and circumstances.
g) Fair value measurement
Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an armâs length transaction at the reporting date.
(XXIII) Recent Accounting Developments
On 28th March, 2018, the Ministry of Corporate Affairs (MCA) issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying amendments to Ind AS 21, âThe Effects of Changes in Foreign Exchange Ratesâ and the new standard Ind AS 115, âRevenue from Contract with Customersâ. These amendments are applicable to the Company from 1st April, 2018.
Amendment to Ind AS 21:
On 28th March, 2018, MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing âAppendix B to Ind AS 21: Foreign currency transactions and advance considerationâ which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. This amendment will come into force from 1st April, 2018.
Standard issued but not yet effective (Ind AS 115):
On 28th March, 2018, the MCA notified the Ind AS 115, Revenue from Contracts with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.
The effective date for adoption of Ind AS 115 is financial periods beginning on or after 1st April, 2018.
The Company is in process of evaluating the impact due to above changes in accounting principles. However, based on preliminary assessment, there will not be any material impact on the financial position and performance of the Company.
Mar 31, 2016
A. Company overview:-
Kamadgiri Fashion Limited is a public company domiciled in India and incorporated under the provisions of the Companies Act, 2013. Its shares are listed on BSE in India. The company is engaged in the manufacturing and job work in Textile Industry.
B. Significant accounting policies
1. Basis of Accounting
These financial statements have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP) to comply with 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 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.
2. Use of Estimates
The preparation of financial statements is in conformity with the generally accepted accounting principles requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities including contingent liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Differences between actual results and estimates are recognized in the period in which the results are known/materialized.
3. Tangible Assets, Intangible Assets and Capital Work in Progress
Tangible Assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises of purchase price and any attributable cost required for bringing the assets to its working conditions for its intended use.
Capital Work-in-Progress includes advances paid to acquire fixed assets, and the costs of fixed assets that are not ready for their intended use at the balance sheet date.
Intangible assets are stated at acquisition cost less accumulated amortization and accumulated impairment losses if any. Intangible assets are amortised on a straight line basis over their estimated useful lives. The cost of an intangible asset comprises the consideration paid for acquisition, including any duties and taxes and any directly attributable expenditure on making the asset ready for its intended use.
4. Depreciation and Amortization
Depreciation on fixed assets is provided on âStraight line methodâ at the rates specified in Scheduled II to the Companies Act, 2013. Further,
- Cost of leasehold land is amortized over the period of lease.
- Cost of software capitalized is amortized over a period of three years.
- Depreciation in respect of addition to fixed assets is provided on pro-rata basis from the date on which such assets are capitalized.
- Depreciation on fixed assets sold, discarded or demolished during the year is being provided at their respective rates up to the date on which such assets are disposed off.
- Effective 1st April, 2014, the Company depreciates its fixed assets over the useful life in the manner prescribed in Schedule II of the Act.
5. Investments
Investments that are readily realizable and intended to be held generally for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long term investment are carried at cost less provision recorded to recognize any decline, other than temporary, in the carrying value of each investment.
6. Valuation of Inventories
- Raw Materials (Including goods in transit) are valued at lower of cost and Net Realisable Value. However, materials and other items held for use in production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
- Stores and Spares are valued at cost.
- Work in process is valued at cost which includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.
- Finished Stocks are valued at lower of cost or net realizable value. Cost for this purpose includes direct cost and attributable overheads.
- Cost is ascertained on the FIFO/Specific Identification basis, as applicable.
7. Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue shall be reliably measured.
Sale of goods
Revenue is recognized on transfer of significant risks and rewards of ownership of the goods (which is generally on the dispatch of goods) to the buyer.
Job Work Charges
Incomes from job charges are recognized as and when the services are rendered.
Interest Income
Interest income is recognized on the time proportion basis taking into account the amount outstanding and the rate applicable.
8. Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date if there is an indication of impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value at the weighted average cost of capital. Net selling price is the amount obtainable from sale of the asset in an arm length transaction between knowledgeable, willing parties, less the cost of disposal. After impairment the depreciation is provided on the revised carrying amount of the asset over its remaining useful life.
9. Employee Benefits
a) Employee benefits comprise both defined contribution and defined benefit plans.
b) Provident fund is a defined contribution plan
Each eligible employee and the Company make an equal contribution at a percentage of the basic salary specified under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The Company has no further obligations under the plan beyond its periodic contributions.
c) Gratuity and Leave Encashment are defined benefit plans:-
The company''s liability towards gratuity and leave encashment are charged off to the Statement of Profit & Loss in the period in which the employee has rendered services at the present value of the amounts payable determined using actuarial valuation techniques. The actuarial method used for measuring the liability is the Projected Unit Credit method.
d) Actuarial gains and/or losses in respect of post-employment benefits are charged to Statement of Profit and Loss or capitalized in case of new projects taken up by the company.
e) All short term employee benefits are accounted for on undiscounted basis during the accounting period based on services rendered by employees.
10. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources to settle the obligation, in respect of which a reliable estimate is possible. Provisions are not discounted to its present value and are determined on the basis of the best estimate required to settle the obligation as on the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Contingent Liabilities are not recognized in the financial statements but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.
11. Taxes on Income
Provision for current tax is made in accordance with and at the rates and in the manner specified under the Income Tax Act, 1961 as amended from time to time. Income taxes are accrued at the same period in which the related revenue and expense arise. A provision is made for income tax based on the tax liability computed after considering tax allowances and exemptions.
Deferred Tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
12. Leases
Where the company is lessee:
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight-line basis over the period of the lease or other systematic basis more representative of the time pattern of the user''s benefits.
Where the company is lessor:
Lease income is recognized in Statement of Profit and Loss on a straight line basis over the lease term. Costs including depreciation are recognized as an expense in the Statement of Profit and Loss. Initial direct costs such as legal cost, brokerage, etc. are recognized immediately in the Statement of Profit and Loss.
13. Transaction in Foreign Currencies
a) Initial Recognition:
Foreign Currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
b) Conversion:
Foreign Currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of the historical cost denominated in the foreign currency are reported using the exchange rate at the date of the transaction; nonmonetary items which are carried at a fair value or other similar valuation denominated in a foreign currency are reported using the exchange rate that existed on the date the values were determined.
c) Exchange Difference:
The exchange difference arising on the settlement of monetary items or on reporting unsettled monetary items at the rates different from those at which they were initially recorded during the year, or reported in the previous financial statements, are recognized as income or as expenses in the period in which they arise.
d) Forward Exchange Contracts:
In case of transactions covered by forward exchange contracts, which are not intended for trading or speculation purposes, the premium/discount represented by difference between the exchange rate at the date of the inception of the forward exchange contract and forward rate specified in the contract is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the statement of Profit and Loss in the period in which they occur. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for that period.
e) Non-monetary foreign currency items such as investments are carried at cost.
14. Cash and Cash Equivalents
Cash and Cash Equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short term investment with an original maturity of three month or less.
15. Earnings per Share (EPS)
Basic earnings per share are calculated by dividing the net profit or loss after tax for the period attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent they that they were entitled to participate in the dividends relative to a fully paid equity share during the reporting period. The weighted average numbers of equity shares outstanding during the period are adjusted for events like bonus issue, bonus element in a rights issue to the existing shareholders, share split and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, net profit or loss for the period attributable to equity share holders and the weighted average no. of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
16. Government Grants
Grants received against specific fixed assets are adjusted to the cost of the assets and those in the nature of promoter''s contribution are credited to Capital Reserve. Revenue Grants are recognized in the Profit and Loss Account in accordance with the related scheme and in the period in which these are realization.
17. Borrowing Costs :
Interest and other borrowing costs attributable to qualifying assets are capitalized. Other interest & borrowing costs are charged to revenue.
18. Application of Securities Premium Account:
Share and debenture Issue expenses and Premium payable on Redemption of Debentures, are charged first against available balance in Securities Premium Account.
c) Aggregate number of bonus shares issued, share issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date - NIL (PY - NIL)
d) Terms/rights attached to equity shares :
The company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity share is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the company , the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Mar 31, 2015
1. Basis of Accounting
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. Pursuant to section 133 of the
Companies (Accounts) Rules, 2014, till the standards of accounting or
any addendum thereto are prescribed by Central Government in
consultation and recommendation of the National Financial Reporting
Authority, the exiting Accounting Standards notified under the
Companies Act, 1956 read shall continue to apply. Consequently, these
financial statements have been prepared to comply in all material
aspects with the accounting standards notified under Sanction 211(3C)
of Companies Act, 1956 (Companies (Accounting Standards) Rules, 2006,
as amended) and other relevant provisions of the Companies Act, 2013.
All the assets and liabilities have been classified as current or
non-current as per Company's normal operating cycle and other criteria
set out in Schedule III of the Companies Act, 2013. Based on the nature
of products and the time between the acquisition of assets for
processing and their realization in cash and cash equivalent, the
Company has ascertained its operating cycle to be 12 months for the
purpose of current-non-current classification of assets and
liabilities.
2. Use of Estimates
The preparation of financial statements is in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period.
Although these estimates are based on the management's best knowledge
of the current events and actions, actual results could differ from the
estimates.
3. Fixed Assets, Intangible Assets and Capital Work in Progress
Fixed assets are stated at cost less accumulated depreciation. Cost
comprises of purchase price and any attributable cost required for
bringing the assets to its working conditions for its intended use.
Capital Work-in-Progress includes advances paid to acquire fixed
assets, and the costs of fixed assets that are not ready for their
intended use at the balance sheet date. Intangible assets are stated at
cost less accumulated amortisation. The cost of an intangible asset
comprises the consideration paid for acquisition, including any duties
and taxes and any directly attributable expenditure on making the asset
ready for its intended use.
4. Depreciation
Depreciation on fixed assets is provided on "Straight line method" at
the rates specified in Scheduled II to the Companies Act, 2013.
Computer software is grouped under "Intangible Assets" and is
amortized over its useful life using straight line method in accordance
with the rates prescribed against computers in Schedule II of the
Companies Act, 2013. Further,
- Cost of leasehold land is amortized over the period of lease.
- Depreciation in respect of addition to fixed assets is provided on
pro-rata basis from the date on which such assets are capitalized.
- Depreciation on fixed assets sold, discarded or demolished during
the year is being provided at their respective rates up to the date on
which such assets are disposed off.
- Effective 1st April, 2014, the Company depreciates its fixed assets
over the useful life in the manner prescribed in Schedule II of the
Act, as against the earlier practice of depreciating at the rates
prescribed in Schedule XIV of the Companies Act, 1956
5. Investments
Investments that are readily realizable and intended to be held
generally for not more than a year are classified as current
investments. All other investments are classified as long term
investments. Current investmentsare carried at lower of cost and fair
value determined on an individual investment basis. Long term
investment are carried at cost less provision recorded to recognize any
decline, other than temporary, in the carrying value of each
investment.
6. Valuation of Inventories
- Raw Materials (Including goods in transit) are valued at lower of
cost and Net Realisable Value. However, materials and other items held
for use in production of inventories are not written down below cost if
the finished products in which they will be incorporated are expected
to be sold at or above cost.
- Stores and Spares are valued at cost.
- Work in process is valued at cost which includes direct materials
and labour and a proportion of manufacturing overheads based on normal
operating capacity.
- Finished Stocks are valued at lower of cost or net realizable
value. Cost for this purpose includes direct cost and attributable
overheads.
- Cost is ascertained on the FIFO/Specific Identification basis, as
applicable.
7. Revenue Recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the company and the revenue shall be
reliably measured.
Sale of goods
Revenue is recognized on transfer of significant risks and rewards of
ownership of the goods (which is generally on the dispatch of goods) to
the buyer.
Job Work Charges
Incomes from job charges are recognized as and when the services are
rendered.
Interest Income
Interest income is recognised on the time proportion basis taking into
account the amount outstanding and the rate applicable.
8. Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is an indication of impairment based on internal / external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital. Net
selling price is the amount obtainable from sale of the asset in an arm
length transaction between knowledgeable, willing parties, less the
cost of disposal. After impairment the depreciation is provided on the
revised carrying amount of the asset over its remaining useful life.
9. Employee Benefits
a) Employee benefits comprise both defined contribution and defined
benefit plans.
b) Provident fund is a defined contribution plan
Each eligible employee and the Company make an equal contribution at a
percentage of the basic salary specified under the Employees Provident
Funds and Miscellaneous Provisions Act, 1952. The Company has no
further obligations under the plan beyond its periodic contributions.
c) Gratuity and Leave Encashment are defined benefit plans:-
The company's liability towards gratuity and leave encashment are
charged off to the Statement of Profit & Loss in the period in which
the employee has rendered services at the present value of the amounts
payable determined using actuarial valuation techniques. The actuarial
method used for measuring the liability is the Projected Unit Credit
method.
d) Actuarial gains and/or losses in respect of post-employment benefits
are charged to Statement of Profit and Loss or capitalised in case of
new projects taken up by the company.
e) All short term employee benefits are accounted for on undiscounted
basis during the accounting period based on services rendered by
employees.
10. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when there is a present obligation as a
result of past events and it is probable that there will be an outflow
of resources to settle the obligation, in respect of which a reliable
estimate is possible. Provisions are not discounted to its present
value and are determined on the basis of the best estimate required to
settle the obligation as on the balance sheet date. These are reviewed
at each balance sheet date and adjusted to reflect the current best
estimates.
Contingent Liabilities are not recognized in the financial statements
but are disclosed in the notes. Contingent Assets are neither
recognized nor disclosed in the financial statements.
11. Taxes on Income
Provision for current tax is made in accordance with and at the rates
and in the manner specified under the Income Tax Act, 1961 as amended
from time to time. Income taxes are accrued at the same period in which
the related revenue and expense arise. A provision is made for income
tax based on the tax liability computed after considering tax
allowances and exemptions.
Deferred Tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognised only to the extent
that there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
realised. In situations where the company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are recognised
only if there is virtual certainty supported by convincing evidence
that they can be realised against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
12. Leases
Where the company is lessee:
Leases where the lessor effectively retains substantially all the risk
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognised as expenses
in the Statement of Profit and Loss on a straight line basis over the
lease term.
Where the company is lessor:
Assets subject to operating leases are included in fixed assets; lease
income is recognised in Statement of Profit and Loss on a straight line
basis over the lease term. Costs including depreciation are recognised
as an expense in the Statement of Profit and Loss. Initial direct costs
such as legal cost, brokerage, etc. are recognised immediately in the
Statement ofProfit and Loss.
13. Transaction in Foreign Currencies
a) Initial Recognition:
Foreign Currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
b) Conversion:
Foreign Currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of the historical cost
denominated in the foreign currency are reported using the exchange
rate at the date of the transaction; non-monetary items which are
carried at a fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rate that existed on
the date the values were determined.
c) Exchange Difference:
The exchange difference arising on the settlement of monetary items or
on reporting unsettled monetary items at the rates different from those
at which they were initially recorded during the year, or reported in
the previous financial statements, are recognised as income or as
expenses in the period in which they arise.
d) Forward Exchange Contracts:
In case of transactions covered by forward exchange contracts, which
are not intended for trading or speculation purposes, the
premium/discount represented by difference between the exchange rate at
the date of the inception of the forward exchange contract and forward
rate specified in the contract is amortised as expense or income over
the life of the contract.
Exchange differences on such contracts are recognised in the statement
of Profit and Loss in the period in which they occur.
Any profit or loss arising on cancellation or renewal of forward
exchange contract is recognised as income or as expense for that
period.
e) Non-monetary foreign currency items such as investments are carried
at cost.
14. Cash and Cash Equivalents
Cash and Cash Equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short term investment with an
original maturity of three month or less.
15. Earnings per Share (EPS)
Basic earnings per share are calculated by dividing the net profit or
loss after tax for the period attributable to the equity shareholders
by the weighted average number of equity shares outstanding during the
period. Partly paid equity shares are treated as a fraction of an
equity share to the extent they that they were entitled to participate
in the dividends relative to a fully paid equity share during the
reporting period. The weighted average numbers of equity shares
outstanding during the period are adjusted for events like bonus issue,
bonus element in a rights issue to the existing shareholders, share
split and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, net profit
or loss for the period attributable to equity share holders and the
weighted average no. of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
16. Government Grants
Grants received against specific fixed assets are adjusted to the cost
of the assets and those in the nature of promoter's contribution are
credited to Capital Reserve. Revenue Grants are recognised in the
Profit and Loss Account in accordance with the related scheme and in
the period in which these are realisation.
17. Borrowing Costs :
Interest and other borrowing costs attributable to qualifying assets
are capitalised. Other interest & borrowing costs are charged to
revenue.
18. Application of Securities Premium Account:
Share and debenture Issue expenses and Premium payable on Redemption of
Debentures, are charged first against available balance in Securities
Premium Account.
Mar 31, 2014
1. Basis of Accounting
The financial statements are prepared in accordance with generally
accepted accounting principles (GAAP) in India under the historical
cost convention on accrual basis. GAAP comprise mandatory accounting
standards as prescribed by the Companies (Accounting Standards) Rules,
2006 (as amended) as per section 211(3C) of the Companies Act, 1956 and
Guidelines issued by the Securities and Exchange Board of India.
All the 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 schedule VI to the Companies Act, 1956. Based on the nature
of products and the time between the acquisition of assets for
processing and their realization in cash and cash equivalent, the
Company has ascertained its operating cycle to be 12 months for the
purpose of current-non current classification of assets and
liabilities.
2. Use of Estimates
The preparation of financial statements is in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period.
Although these estimates are based on the management''s best knowledge
of the current events and actions, actual results could differ from the
estimates.
3. Fixed Assets, Intangible Assets and Capital Work in Progress
Fixed assets are stated at cost less accumulated depreciation. Cost
comprises of purchase price and any attributable cost required for
bringing the assets to its working conditions for its intended use.
Capital Work-in-Progress includes advances paid to acquire fixed
assets, and the costs of fixed assets that are not ready for their
intended use at the balance sheet date. Intangible assets are stated at
cost less accumulated amortisation. The cost of an intangible asset
comprises the consideration paid for acquisition, including any duties
and taxes and any directly attributable expenditure on making the asset
ready for its intended use.
4. Depreciation
Depreciation on fixed assets is provided on "Straight line method" at
the rates specified in schedule XIV to the Companies Act, 1956.
Computer software is grouped under "Intangible Assets" and is amortized
over its useful life using straight line method in accordance with the
rates prescribed against computers in schedule XIV of the Companies
Act. 1956. Further,
* Cost of leasehold land is amortized over the period of lease.
* Assets each costing $ 5,000 or less are depreciated fully in the year
of purchase.
* Depreciation in respect of addition to fixed assets is provided on
pro-rata basis from the date on which such assets are capitalized.
* Depreciation on fixed assets sold, discarded or demolished during the
year is being provided at their respective rates up to the date on
which such assets are disposed off.
5. Investments
Investments that are readily realizable and intended to be held
generally for not more than a year are classified as current
investments. All other investments are classified as long term
investments. Current investments are carried at lower of cost and fair
value determined on an individual investment basis. Long term
investment are carried at cost less provision recorded to recognize any
decline, other than temporary, in the carrying value of each
investment.
6. Valuation of Inventories
* Raw Materials (Including goods in transit) are valued at lower of
cost and Net Realisable Value. However, materials and other items held
for use in production of inventories are not written down below cost if
the finished products in which they will be incorporated are expected
to be sold at or above cost.
* Stores and Spares are valued at cost.
* Work in process is valued at cost which includes direct materials and
labour and a proportion of manufacturing overheads based on normal
operating capacity.
* Finished Stocks are valued at lower of cost or net realizable value.
Cost for this purpose includes direct cost and attributable overheads.
* Cost is ascertained on the FIFO/Specific Identification basis, as
applicable.
7. Revenue Recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the company and the revenue shall be
reliably measured.
Sale of goods
Revenue is recognized on transfer of significant risks and rewards of
ownership of the goods (which is generally on the dispatch of goods) to
the buyer.
Job Work Charges
Incomes from job charges are recognized as and when the services are
rendered, interest Income
Interest income is recognised on the time proportion basis taking into
account the amount outstanding and the rate applicable.
8. Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is an indication of impairment based on internal / external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital. Net
selling price is the amount obtainable from sale of the asset in an arm
length transaction between knowledgeable, willing parties, less the
cost of disposal. After impairment the depreciation is provided on the
revised carrying amount of the asset over its remaining useful life.
9. Employee Benefits
a) Employee benefits comprise both defined contribution and defined
benefit plans.
b) Provident fund is a defined contribution plan
Each eligible employee and the Company make an equal contribution at a
percentage of the basic salary specified under the Employees Provident
Funds and Miscellaneous Provisions Act, 1952. The Company has no
further obligations under the plan beyond its periodic contributions.
c) Gratuity and Leave Encashment are defined benefit plans:-
The company''s liability towards gratuity and leave encashment are
charged off to the Statement of Profit & Loss in the period in which
the employee has rendered services at the present value of the amounts
payable determined using actuarial valuation techniques. The actuarial
method used for measuring the liability is the Projected Unit Credit
method.
d) Actuarial gains or losses in respect of post-employment benefits
charged to statement of Profit and Loss or Capitalised in case of new
projects taken up by the company
e) All Short-term employee benefits are accounted for an undiscounted
basis during the accounting periodbased on services rendered by
employees
10. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when there is a present obligation as a
result of past events and it is probable that there will be an outflow
of resources to settle the obligation, in respect of which a reliable
estimate is possible. Provisions are not discounted to its present
value and are determined on the basis of the best estimate required to
settle the obligation as on the balance sheet date. These are reviewed
at each balance sheet date and adjusted to reflect the current best
estimates. Contingent Liabilities are not recognized in the financial
statements but are disclosed in the notes. Contingent Assets are
neither recognized nor disclosed in the financial statements.
11. Taxeson Income
Provision for current tax is made in accordance with and at the rates
and in the manner specified under the Income Tax Act, 1961 as amended
from time to time. Income taxes are accrued at the same period in which
he related revenue and expense arise. A provision is made for income
tax based on the tax liability computed after considering tax
allowances and exemptions.
Deferred Tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognised only to the extent
that there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
realised. In situations where the company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are recognised
only if there is virtual certainty supported by convincing evidence
that they can be realised against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes-down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
12. Leases
Where the company is lessee:
Leases where the lessor effectively retains substantially all the risk
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognised as expenses
in the Statement of Profit and Loss on a straight line basis over the
lease term.
Where the company is lessor:
Assets subject to operating leases are included in fixed assets; lease
income is recognised in Statement of Profit and Loss on a straight line
basis over the lease term. Costs including depreciation are recognised
as an expense in the Statement of Profit and Loss. Initial direct costs
such as legal cost, brokerage, etc. are recognised immediately in the
Statement of Profit and Loss.
13. Transaction in Foreign Currencies
a) Initial Recognition:
Foreign Currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
b) Conversion:
Foreign Currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of the historical cost
denominated in the foreign currency are reported using the exchange
rate at the date of the transaction; non-monetary items which are
carried at a fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rate that existed on
the date the values were determined.
c) Exchange Difference:
The exchange difference arising on the settlement of monetary items or
on reporting unsettled monetary items at the rates different from those
at which they were initially recorded during the year, or reported in
the previous financial statements, are recognised as income or as
expenses in the period in which they arise.
d) Forward Exchange Contracts:
In case of transactions covered by forward exchange contracts, which
are not intended for trading or speculation purposes, the
premium/discount represented by difference between the exchange rate at
the date of the inception of the forward exchange contract and forward
rate specified in the contract is amortised as expense or income over
the life of the contract. Exchange differences on such contracts are
recognised in the statement of Profit and Loss in the period in which
they occur. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as Income or as expense for
that period.
e) Non-monetary foreign currency items such as investments are carried
at cost.
14. Cash and Cash Equivalents
Cash and Cash Equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short term investment with an
original maturity of three month or less.
15. Earnings Per Share (EPS)
Basic earnings per share are calculated by dividing the net profit or
loss after tax for the period attributable to the equity shareholders
by the weighted average number of equity shares outstanding during the
period. Partly paid equity shares are treated as a fraction of an
equity share to the extent they that they were entitled to participate
in the dividends relative to a fully paid equity share during the
reporting period. The weighted average numbers of equity shares
outstanding during the period are adjusted for events like bonus issue,
bonus element in a rights issue to the existing shareholders, share
split and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, net profit
or loss for the period attributable to equity shareholders and the
weighted average no. of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
16. Government Grants:
Government grants in the nature of the promoters'' contribution are
credited to the capital reserve and treated as a part of the share
holders'' funds.
17. Borrowing Costs:
Interest and other borrowing costs attributable to qualifying assets
are capitalised. Other interest & borrowing costs are charged to
revenue.
18. Application of Securities Premium Account:
Share and debenture Issue expenses and Premium payable on Redemption of
Debentures, are charged first against available balance in Securities
Premium Account.
Mar 31, 2012
1. Basis of Accounting
The financial statements are prepared in accordance with generally
accepted accounting principles (GAAP) in India under the historical
cost convention on accrual basis. GAAP comprise mandatory accounting
standards as prescribed by the Companies (Accounting Standards) Rules,
2006 (as amended), the provisions of the Companies Act, 1956 and
guidelines issued by the Securities and Exchange Board of India.
2. Use of Estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period.
Although these estimates are based on the management's best knowledge
of the current events and actions, actual results could differ from the
estimates.
3. Fixed Assets, Intangible Assets and Capital Work in Progress
Fixed assets are stated at cost less accumulated depreciation. Cost
comprises the purchase price and any attributable cost required for
bringing the assets to its working conditions for its intended use.
Capital Work-in-Progress includes advances paid to acquire fixed
assets, and the costs of fixed assets that are not ready for their
intended use at the balance sheet date. Intangible assets are stated at
cost less accumulated amortization. The cost of an intangible asset
comprises the consideration paid for acquisition, including any duties
and taxes and any directly attributable expenditure on making the asset
ready for its intended use.
4. Depreciation
Depreciation on fixed assets is provided on "Straight line method" at
the rates specified in schedule XIV to the Companies Act, 1956.
Computer software is grouped under "Intangible Assets" and is
amortized over its useful life using straight line method in accordance
with the rates prescribed against computers in schedule XIV of the
Companies Act, 1956. Further,
- Cost of leasehold land is amortized over the period of lease.
- Assets each costing Rs. 5,000 or less are depreciated fully in the
year of purchase.
- Depreciation in respect of addition to fixed assets is provided on
pro-rata basis from the date on which such assets are capitalized.
- Depreciation on fixed assets sold, discarded or demolished during
the year is being provided at their respective rates up to the date on
which such assets are disposed off.
5. Investments
Investments that are readily realizable and intended to be held
generally for not more than a year are classifieds current investments.
All other investments are classified as long term investments. Current
investment is carried at lower of cost and fair value determined on an
individual investment basis. Long term investment are carried at cost
less provision recorded to recognize any decline, other than temporary,
in the carrying value of each investment.
6. Valuation of Inventories
- Raw Materials (including goods in transit) are valued at lower of
cost and Net Realizable Value. However, materials and other items held
for use in production of inventories are not written down below cost if
the finished products in which they will be incorporated are expected
to be sold at or above cost.
- Stores and Spares are valued at cost.
- Work in process is valued at cost which includes direct materials
and lab our and a proportion of manufacturing overheads based on normal
operating capacity.
- Finished Stocks are valued at lower of cost or net realizable
value. Cost for this purpose includes direct cost and attributable
overheads.
- Cost is ascertained on the FIFO/Specific Identification basis, as
applicable.
7. Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue shall be
reliably measured.
Sale of goods
Revenue is recognized on transfer of significant risks and rewards of
ownership of the goods (which is generally on the dispatch of goods) to
the buyer.
Job Work Charges
Incomes from job charges are recognized as and when the services are
rendered.
Interest Income
Interest income is recognized on the time proportion basis taking into
account the amount outstanding and the rate applicable.
8. Impairment of Assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is an indication of impairment based on internal / external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital. Net
selling price is the amount obtainable from sale of the asset in an arm
length transaction between knowledgeable, willing parties, less the
cost of disposal. After impairment the depreciation is provided on the
revised carrying amount of the asset over its remaining useful life.
9. Employee Benefits
a) Employee benefits comprise both defined contribution and defined
benefit plans.
b) Provident fund is a defined contribution plan
Each eligible employee and the Company make an equal contribution at a
percentage of the basic salary specified under the Employees Provident
Funds and Miscellaneous Provisions Act, 1952. The Company has no
further obligations under the plan beyond its periodic contributions.
c) Gratuity and Leave Encashment are defined benefit plans:-
The Company's liability towards gratuity and leave encashment are
charged off to the Profit & Loss Account in the period in which the
employee has rendered services at the present value of the amounts
payable determined using actuarial valuation techniques. The actuarial
method used for measuring the liability is the Projected Unit Credit
method.
d) Actuarial gains and/or losses in respect of post-employment benefits
are charged to profit and loss account or capitalized in case of new
projects taken up by the company.
e) All short term employee benefits are accounted for on undiscounted
basis during the accounting period based on services rendered by
employees. ,
10. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when there is a present obligation as a
result of past events and it is probable that there will be an outflow
of resources to settle the obligation, in respect of which a reliable
estimate is possible. Provisions are not discounted to its present
value and are determined on the basis of the best estimate required to
settle the obligation as on the balance sheet date. These are reviewed
at each balance sheet date and adjusted to reflect the current best
estimates.
Contingent Liabilities are not recognized in the financial statements
but are disclosed in the notes. Contingent Assets are neither
recognized nor disclosed in the financial statements.
11. Taxes on Income
Provision for current tax is made in accordance with and at the rates
and in the manner specified under the Income Tax Act, 1961 as amended
from time to time. Income taxes are accrued at the same period in which
the related revenue and expense arise. A provision is made for income
tax based on the tax liability computed after considering tax
allowances and exemptions.
Deferred Tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date. Deferred
tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current
tax liabilities and the deferred tax assets and deferred tax
liabilities relate to the taxes on income levied by same governing
taxation laws. Deferred tax assets are recognized only to the extent
that there is reasonable certainty that sufficient future taxable
income will be available against which such deferred tax assets can be
realized. In situations where the Company has unabsorbed depreciation
or carry forward tax losses, all deferred tax assets are recognized
only if there is virtual certainty supported by convincing evidence
that they can be realized against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes - down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
12. Leases
Where the Company is lessee:
Leases where the less or effectively retains substantially all the risk
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognized as expenses
in the profit and loss account on a straight line basis over the lease
term.
Where the Company is less or:
Assets subject to operating leases are included in fixed assets; lease
income is recognized in profit and loss account on a straight line
basis over the lease term. Costs including depreciation are recognized
as an expense in the profit and loss account. Initial direct costs such
as legal cost, brokerage, etc. are recognized immediately in the profit
and loss account.
13. Transaction in Foreign Currencies
a) Initial Recognition:
Foreign Currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
b) Conversion:
Foreign Currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of the historical cost
denominated in the foreign currency are reported using the exchange
rate at the date of the transaction; non-monetary items which are
carried at a fair value or other similar valuation denominated in a
foreign currency are reported using the exchange rate that existed on
the date the values were determined.
c) Exchange Difference:
The exchange difference arising on the settlement of monetary items or
on reporting unsettled monetary items at the rates different from those
at which they were initially recorded during the year, or reported in
the previous financial statements, are recognized as income or as
expenses in the period in which they arise.
d) Forward Exchange Contracts:
In case of transactions covered by forward exchange contracts, which
are not intended for trading or speculation purposes, the
premium/discount represented by difference between the exchange rate at
the date of the inception of the forward exchange contract and forward
rate specified in the contract is amortized as expense or income over
the life of the contract.
Exchange differences on such contracts are recognized in the statement
of profit and loss account in the period in which they occur.
Any profit or loss arising on cancellation or renewal of forward
exchange contract is recognized as income or as expense for that
period.
e) Non-monetary foreign currency items such as investments are carried
at cost.
14. Cash and Cash Equivalents
Cash and Cash Equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short term investment with an
original maturity of three month or less.
15. Earnings per Share (EPS)
Basic earnings per share are calculated by dividing the net profit or
loss after tax for the period attributable to the equity shareholders
by the weighted average number of equity shares outstanding during the
period. Partly paid equity shares are treated as a fraction of an
equity share to the extent they that they were entitled to participate
in the dividends relative to a fully paid equity share during the
reporting period. The weighted average numbers of equity shares
outstanding during the period are adjusted for events like bonus issue,
bonus element in a rights issue to the existing shareholders, share
split and reverse share split (consolidation of shares).
For the purpose of calculating diluted earnings per share, net profit
or loss for the period attributable to equity share holders and the
weighted average no. of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
16. Government Grants
Government grants in the nature of the promoters' contribution are
credited to the capital reserve and treated as a part of the
shareholders' funds.
17. Borrowing Costs:
Interest and other borrowing costs attributable to qualifying assets
are capitalized. Other interest & borrowing costs are charged to
revenue.
18. Application of Securities Premium Account:
Share and debenture Issue expenses and Premium payable on Redemption of
Debentures, are charged first against available balance in Securities
Premium Account.
Mar 31, 2010
1. Basis of Accounting
The financial statements are prepared in accordance with generally
accepted accounting principles (GAAP) in India under the historical
cost convention on accrual basis. GAAP comprise mandatory accounting
standards as prescribed by the Companies (Accounting Standards) Rules,
2006, the provisions of the Companies Act, 1956 and guidelines issued
by the Securities and Exchange Board of India.
2. Use of Estimates
The preparation of financial statements in Conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Difference between the actual results and estimates
are recognised in the period in which the results are known or
materialised.
3. Fixed Assets And Depreciation
All fixed assets except lands are stated at cost less accumulated
depreciation. Cost comprises the purchase price and any attributable
cost required for bringing the assets to its working conditions for
intended use.
- Cost of leasehold land is amortized over the period of lease.
- Depreciation on fixed assets is provided on "Straight line method" at
the rates specified in Scheduled XIV to the Companies Act, 1956.
- Depreciation in respect of addition to fixed assets is provided on
pro-rata basis from the month in which such assets are acquired/
installed/started commercial production.
- Depreciation on fixed assets sold, discarded or demolished during the
year is being provided at their respective rates up to the months in
which such assets are sold, discarded or demolished.
4. Investments
- Long term Investments are stated at cost.
- Short term investments are being valued at cost or market value
whichever is lower.
5. Valuation of Inventories
- Valuation of inventories is inclusive of taxes or duties incurred and
on FIFO basis.
- Raw materials are valued at lower of cost or net realizable value.
- Stores & Spares are valued at cost.
- Work in process is valued at cost which includes direct materials and
labor and a proportion of manufacturing overheads based on normal
operating capacity.
- Finished Stocks are valued at lower of cost or net realizable value.
6. Revenue Recognition
- Sale of Goods is recognized on transfer of significant risks and
rewards of ownership which is on the dispatch of goods.
- Incomes from job charges are recognized as and when the services are
rendered.
- Interest income is accounted on accrual basis.
7. Impairment loss
Impairment loss is provided to the extent the carrying amount(s) of
assets exceed their recoverable amounts(s). Recoverable amount is the
higher of an asset net selling price and its value in use. Value in use
is the present value of estimated future cash flow expected to arise
from the continuing use of the asset and from its disposal at the end
of its useful life. Net selling price is the amount obtainable from
sale of the asset in an arm length transaction between knowledgeable,
willing parties, less the cost of disposal.
8. Retirement And Other Benefits To Employees
- Employees benefit under defined contribution plan such as
contribution to provident fund and employees benefits under defined
benefit plan for leave encashment are charged off at the undiscounted
amount in the year in which the related service provided.
- Post employment benefits under defined benefit plan such as gratuity
are charged off in the year in which the employee has rendered services
at the present value of the amounts payable determined using actuarial
valuation techniques. Actuarial gain and/or losses in respect of post
employment benefits are charged to profit and loss account or
capitalised in case of new projects taken up by the company.
9. Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
10. Taxes on Income
Current tax is determined as the amount of tax payable in respect of
taxable income for the year. Deferred tax is recognised, on timing
differences, being the difference between taxable incomes and
accounting income that originate in one year and are capable of
reversal in one or more subsequent years.
11. Leases:
Where the company is lessee:
Leases where the lessor effectively retains substantially all the risk
and benefits of ownership of the leased term, are classified as
operating leases. Operating lease payments are recognised as expenses
in the profit and loss account on a straight line basis over the lease
term. Where the company is lessor:
Assets subject to operating leases are included in fixed assets; lease
income is recognised in profit and loss account on a straight line
basis over the lease term. Costs including depreciation are recognised
as an expense in the profit and loss account. Initial direct costs such
as legal cost, brokerage etc are recognised immediately in the profit
and loss account.
12. Transaction in Foreign Currencies
a) Initial Reorganisation:
Transactions denominated in foreign currencies are recorded by applying
the exchange rates prevailing at the date of the transactions.
b) Conversion:
Monetary items denominated in foreign currencies remaining unsettled at
the end of the year, are restated using the closing rates.
c) Exchange Difference:
The exchange difference arising on the settlement of monetary items or
on reporting unsettled monetary items at the rates different from those
at which they were initially recorded during the year, or reported in
the previous financial statements, are recognised as income or as
expenses in the year in which they arise.
In case the monetary items are covered by the forward exchange
contracts, the difference between the yearend exchange rate and the
exchange rate at the date of the inception of the forward exchange
contract is recognised as exchange difference.
d) Forward Exchange Contracts:
In case of transactions covered by forward exchange contracts, which
are not intended for trading or speculation purposes, the
premium/discount represented by difference between the exchange rate at
the date of the inception of the forward exchange contract and forward
rate specified in the contract is amortised as expense or income
overthe life of the contract.
Exchange differences on such contracts are recognised in the statement
of profit and loss account in the year in which the exchange rate
changes.
Any profit or loss arising on cancellation or renewal of forward
exchange contract is recognised as income or as expense for the year.
e) Non-monetary foreign currency items such as investments are carried
at cost.
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