Accounting Policies of Morarjee Textiles Ltd. Company
Mar 31, 2018
Note 1: Significant Accounting Policies
(a) Basis of Preparation of Financial Statements
(i) Statement of Compliance with Indian Accounting Standards (Ind AS)
These financial statements comply, in all material respects, with Ind AS notified under section 133 of the Companies Act, 2013 ("the Act"), Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other relevant provisions of the Act.
The financial statements up to year ended 31st March 2017 were prepared in accordance with the accounting standards notified under the Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Companies Act, 1956.
These financial statements are the Company''s first Ind AS financial statements and are complied with Ind AS 101 ''First Time Adoption of Indian Accounting Standards'' (Ind AS 101). The transition to Ind AS has been carried out from the accounting principles generally accepted in India ("Indian GAAP") which is considered as the "Previous GAAP" for purposes of Ind AS 101.
The date of transition to Ind AS is 1st April, 2016. Refer Note no. 34 for an explanation of how the transition from Previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.
(ii) Historical Cost Convention
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities:
a) Certain financial assets and liabilities that are measured at fair value
b) Derivative financial instruments
(iii) Functional and Presentation Currency
These financial statements are presented in Indian Rupees, which is also the functional currency of the Company. All financial information presented in Indian Rupees has been rounded off to two decimals in lakhs.
(iv) Current and Non-current Classification
All assets and liabilities have been classified as current and non-current as per the Company''s normal operating cycle (Twelve months) and other criteria set out in Schedule III to the Act.
(b) Property, Plant and Equipment (PPE) and Depreciation
All items of PPE are stated at cost less depreciation and impairment, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost includes its purchase price including non-refundable taxes and duties, directly attributable costs of bringing the asset to its present location and condition and initial estimate of costs of dismantling and removing the item and restoring the site on which it is located.
Subsequent costs are included in the carrying amount of PPE or recognised as a separate PPE, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss during the reporting period in which they are incurred.
Machinery spares and servicing equipment are recognised as PPE when they meet the definition of PPE. Otherwise, such items are classified as inventory.
Capital work- in- progress includes cost of PPE under installation / under development as at the Balance Sheet date.
The Company depreciates its PPE over the useful life in the manner prescribed under Part C of Schedule II to the Act. Depreciation commences when the assets are ready for their intended use and is computed on pro-rata basis from the date of installation/ acquisition till the date of sale/ disposal. Management believes that useful life of assets are same as those prescribed in Schedule II to the Act, except for machinery spares wherein based on technical evaluation, useful life has been estimated to be different from that prescribed in Schedule II of the Act
Useful life considered for calculation of depreciation for machinery spares varies from 2 to 10 years.
Lease hold PPE are amortised over the period of lease or useful life, whichever is lower. Leasehold land (under Finance Lease) is amortised over the period of lease.
Gains and losses on disposals are determined by comparing net disposal proceeds with carrying amount. These are included in the Statement of Profit and Loss.
(c) Intangible Assets and Amortisation
Intangible assets that are acquired by the Company, which have finite useful lives are measured at cost less amortisation and impairment, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost includes its purchase price including non-refundable taxes and duties, directly attributable costs of bringing the asset to its present location and condition.
Intangible assets are amortised on straight line basis over the estimated useful life.
Useful life considered for amortisation of intangible assets being computer Software is 10 years.
Gains and losses on disposals are determined by comparing net disposal proceeds with carrying amount. These are included in the Statement of Profit and Loss.
(d) Leases
Where the Company is Lessee
A lease is classified at the inception date as a finance lease or an operating lease.
A lease that transfers substantially all the risks and rewards incidental to ownership to the Company is classified as a finance lease. Finance leases are capitalised at the commencement of the lease at the inception date at fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the Statement of Profit and Loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with Company''s general policy on the borrowing cost.
All other leases are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss on straight line basis over the lease term, unless the payments are structured to increase in line with the expected general inflation to compensate for the lessor in expected inflationary cost increase.
Where the Company is Lessor
Leases are classified as finance leases when substantially all of the risks and rewards of ownership transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the Company''s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of the lease.
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight line basis over the term of the relevant lease.
(e) Borrowing Cost
Borrowing costs are interest and other costs that the Company incurs in connection with the borrowing of funds and is measured with reference to the effective interest rate applicable to the respective borrowing.
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use. Other borrowing costs are expensed in the period in which they are incurred.
(f) Government Grants
Grants from the government are recognised at their fair value where there is reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
Government grants relating to the purchase of PPE are included in non-financial liabilities as deferred income and are credited to the Statement of Profit and Loss on straight line basis over the expected lives of related assets and presented within other income.
Government grants relating to an expense item are recognised in the Statement of Profit and Loss by way of a deduction to the related expense on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.
(g) Financial instruments
(i) Financial Assets
Initial Recognition and Measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Subsequent Measurement
The Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income (FVTOCI) or fair value through profit or loss (FVTPL) on the basis of its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset, as per Ind AS 109.
a. Subsequent Measurement - Equity Instruments
All equity investments other than investments in subsidiaries, joint ventures and associates are measured at fair value. Equity investments which are held for trading are classified as FVTPL. For all other equity investments, the Company decides to classify the same either at FVTOCI or FVTPL. The Company makes such election on an instrument by instrument basis. The classification is made on initial recognition and is irrevocable.
Investment in equity instruments of subsidiaries, joint ventures and associates are measured at cost.
b. Subsequent Measurement - Debt Instruments
A financial asset being debt instrument that meets the following 2 conditions is measured at amortised cost (net off any write down for impairment) unless the asset is designated at fair value through profit or loss under the fair value option.
Business Model Test: the objective of the Company''s model is to hold the financial asset to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realise its fair value changes).
Cash Flow Characteristics Test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.
A financial asset that meets the following 2 conditions is measured at fair value through other comprehensive income unless the asset is designated at fair value through profit or loss under the fair value option.
Business Model Test: the financial asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling the financial assets.
Cash Flow Characteristics Test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.
Even if an instrument meets the two requirements to be measured at amortised cost or fair value through other comprehensive income, a financial asset is measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an''accounting mismatch'') that would otherwise arise from measuring assets or liabilities or recognising the gains or losses on them on different basis.
All other debt instruments are measured at fair value through profit or loss.
Derecognition of Financial Assets
The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all risks and rewards of ownership of the asset, to another entity.
Impairment of Financial Assets
Loss allowance for expected credit losses is recognised for financial assets measured at amortised cost and FVTOCI.
For financial assets other than trade receivables, whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve months expected credit losses is recognised. Loss allowance equal to the lifetime expected credit losses is recognised if the credit risk on the financial instruments has significantly increased since initial recognition.
The Company follows ''simplified approach'' for recognition of impairment loss allowance on trade receivables, considering historical trend, industry practices and the business environment in which the Company operates or any other appropriate basis.
The impairment losses and reversals are recognised in Statement of Profit and Loss.
(ii) Equity and Financial Liabilities
Debt and equity instruments issued by an entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
a. Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
b. Financial Liabilities
Initial Recognition and Measurement
Financial liabilities are initially recognised at fair value plus any transaction costs that are attributable to the acquisition of the financial liabilities, except for the financial liabilities at FVTPL which are initially measured at fair value.
Subsequent Measurement
The financial liabilities are classified for subsequent measurement either at amortised cost or at fair value through Profit and Loss (FVTPL).
Amortised cost for financial liabilities represents amount at which financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount.
Derecognition of Financial Liabilities
A financial liability is removed from the Balance Sheet when the obligation is discharged, or is cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Derivative Financial Instruments
Derivative financial instruments such as forward contracts are taken by the Company to hedge its foreign currency risks, are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value with changes in fair value recognised in the Statement of Profit and Loss in the period when they arise (other than in case of hedge accounting).
Offsetting of Financial Instruments
Financials assets and financial liabilities are offset and the net amount is reported in the Balance Sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
(h) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 â Quoted prices in active markets for identical assets or liabilities
- Level 2 â Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
- Level 3 â Inputs for the asset or liability that are not based on observable market data.
(i) Inventories
Inventories are stated at the lower of cost and net realisable value. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. The cost formula used for determination of cost is ''Weighted Average Cost.
Machinery spares, stand-by equipment and servicing equipment are recognised as inventory when the useful life is less than one year and the same are charged to the Statement of Profit and Loss as and when issued for consumption.
(j) Income Tax
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The Company''s liability for current tax is calculated using the Indian tax rates and laws that have been enacted by the reporting date. The Company periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretations and provisions where appropriate.
Deferred income tax is provided in full, using the liability method on temporary differences arising between the tax bases of assets and liabilities and their carrying amount in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax assets is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, only if, it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and current tax liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Minimum Alternate Tax (MAT) credit is recognised as deferred tax asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.
(k) Provisions and Contingencies Provisions
A provision is recognised when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent Liabilities and Contingent Assets
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 recognised 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 recognised because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements unless the probability of outflow of resources is remote.
Contingent assets are not recognised in the financial statements. If the inflow of economic benefits is probable, then it is disclosed in the financial statements.
Provisions, contingent liabilities, contingent assets and commitments are reviewed at each Balance Sheet date.
(l) Employee Benefits
(i) Short-term Obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
(ii) Post-employment Obligations
The Company operates the following post-employment schemes:
(a) Defined benefit plan (Gratuity), and
(b) Defined contribution plans such as superannuation scheme, provident fund.
Defined Benefit Plan
The liability or asset recognised in the Balance Sheet in respect of defined benefit gratuity plan is the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated annually on the basis of actuarial valuation using the Projected Unit Credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The interest cost is calculated by applying the discount rate to the balance of the defined benefit obligation. This cost is included in employee benefits expense in the Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income.
Defined Contribution Plans
Defined Contribution Plans such as superannuation scheme, provident fund are charged to the Statement of Profit and Loss as an expense, when an employee renders the related services.
(iii) Other Long-term Employee Benefits
The liabilities for compensated absences that are not expected to be settled wholly within 12 months are measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the Projected Unit Credit method. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in the Statement of Profit and Loss.
The obligations are presented as current liabilities in the Balance Sheet if the entity does not have any unconditional right to defer settlement for at least 12 months after the end of the reporting period, regardless of when the actual settlement is expected to occur.
(m) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The CODM monitors the operating results of its business segments separately for the purpose of making decision about the resources allocation and performance assessment. The operating segments have been identified on the basis of the nature of products/ services.
The Board of Directors of the Company has appointed the Managing Director as the Chief Operating Decision Maker (CODM) who is assessing the financial performance and position of the Company, and makes strategic decisions.
(n) Cash and Cash Equivalents
For the purpose of presentation in the Statement of Cash Flows as well as the Balance Sheet, cash and cash equivalents include cash on hand, demand deposits with banks, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(o) Earnings per Share (EPS)
Basic earnings per share are computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for the events for bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares).
Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for dividend, interest and other charges to expense or income (net off any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on conversion of all dilutive potential equity shares.
(p) Non-current Assets Held for Sale
The Company classifies non-current assets as held sale if their carrying amounts will be recovered principally through a sale rather than through continuing use. Such non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Any expected loss is recognised immediately in the Statement of Profit and Loss.
The criteria for held for sale classification are regarded as met only when the sale is highly probable i.e. an active program to locate a buyer to complete the plan has been initiated and the asset is available for immediate sale in its present condition and the assets must have been actively marketed for sale at a price that is reasonable in relation to its current fair value. Actions required to complete the sale should indicate that it is unlikely that significant changes to that plan to sale these assets will be made. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
PPE and intangible assets once classified as held for sale are not depreciated or amortised. Assets and liabilities classified as held for sale are presented separately as current items in the Balance Sheet.
(q) Dividend Distribution to Equity Shareholders
Dividend distributed to Equity shareholders is recognised as distribution to owners of capital in the Statement of Changes in Equity, in the period in which it is paid. Dividend proposed by the Board of Directors, subject to the approval of shareholders, is disclosed in the notes to financial statements.
(r) Foreign Currency Transactions
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.
(s) Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable net of discounts, returns and rebates taking into account contractually defined terms and excluding taxes or duties collected on behalf of the government.
Sale of Products
Sales are recognised when substantial risk and rewards of ownership are transferred to customer as per the terms of contract. No revenue is recognised if there are significant uncertainties regarding recovery of the amount due, associated costs or the possible return of goods.
Duty Drawback Scheme
Export benefits under Duty Drawback Scheme is estimated and accounted in the year of export.
Interest Income
Interest income is accrued on a time proportion basis, by reference to the principal outstanding and the applicable effective interest rate.
Dividend Income
Dividend income from investments is recognised when the shareholder''s rights to receive payment have been established. Income from Services
Income from services is recognised (net of taxes as applicable) as they are rendered, based on agreement/arrangement with the concerned customers.
(t) Significant Accounting Estimates, Judgements and Assumptions:
The preparation of the Company''s financial statements in conformity with Ind AS requires Management to make judgements, 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. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances existing when the financial statements were prepared. The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates is recognised in the year in which the estimates are revised and in any future year affected.
In the process of applying the Company''s accounting policies, Management has made the following judgements which have significant effect on the amounts recognised in the financial statements:
i. Useful Lives of Property, Plant and Equipment: Determination of the estimated useful life of tangible assets and the assessment as to which components of the cost may be capitalised. Useful life of tangible assets is based on the life specified in Schedule II of the Act and also as per Management estimate for certain category of assets. Assumption also needs to be made, when the Company assesses, whether as asset may be capitalised and which components of the cost of the assets may be capitalised.
ii. Fair Value Measurement of Financial Instruments: When the fair values of financial 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 appropriate valuation techniques. The inputs for these valuations are taken from observable sources where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of various inputs including liquidity risk, credit risk, volatility etc. Changes in assumptions/ judgements about these factors could affect the reported fair value of financial instruments.
iii. Measurement of Defined Benefit Plan: The cost of the defined benefit gratuity plan and other post-employment benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
iv. Impairment of Financial Assets: Trade receivables are stated at their normal value as reduced by appropriate allowances for estimated irrecoverable amounts. Individual trade receivables are written off when Management deems them not collectable. Impairment is made on the expected credit loss model, which is the present value of the cash shortfall over the expected life of the financial assets. The impairment provisions for financial assets are based on assumption about the risk of default and expected loss rates. Judgement in making these assumptions and selecting the inputs to the impairment calculation are based on past history, existing market condition as well as forward looking estimates at the end of each reporting period.
v. Impairment of Non-financial Assets: The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or Cash Generating Units (CGU''s) fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered as impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if no such transactions can be identified, an appropriate valuation model is used.
vi. Contingencies: Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/ claim/ litigation against the Company as it is not possible to predict the outcome of pending matters with accuracy.
(u) Recent Accounting Developments
On 28th March, 2018, the Ministry of Corporate Affairs (MCA) issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying amendments to Ind AS 21, ''The Effects of Changes in Foreign Exchange Rates'' and the new standard Ind AS 115, ''Revenue from Contract with Customers''. These amendments are applicable to the Company from 1st April, 2018.
Amendment to Ind AS 21:
On 28th March, 2018, MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing ''Appendix B to Ind AS 21: Foreign currency transactions and advance consideration'' which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. This amendment will come into force from 1st April, 2018.
Standard issued but not yet effective (Ind AS 115):
On 28th March, 2018, the MCA notified the Ind AS 115, Revenue from Contracts with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity''s contracts with customers.
The effective date for adoption of Ind AS 115 is financial periods beginning on or after 1st April, 2018.
The Company will adopt this standard using the cumulative catch up transition method affective April 1, 2018 and accordingly, the comparative for year ended March 31, 2018 will not be retrospectively adjusted.
The Company is in process of evaluating the impact due to above changes in accounting principles. However, based on preliminary assessment, there will not be any material impact on the financial position and performance of the Company.
Mar 31, 2017
Note 1 : Significant Accounting Policies
1. Basis of preparation of financial statement
(a) Basis of Accounting:
The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting to comply with the accounting standards notified under the relevant provisions of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014.
All Assets and Liabilities have been classified as current or noncurrent as per the company''s normal operating cycle and other criteria set out in Schedule III to Companies Act, 2013. Based on the nature of product and the time between the acquisition of assets for processing and their realization in cash or cash equivalent, the company has ascertained its operating cycle to be 12 months for the purpose of current and noncurrent classification of assets and liabilities.
(b) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) in India requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements.
2. Property, Plant & Equipment
All Tangible/Intangible are stated at cost net of recoverable taxes, less of accumulated depreciation / amortization and impairment loss if any. The cost of Tangible/Intangible comprises its purchase price, borrowing cost and any other cost directly attributable to bringing the assets to its working condition for its intended use. Capital Subsidy received for a specific asset is reduced from its cost. The expenditure incurred on commissioning of the project, including the expenditure incurred on test runs and experimental production, is capitalized.
Subsequent expenditure related to an item of tangible fixed assets are added to its book value only if they increase the future benefit from the existing asset beyond its previously assessed standard of performance.
3. Depreciation and Amortization
Depreciation on all tangible fixed assets is provided under Straight Line Method based on its useful lives as prescribed under Schedule II of Companies Act, 2013. Leasehold land is amortized over the primary lease period. Computer Software is amortized under Straight Line Method over useful life of 10 years
4. Lease Accounting
Lease rentals on assets taken on lease are recognized as expense in the statement of profit and loss account on an accrual basis over the lease term.
5. Inventory
a) Raw materials, work in progress, finished goods, packing materials, stores, spares, traded goods and consumables are carried at the lower of cost and net realizable value. The comparison of cost and net realizable value is made on an item-by-item basis. Damaged, unserviceable and inert stocks are suitably depreciated.
b) In determining cost of raw materials, packing materials, traded goods, stores, spares and consumables, weighted average cost method is used.
c) 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, excise duty as applicable 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.
6. Investments
Long term /non- current investments are carried at cost. Provision for diminution in the value of long term investments is made only if such a decline is not temporary in the opinion of the management. Current investments are carried at lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments.
Profit and loss on sale of investments is determined on a first in first out (FIFO) basis.
7. Revenue Recognition
Revenue is recognized only when there is no significant uncertainty as to the measurability / collectability of amount.
8. Transactions in Foreign Exchange
Transaction in foreign currency is recorded at the exchange rate prevailing on the date of the transaction. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the statement of profit and loss except in case of long term liabilities where they relate to acquisition of fixed assets in which case they are adjusted to carrying amount of fixed assets.
The premium on forward exchange contracts is recognized over the period of the contracts in the statement of profit and loss..
9. Employee Benefits
(i) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service. The Company recognises the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
(ii) Post-Employment Benefits:
(a) Defined contribution plans
Defined contribution plans are, Government administered Provident Fund Scheme and Government administered Pension Fund Scheme for all employees and Superannuation scheme for eligible employees. The Company''s contribution to defined contribution plans are recognized in the profit and loss account in the financial year to which they relate.
The interest to the beneficiaries every year is being notified by the Government.
(b) Defined benefit plans
(i) Gratuity
The Company provides for gratuity, a defined benefit retirement plan covering eligible employees, The Company makes a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment based on respective employee''s salary and tenure of employment with the company.
Liabilities with regard to gratuity are determined by actuarial valuation performed by an independent actuary at each balance sheet date using the Projected Unit Credit Method. The gratuity liability being unfunded, the company recognizes the obligation in balance sheet as liability in accordance with Accounting Standard 15 Employee Benefits. Acturial Gain / Loss arising from experience adjustments and changes in actuarial assumptions are recognized in statement of Profit & Loss in period in which they arise.
(ii) Compensated Absences (Leave Encashment)
The Employees of the Company are entitled to compensated absences which are both accumulating (subject to maximum limit) and non accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial valuation using the Projected Unit Credit Method on the additional amount expected to be paid or availed as a result of unused entitlement that has accumulated at balance sheet date. Expense on non accumulating compensated absences is recognized in the period in which absences occur.
10. Provision for Taxation
Income tax expense comprises current tax and deferred tax charge or credit. Provision for current tax is made on the basis of the assessable income at the tax rate applicable to the relevant assessment year. The deferred tax asset and deferred tax liability is calculated by applying tax rate and tax laws that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws are recognized only if there is a virtual certainty of its realization supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized only to the extant there is reasonable certainty of its realization. At each Balance Sheet date, the carrying amount of deferred tax assets are reviewed to reassure realization.
Minimum Alternate Tax credit (MAT Credit) is recognized as an asset only when and to the extant there is a convincing evidence that the Company will pay normal 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 convincing evidence to the effect that the Company will pay normal income tax during the specified period.
11. Provisions and Contingencies
The company creates a provision when there exists a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources is remote, no provision or disclosure is made.
12. Earnings per share
The basic and diluted earnings per share ("EPS") is computed by dividing the net profit after tax for the year by weighted average number of equity shares outstanding during the year.
13. Dividend
Financial Dividend recommended by the Board of Directors is accounted in the financial year in which it is approved by the Shareholders at the Annual General Meeting.
Mar 31, 2016
NOTES ON FINANCIAL STATEMENT FOR THE YEAR ENDED 31st MARCH, 2016
Note 1 : Significant Accounting Policies
1. Basis of preparation of financial statement
(a) Basis of Accounting:
The financial statements have been prepared and presented under the historical cost convention on accrual basis of accounting to comply with the accounting standards notified under the relevant provisions of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014.
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 Schedule III to Companies Act, 2013. Based on the nature of product and the time between the acquisition of assets for processing and their realization in cash or cash equivalent, the company has ascertained its operating cycle to be 12 months for the purpose of current and non current classification of assets and liabilities.
(b) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) in India requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities on the date of financial statements.
2. Fixed Assets
All Fixed Assets are stated at cost net of recoverable taxes, less of accumulated depreciation / amortization and impairment loss if any. The cost of Fixed Assets comprises its purchase price, borrowing cost and any other cost directly attributable to bringing the assets to its working condition for its intended use. Capital Subsidy received for a specific asset is reduced from its cost. The expenditure incurred on commissioning of the project, including the expenditure incurred on test runs and experimental production, is capitalized.
Subsequent expenditure related to an item of tangible fixed assets are added to its book value only if they increase the future benefit from the existing asset beyond its previously assessed standard of performance.
3. Depreciation and Amortization
Depreciation on all tangible fixed assets is provided under Straight Line Method based on its useful lives as prescribed under Schedule II of Companies Act, 2013. Leasehold land is amortized over the primary lease period. Computer Software is amortized under Straight Line Method over useful life of 10 years
4. Lease Accounting
Lease rentals on assets taken on lease are recognized as expense in the statement of profit and loss account on an accrual basis over the lease term.
5. Inventory
a) Raw materials, work in progress, finished goods, packing materials, stores, spares, traded goods and consumables are carried at the lower of cost and net realizable value. The comparison of cost and net realizable value is made on an item-by-item basis. Damaged, unserviceable and inert stocks are suitably depreciated.
b) In determining cost of raw materials, packing materials, traded goods, stores, spares and consumables, weighted average cost method is used.
c) 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, excise duty as applicable 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.
6. Investments
Long term /non- current investments are carried at cost. Provision for diminution in the value of long term investments is made only if such a decline is not temporary in the opinion of the management. Current investments are carried at lower of cost and fair value. The comparison of cost and fair value is done separately in respect of each category of investments.
Profit and loss on sale of investments is determined on a first in first out (FIFO) basis.
7. Revenue Recognition
Revenue is recognized only when there is no significant uncertainty as to the measurability / collectability of amount.
8. Transactions in Foreign Exchange
Transaction in foreign currency is recorded at the exchange rate prevailing on the date of the transaction. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the statement of profit and loss except in case of long term liabilities where they relate to acquisition of fixed assets in which case they are adjusted to carrying amount of fixed assets.
The premium on forward exchange contracts is recognized over the period of the contracts in the statement of profit and loss..
9. Employee Benefits
(i) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits and they are recognized in the period in which the employee renders the related service. The Company recognizes the undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.
Mar 31, 2015
1. Basis of preparation of financial statement
(a) Basis of Accounting:
The financial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting to comply
with the accounting standards notified under the relevant provisions of
the Companies Act, 2013 read with Rule 7 of the Companies (Accounts)
Rules 2014.
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 Schedule III to Companies Act, 2013. Based on the nature of
product and the time between the acquisition of assets for processing
and their realisation in cash or cash equivalent, the company has
ascertained its operating cycle to be 12 months for the purpose of
current and non current classification of assets and liabilities.
(b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) in India requires Management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosures of contingent liabilities on
the date of financial statements.
2. Fixed Assets
All Fixed Assets are stated at cost net of recoverable taxes, less of
accumulated depreciation / amortisation and impairment loss if any. The
cost of Fixed Assets comprises its purchase price, borrowing cost and
any other cost directly attributable to bringing the assets to its
working condition for its intended use. Capital Subsidy received for a
specific asset is reduced from its cost.The expenditure incurred on
commissioning of the project, including the expenditure incurred on
test runs and experimental production, is capitalised.
Subsequent expenditure related to an item of tangible fixed assets are
added to its book value only if they increase the future benefit from
the existing asset beyond its previously assessed standard of
performance.
3. Depreciation and Amortisation
Depreciation on all tangible fixed assets is provided under Straight
Line Method based on its useful lives as prescribed under Schedule II
of Companies Act, 2013. Leasehold land is amortised over the primary
lease period. Computer Software is amortised under Straight Line
Method over useful life of 10 years.
4. Lease Accounting
Lease rentals on assets taken on lease are recognized as expense in the
statement of profit and loss account on an accrual basis over the lease
term.
5. Inventory
a) Raw materials, work in progress, finished goods, packing materials,
stores, spares, traded goods and consumables are carried at the lower
of cost and net realisable value. The comparison of cost and net
realisable value is made on an item-by-item basis. Damaged,
unserviceable and inert stocks are suitably depreciated.
b) In determining cost of raw materials, packing materials, traded
goods, stores, spares and consumables, weighted average cost method is
used.
c) 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, excise duty as applicable 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.
6. Investments
Long term /non- current investments are carried at cost. Provision for
diminution in the value of long term investments is made only if such a
decline is not temporary in the opinion of the management. Current
investments are carried at lower of cost and fair value. The comparison
of cost and fair value is done separately in respect of each category
of investments.
Profit and loss on sale of investments is determined on a first in
first out (FIFO) basis.
7. Revenue Recognition
Revenue is recognised only when there is no significant uncertainty as
to the measurability / collectability of amount.
8. Transactions in Foreign Exchange
Transaction in foreign currency is recorded at the exchange rate
prevailing on the date of the transaction. Any income or expense on
account of exchange difference either on settlement or on translation
is recognised in the statement of profit and loss except in case of
long term liabilities where they relate to acquisition of fixed assets
in which case they are adjusted to carrying amount of fixed assets.
The premium on forward exchange contracts is recognized over the period
of the contracts in the statement of profit and loss.
9. Employee Benefits
(i) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits and they are
recognized in the period in which the employee renders the related
service. The Company recognises the undiscounted amount of short term
employee benefits expected to be paid in exchange for services rendered
as a liability (accrued expense) after deducting any amount already
paid.
(ii) Post-Employment Benefits:
(a) Defined contribution plans
Defined contribution plans are, Government administered Provident Fund
Scheme and Government administered Pension Fund Scheme for all
employees and Superannuation scheme for eligible employees. The
Company''s contribution to defined contribution plans are recognized in
the profit and loss account in the financial year to which they relate.
The interest to the beneficiaries every year is being notified by the
Government.
(b) Defined benefit plans (i) Gratuity
The Company provides for gratuity, a defined benefit retirement plan
covering eligible employees, The Company makes a lump-sum payment to
vested employees at retirement, death, incapacitation or termination of
employment based on respective employee''s salary and tenure of
employment with the company.
Liabilities with regard to gratuity are determined by actuarial
valuation performed by an independent actuary at each balance sheet
date using the Projected Unit Credit Method. The gratuity liability
being unfunded, the company recognises the obligation in balance sheet
as liability in accordance with Accounting Standard 15 Employee
Benefits. Acturial Gain / Loss arising from experience adjustments and
changes in actuarial assumptions are recognised in statement of Profit
& Loss in period in which they arise.
(ii) Compensated Absences (Leave Encashment)
The Employees of the Company are entitled to compensated absences which
are both accumulating (subject to maximum limit) and non accumulating
in nature. The expected cost of accumulating compensated absences is
determined by actuarial valuation using the Projected Unit Credit
Method on the additional amount expected to be paid or availed as a
result of unused entitlement that has accumulated at balance sheet
date. Expense on non accumulating compensated absences is recognised in
the period in which absences occur.
10. Provision for Taxation
Income tax expense comprises current tax and deferred tax charge or
credit. Provision for current tax is made on the basis of the
assessable income at the tax rate applicable to the relevant assessment
year. The deferred tax asset and deferred tax liability is calculated
by applying tax rate and tax laws that have been enacted or
substantively enacted at the balance sheet date. Deferred tax assets
arising mainly on account of brought forward losses and unabsorbed
depreciation under tax laws are recognized only if there is a virtual
certainty of its realization supported by convincing evidence. Deferred
tax assets on account of other timing differences are recognized only
to the extant there is reasonable certainty of its realization. At each
Balance Sheet date, the carrying amount of deferred tax assets are
reviewed to reassure realization.
Minimum Alternate Tax credit (MAT Credit) is recognized as an asset
only when and to the extant there is a convincing evidence that the
Company will pay normal 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
convincing evidence to the effect that the Company will pay normal
income tax during the specified period.
11. Provisions and Contingencies
The company creates a provision when there exists a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which likelihood of
outflow of resources is remote, no provision or disclosure is made.
12. Earnings per share
The basic and diluted earnings per share ("EPS") is computed by
dividing the net profit after tax for the year by weighted average
number of equity shares outstanding during the year.
13. Proposed Dividend
Dividend if any recommended by the Board of Directors is provided for
in the accounts, pending approval at the Annual General Meeting.
Mar 31, 2014
1. Basis of preparation of financial statement
(a) Basis of Accounting:
The financial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting to comply
with the accounting standards prescribed in the Companies (Accounting
Standards) Rules, 2006 and with the relevant provisions of the
Companies Act, 1956.
(b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) in India requires Management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosures of contingent liabilities on
the date of financial statements.
2. Fixed Assets
All the fixed assets are stated at historical cost. In respect of
Assets acquired under new project/ expansion/ restructuring, interest
cost on borrowings and other related expenses during trial runs and
upto satisfactory commencement of commercial production have been
capitalised to Plant & Machinery and any subsidy given for a specific
asset is reduced from cost. The Accounting Standard -10 of the
Institute of Chartered Accountants of India has been compiled with in
this respect.
3. Depreciation
Depreciation has been provided net of reversal of excess provision if
any on straight line method on all fixed assets except Leasehold land
at the rates specified in Schedule XIV to the Companies Act, 1956.
Premium on lease hold land is amortised over the period of lease.
Intangible assets are amortised over their estimated useful life.
4. Lease Accounting
Lease rentals on assets taken on lease are recognized as expense in the
statement of profit and loss account on an accrual basis over the lease
term.
5. Inventory
a) Raw materials, work in progress, finished goods, packing materials,
stores, spares, traded goods and consumables are carried at the lower
of cost and net realisable value. The comparison of cost and net
realisable value is made on an item-by-item basis. Damaged,
unserviceable and inert stocks are suitably depreciated.
b) In determining cost of raw materials, packing materials, traded
goods, stores, spares and consumables, weighted average cost 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.
c) Cost of finished goods and work-in-process includes the cost of raw
materials, packing materials, an appropriate share of fixed and
variable production overheads, excise duty as applicable 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.
6. Investments
Long term investments are carried at cost. Provision for diminution in
the value of long term investments is made only if such a decline is
not temporary in the opinion of the management. Short term investments
are carried at lower of cost and fair value. The comparison of cost and
fair value is done separately in respect of each category of
investments.
Profit and loss on sale of investments is determined on a first in
first out (FIFO) basis.
7. Revenue Recognition
Revenue is recognized only when there is no significant uncertainty as
to the measurability / collectability of amount.
8. Transactions in Foreign Exchange
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. Exchange differences
arising on foreign exchange transactions settled during the year are
recognized in the Profit and loss account of the year.
Monetary assets and liabilities denominated in foreign currencies,
which are outstanding as at the year end are translated at the closing
exchange rate and the resultant exchange differences are recognized in
the Profit and loss account.
The premium or discount on forward exchange contracts is recognized
over the period of the contracts in the profit and loss account.
9. Employee Benefits
(i) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits and they are
recognized in the period in which the employee renders the related
service. The Company recognises the undiscounted amount of short term
employee benefits expected to be paid in exchange for services rendered
as a liability (accrued expense) after deducting any amount already
paid.
(ii) Post-Employment Benefits:
(a) Defined contribution plans
Defined contribution plans are, Government administered Provident Fund
Scheme and Government administered Pension Fund Scheme for all
employees and Superannuation scheme for eligible employees. The
Company''s contribution to defined contribution plans are recognized in
the profit and loss account in the financial year to which they relate.
The interest to the beneficiaries every year is being notified by the
Government.
(b) Defined benefit plans
(i) Defined benefit gratuity plan
The Company operates a defined benefit gratuity plan for employees.
The cost of providing defined benefits is determined using the
Projected Unit Credit Method with actuarial valuations being carried
out at each balance sheet date. Past service cost is recognized
immediately to the extent that the benefits are already vested, else is
amortised on a straight-line basis over the average period until the
amended benefits become vested.
The defined benefit obligations recognized in the balance sheet
represents the present value of the defined benefit obligation as
adjusted for unrecognized actuarial gains and losses and unrecognized
past service costs, and 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 unrecognized past service cost plus the present value of available
refunds and reductions in future contributions to the plan.
(iii) Other long term employee benefits
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 leaves. 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.
10. Provision for Taxation
Income tax expense comprises of current tax (i.e. amount of tax for the
period determined in accordance with the Income Tax Act, 1961),
deferred tax charge or credit (reflecting the tax effects of timing
differences between accounting income and taxable income for the
period) and fringe benefit tax (computed in accordance with the
relevant provisions of the Income tax Act, 1961).
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognized using the tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realised in future;
however, where there is unabsorbed depreciation or carry forward loss
under taxation laws, deferred tax assets are recognized only if there
is a virtual certainty of realisation of such assets. Deferred tax
assets are reviewed as at each balance sheet date to reassess
realisation.
11. Provisions and Contingencies
The company creates a provision when there exists a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which likelihood of
outflow of resources is remote, no provision or disclosure is made.
12. Earnings per share
The basic and diluted earnings per share ("EPS") is computed by
dividing the net profit after tax for the year by weighted average
number of equity shares outstanding during the year.
13. Proposed Dividend
Dividend if any recommended by the Board of Directors is provided for
in the accounts, pending approval at the Annual General Meeting.
Mar 31, 2013
1. Basis of preparation of fnancial statement
(a) Basis of Accounting:
The fnancial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting to comply
with the accounting standards prescribed in the Companies (Accounting
Standards) Rules, 2006 and with the relevant provisions of the
Companies Act, 1956.
(b) Use of Estimates
The preparation of fnancial statements in conformity with generally
accepted accounting principles (GAAP) in India requires Management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosures of contingent liabilities on
the date of fnancial statements.
2. Fixed Assets
All the fxed assets are stated at historical cost. In respect of Assets
acquired under new project/ expansion/ restructuring, interest cost on
borrowings and other related expenses during trial runs and upto
satisfactory commencement of commercial production have been
capitalised to Plant & Machinery and any subsidy given for a specifc
asset is reduced from cost. The Accounting Standard -10 of the
Institute of Chartered Accountants of India has been compiled with in
this respect.
3. Depreciation
Depreciation has been provided net of reversal of excess provision if
any on straight line method on all fxed assets except Leasehold land at
the rates specifed in Schedule XIV to the Companies Act, 1956. Premium
on lease hold land is amortised over the period of lease. Intangible
assets are amortised over their estimated useful life.
4. Lease Accounting
Lease rentals on assets taken on lease are recognized as expense in the
statement of proft and loss account on an accrual basis over the lease
term.
5. Inventory
a) Raw materials, work in progress, fnished goods, packing materials,
stores, spares, traded goods and consumables are carried at the lower
of cost and net realisable value. The comparison of cost and net
realisable value is made on an item-by-item basis. Damaged,
unserviceable and inert stocks are suitably depreciated.
b) In determining cost of raw materials, packing materials, traded
goods, stores, spares and consumables, weighted average cost 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.
c) Cost of fnished goods and work-in-process includes the cost of raw
materials, packing materials, an appropriate share of fxed and variable
production overheads, excise duty as applicable 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.
6. Investments
Long term investments are carried at cost. Provision for diminution in
the value of long term investments is made only if such a decline is
not temporary in the opinion of the management. Short term investments
are carried at lower of cost and fair value. The comparison of cost and
fair value is done separately in respect of each category of
investments.
Proft and loss on sale of investments is determined on a frst in frst
out (FIFO) basis.
7. Revenue Recognition
Revenue is recognized only when there is no signifcant uncertainty as
to the measurability / collectability of amount.
8. Transactions in Foreign Exchange
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. Exchange differences
arising on foreign exchange transactions settled during the year are
recognized in the Proft and loss account of the year.
Monetary assets and liabilities denominated in foreign currencies,
which are outstanding as at the year end are translated at the closing
exchange rate and the resultant exchange differences are recognized in
the Proft and loss account.
The premium or discount on forward exchange contracts is recognized
over the period of the contracts in the proft and loss account.
9. Employee Benefts
(i) Short Term Employee Benefts:
All employee benefts payable wholly within twelve months of rendering
the service are classifed as short term employee benefts and they are
recognized in the period in which the employee renders the related
service. The Company recognises the undiscounted amount of short term
employee benefts expected to be paid in exchange for services rendered
as a liability (accrued expense) after deducting any amount already
paid.
(ii) Post-Employment Benefts:
(a) Defned contribution plans
Defned contribution plans are, Government administered Provident Fund
Scheme and Government administered Pension Fund Scheme for all
employees and Superannuation scheme for eligible employees. The
Company''s contribution to defned contribution plans are recognized in
the proft and loss account in the fnancial year to which they relate.
The interest to the benefciaries every year is being notifed by the
Government.
(b) Defned beneft plans
(i) Defned beneft gratuity plan
The Company operates a defned beneft gratuity plan for employees.
The cost of providing defned benefts is determined using the Projected
Unit Credit Method with actuarial valuations being carried out at each
balance sheet date. Past service cost is recognized immediately to the
extent that the benefts are already vested, else is amortised on a
straight-line basis over the average period until the amended benefts
become vested.
The defned beneft obligations recognized in the balance sheet
represents the present value of the defned beneft obligation as
adjusted for unrecognized actuarial gains and losses and unrecognized
past service costs, and as reduced by the fair value of plan assets, if
applicable. Any defned beneft asset (negative defned beneft obligations
resulting from this calculation) is recognized representing the
unrecognized past service cost plus the present value of available
refunds and reductions in future contributions to the plan.
(iii) Other long term employee benefts
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 leaves. The Company determines the
liability for such accumulated leaves using the Projected Accrued
Beneft Method with actuarial valuations being carried out at each
balance sheet date.
10. Provision for Taxation
Income tax expense comprises of current tax (i.e. amount of tax for the
period determined in accordance with the Income Tax Act, 1961),
deferred tax charge or credit (refecting the tax effects of timing
differences between accounting income and taxable income for the
period) and fringe beneft tax (computed in accordance with the relevant
provisions of the Income tax Act, 1961).
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognized using the tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realised in future;
however, where there is unabsorbed depreciation or carry forward loss
under taxation laws, deferred tax assets are recognized only if there
is a virtual certainty of realisation of such assets. Deferred tax
assets are reviewed as at each balance sheet date to reassess
realisation.
11. Provisions and Contingencies
The company creates a provision when there exists a present obligation
as a result of a past event that probably requires an outfow of
resources and a reliable estimate can be made of the amount of the
obligation. 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 outfow of resources. When there is a possible
obligation or a present obligation in respect of which likelihood of
outfow of resources is remote, no provision or disclosure is made.
12. Earnings per share
The basic and diluted earnings per share ("EPS") is computed by
dividing the net proft after tax for the year by weighted average
number of equity shares outstanding during the year.
13. Proposed Dividend
Dividend if any recommended by the Board of Directors is provided for
in the accounts, pending approval at the Annual General Meeting.
Mar 31, 2012
1. Basis of preparation of financial statement
(a) Basis of Accounting:
The financial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting to comply
with the accounting standards prescribed in the Companies (Accounting
Standards) Rules, 2006 and with the relevant provisions of the
Companies Act, 1956.
(b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) in India requires Management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosures of contingent liabilities on
the date of financial statements.
2. Fixed Assets
All the fixed assets are stated at historical cost. In respect of
Assets acquired under new project/ expansion/ restructuring, interest
cost on borrowings and other related expenses during trial runs and
upto satisfactory commencement of commercial production have been
capitalised to Plant & Machinery and any subsidy given for a specific
asset is reduced from cost. The Accounting Standard -10 of the
Institute of Chartered Accountants of India has been compiled with in
this respect.
3. Depreciation
Depreciation has been provided net of reversal of excess provision if
any on straight line method on all fixed assets except Leasehold land
at the rates specified in Schedule XIV to the Companies Act, 1956.
Premium on lease hold land is amortised over the period of lease.
Intangible assets are amortised over their estimated useful life.
4. Lease Accounting
Lease rentals on assets taken on lease are recognized as expense in the
statement of profit and loss account on an accrual basis over the lease
term.
5. Inventory
a) Raw materials, work in progress, finished goods, packing materials,
stores, spares, traded goods and consumables are carried at the lower
of cost and net realisable value. The comparison of cost and net
realisable value is made on an item-by-item basis. Damaged,
unserviceable and inert stocks are suitably depreciated.
b) In determining cost of raw materials, packing materials, traded
goods, stores, spares and consumables, weighted average cost 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.
c) Cost of finished goods and work-in-process includes the cost of raw
materials, packing materials, an appropriate share of fixed and
variable production overheads, excise duty as applicable 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.
6. Investments
Long term investments are carried at cost. Provision for diminution in
the value of long term investments is made only if such a decline is
not temporary in the opinion of the management. Short term investments
are carried at lower of cost and fair value. The comparison of cost and
fair value is done separately in respect of each category of
investments.
Profit and loss on sale of investments is determined on a first in
first out (FIFO) basis.
7. Revenue Recognition
Revenue is recognized only when there is no significant uncertainty as
to the measurability / collectability of amount.
8. Transactions in Foreign Exchange
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. Exchange differences
arising on foreign exchange transactions settled during the year are
recognized in the Profit and loss account of the year.
Monetary assets and liabilities denominated in foreign currencies,
which are outstanding as at the year end are translated at the closing
exchange rate and the resultant exchange differences are recognized in
the Profit and loss account.
The premium or discount on forward exchange contracts is recognized
over the period of the contracts in the profit and loss account.
9. Employee Benefits
(i) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits and they are
recognized in the period in which the employee renders the related
service. The Company recognises the undiscounted amount of short term
employee benefits expected to be paid in exchange for services rendered
as a liability (accrued expense) after deducting any amount already
paid.
(ii) Post-Employment Benefits:
(a) Defined contribution plans
Defined contribution plans are, Government administered Provident Fund
Scheme and Government administered Pension Fund Scheme for all
employees and Superannuation scheme for eligible employees. The
Company's contribution to defined contribution plans are recognized in
the profit and loss account in the financial year to which they relate.
The interest to the beneficiaries every year is being notified by the
Government.
(b) Defined benefit plans
(i) Defined benefit gratuity plan
The Company operates a defined benefit gratuity plan for employees.
The cost of providing defined benefits is determined using the
Projected Unit Credit Method with actuarial valuations being carried
out at each balance sheet date. Past service cost is recognized
immediately to the extent that the benefits are already vested, else is
amortised on a straight-line basis over the average period until the
amended benefits become vested.
The defined benefit obligations recognized in the balance sheet
represents the present value of the defined benefit obligation as
adjusted for unrecognized actuarial gains and losses and unrecognized
past service costs, and 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 unrecognized past service cost plus the present value of available
refunds and reductions in future contributions to the plan.
(iii) Other long term employee benefits
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 leaves. 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.
10. Provision for Taxation
Income tax expense comprises of current tax (i.e. amount of tax for the
period determined in accordance with the Income Tax Act, 1961),
deferred tax charge or credit (reflecting the tax effects of timing
differences between accounting income and taxable income for the
period) and fringe benefit tax (computed in accordance with the
relevant provisions of the Income tax Act, 1961).
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognized using the tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realised in future;
however, where there is unabsorbed depreciation or carry forward loss
under taxation laws, deferred tax assets are recognized only if there
is a virtual certainty of realisation of such assets. Deferred tax
assets are reviewed as at each balance sheet date to reassess
realisation.
11. Provisions and Contingencies
The company creates a provision when there exists a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which likelihood of
outflow of resources is remote, no provision or disclosure is made.
12. Earnings per share
The basic and diluted earnings per share ("EPS") is computed by
dividing the net profit after tax for the year by weighted average
number of equity shares outstanding during the year.
13. Proposed Dividend
Dividend if any recommended by the Board of Directors is provided for
in the accounts, pending approval at the Annual General Meeting.
Mar 31, 2011
1. Basis of preparation of financial statement
(a) Basis of Accounting:
The financial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting to comply
with the accounting standards prescribed in the Companies (Accounting
Standards) Rules, 2006 and with the relevant provisions of the
Companies Act, 1956.
(b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) in India requires Management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosures of contingent liabilities on
the date of financial statements.
2. Fixed Assets
All the fixed assets are stated at historical cost. In respect of
Assets acquired under new project/ expansion/ restructuring, interest
cost on borrowings and other related expenses during trial runs and
upto satisfactory commencement of commercial production have been
capitalised to Plant & Machinery and any subsidy given for a specific
asset is reduced from cost. The Accounting Standard -10 of the
Institute of Chartered Accountants of India has been compiled with in
this respect.
3. Depreciation
Depreciation has been provided net of reversal of excess provision if
any on straight line method on all fixed assets except Leasehold land
at the rates specified in Schedule XIV to the Companies Act, 1956.
Premium on lease hold land is amortised over the period of lease.
Intangible assets are amortised over their estimated useful life.
4. Lease Accounting
Lease rentals on assets taken on lease are recognized as expense in the
statement of profit and loss account on an accrual basis over the lease
term.
5. Inventory
a) Raw materials, work in progress, finished goods, packing materials,
stores, spares, traded goods and consumables are carried at the lower
of cost and net realisable value. The comparison of cost and net
realisable value is made on an item-by-item basis. Damaged,
unserviceable and inert stocks are suitably depreciated.
b) In determining cost of raw materials, packing materials, traded
goods, stores, spares and consumables, weighted average cost 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.
c) Cost of finished goods and work-in-process includes the cost of raw
materials, packing materials, an appropriate share of fixed and
variable production overheads, excise duty as applicable 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.
6. Investments
Long term investments are carried at cost. Provision for diminution in
the value of long term investments is made
only if such a decline is not temporary in the opinion of the
management. Short term investments are carried at lower of cost and
fair value. The comparison of cost and fair value is done separately in
respect of each category of investments.
Profit and loss on sale of investments is determined on a first in
first out (FIFO) basis.
7. Revenue Recognition
Revenue is recognized only when there is no significant uncertainty as
to the measurability / collectability of amount.
8. Transactions in Foreign Exchange
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. Exchange differences
arising on foreign exchange transactions settled during the year are
recognized in the Profit and loss account of the year.
Monetary assets and liabilities denominated in foreign currencies,
which are outstanding as at the year end are translated at the closing
exchange rate and the resultant exchange differences are recognized in
the Profit and loss account.
The premium or discount on forward exchange contracts is recognized
over the period of the contracts in the profit and loss account.
9. Employee Benefits
(i) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short term employee benefits and they are
recognized in the period in which the employee renders the related
service. The Company recognises the undiscounted amount of short term
employee benefits expected to be paid in exchange for services rendered
as a liability (accrued expense) afiter deducting any amount already
paid.
(ii) Post-Employment Benefits:
(a) Defned contribution plans
Defned contribution plans are, Government administered Provident Fund
Scheme and Government administered Pension Fund Scheme for all
employees and Superannuation scheme for eligible employees. The
Companys contribution to defned contribution plans are recognized in
the profit and loss account in the financial year to which they relate.
The interest to the beneficiaries every year is being notified by the
Government.
(b) Defined benefit plans
(i) Defined benefit gratuity plan
The Company operates a defned benefit gratuity plan for employees.
The cost of providing defned benefits is determined using the Projected
Unit Credit Method with actuarial valuations being carried out at each
balance sheet date. Past service cost is recognized immediately to the
extent that the benefits are already vested, else is amortised on a
straight-line basis over the average period until the amended benefits
become vested.
The defned benefit obligations recognized in the balance sheet
represents the present value of the defned benefit obligation as
adjusted for unrecognized actuarial gains and losses and unrecognized
past service costs, and as reduced by the fair value of plan assets, if
applicable. Any defned benefit asset (negative defned benefit
obligations resulting from this calculation) is recognized representing
the unrecognized past service cost plus the present value of available
refunds and reductions in future contributions to the plan.
(iii) Other long term employee benefits
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 leaves. 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.
10. Provision for Taxation
Income tax expense comprises of current tax (i.e. amount of tax for the
period determined in accordance with the Income Tax Act, 1961),
deferred tax charge or credit (refecting the tax effects of timing
differences between accounting income and taxable income for the
period) and fringe benefit tax (computed in accordance with the
relevant provisions of the Income tax Act, 1961).
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognized using the tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realised in future;
however, where there is unabsorbed depreciation or carry forward loss
under taxation laws, deferred tax assets are recognized only if there
is a virtual certainty of realisation of such assets. Deferred tax
assets are reviewed as at each balance sheet date to reassess
realisation.
11. Provisions and Contingencies
The Company creates a provision when there exists a present obligation
as a result of a past event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there
is a possible obligation or a present obligation that may, but probably
will not require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which likelihood of
outflow of resources is remote, no provision or disclosure is made.
12. Earnings per share
The basic and diluted earnings per share ("EPS") is computed by
dividing the net profit afiter tax for the year by weighted average
number of equity shares outstanding during the year.
13. Proposed Dividend
Dividend if any recommended by the Board of Directors is provided for
in the accounts, pending approval at the Annual General Meeting.
Mar 31, 2010
(a) Basis of Accounting
The fnancial statements have been prepared and presented under the
historical cost convention on accrual basis of accounting to comply
with the accounting standards prescribed in the Companies (Accounting
Standards) Rules, 2006 and with the relevant provisions of the
Companies Act, 1956.
(b) Use of Estimates
The preparation of fnancial statements in conformity with generally
accepted accounting principles (GAAP) in India requires Management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosures of contingent liabilities on
the date of fnancial statements.
2. Fixed Assets
All the fixed assets are stated at historical cost. In respect of
Assets acquired under new project/ expansion/ restructuring, interest
cost on borrowings and other related expenses during trial runs and
upto satisfactory commencement of commercial production have been
capitalised to Plant & Machinery and any subsidy given for a specifc
asset is reduced from cost. The Accounting Standard -10 of the
Institute of Chartered Accountants of India has been compiled with in
this respect.
3. Depreciation
Depreciation has been provided net of reversal of excess provision if
any on straight line method on all fixed assets except Leasehold land
at the rates specifed in Schedule XIV to the Companies Act, 1956.
Premium on lease hold land is amortised over the period of lease.
Intangible assets are amortised over their estimated useful life.
4. Lease Accounting
Lease rentals on assets taken on lease are recognized as expense in the
statement of profit and loss account on an accrual basis over the lease
term.
5. Inventory
a) Raw materials, work in progress, fnished goods, packing materials,
stores, spares, traded goods and consumables are carried at the lower
of cost and net realisable value. The comparison of cost and net
realisable value is made on an item-by-item basis. Damaged,
unserviceable and inert stocks are suitably depreciated.
b) In determining cost of raw materials, packing materials, traded
goods, stores, spares and consumables, weighted average cost 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.
c) Cost of fnished goods and work-in-process includes the cost of raw
materials, packing materials, an appropriate share of fixed and
variable production overheads, excise duty as applicable 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.
6. Investments
Long term investments are carried at cost. Provision for diminution in
the value of long term investments is made only if such a decline is
not temporary in the opinion of the management. Short term investments
are carried at lower of cost and fair value. The comparison of cost and
fair value is done separately in respect of each category of
investments.
Profit and loss on sale of investments is determined on a frst in frst
out (FIFO) basis.
7. Revenue Recognition
Revenue is recognized only when there is no signifcant uncertainty as
to the measurability / collectability of amount.
8. Transactions in Foreign Exchange
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. Exchange differences
arising on foreign exchange transactions settled during the year are
recognized in the profit and loss account of the year.
Monetary assets and liabilities denominated in foreign currencies,
which are outstanding as at the year end are translated at the closing
exchange rate and the resultant exchange differences are recognized in
the profit and loss account.
The premium or discount on forward exchange contracts is recognized
over the period of the contracts in the profit and loss account.
9. Employee Benefits
(i) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classifed as short term employee benefits and they are
recognized in the period in which the employee renders the related
service. The Company recognises the undiscounted amount of short term
employee benefits expected to be paid in exchange for services rendered
as a liability (accrued expense) afiter deducting any amount already
paid.
(ii) Post-Employment Benefits:
(a) Defned contribution plans
Defned contribution plans are Government administered Provident Fund
Scheme and Government administered Pension Fund Scheme for all
employees and Superannuation scheme for eligible employees. The
Companys contribution to defned contribution plans are recognized in
the profit and loss account in the fnancial year to which they relate.
The interest to the benefciaries every year is being notifed by the
Government.
(b) Defned benefit plans
(i) Defned benefit gratuity plan
The Company operates a defned benefit gratuity plan for employees.
The cost of providing defned benefits is determined using the Projected
Unit Credit Method with actuarial valuations being carried out at each
balance sheet date. Past service cost is recognized immediately to the
extent that the benefits are already vested, else is amortised on a
straight-line basis over the average period until the amended benefits
become vested.
The defned benefit obligations recognized in the balance sheet
represents the present value of the defned benefit obligation as
adjusted for unrecognized actuarial gains and losses and unrecognized
past service costs and as reduced by the fair value of plan assets, if
applicable. Any defned benefit asset (negative defned benefit
obligations resulting from this calculation) is recognized representing
the unrecognized past service cost plus the present value of available
refunds and reductions in future contributions to the plan.
(iii) Other long term employee benefits
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 leaves. 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.
10. Provision for Taxation
Income tax expense comprises of current tax (i.e. amount of tax for the
period determined in accordance with the Income Tax Act, 1961),
deferred tax charge or credit (refecting the tax effects of timing
differences between accounting income and taxable income for the
period) and fringe benefit tax (computed in accordance with the
relevant provisions of the Income tax Act, 1961).
The deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognized using the tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax assets are recognized only to the extent there is
reasonable certainty that the assets can be realised in future;
however, where there is unabsorbed depreciation or carry forward loss
under taxation laws, deferred tax assets are recognized only if there
is a virtual certainty of realisation of such assets. Deferred tax
assets are reviewed as at each balance sheet date to reassess
realisation.
11. Provisions and Contingencies
The company creates a provision when there exists a present obligation
as a result of a past event that probably requires an outfow of
resources and a reliable estimate can be made of the amount of the
obligation. 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 outfow of resources. When there is a possible
obligation or a present obligation in respect of which likelihood of
outfow of resources is remote, no provision or disclosure is made.
12. Earnings per share
The basic and diluted earnings per share ("EPS") is computed by
dividing the net profit afiter tax for the year by weighted average
number of equity shares outstanding during the year.
13. Proposed Dividend
Dividend if any recommended by the Board of Directors is provided for
in the accounts, pending approval at the Annual General Meeting.
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