Mar 31, 2018
1. SIGNIFICANT ACCOUNTING POLICIES:
1.1. Basis of preparation of financial statements
(i) Compliance with Ind AS
These financial statements have been prepared in accordance with Indian Accounting Standards (hereinafter referred to as the âInd ASâ) as notified under Section 133 of the Companies Act, 2013 (âActâ) read with the Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act.
For all periods up to and including the year ended 31st March, 2017, the Company had prepared its financial statements in accordance with Accounting Standards notified under the Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (âPrevious GAAPâ).
These financial statements are the first financial statements prepared under Ind AS. The date of transition to Ind AS is 1st April, 2016. Refer Note 46 for an explanation of how the transition from Indian GAAP (IGAAP) to Ind AS has affected the Companyâs financial position, financial performance and cash flows.
These financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting except for certain financial assets and financial liabilities (including Derivative Instrument) that are measured at fair values (Refer note No. 35) and Defined benefit planned assets measured at fair value (Refer note no. 41)at the end of each reporting period, as stated in the accounting policies set out below. The accounting policies have been applied consistently over all the periods presented in these financial statements.
(ii) Use of estimates and judgments
The estimates and judgments used in the preparation of the financial statements are continuously evaluated by the Company and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Differences between actual results and estimates are recognised in the period in which the results are known/materialised.
The said estimates are based on the facts and events, that existed as at the reporting date, or that occurred after that date but provide additional evidence about conditions existing as at the reporting date.
(iii) Current / Non- Current Classification
All assets and liabilities have been classified as current or noncurrent as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013.
1.2. Property, Plant and Equipment
The Company has applied for the one time transition exemption of considering the previous GAAP carrying value of all its Property Plant and Equipment as on the transition date i.e. April 1, 2016 as deemed cost of property plant and equipment under IND AS. Hence regarded thereafter as historical cost.
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at cost less depreciation and impairment, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
The Company identifies and determines cost of each part of an item of property, plant and equipment separately, if the part has a cost which is significant to the total cost of that item of property, plant and equipment and has useful life that is materially different from that of the remaining item.
The cost of an item of property, plant and equipment comprises of its purchase price including import duties and other non refundable purchase taxes or levies, directly attributable cost of bringing the asset to its working condition for its intended use and the initial estimate of decommissioning, restoration and similar liabilities, if any. Any trade discounts and rebates are deducted in arriving at the purchase price. Cost includes cost of replacing a part of a plant and equipment if the recognition criteria are met. Expenses directly attributable to new manufacturing facility during its construction period are capitalized if the recognition criteria are met. Expenditure related to plans, designs and drawings of buildings or plant and machinery is capitalized under relevant heads of property, plant and equipment if the recognition criteria are met.
Capital work in progress and Capital advances:
Cost of assets not ready for intended use, as on the Balance Sheet date, is shown as capital work in progress. Advances given towards acquisition of fixed assets outstanding at each Balance Sheet date are disclosed as Other Non-Current Assets.
Depreciation:
Depreciation on each part of an item of property, plant and equipment is provided using the Straight Line Method based on the useful life of the asset as estimated by the management and is charged to the Statement of Profit and Loss as per the requirement of Schedule II of the Companies Act, 2013. The estimate of the useful life of the assets is determined as prescribed in Schedule II of Companies Act, 2013.
The residual values are not more than 5% of the original cost of the asset. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Derecognition:
The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising from the Derecognition of an item of property, plant and equipment is measured as the difference between the net disposal proceeds and the carrying amount of the item and is recognized in the Statement of Profit and Loss when the item is derecognized.
1.3. Intangible Assets
Intangible assets are initially recognised at cost. Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the assets will flow to the Company and the cost of the asset can be measured reliably.
Amortization
Intangible Assets with finite lives are amortized on a Straight Line basis over the estimated useful economic life. The amortization expense on intangible assets with finite lives is recognized in the Statement of Profit and Loss. The estimated useful life of intangible assets is mentioned below:
Computer software: 5 Years
Licenses & Commercial Rights: 7 Years
The amortization period and the amortization method for an intangible asset with finite useful life is reviewed at the end of each financial year. If any of these expectations differ from previous estimates, such change is accounted for as a change in an accounting estimate.
Derecognition
The carrying amount of an intangible asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising from the Derecognition of an intangible asset is measured as the difference between the net disposal proceeds and the carrying amount of the intangible asset and is recognized in the Statement of Profit and Loss when the asset is derecognized.
Research and Development
Expenditure on research is recognised as an expense when it is incurred. Expenditure on development which does not meet the criteria for recognition as an intangible asset is recognised as an expense when it is incurred.
Items of property, plant and equipment and acquired Intangible Assets utilized for Research and Development are capitalised and depreciated in accordance with the policies stated for Property, Plant and Equipment and Intangible Assets.
1.4. Impairment
Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are tested for impairment annually and whenever there is an indication that the asset may be impaired.
Assets that are subject to depreciation are reviewed for impairment, whenever events or changes in circumstances indicate that carrying amount may not be recoverable. Such circumstances include, though are not limited to, significant or sustained decline in revenues or earnings and material adverse changes in the economic environment.
An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit (CGU) exceeds its recoverable amount. The recoverable amount of an asset is the greater of its fair value less cost to sell and value in use. To calculate value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market rates and the risk specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the CGU to which the asset belongs. Fair value less cost to sell is the best estimate of the amount obtainable from the sale of an asset in an armâs length transaction between knowledgeable, willing parties, less the cost of disposal.
Impairment losses, if any, are recognized in the Statement of Profit and Loss and included in depreciation and amortization expense. Impairment losses are reversed in the Statement of Profit and Loss only to the extent that the assetâs carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had previously been recognized.
1.5. Lease
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
In respect of assets taken on operating lease, lease rentals are charged to the Statement of Profit and 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 Companyâs expected inflationary cost increases.
1.6. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
A financial asset is recognised in the balance sheet when the Company becomes party to the contractual provisions of the instrument. At initial recognition, the Company measures a financial asset at its fair value plus or minus, in the case of a financial asset not at fair value through statement of profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset.
Subsequent measurement
For purpose of subsequent measurement, financial assets are classified into:
a. Financial assets measured at amortised cost;
b. Financial assets measured at fair value through other comprehensive income (FVTOCI);
c. Financial assets measured at fair value through statement of profit and loss (FVTPL)
The Company classifies its financial assets in the above mentioned categories based on:
a. The Companyâs business model for managing the financial assets;
b. The contractual cash flows characteristics of the financial asset.
Financial assets measured at amortised cost
This category generally applies to trade and other receivables.
A financial asset is measured at amortised cost if both of the following conditions are met:
a. The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows;
b. The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
Financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss.
Financial assets measured at fair value through other comprehensive income (FVTOCI)
A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:
a. The financial asset is held within a business model whose objective is achieved by both collecting the contractual cash flows and selling financial assets;
b. The assetâs contractual cash flows represent SPPI.
Financial assets measured at fair value through the statement of profit and loss (FVTPL)
FVTPL is a residual category. Any financial asset, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to designate a financial asset, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised as âother incomeâ in the Statement of Profit and Loss.
Equity Instruments
All the equity instruments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL.
If the company decides to classify an equity instrument as at FVTOCI, then all the fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the company may transfer the cumulative gain or loss within equity. Equity instruments included within FVTPL category are measured at fair value with all the changes recognized in statement of profit and loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognized (i.e. removed from the Companyâs balance sheet) when:
a. The contractual rights to the cash flows from the financial asset have expired, or
b. The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either
c. The Company has transferred substantially all the risks and rewards of the asset, or
d. The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
In accordance with Ind AS 109, the Company assesses impairment based on expected credit loss (ECL) model to the following:
a. Financial assets measured at amortised cost;
b. Financial assets measured at fair value through other comprehensive income
Expected credit losses are measured through a loss allowance at an amount equal to:
a. The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
b. Full time expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
The Company follows simplified approach for recognition of impairment loss allowance on trade receivables, under the simplified approach; the Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable which is adjusted for managementâs estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through statement of profit and loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in case of loans and borrowings and payables, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables and short term borrowings.
Subsequent measurement
a. Financial liabilities measured at amortised cost;
b. Financial liabilities subsequently measured at fair value through statement of profit and loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
Financial liabilities designated upon initial recognition at fair value through statement of profit and loss are designated as such at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied.
Trade and other payables
These amounts represent liability for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Fair Value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
(i) In the principal market for the asset or liability, or
(ii) In the absence of a principal market, in the most advantageous market for the asset or liability
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are 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 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
1.7. Derivative financial instruments and Hedge Accounting Initial recognition and subsequent measurement
The Company uses derivative financial instruments, such as forward currency contracts, to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.
1.8. Inventories
Raw materials, work-in-progress, finished goods, packing materials, stores, spares, components, consumables and stock-in trade are carried at the 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 goods in which they will be incorporated are expected to be sold at or above cost. The comparison of cost and net realizable value is made on an item by item basis.
In determining the cost of raw materials, packing materials, stock-in-trade, stores, spares, components and consumables, FIFO method is used. Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and condition.
Cost of finished goods and work-in-progress includes the cost of raw materials, packing materials, an appropriate share of fixed and variable production overheads, and other costs incurred in bringing the inventories to their present location and condition. Fixed production overheads are allocated on the basis of normal capacity of production facilities.
1.9. Revenue Recognition
Revenue is recognized when it is probable that economic benefits associated with a transaction flows to the Company in the ordinary course of its activities and the amount of revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates allowed by the Company.
Revenue includes only the gross inflows of economic benefits, including excise duty, received and receivable by the Company, on its own account. Amounts collected on behalf of third parties such as sales tax and value added tax are excluded from revenue.
Sale of products:
Sales are recognized when substantial risk and rewards of ownership are transferred to customer, In case of domestic customer, generally sales take place when goods are dispatched or delivery is handed over to transporter, in case of export customers, generally sales take place when goods are shipped onboard based on bill of lading.
Revenue from services:
Revenue from services is recognized when the stage of completion can be measured reliably. Stage of completion is measured by the services performed till Balance Sheet date as a percentage of total services contracted.
Interest and dividends:
Interest income is recognized using effective interest method. Dividend income is recognized when the right to receive dividend is established.
Other Operating Revenue -Export Incentive:
Export Incentives are recognized as income when right to receive credit as per the terms of the scheme is established in respect of the exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.
1.10. Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM) of the Company. The CODM is responsible for allocating resources and assessing performance of the operating segments of the Company.
1.11. Borrowing Costs
Interest and other borrowing costs attributable to qualifying assets are capitalised. Other interest and borrowing costs are charged to Statement of Profit and Loss.
1.12. Earnings per Share Basic earnings per share:
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of Equity Shares outstanding during the year.
Diluted earnings per share:
Diluted earnings per share is calculated by dividing the profit for the year attributable to the equity holders of the Company by weighted average number of Equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential Equity shares in to Equity shares.
1.13. Foreign Currency Translation Functional and presentation currency:
The financial statements are presented in Indian rupee (INR), which is Companyâs functional and presentation currency. Initial Recognition:
On initial recognition, transactions in foreign currencies entered into by the Company are recorded in the functional currency (i.e. Indian Rupees), by applying to the foreign currency amount, the spot exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss.
Transactions and balances:
Transactions in foreign currencies are recognised at the prevailing exchange rates on the transaction dates. Realised gains and losses on settlement of foreign currency transactions are recognised in the Statement of Profit and Loss.
Monetary foreign currency assets and liabilities at the year-end are translated at the year-end exchange rates and the resultant exchange differences are recognised in the Statement of Profit and Loss.
1.14. Income Taxes
Tax expense is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.
Current tax:
Current tax is the amount of income taxes payable in respect of taxable profit for a period. Taxable profit differs from âprofit before taxâ as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible under the Income Tax Act, 1961.
Current tax is measured using tax rates that have been enacted by the end of reporting period for the amounts expected to be recovered from or paid to the taxation authorities.
Deferred tax:
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit under Income Tax Act, 1961.
Deferred tax liabilities are generally recognized for all taxable temporary differences. However, in case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the taxable profit nor the accounting profit, deferred tax liabilities are not recognized. Also, for temporary differences if any that may arise from initial recognition of goodwill, deferred tax liabilities are not recognized.
Deferred tax assets are generally recognized for all deductible temporary differences to the extent it is probable that taxable profits will be available against which those deductible temporary difference can be utilized. In case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the taxable profit nor the accounting profit, deferred tax assets are not recognized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefits of part or all of such deferred tax assets to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Minimum Alternate Tax 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.
Presentation of current and deferred tax:
Current and deferred tax are recognized as income or an expense in the Statement of Profit and Loss, except when they relate to items that are recognized in Other Comprehensive Income, in which case, the current and deferred tax income/ expense are recognized in Other Comprehensive Income.
The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. In case of deferred tax assets and deferred tax liabilities, the same are offset if the Company has a legally enforceable right to set off corresponding current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority on the Company.
1.15. Provisions and Contingent Liabilities
The Company recognizes provisions when a present obligation (legal or constructive) as a result of a past event exists and it is probable that an outflow of resources embodying economic benefits will be required to settle such obligation and the amount of such obligation can be reliably estimated.
If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources embodying economic benefits or the amount of such obligation cannot be measured reliably. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.
1.16. Employee Benefits
Short Term Employee Benefits:
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus, short term compensated absences, ex-gratia, etc. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognised as an expense as the related service is rendered by employees.
Other long-term employee benefit obligations:
Entitlements to annual leave and sick leave are recognized when they accrue to employees. Sick leave can only be availed while annual leave can either be availed or encashed subject to a restriction on the maximum number of accumulation of leave. The Company determines the liability for such accumulated leaves using the Projected Accrued Benefit method with actuarial valuations being carried out at each Balance Sheet date. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss.
Post-Employment Benefits:
(i) Defined Contribution plans:
Defined contribution plans are employee state insurance scheme and Government administered pension fund scheme for all applicable employees and superannuation scheme for eligible employees.
Recognition and measurement of defined contribution plans:
The Company recognizes contribution payable to a defined contribution plan as an expense in the Statement of Profit and Loss when the employees render services to the Company during the reporting period. If the contributions payable for services received from employees before the reporting date exceed the contributions already paid, the deficit payable is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the reporting date, the excess is recognized as an asset to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund.
(ii) Defined Benefit plans: Provident Fund scheme:
Defined Contribution Plans such as Provident Fund etc., are charged to the Statement of Profit and Loss as incurred. The contributions are made to a government administered Provident Fund towards which the Company has no further obligations beyond its monthly contributions.
Defined benefit Gratuity plan:
The Company has funded its gratuity liability with Life Insurance Corporation of India (LIC)
Defined Privilege Leave Benefit plan:
Provision for Leave Encashment, which are expected to be availed and encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of leave encashment as the additional amount expected to be paid as a result of the unused entitlement as at the year end. Leave encashment, which are expected to be availed or encashed beyond 12 months from the end of the year are treated as other long term employee benefits.
The Companyâs liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognised in the Statement of Profit and Loss in the year in which they arise.
Recognition and measurement of Defined Benefit plans:
The cost of providing defined benefits is determined using the Projected Unit Credit method with actuarial valuations being carried out at each reporting date. The defined benefit obligations recognized in the Balance Sheet represent the present value of the defined benefit obligations as reduced by the fair value of plan assets, if applicable. Any defined benefit asset (negative defined benefit obligations resulting from this calculation) is recognized representing the present value of available refunds and reductions in future contributions to the plan.
All expenses represented by current service cost, past service cost, if any, and net interest on the defined benefit liability / (asset) are recognized in the Statement of Profit and Loss. Remeasurements of the net defined benefit liability / (asset) comprising actuarial gains and losses and the return on the plan assets (excluding amounts included in net interest on the net defined benefit liability/asset), are recognized in Other Comprehensive Income. Such remeasurements are not reclassified to the Statement of Profit and Loss in the subsequent periods.
The Company presents the above liability/(asset) as current and non-current in the Balance Sheet as per actuarial valuation by the independent actuary; however, the entire liability towards gratuity is considered as current as the Company will contribute this amount to the LIC within the next twelve months.
1.17. Recent accounting pronouncements Standards issued but not yet effective:
In March, 2018, the Ministry of Corporate Affairs (MCA) issued the Companies (Indian Accounting Standards) Amendment Rules, 2018, notifying Ind AS 115, Revenue from Contract with Customers, Appendix B to Ind AS 21, Foreign Currency Transactions and advance consideration and amendments to certain other standards. These amendments are in line with recent amendments made by International Accounting Standards Board (IASB). These amendments are applicable to the Company from 1st April, 2018. The Company will be adopting the amendments from their effective date.
a) Ind AS 115, Revenue from Contract with Customers:
Ind AS 115 supersedes Ind AS 11, Construction Contracts and Ind AS 18, Revenue, Ind AS 115 requires an entity to report information regarding nature, amount, timing and uncertainty of revenue and cash flows arising from a contract with customers. The Principle of Ind AS 115 is that an entity should recognize revenue that demonstrates the transfer of promised goods and services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard can be applied either retrospectively to each prior reporting period presented or can be applied retrospectively with recognition of cumulative effect of contracts that are not completed contracts at the date of initial application of the standard.
Based on the preliminary assessment performed by the Company, the impact of application of the standard is not expected to be material.
b) Appendix B to Ind AS 21, Foreign currency transactions and advance consideration:
The Appendix clarifies that the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the asset, expenses or income (or part of it) is the date on which an entity initially recognizes the nonmonetary asset or non-monetary liability arising from the payment or receipt of advance consideration towards such asset, expenses or income. If there are multiple payments or receipts in advance, then an entity must determine transaction date for each payment or receipts of advance consideration.
The impact of the Appendix on the financial statements, as assessed by the Company, is expected to be not material.
1.18. KEY ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of the Companyâs financial statements requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Critical accounting estimates and assumptions:
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below:
Income taxes
The Companyâs tax jurisdiction is India. Significant judgments are involved in estimating budgeted profits for the purpose of paying advance tax, determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions (Refer Note 34).
Property, Plant and Equipment
Property, Plant and Equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an assetâs expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Companyâs assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.
Defined Benefit Obligation
The costs of providing gratuity and other post-employment benefits are charged to the Statement of Profit and Loss in accordance with Ind AS 19 âEmployee benefitsâ over the period during which benefit is derived from the employeesâ services. The costs are assessed on the basis of assumptions selected by the management. These assumptions include salary escalation rate, discount rates, expected rate of return on assets and mortality rates. The same is disclosed in Note 41,âEmployee benefitsâ.
Fair value measurement of Financial Instruments
When the fair values of financials assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques, including the discounted cash flow model, which involve various judgments and assumptions.
Mar 31, 2016
1 CORPORATE INFORMATION
Mazda Limited (the âCompanyâ ) is a public limited company incorporated in 1990 under provisions of the Companies Act, 1956. The Company is an Engineering company engaged in the business of manufacturing and sales of Vacuum Systems, Condensers, Steam Jet Ejectors, L.P. Heaters , H.P. Heaters, Evaporaters and Pollution Control Equipments. The Companyâs Head Quartes and four manufacturing plants are located in Ahmedabad, Gujarat State. The Company sells its products in the domestic as well as export markets. The equity shares of the Company are listed on the Bombay Stock Exchange Limited(BSE) and Ahmedabad Stock Exchange Limited(ASE).
2 SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Accounting
The financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in India (âIndian GAAPâ) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared under the historical cost convention on accrual basis, except for certain financial instruments which are measured at fair value.
(b) Use of Estimates
The preparation of financial statements in conformity with GAAP requires judgments, estimates and assumptions to be made that affect the reported amount of assets and liabilities, disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.
(c) Tangible Fixed Assets
Fixed assets 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 any other directly attributable cost of bringing the asset to its working condition for the intended use, net off of any trade discounts and rebates.
Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are changed to the Statement of Profit and Loss for the period during which such expenses are incurred.
Gains or losses arising from de recognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.
Capital assets under erection/installation are stated in the Balance Sheet as âCapital Work-in-Progressâ.
(d) Intangible Assets
Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment. They are amortized on a straight line basis over their estimated useful lives.
(e) Research and Development
Revenue expenditure pertaining to Research & Development is charged to revenue under respective heads of accounts in the year in which they are incurred. Capital Expenditure on Research & Development is shown as an addition to Fixed Assets.
(f) Depreciation and Amortization
In respect of fixed assets (other than capital work-in-progress) acquired during the year, depreciation /amortization is charged on a straight line basis so as to write off the cost of the assets over the useful lives and for the assets acquired prior to April 1, 2014, the carrying amount as on April 1, 2014 is depreciated over the remaining useful life based on an evaluation. The useful life of the asset is determined as prescribed in Schedule II to the Companies Act, 2013.
(g) Impairment of Assets
The company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired. If any such indications exist, the carrying value of such assets is reduced to its estimated recoverable amount and the amount of such impairment loss is charged to Profit and Loss Account. If at the Balance Sheet date there is an indication that previously assessed impairment losses no longer exist, than such loss is reversed and the asset is restated to that effect.
(h) Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term. All leases are cancellable in nature and subject to renewal each year.
(i) Investments
Investments, which are readily realizable and intended to be held for not more than a year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.
(j) Inventories
Inventories include raw materials, bought out components, work-in-progress and manufactured finished goods.
(i) Finished products Finished products produced by the Company are valued at lower of cost and net realizable value. Cost includes direct materials, labour, a proportion of manufacturing overheads and Excise duty has been charged on finished goods.
(ii) Work in Progress Work in Progress is valued at cost of direct materials, labour and other Manufacturing overheads up to estimated stage of process.
(iii) Raw materials and stores and spares Raw materials and stores and spares are valued at Lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. The cost is determined using First in First out (FIFO) method.
(k) Revenue Recognition
Revenue is recognized based on the nature of activity when consideration can be reasonably measured and there exists reasonable certainty of its recovery :
(i) Sale of Goods
Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of goods. Excise Duty deducted from turnover (gross) are the amount that is included in the amount of turnover (gross) and not the entire amount of liability arised during the year. Excise duty is accounted on the basis of both, payments made in respect of goods cleared and also provision made for goods lying in bonded warehouse. VAT and Sales Tax are charged to Revenue.
(ii) Interest
Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
(iii) Export Incentives
Export Incentives are recognized as income when right to receive credit as per the terms of the scheme is established in respect of the exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.
(iv) Other Income
Revenue in respect of other income is recognized when no significant uncertainty as to measurability or collectability exists.
(v) Services
Income from services is recognized when the services are rendered.
(vi) Dividend
Dividend Income is recognized when the right to receive dividend is established.
(l) Expenditure during Construction period
Expenditure during construction period is included under capital work-in- progress and the same is allocated to the respective fixed assets on completion of construction.
(m) Foreign Currency Transaction
(i) Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.
(ii) Conversion: At the year end, monetary items denominated in foreign currencies other than those covered by forward contracts are converted into rupee equivalents at the year-end exchange rates.
(iii) Forward Exchange Contracts: In respect of transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the date of the transaction is recognized as income or expense over the period of the contract.
(iv) Exchange Differences: All exchange differences arising on settlement/Conversion of foreign Currency transactions are recognized in the Profit and Loss Account.
(n) Retirement and Other Employee Benefits
(i) Gratuity
The Group provides for gratuity, a defined benefit plan (the âGratuity Planâ) covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employeeâs salary and the tenure of employment. The Companyâs liability is actuarial ly determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the Statement of Profit and Loss in the year in which they arise.
(ii) Leave Encashment
Provision for Leave Encashment, which are expected to be availed and encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of leave encashment as the additional amount expected to be paid as a result of the unused entitlement as at the year end. Leave encashment, which are expected to be availed or encashed beyond 12 months from the end of the year are treated as other long term employee benefits. The Companyâs liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/gains are recognized in the Statement of Profit and Loss in the year in which they arise.
(iii) Provident Fund
Contributions to Defined Contribution schemes such as Provident Fund, etc. are charged to the Profit and Loss account as incurred. The contributions are made to a government administered Provident Fund towards which the Company has no further obligations beyond its monthly contributions.
(o) Income Taxes
Tax Expense comprises of Current and Deferred Tax. Current Income Tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. Deferred Income Taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.
Deferred Income Taxes reflect the impact of Timing Differences between Taxable Income and Accounting Income originating during the Current Year and reversal of timing differences for the earlier years. Deferred Tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences 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.
At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of 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.
(p) Earnings Per Share
The Company reports basic Earnings Per Share (EPS) in accordance with Accounting Standard 20 on Earning Per Share.
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for events of bonus and preferential issue.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
(q) Cash and Cash Equivalents
Cash and cash equivalents in the cash flow statement comprise cash on hand, cash at bank, cash on deposits with banks and corporations, short-term investments with an original maturity of three months or less and remittances in transit. The company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents.
(r) Derivative Instruments
The company uses foreign exchange forward to hedge its risks associated with foreign currency fluctuations . The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income during the same period in which transaction occurs. Exchange differences on such contracts are recognized in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year. The Company does not enter into forward contracts for trading or speculation purpose.
(s) Provisions and Contingent Liabilities
A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. A Contingent Liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A Contingent Liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.
(t) Borrowing Costs
Borrowing costs that are attributable to the acquisitions or construction of fixed assets/ qualifying assets for expansion/ new project are capitalized to respective fixed assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Other borrowing costs are charged to revenue in the year in which they are incurred.
(u) Segment Reporting - Identification of Segment
The Companyâs operating businesses are organized and managed separately according to the nature of products and activities, with each segment representing a strategic business unit that has different products and activities. The Companyâs operation predominantly relates to manufacture of Engineering Goods and the manufacturing of food products. The analysis of geographical segments is based on the geographical location of the customers where they are classified as Domestic and Overseas. Revenue and expenses , which relate to the Company as a whole and are not allocable to segments on a reasonable basis, have been included under âUnallocated corporate expensesâ.
Mar 31, 2015
(a) Basis of Accounting
The financial statements have been prepared in accordance with the
Generally Accepted Accounting Principles in India ('Indian GAAP')
to comply with the Accounting Standards specified under Section 133 of
the Companies Act, 2013, read with Rule 7 of the Companies (Accounts)
Rules, 2014 and the relevant provisions of the Companies Act, 2013. The
financial statements have been prepared under the historical cost
convention on accrual basis, except for certain financial instruments
which are measured at fair value.
(b) Use of Estimates
The preparation of financial statements in conformity with GAAP
requires judgements, estimates and assumptions to be made that affect
the reported amount of assets and liabilities, disclosure of contingent
liabilities on the date of the financial statements and the reported
amount 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/materialised.
(c) Tangible Fixed Assets
Fixed assets 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 any other
directly attributable cost of bringing the asset to its working
condition for the intended use, net off of any trade discounts and
rebates. Subsequent expenditure related to an item of fixed asset is
added to its book value only if it increases the future benefits from
the existing asset beyond its previously assessed standard of
performance. All other expenses on existing fixed assets, including
day-to-day repair and maintenance expenditure and cost of replacing
parts, are changed to the Statement of Profit and Loss for the period
during which such expenses are incurred.Gains or losses arising from
derecognition of fixed assets are measured as the difference between
the net disposal proceeds and the carrying amount of the asset and are
recognized in the Statement of Profit and Loss when the asset is
derecognized.Capital assets under erection/installation are stated in
the Balance Sheet as "Capital Work-in-Progress".
(d) Intangible Assets
Intangible assets are recorded at the consideration paid for
acquisition of such assets and are carried at cost less accumulated
amortization and impairment. They are amortized on a straight line
basis over their estimated useful lives.
(e) Research and Development
Revenue expenditure pertaining to Research & Development is charged to
revenue under respective heads of accounts in the year in which they
are incurred. Capital Expenditure on Research & Development is shown as
an addition to Fixed Assets.
(f) Depreciation
In respect of fixed assets (other than capital work-in-progress)
acquired during the year, depreciation /amortisation is charged on a
straight line basis so as to write off the cost of the assets over the
useful lives and for the assets acquired prior to April 1,2014, the
carrying amount as on April 1,2014 is depreciated over the remaining
useful life based on an evaluation. The useful life of the asset is
determined as prescribed in Schedule II to the Companies Act, 2013.
(g) Impairment of Assets
The company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired. If any such indications
exist, the carrying value of such assets is reduced to its estimated
recoverable amount and the amount of such impairment loss is charged to
Profit and Loss Account. If at the Balance Sheet date there is an
indication that previously assessed impairment losses no longer exist,
than such loss is reversed and the asset is restated to that effect.
(h) Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term. All leases are cancellable in nature and subject to renewal
each year.
(i) Investments
Investments, which are readily realisable and intended to be held for
not more than a year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long- term investments. Current investments are carried
in the financial statements at lower of cost and fair value determined
on an individual investment basis. Long-term investments are carried at
cost. However, provision for diminution in value is made to recognise a
decline other than temporary in the value of the investments.
(j) Inventories
Inventories include raw materials, bought out components,
work-in-progress and manufactured finished goods.
(i) Finished products: Finished products produced by the Company are
valued at lower of cost and net realizable value. Cost includes direct
materials, labour, a proportion of manufacturing overheads and Excise
duty has been charged on finished goods.
(ii) Work in Progress:Work in Progress is valued at cost of direct
materials, labour and other Manufacturing overheads up to estimated
stage of process.
(iii) Raw materials and stores & spares: Raw materials and stores and
spares are valued at Lower of cost and net realizable value. However,
materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they
will be incorporated are expected to be sold at or above cost. The cost
is determined using First in First out (FIFO) method.
(k) Revenue Recognition
Revenue is recognized based on the nature of activity when
consideration can be reasonably measured and there exists reasonable
certainty of its recovery :
(i) Sale of Goods
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer, usually on delivery of
goods. Excise Duty deducted from turnover (gross) are the amount that
is included in the amount of turnover (gross) and not the entire amount
of liability arised during the year. Excise duty is accounted on the
basis of both, payments made in respect of goods cleared and also
provision made for goods lying in bonded warehouse. VAT and Sales Tax
are charged to Revenue.
(ii) Interest
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
(iii) Export Incentives
Export Incentives are recognized as income when right to receive credit
as per the terms of the scheme is established in respect of the exports
made and when there is no significant uncertainty regarding the
ultimate collection of the relevant export proceeds.
(iv) Other Income
Revenue in respect of other income is recognized when no significant
uncertainty as to measurability or collectability exists.
(v) Services
Income from services is recognized when the services are rendered.
(vi) Dividend
Dividend Income is recognized when the right to receive dividend is
established.
(l) Expenditure during Construction period
Expenditure during construction period is included under capital
work-in- progress and the same is allocated to the respective fixed
assets on completion of construction.
(m) Foreign Currency Transaction
(i) Initial Recognition: Transactions denominated in foreign currencies
are recorded at the exchange rates prevailing on the date of the
transaction.
(ii) Conversion: At the year end, monetary items denominated in foreign
currencies other than those covered by forward contracts are converted
into rupee equivalents at the year-end exchange rates.
(iii) Forward Exchange Contracts: In respect of transactions covered by
forward exchange contracts, the difference between the forward rate and
the exchange rate at the date of the transaction is recognized as
income or expense over the period of the contract.
(iv) Exchange Differences: All exchange differences arising on
settlement/Conversion of foreign Currency transactions are recognized
in the Profit and Loss Account.
(n) Retirement and Other Employee Benefits
(i) Gratuity
The Group provides for gratuity, a defined benefit plan (the
"Gratuity Plan") covering eligible employees in accordance with the
Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum
payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective
employee's salary and the tenure of employment. The Company's
liability is actuarially determined (using the Projected Unit Credit
method) at the end of each year. Actuarial losses/gains are recognized
in the Statement of Profit and Loss in the year in which they arise.
(ii) Leave Encashment
Provision for Leave Encashment, which are expected to be availed and
encashed within 12 months from the end of the year are treated as short
term employee benefits. The obligation towards the same is measured at
the expected cost of leave encashment as the additional amount expected
to be paid as a result of the unused entitlement as at the year end.
Leave encashment, which are expected to be availed or encashed beyond
12 months from the end of the year are treated as other long term
employee benefits. The Company's liability is actuarially determined
(using the Projected Unit Credit method) at the end of each year.
Actuarial losses/ gains are recognised in the Statement of Profit and
Loss in the year in which they arise.
(iii) Provident Fund :
Contributions to Defined Contribution schemes such as Provident Fund,
etc. are charged to the Profit and Loss account as incurred. The
contributions are made to a government administered Provident Fund
towards which the Company has no further obligations beyond its monthly
contributions.
(o) Income Taxes
Tax Expense comprises of Current and Deferred Tax. Current Income Tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India. Deferred
Income Taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years.
Deferred Income Taxes reflect the impact of Timing Differences between
Taxable Income and Accounting Income originating during the Current
Year and reversal of timing differences for the earlier years. Deferred
Tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred tax liabilities
are recognized for all taxable timing differences. Deferred tax assets
are recognized for deductible timing differences 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.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of 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.
(p) Earnings Per Share
The Company reports basic Earning Per Share (EPS) in accordance with
Accounting Standard 20 on Earning Per Share.
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period
are adjusted for events of bonus and preferential issue.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(q) Cash and Cash Equivalents
Cash and cash equivalents in the cash flow statement comprise cash on
hand, cash at bank, cash on deposits with banks and corporations,
short-term investments with an original maturity of three months or
less and remittances in transit.The company considers all highly liquid
financial instruments, which are readily convertible into known amounts
of cash that are subject to an insignificant risk of change in value
and having original maturities of three months or less from the date of
purchase, to be cash equivalents.
(r) Derivative Instruments
The company uses foreign exchange forward to hedge its risks associated
with foreign currency fluctuations . The premium or discount arising at
the inception of forward exchange contracts is amortised as expense or
income during the same period in which transaction occurs. Exchange
differences on such contracts are recognised in the Statement of Profit
and Loss in the year in which the exchange rates change. Any profit or
loss arising on cancellation or renewal of forward exchange contract is
recognised as income or as expense for the year. The Company does not
enter into forward contracts for trading or speculation purpose.
(s) Provisions and Contingent Liabilities
A provision is recognized when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates. A Contingent Liability is a possible obligation that arises
from past events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A Contingent Liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(t) Borrowing Costs
Borrowing costs that are attributable to the acquisitions or
construction of fixed assets/ qualifying assets for expansion/new
project are capitalized to respective fixed assets. A qualifying asset
is one that necessarily takes substantial period of time to get ready
for its intended use. Other borrowing costs are charged to revenue in
the year in which they are incurred.
(u) Research & Development Expenses
Revenue expenditure on Research and Development is charged off in the
year in which it is incurred. Capital expenditure on Research and
Development is included under Fixed Assets.
(v) Segment Reporting - Identification of Segment
The Company's operating businesses are organized and managed
separately according to the nature of products and activities, with
each segment representing a strategic business unit that has different
products and activities. The Company's operation predominantly
relates to manufacture of Engineering Goods and the manufacturing of
food products. The analysis of geographical segments is based on the
geographical location of the customers where they are classified as
Domestic and Overseas. Revenue and expenses , which relate to the
Company as a whole and are not allocable to segments on a reasonable
basis, have been included under "Unallocated corporate expenses".
(b) The Company has only one class of equity shares having a par value
of Rs. 10 per share. Each equity shareholder is entitled to one vote per
share. In the event of liquidation of the Company, the equity
shareholders 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.
(d) For current financial year the Dividend Proposed to be distributed
to equity shareholders Rs. 6.00 Per Share (Previous Year Rs. 5.50 Per
Share) as final dividend. The Dividend proposed by the Board of
Directors is subject to the approval of the Shareholders in the ensuing
Annual General Meeting.
(e) There are no shares alloted as fully paid up during the period of
five years immediately preceeding the reporting date i.e. 31/03/2015.
* Cash credit facility, Export Packing Credit facility from the State
Bank of India are secured by the Pledge/Hypothecation of stock, book
debts and equitable mortgage of the assets of the company and
co-lateral security of premise owned by Mr. Sorab Mody, situated at
Odhav GIDC and also personally guaranteed by Mr. Sorab Mody, who is the
Managing Director of the company.
Mar 31, 2014
(a) Basis of Accounting
The financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis.These financial statements have been
prepared to comply in all material aspects with the Accounting
Standards notified under Section 211 (3C) [Companies (Accounting
Standards) Rules,2006, as amended] and the other relevant provisions of
the Companies Act, 1956.
(b) Presentation & Disclosure of financial statements
During the year ended March 31, 2014, the Revised Schedule VI notified
under the Companies Act, 1956 has become applicable to the Company, for
preparation and presentation of its financial statements. The adoption
of Revised Schedule VI does not impact the recognition and measurement
principles followed for preparation of financial statements. However it
has a significant impact on the presentation and disclosures made in
the financial statements. The Company has also reclassified the
previous year figures in accordance with the requirements applicable in
the current year. All assets and liabilities have been classified as
current or non-current as per the Company''s normal operating cycle and
other criteria set out in the Revised 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 realisation in cash and
cash equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current and non current classification of
assets and liabilities.
(c) Tangible Fixed Assets
Fixed assets 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 any other
directly attributable cost of bringing the asset to its working
condition for the intended use, net off of any trade discounts and
rebates. Subsequent expenditure related to an item of fixed asset is
added to its book value only if it increases the future benefits from
the existing asset beyond its previously assessed standard of
performance. All other expenses on existing fixed assets, including
day-to-day repair and maintenance expenditure and cost of replacing
parts, are changed to the Statement of Profit and Loss for the period
during which such expenses are incurred.Gains or losses arising from
derecognition of fixed assets are measured as the difference between
the net disposal proceeds and the carrying amount of the asset and are
recognized in the Statement of Profit and Loss when the asset is
derecognized.Capital assets under erection/installation are stated in
the Balance Sheet as "Capital Work-in-Progress".
(d) Intangible Assets
Intangible Assets are carried at cost less accumulated amortization and
accumulated impairment losses, if any. Intangible Assets are amortized
on a Straight-line basis over the estimated useful economic life.
Computer Software is being depreciated on straight line method at the
rates specified in Schedule XIV of the Companies Act, 1956.
(e) Research and Development
Revenue expenditure pertaining to Research & Development is charged to
revenue under respective heads of accounts in the year in which they
are incurred. Capital Expenditure on Research & Development is shown as
an addition to Fixed Assets.
(f) Depreciation
(i) Depreciation on fixed assets is provided on straight line method at
the rates provided by Schedule XIV to the Companies Act, 1956.
(ii) Depreciation on assets acquired / sold during the year has been
provided on pro-rata basis.
(iii) Assets costing individually Rs. 5,000 or less are depreciated
fully in the year of acquisition.
(g) Impairment of Assets
The company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired. If any such indications
exist, the carrying value of such assets is reduced to its estimated
recoverable amount and the amount of such impairment loss is charged to
Profit and Loss Account. If at the Balance Sheet date there is an
indication that previously assessed impairment losses no longer exist,
than such loss is reversed and the asset is restated to that effect.
(h) Leases
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term. All leases are cancellable in nature and subject to renewal
each year.
(i) Investments
Investments, which are readily realisable and intended to be held for
not more than a year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long- term investments. Current investments are carried
in the financial statements at lower of cost and fair value determined
on an individual investment basis. Long-term investments are carried at
cost. Investments in share of foreign subsidiaries are reported in
Indian Currency at the rate of exchange prevailing on the date of
transaction. However, provision for diminution in value is made to
recognise a decline other than temporary in the value of the
investments.
(j) Inventories
Inventories include raw materials, bought out components,
work-in-progress and manufactured finished goods.
(i) Finished products produced by the Company are valued at lower of
cost and net realizable value. Cost includes direct materials, labour,
a proportion of manufacturing overheads and Excise duty has been
charged on finished goods.
(ii) Work-in-Progress is valued at cost of direct materials, labour and
other Manufacturing overheads up to estimated stage of process.
(iii) Raw materials and stores and spares:Raw materials and stores and
spares are valued at Lower of cost and net realizable value. However,
materials and other items held for use in the production of inventories
are not written down below cost if the finished products in which they
will be incorporated are expected to be sold at or above cost. The cost
is determined using First in First out (FIFO) method.
(k) Revenue Recognition
Revenue is recognized based on the nature of activity when
consideration can be reasonably measured and there exists reasonable
certainty of its recovery :
(i) Sale of Goods
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer, usually on delivery of
goods. Excise Duty deducted from turnover (gross) are the amount that
is included in the amount of turnover (gross) and not the entire amount
of liability arised during the year. Excise duty is accounted on the
basis of both, payments made in respect of goods cleared and also
provision made for goods lying in bonded warehouse. VAT and Sales Tax
are charged to Revenue.
(ii) Interest
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
(iii) Export Incentives
Export Incentives are recognized as income when right to receive credit
as per the terms of the scheme is established in respect of the exports
made and when there is no significant uncertainty regarding the
ultimate collection of the relevant export proceeds.
(iv) Other Income
Revenue in respect of other income is recognized when no significant
uncertainty as to measurability or collectability exists.
(v) Services
Income from services is recognized when the services are rendered.
(vi) Dividend
Dividend Income is recognized when the right to receive dividend is
established.
(l) Expenditure during Construction period
Expenditure during construction period is included under capital
work-in- progress and the same is allocated to the respective fixed
assets on completion of construction.
(m) Foreign Currency Transaction
(i) Initial Recognition: Transactions denominated in foreign currencies
are recorded at the exchange rates prevailing on the date of the
transaction.
(ii) Conversion: At the year end, monetary items denominated in foreign
currencies other than those covered by forward contracts are converted
into rupee equivalents at the year-end exchange rates.
(iii) Forward Exchange Contracts: In respect of transactions covered by
forward exchange contracts, the difference between the forward rate and
the exchange rate at the date of the transaction is recognized as
income or expense over the period of the contract.
(iv) Exchange Differences: All exchange differences arising on
settlement/Conversion of foreign Currency transactions are recognized
in the Profit and Loss Account.
(n) Retirement and Other Employee Benefits
(i) Gratuity
The Group provides for gratuity, a defined benefit plan (the "Gratuity
Plan") covering eligible employees in accordance with the Payment of
Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to
vested employees at retirement, death, incapacitation or termination of
employment, of an amount based on the respective employee''s salary and
the tenure of employment. The Company''s liability is actuarially
determined (using the Projected Unit Credit method) at the end of each
year. Actuarial losses/gains are recognized in the Statement of Profit
and Loss in the year in which they arise.
(ii) Leave Encashment
Provision for Leave Encashment, which are expected to be availed and
encashed within 12 months from the end of the year are treated as short
term employee benefits. The obligation towards the same is measured at
the expected cost of leave encashment as the additional amount expected
to be paid as a result of the unused entitlement as at the year end.
Leave encashment, which are expected to be availed or encashed beyond
12 months from the end of the year are treated as other long term
employee benefits. The Company''s liability is actuarially determined
(using the Projected Unit Credit method) at the end of each year.
Actuarial losses/ gains are recognised in the Statement of Profit and
Loss in the year in which they arise.
(iii) Provident Fund :
Contributions to Defined Contribution schemes such as Provident Fund,
etc. are charged to the Profit and Loss account as incurred. The
contributions are made to a government administered Provident Fund
towards which the Company has no further obligations beyond its monthly
contributions.
(o) Income Taxes
Tax Expense comprises of Current and Deferred Tax. Current Income Tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India. Deferred
Income Taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years.
Deferred Income Taxes reflect the impact of Timing Differences between
Taxable Income and Accounting Income originating during the Current
Year and reversal of timing differences for the earlier years. Deferred
Tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred tax liabilities
are recognized for all taxable timing differences. Deferred tax assets
are recognized for deductible timing differences 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.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of 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.
(p) Earnings Per Share
The Company reports basic Earning Per Share (EPS) in accordance with
Accounting Standard 20 on Earning Per Share.
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period
are adjusted for events of bonus and preferential issue.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(q) Cash and Cash Equivalents
Cash and cash equivalents in the cash flow statement comprise cash on
hand, cash at bank, short-term investments with an original maturity of
three months or less and remittances in transit.
(r) Derivative Instruments
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income during the same period in
which transaction occurs. Exchange differences on such contracts are
recognised in the Statement of Profit and Loss in the year in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of forward exchange contract is recognised as income or as
expense for the year. The Company does not enter into forward contracts
for trading or speculation purpose.
(s) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
(t) Contingent Liabilities
A Contingent Liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A Contingent Liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(u) Borrowing Costs
Borrowing costs that are attributable to the acquisitions or
construction of fixed assets for expansion/new project are capitalized
to respective fixed assets. Other borrowing costs are charged to
revenue in the year in which they are incurred.
(v) Segment Reporting - Identification of Segment
The Company''s operating businesses are organized and managed separately
according to the nature of products and activities, with each segment
representing a strategic business unit that has different products and
activities. The analysis of geographical segments is based on the
geographical location of the customers. Revenue and expenses, which
relate to the Company as a whole and are not allocable to segments on a
reasonable basis, have been included under "Unallocated corporate
expenses".
(w) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present Earnings Before
Interest, Tax, Depreciation and Amortization (EBITDA) as a separate
line item on the face of the Statement of Profit and Loss. The Company
measures EBITDA on the basis of Profit / (Loss) from continuing
operations. In its measurement, the Company does not include
Depreciation and Amortization expense, Finance Costs and Tax expenses.
Mar 31, 2013
(A) BASIS OF ACCOUNTING
The financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis.These financial statements have been
prepared to comply in all material aspects with the Accounting
Standards notified under Section 211(3C) [Companies
(AccountingStandards)Rules,2006,as amended] and the other relevant
provisions of theCompaniesAct, 1956.
(B) PRESENTATION & DISCLOSURE OF FINANCIAL STATEMENTS
During the year ended March 31, 2013, the Revised Schedule VI notified
under the Companies Act, 1956 has become applicable to the company, for
preparation and presentation of its financial statements. The adoption
of Revised Schedule VI does not impact the recognition and measurement
principles followed for preparation of financial statements. However it
has a significant impact on the presentation and disclosures made in
the financial statements. The company has also reclassified the
previous year figures in accordance with the requirements applicable
inthe current year.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Based on the nature of products and the time between the acquisition of
assets for processing and their realisation in cash and cash
equivalents, the company has ascertained its operating cycle as 12
months for the purpose of current and non current classification of
assets and liabilities.
(C) TANGIBLE FIXED ASSETS
Fixed assets 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 any other
directly attributable cost of bringing the asset to its working
condition for the intended use, net offofany trade discounts and
rebates.
Subsequent expenditure related to an item of fixed asset isaddedtoits
book value onlyif it increases the future benefits from the existing
asset beyond its previously assessed standard of performance. All other
expenses on existing fixed assets, including day-to-day repair and
maintenance expenditure and cost of replacing parts, are changedto the
Statementof Profit and Loss for the period during which such expenses
are incurred.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the Statement of Profit and
Loss when the asset isderecognized.
Capital assets under erection/installation are statedinthe Balance
Sheet as "Capital Work-in-Progress".
(D) INTANGIBLE ASSETS
Intangible Assets are carried at cost less accumulated amortization and
accumulated impairment losses, if any. Intangible Assets are amortized
on a Straight-line basis over the estimated useful economic life.
Computer Software is being depreciated on straight line method at the
rates specified in Schedule XIV of the CompaniesAct, 1956.
(E) RESEARCH AND DEVELOPMENT
Revenue expenditure pertaining to Research & Development is chargedto
revenue under respective heads of accounts in the year in which they
are incurred. Capital Expenditure on Research & Development is shown as
an addition toFixedAssets.
(F) DEPRECIATION
(i) Depreciation on fixed assets is provided on straight line method at
the rates provided by Schedule XIV to the CompaniesAct, 1956.
(ii) Depreciation on assets acquired/sold during the year has been
provided on pro-rata basis. (iii) Assets costing individually Rs. 5,000
or less are depreciated fully in the year of acquisition.
(G) IMPAIRMENTOFASSETS
The company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired. If such indications exist,
the carrying value of such assets is reduced to its estimated
recoverable amount and the amount of such impairment loss is charged to
Profit and Loss Account. If at the Balance Sheet date there is an
indication that previously assessed impairment losses no longer exist,
than such loss is reversed and the assetisrestatedtothat effect.
(H) LEASES
Where the lessor effectively retains substantially all the risks and
benefits of ownership of the leased item, are classified as operating
leases. Operating lease payments are recognized as an expense in the
Statement of Profit and Loss on a straight-line basis over the lease
term. All leases are cancellable in nature and subject to renewal each
year.
(I) INVESTMENTS
Investments, which are readily realisable and intended to be held for
not more than a year from the date on which such investments are made,
are classifiedascurrent investments.All other investments are
classified as long-term investments.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. Investments in share of
foreign subsidiaries are reported in Indian Currency at the rate of
exchange prevailing on the date of transaction. However, provision for
diminution in value is made to recognise a decline other than temporary
in the value of the investments.
(J) INVENTORIES
Inventories include raw materials, bought out components,
work-in-progress and manufactured finished goods.
(i) Finished products produced by the company are valued at lower of
cost and net realizable value. Cost includes direct materials, labour,
a proportion of manufacturing overheads and Excise duty has been
chargedon finished goods.
(ii) Work-in Progress is valued at cost of direct materials, labour and
other Manufacturing overheads up to estimated stageofprocess.
(iii) Raw materials and stores and spares:
Raw materials and stores and spares are valued at Lower of cost and net
realizable value. However, materials and other items held for use in
the production of inventories are not written down below cost if the
finished products in which they will be incorporated are expected to be
sold at or above cost. The costisdetermined using FirstinFirst out
(FIFO) method.
(K) REVENUERECOGNITION
Revenue is recognized based on the nature of activity when
consideration can be reasonably measured and there exists reasonable
certaintyofits recovery :
(I) SALEOFGOODS
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer, usually on delivery of
goods. Excise Duty deducted from turnover (gross) are the amount that
is included in the amount of turnover (gross) and not the entire amount
of liability arised during the year. Excise duty is accounted on the
basis of both, payments made in respect of goods cleared and also
provision made for goods lyingin bonded warehouse. VATand SalesTax are
chargedto Revenue.
(II) INTEREST
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
(III) EXPORTINCENTIVES
Export Incentives are recognized asincome when right toreceive credit
as per the termsofthe scheme is established in respect of the exports
made and when there is no significant uncertainty regarding the
ultimate collectionof the relevant export proceeds.
(IV) OTHERINCOME
Revenueinrespectof other income isrecognized when nosignificant
uncertainty astomeasurability or collectability exists.
(V) SERVICES
Income from servicesis recognized when the services are rendered.
(VI) DIVIDEND
Dividend Incomeisrecognized when the righttoreceive dividend
isestablished.
(L) EXPENDITUREDURINGCONSTRUCTIONPERIOD
Expenditure during construction periodis included under capital
work-in- progress and the same is allocated to the respective fixed
assetson completionofconstruction.
(M) FOREIGN CURRENCY TRANSACTION
(i) Initial Recognition: Transactions denominatedinforeign currencies
are recorded at the exchange rates prevailingonthe dateofthe
transaction.
(ii) Conversion: At the year end, monetary items denominated in foreign
currencies other than those covered by forward contracts are converted
into rupee equivalentsatthe year-end exchange rates.
(iii) Forward Exchange Contracts: In respect of transactions covered by
forward exchange contracts, the difference between the forward rate and
the exchange rate at the date of the transaction is recognized as
incomeor expense over the period ofthe contract.
(iv) Exchange Differences: All exchange differences arising on
settlement/conversion of foreign currency transactions are recognized
inthe Profit and LossAccount.
(N) RETIREMENTANDOTHEREMPLOYEEBENEFITS
(I) GRATUITY
The Group provides for gratuity,adefined benefit plan (the "Gratuity
Plan") covering eligible employees in accordance with the Payment of
GratuityAct, 1972. The Gratuity Plan provides a lump sum payment to
vested employees at retirement, death, incapacitation or termination of
employment, of an amount based on the respective employee''s salary and
the tenure of employment. The Company''s liability is actuarially
determined (using the Projected Unit Credit method) at the end of each
year. Actuarial losses/gains are recognizedinthe StatementofProfit and
Lossinthe yearinwhich they arise.
(II) LEAVEENCASHMENT
Provision for Leave Encashment, which are expected to be availed and
encashed within 12 months from the end of the year are treated as short
term employee benefits. The obligation towards the same is
measuredatthe expected cost of leave encashmentas the additional amount
expected to bepaid as a result of the unused entitlement as at the year
end. Leave encashment, which are expected to be availed or encashed
beyond 12 months from the end of the year are treated as other long
term employee benefits. The Company''s liability is actuarially
determined (using the Projected Unit Credit method) at the end of each
year. Actuarial losses/gains are recognised in the Statement of Profit
and Loss inthe year inwhich they arise.
(III) PROVIDENTFUND
Contributions to Defined Contribution schemes such as Provident Fund,
etc. are charged to the Profit and Loss account as incurred. The
contributions are made to a government administered Provident Fund
towards which the Company hasnofurther obligations beyond its monthly
contributions.
(O) INCOMETAXES
Tax Expense comprisesofCurrent and Deferred Tax. Current Income Tax is
measured at the amount expected to be paidto the tax authorities in
accordance with the Income-taxAct, 1961 enactedinIndia. Deferred Income
Taxes reflects the impact of current year timing differences between
taxable income and accounting income for the year and reversalof timing
differencesof earlier years.
Deferred Income Taxes reflect the impact of Timing Differences between
Taxable Income and Accounting Income originating during the Current
Year and reversalof timing differences for the earlier years.
DeferredTax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred tax liabilities
are recognized for all taxable timing differences. Deferred tax assets
are recognized for deductible timing differences 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 depreciationor
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.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of deferred
tax asset to the extent that it isno 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,asthe case may be, that
sufficient future taxable income will be available.
(P) EARNINGSPERSHARE
The Company reports basic Earning Per Share (EPS) in accordance
withAccounting Standard 20 on Earning Per Share.
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period
are adjusted for eventsofbonus and preferential issue.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(Q) CASHANDCASHEQUIVALENTS
Cash and cash equivalents in the cash flow statement comprise cash on
hand, cash at bank, short-term investments withanoriginal maturityof
three months orless and remittancesin transit.
(R) DERIVATIVEINSTRUMENTS
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income during the same period in
which transaction occurs. Exchange differences on such contracts are
recognised in the Statement of Profit and Loss in the year in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of forward exchange contract is recognised as income or as
expense for the year.The Company does not enter into forward contracts
for tradingor speculation purpose.
(S) PROVISIONS
A provision is recognized when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjustedto reflect the current best
estimates.
(T) CONTINGENTLIABILITIES
AContingent Liability is apossible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A Contingent Liability also arises
in extremely rare cases where there is a liability that cannot
berecognized because itcannot be measured reliably. The Company does
not recognize a contingent liability but discloses its existence in the
financial statements.
(U) BORROWINGCOSTS
Borrowing costs that are attributable to the acquisitions or
construction of fixed assets for expansion/new project are capitalized
to respective fixed assets. Other borrowing costs are charged to
revenue in the year in which they are incurred.
(V) SEGMENTREPORTING-IDENTIFICATIONOFSEGMENT
The CompanyÂs operating businesses are organized and managed separately
according to the nature of products and activities, with each segment
representing a strategic business unit that has different products and
activities. The analysis of geographical segments is based on the
geographical location of the customers. Revenue and expenses, which
relate to the Company as a whole and are not allocable to segments on a
reasonable basis, have been included under "Unallocated corporate
expenses".
(W) MEASUREMENTOFEBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
CompaniesAct, 1956, the Company has elected to present Earnings Before
Interest, Tax, Depreciation and Amortization (EBITDA) as a separate
line item on the face of the Statement of Profit and Loss. The Company
measures EBITDA on the basis of Profit / (Loss) from continuing
operations. In its measurement, the Company does not include
Depreciation and Amortization expense, Finance Costs andTax expenses.
Mar 31, 2012
(A) BASIS OF ACCOUNTING
The financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the Accounting
Standards notified under Section 211 (3C) [Companies (Accounting
Standards) Rules,2006, as amended] and the other relevant provisions of
the Companies Act, 1956.
(B) PRESENTATION & DISCLOSURE OF FINANCIAL STATEMENTS
During the year ended March 31, 2012, the Revised Schedule VI notified
under the Companies Act, 1956 has become applicable to the Company for
preparation and presentation of its financial statements. The adoption
of Revised Schedule VI does not impact the recognition and measurement
principles followed for preparation of financial statements. However it
has a significant impact on the presentation and disclosures made in
the financial statements. The Company has also reclassified the
previous year figures in accordance with the requirements applicable in
the current year.
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out in the Revised 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
equivalents, the Company has ascertained its operating cycle as 12
months for the purpose of current and noncurrent classification of
assets and liabilities.
(C) TANGIBLE FIXED ASSETS
Fixed assets 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 any other
directly attributable cost of bringing the asset to its working
condition for the intended use, net off of any trade discounts and
rebates.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
changed to the Statement of Profit and Loss for the period during which
such expenses are incurred.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the Statement of Profit and
Loss when the asset is derecognized.
Capital assets under erection/installation are stated in the Balance
Sheet as "Capital Work-in-Progress".
(D) INTANGIBLE ASSETS
Intangible Assets are carried at cost less accumulated amortization and
accumulated impairment losses, if any. Intangible Assets are amortized
on a Straight-line basis over the estimated useful economic life.
Computer Software is being depreciated on straight line method at the
rates specified in Schedule XIV of the Companies Act, 1956.
(E) RESEARCH AND DEVELOPMENT
Revenue expenditure pertaining to Research & Development is charged to
revenue under respective heads of accounts in the year in which they
are incurred. Capital Expenditure on Research & Development is shown as
an addition to Fixed Assets.
(F) DEPRECIATION
(i) Depreciation on fixed assets is provided on straight line method at
the rates provided by Schedule XIV to the Companies Act, 1956.
(ii) Depreciation on assets acquired / sold during the year has been
provided on pro-rata basis.
(iii) Assets costing individually Rs. 5,000 or less are depreciated fully
in the year of acquisition.
(G) IMPAIRMENT OF ASSETS
The company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired. If any such indications
exist, the carrying value of such assets is reduced to its estimated
recoverable amount and the amount of such impairment loss is charged to
Profit and Loss Account. If at the Balance Sheet date there is an
indication that previously assessed impairment losses no longer exist,
than such loss is reversed and the asset is restated to that effect.
(H) LEASES
Leases where the less or effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term. All leases are cancellable in nature and subject to renewal
each year.
(I) INVESTMENTS
Investments, which are readily realizable and intended to be held for
not more than a year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long-term investments.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. Investments in share of
foreign subsidiaries are reported in Indian Currency at the rate of
exchange prevailing on the date of transaction. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
(J) INVENTORIES
Inventories include raw materials, bought out components,
work-in-progress and manufactured finished goods.
(i) Finished products produced by the Company are valued at lower of
cost and net realizable value. Cost includes direct materials, lab our,
a proportion of manufacturing overheads and Excise duty has been
charged on finished goods.
(ii) Work in Progress is valued at cost of direct materials, lab our and
other Manufacturing overheads up to estimated stage of process.
(iii) Raw materials and stores and spares:
Raw materials and stores and spares are valued at Lower of cost and net
realizable value. However, materials and other items held for use in
the production of inventories are not written down below cost if the
finished products in which they will be incorporated are expected to be
sold at or above cost. The cost is determined using First in First out
(FIFO) method.
(K) REVENUE RECOGNITION
Revenue is recognized based on the nature of activity when
consideration can be reasonably measured and there exists reasonable
certainty of its recovery:
(I) SALE OF GOODS
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer, usually on delivery of
goods. Excise Duty deducted from turnover (gross) are the amount that
is included in the amount of turnover (gross) and not the entire amount
of liability arised during the year. Excise duty is accounted on the
basis of both, payments made in respect of goods cleared and also
provision made for goods lying in bonded warehouse. VAT and Sales Tax
are charged to Revenue.
(II) INTEREST
Revenue is recognised on a time proportion basis taking into account
the amount outstanding and the rate applicable.
(III) EXPORT INCENTIVES
Export Incentives are recognized as income when right to receive credit
as per the terms of the scheme is established in respect of the exports
made and when there is no significant uncertainty regarding the
ultimate collection of the relevant export proceeds.
(IV) OTHER INCOME
Revenue in respect of other income is recognized when no significant
uncertainty as to measurability or collectability exists.
(V) SERVICES
Income from services is recognized when the services are rendered.
(VI) DIVIDEND
Dividend Income is recognized when the right to receive dividend is
established.
(L) EXPENDITURE DURING CONSTRUCTION PERIOD
Expenditure during construction period is included under capital
work-in- progress and the same is allocated to the respective fixed
assets on completion of construction.
(M) FOREIGN CURRENCY TRANSACTION
(i) Initial Recognition: Transactions denominated in foreign currencies
are recorded at the exchange rates prevailing on the date of the
transaction.
(ii) Conversion: At the year end, monetary items denominated in foreign
currencies other than those covered by forward contracts are converted
into rupee equivalents at the year-end exchange rates.
(iii) Forward Exchange Contracts: In respect of transactions covered by
forward exchange contracts, the difference between the forward rate and
the exchange rate at the date of the transaction is recognized as
income or expense over the period of the contract.
(iv) Exchange Differences: All exchange differences arising on
settlement/Conversion of foreign Currency transactions are recognized
in the Profit and Loss Account.
(N) RETIREMENT AND OTHER EMPLOYEE BENEFITS (I) GRATUITY
The Group provides for gratuity, a defined benefit plan (the "Gratuity
Plan") covering eligible employees in accordance with the Payment of
Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to
vested employees at retirement, death, incapacitation or termination of
employment, of an amount based on the respective employee's salary
and the tenure of employment. The Company's liability is actuarially
determined (using the Projected Unit Credit method) at the end of each
year. Actuarial losses/gains are recognized in the Statement of Profit
and Loss in the year in which they arise.
(II) LEAVE ENCASHMENT
Provision for Leave Encashment, which are expected to be availed and
encashed within 12 months from the end of the year are treated as short
term employee benefits. The obligation towards the same is measured at
the expected cost of leave encashment as the additional amount expected
to be paid as a result of the unused entitlement as at the year end.
Leave encashment, which are expected to be availed or encashed beyond
12 months from the end of the year are treated as other long term
employee benefits. The Company's liability is actuarially determined
(using the Projected Unit Credit method) at the end of each year.
Actuarial losses/gains are recognised in the Statement of Profit and
Loss in the year in which they arise.
(III) PROVIDENT FUND
Contributions to Defined Contribution schemes such as Provident Fund,
etc. are charged to the Profit and Loss account as incurred. The
contributions are made to a government administered Provident Fund
towards which the Company has no further obligations beyond its monthly
contributions.
(O) INCOME TAXES
Tax Expense comprises of Current and Deferred Tax. Current Income Tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India. Deferred
Income Taxes reflects the impact of current year timing differences
between taxable income and accounting income for the year and reversal
of timing differences of earlier years.
Deferred Income Taxes reflect the impact of Timing Differences between
Taxable Income and Accounting Income originating during the Current
Year and reversal of timing differences for the earlier years. Deferred
Tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date. Deferred tax liabilities
are recognized for all taxable timing differences. Deferred tax assets
are recognized for deductible timing differences 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.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes-down the carrying amount of 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.
(P) EARNINGS PER SHARE
The Company reports basic Earnings Per Share (EPS) in accordance with
Accounting Standard 20 on Earning Per Share.
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders (after
deducting preference dividends and attributable taxes) by the weighted
average number of equity shares outstanding during the period. The
weighted average number of equity shares outstanding during the period
are adjusted for events of bonus and preferential issue.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(Q) CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the cash flow statement comprise cash on
hand, cash at bank, short-term investments with an original maturity of
three months or less and remittances in transit.
(R) DERIVATIVE INSTRUMENTS
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income during the same period in
which transaction occurs. Exchange differences on such contracts are
recognised in the Statement of Profit and Loss in the year in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of forward exchange contract is recognised as income or as
expense for the year. The Company does not enter into forward contracts
for trading or speculation purpose.
(S) PROVISIONS
A provision is recognized when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
(T) CONTINGENT LIABILITIES
A Contingent Liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A Contingent Liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(U) BORROWING COSTS
Borrowing costs that are attributable to the acquisitions or
construction of fixed assets for expansion/new project are capitalized
to respective fixed assets. Other borrowing costs are charged to
revenue in the year in which they are incurred.
(V) SEGMENT REPORTING - IDENTIFICATION OF SEGMENT
The Company's operating businesses are organized and managed separately
according to the nature of products and activities, with each segment
representing a strategic business unit that has different products and
activities. The analysis of geographical segments is based on the
geographical location of the customers. Revenue and expenses, which
reate to the Company as a whole and are not allocable to segments on a
reasonable basis, have been included under "Unallocated corporate
expenses".
(W) MEASUREMENT OF EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present Earnings Before
Interest, Tax, Depreciation and Amortization (EBITDA) as a separate
line item on the face of the Statement of Profit and Loss. The Company
measures EBITDA on the basis of Profit / (Loss) from continuing
operations. In its measurement, the Company does not include
Depreciation and Amortization expense, Finance Costs and Tax expenses.
Mar 31, 2011
A. ACCOUNTING CONVENTION
i) Basis of Preparations of Financial Statements:
The financial statements have been prepared and presented under the
historical cost convention on accrual and going concern basis of
accounting in accordance with the accounting principles generally
accepted in India ("GAAP") and comply with the Accounting Standards
issued by the Institute of Chartered Accountants of India and with the
relevant provisions of the Companies Act, 1956.
II) Use of Estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount 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/materialised.
B. SALES
i) Sales are inclusive of Excise duty charged to customers and net of
discount and rebates allowed.
ii) Revenue is recognised based on the nature of activity when
consideration can be reasonably measured and there exists reasonable
certainty of its recovery:
- Sale: Revenue from sale of goods is recognised when the substantial
risks and rewards of ownership is transferred to the buyer under the
terms of contract.
- Interest: Interest is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
- Other Income: Revenue in respect of other income is recognised when no
significant uncertainty as to measurability or collectability exists.
- Services: Income from services is recognised when the services are
rendered.
Dividend: Dividend Income is recognised when the right to receive
dividend is established.
C. FIXED ASSETS
Fixed assets are stated at cost of acquisition or construction, net of
cenvat credit and depreciation / amortization. Cost includes any cost
attributable for bringing the asset to its working condition for its
intended use. Capital work-in- progress includes cost of assets not
ready for their intended use and includes advances paid to acquire
fixed assets.
D. DEPRECIATION
Depreciation on fixed assets is provided on straight line method at the
rates provided by Schedule XIV to the Companies Act, 1956.
Depreciation on additions / disposal of fixed assets during the year is
provided on pro-rata basis according to the period during which the
assets are put to use.
E. INVENTORIES
Inventories include raw materials, bought out components,
work-in-progress and manufactured finished goods.
i) Finished products produced by the company are valued at lower of
cost and net realizable value. Cost includes direct materials, labour,
a proportion of manufacturing overheads and Excise duty has been
charged on finished goods.
ii) Work in Progress is valued at cost of direct materials, labour and
other manufacturing overheads up to estimated stage of process.
iii) Raw materials and stores and spares are valued at lower of cost
and net realisable value. However, materials and other items held for
use in the production of inventories are not written down below cost if
the finished products in which they will be incorporated are expected
to be sold at or above cost.
The cost is determined using First In First Out ( FIFO ) method.
F. RESEARCH & DEVELOPMENT
Revenue expenditure pertaining to Research & Development is charged to
revenue under respective heads of accounts in the year in which they
are incurred. Capital Expenditure on Research & Development is shown as
an addition to Fixed Assets.
G. EMPLOYEE BENEFITS
i) Short-term employee benefits are recognised as an expense at the
undiscounted amount in the profit and loss account of the year in which
the related service is rendered.
ii) Post employment and other long term employee benefits are
recognised as an expense in the profit and loss account for the year in
which the employee has rendered services. The expense is recognised at
the present value of the amounts payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employmentand other long term benefits are charged to the profit and
loss account.
H. INVESTMENTS
Long term investments are stated at cost. Provision for diminution in
the value of long term investments is made only if such a decline is
otherthan temporary in nature.
Investments that readily realizable and intended to be held for not
more than one year from the date on which such investment is made are
classified as current investment. Current Investments are stated at
lower of cost or fair value, which is determined for each individual
investment.
I. TRANSACTIONS IN FOREIGN CURRENCIES
i) Initial Recognition: Transactions denominated in foreign currencies
are recorded at the exchange rates prevailing on the date of the
transaction.
ii) Conversion: At the year end, monetary items denominated in foreign
currencies other than those covered by forward contracts are converted
into rupee equivalents at the year-end exchange rates.
iii) Forward Exchange Contracts: In respect of transactions covered by
forward exchange contracts, the difference between the forward rate and
the exchange rate at the date of the transaction is recognised as
income or expense over the period of the contract.
iv) Exchange Differences: All exchange differences arising on
settlement/Conversion of foreign Currency transactions are recognised
in the Profit and Loss Account.
J. IMPAIRMENT OF ASSETS
The company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired. If any such indications
exist, the carrying value of such assets is reduced to its estimated
recoverable amount and the amount of such impairment loss is charged to
Profit and Loss Account. If at the Balance Sheet date there is an
indication that previously assessed impairment losses no longer exist,
than such loss is reversed and the asset is restated to that effect.
K. INTANGIBLEASSET
Intangible asset is stated at cost of acquisition less accumulated
amortization. Technical know how is amortized over the period of six
years.
L. BORROWING COST
Borrowing cost attributable to the acquisition, construction or
production of a qualifying asset is capitalized as a part bf the cost
of that asset. Borrowing cost which are not attributable to the
qualifying assets, are recognised as an expense in the period in which
they are incurred.
M. TAXATION
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act. Deferred income taxes
reflect the impact of the current year timing differences between
taxable income and accounting income for the year and reversal of
timing differences of earlier years.
Deferred income tax is measured based on the income tax rate and the
tax laws enacted or substantively enacted at the Balance Sheet date.
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 are recognised only if
there is virtual certainty supported by convincing evidence that such
deferred tax assets can be realized against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised
deferred tax assets, if any. It recognizes unrecognised deferred tax
assets to the extent that it has become reasonably certain or virtually
certain, as the case may be, that sufficient future taxable income will
be available against which such deferred tax assets can be realized.
N. LEASE
Lease Payments under Operating Leases are recognised as an expense in
the statement of profit and loss on a straight line basis over the
lease term.
O. EARNINGS PER SHARE
The Company reports basic and diluted Earnings per Share (EPS) in
accordance with Accounting Standard 20 - Earnings per Share. Basic EPS
is computed by dividing the net profit or loss for the year by the
weighted average number of equity shares outstanding during the year.
P. EXPENDITURE DURING CONSTRUCTION PERIOD
Expenditure during construction period is included under capital
work-in- progress and the same is allocated to the respective fixed
assets on completion of construction.
Q. PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement
are recognised 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 recognised but are disclosed in the notes.
Contingent assets are neither recognised nor disclosed in the financial
statements.
Mar 31, 2010
I) Basis of Preparations of Financial Statements:
The financial statements have been prepared and presented under the
historical cost convention on accrual and going concern basis of
accounting in accordance with the accounting principles generally
accepted in India ("GAAP") and comply with the Accounting Standards
issued by the Institute of Chartered Accountants of India and with the
relevant provisions of the Companies Act, 1956.
II) Use of Estimates:
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amount of assets and
liabilities on the date of the financial statements and the reported
amount 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/materialised.
B. SALES
i) Sales are inclusive of Excise duty charged to customers and net of
discount and rebates allowed.
ii) Revenue is recognised based on the nature of activity when
consideration can be reasonably measured and there exists reasonable
certainty of its recovery:
- Sale: Revenue from sale of goods is recognised when the substantial
risks and rewards of ownership is transferred to the buyer under the
terms of contract.
- Interest: Interest is recognised on a time proportion basis taking
into account the amount outstanding and the rate applicable
Other Income: Revenue in respect of other income is recognised when no
significant uncertainty as to measurability or collectability exists.
Services: Income from services is recognised when the services are
rendered.
Dividend: Dividend Income is recognised when the right to receive
dividend is established.
C. FIXEDASSETS
Fixed assets are stated at cost of acquisition, including any cost
attributable for bringing the asset to its working condition for its
intended use, less accumulated depreciation.
D. DEPRECIATION
Depreciation on fixed assets is provided on straight line method at the
rates.provided by Schedule XIV to the Companies Act, 1956.
Depreciation on additions / disposal of fixed assets during the year is
provided on pro-rata basis according to the period during which the
assets are put to use.
E. INVENTORIES
Inventories include raw materials, bought out components,
work-in-progress and manufactured finished goods.
i) Finished products produced by the Company are valued at lower of
cost and net realizable value. Cost includes direct materials, labour,
a proportion of manufacturing overheads and Excise duty has been
charged on finished goods.
ii) Work in Progress is valued at cost of direct materials, labour and
other manufacturing overheads up to estimated stage of process.
iii) Raw materials and stores and spares are valued at lower of cost
and net realisable value. However, materials and other items held for
use in the production of inventories are not written down below cost if
the finished products in which they will be incorporated are expected
to be sold at or above cost.
The cost is determined using First In First Out ( FIFO ) method.
F. RESEARCH & DEVELOPMENT
Revenue expenditure pertaining to Research & Development is charged to
revenue under respective heads of accounts in the year in which they
are incurred. Capital Expenditure on Research & Development is shown as
an addition to Fixed Assets.
G. EMPLOYEE BENEFITS
Short Term employee benefits
i) Employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits and are
recognised in the period in which the employee renders the related
service. Short-term employee benefits are recognised as an expense of
the undiscounted amount in the profit and loss account of the year.
ii) Post employment and other long term employee benefits are
recognised as an expense in the profit and loss account for the year in
which the employee has rendered services. The expense is recognised at
the present value of the amounts payable determined using actuarial
valuation techniques. Actuarial gains and losses in respect of post
employment and other long term benefits are charged to the profit and
loss account.
H. INVESTMENTS
Long term investments are stated at cost. Provision for diminution in
the value of long term investments is made only if such a decline is
other than temporary in nature.
Investments that readily realisable and intended to be held for not
more than one year from the date on which such investment is made are
classified as current investment. Current investments are stated at
lower of cost or fair value, which is determined for each individual
investment.
I. TRANSACTIONS IN FOREIGN CURRENCIES
i) Initial Recognition: Transactions denominated in foreign currencies
are recorded at the exchange rates prevailing on the date of the
transaction.
ii) Conversion: At the year end, monetary items denominated in foreign
currencies other than those covered by forward contracts are converted
into rupee equivalents at the year-end exchange rates.
iii) Forward Exchange Contracts: In respect of transactions covered by
forward exchange contracts, the difference between the forward rate and
the exchange rate at the date of the transaction is recognised as
income or expense over the period of the contract.
iv) Exchange Differences: All exchange differences arising on
settlement / conversion of foreign currency transactions are recognised
in the Profit and Loss Account.
J. IMPAIRMENT OF ASSETS
The company assesses at each Balance Sheet date whether there is any
indication that any asset may be impaired. If any such indications
exist, the carrying value of such assets is reduced to its estimated
recoverable amount and the amount of such impairment loss is charged to
Profit and Loss Account. If at the Balance Sheet date there is an
indication that previously assessed impairment losses no longer exist,
than such loss is reversed and the asset is restated to that effect.
K. INTANGIBLEASSET
Intangible asset is stated at cost of acquisition less accumulated
amortisation. Technical know how is amortised over the period of six
years.
L. BORROWING COST
Borrowing cost attributable to the acquisition, construction or
production of a qualifying asset are capitalized as a part of the cost
of that asset. Borrowing cost which are not attributable to the
qualifying assets, are recognised as an expense in the period in which
they are incurred.
M. TAXATION
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Indian Income Tax Act. Deferred income taxes
reflect the impact of the current year timing differences between
taxable income and accounting income for the year and reversal of
timing differences of earlier years.
Deferred income tax is measured based on the income tax rate and the
tax laws enacted or substantively enacted at the Balance Sheet date.
Deferred tax assets are only recognized only to the extent that there
is reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets are recognised only if
there is virtual certainty supported by convincing evidence that such
deferred tax assets can be realised against future taxable profits.
At each balance sheet date the Company re-assesses unrecognized
deferred tax assets, if any. It recognises unrecognised deferred tax
assets to the extent that it has become reasonably certain or virtually
certain, as the case may be, that sufficient future taxable income will
be available against which such deferred tax assets can be realised.
N. LEASE
Lease Payments under Operating Leases are recognised as an expense in
the statement of profit and loss on a straight line basis over the
lease term.
O. EARNINGS PER SHARE
The Company reports basic and diluted Earnings per Share (EPS) in
accordance with Accounting Standard 20 - Earnings per Share. Basic EPS
is computed by dividing the net profit or loss for the year by the
weighted average number of equity shares outstanding during the year.
P. EXPENDITURE DURING CONSTRUCTION PERIOD
Expenditure during construction period is included under capital
work-in- progress and the same is allocated to the respective fixed
assets on completion of construction.
Q. PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Provisions involving substantial degree of estimation in measurement
are recognised 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 recognised but are disclosed in the notes.
Contingent assets are neither recognised nor disclosed in the financial
statements.