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Accounting Policies of Nirlon Ltd. Company

Mar 31, 2018

Notes to Financial Statements as at and for the Year ended March 31, 2018

Background of the Company

Nirlon Limited is a Company limited by shares, incorporated and domiciled in India. The Company is engaged in development and management of the industrial park/ information technology (IT) park. The Registered Office of the Company is located at Pahadi Village, off the Western Express Highway, Goregaon (East), Mumbai.

Note 1: Significant Accounting Policies followed by the Company

(a) Basis of preparation

(i) Compliance with Ind AS

These Financial Statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

The Financial Statements up to year ended March

31, 2017 were prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act.

These Financial Statements for the Year ended March 31, 2018 are the first Financial Statements, which have been prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standard) Rules, 2015.

Refer note 42 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.

The Financial Statements have been prepared on a historical cost basis, except for the following assets and liabilities:

i) Certain financial assets and liabilities that are measured at fair value

ii) Assets held for sale-measured at fair value less cost to sell.

The financial statements are presented in Indian Rupees (‘INR’) and all values are rounded to nearest lakh (INR 00,000), except when otherwise indicated.

(ii) Current versus Non-current classification

The Company presents assets and liabilities in the Balance Sheet based on current / non-current classification. An asset is treated as current when it is:

- Expected to be realized or intended to be sold or consumed in normal operating cycle

- Held primarily for purpose of trading

- Expected to be realized within twelve months after the reporting period, or

- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

- It is expected to be settled in normal operating cycle

- It is held primarily for purpose of trading

- It is due to be settled within twelve months after the reporting period, or

- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

(b) Property, plant & equipment

All items of property, plant and equipment are stated at historical cost less depreciation and impairment, if any. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and 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.

Capital work- in- progress includes cost of property, plant and equipment under installation / under development as at the Balance Sheet date.

On transition to Ind AS

Under the previous GAAP (Indian GAAP), property plant and equipment was carried in the Balance Sheet at cost, less accumulated depreciation and accumulated impairment losses, if any. On the date of transition to Ind AS, the Company has elected to continue with the carrying value of property plant and equipment as deemed cost as at April 1, 2016.

Depreciation methods, estimated useful lives and residual value

Depreciation on property, plant & equipment has been provided on written down value method over the estimated useful lives of the assets, based on technical evaluation done by management’s expert, which are lower than those specified by Schedule II to the Companies Act, 2013, in order to reflect the actual usage of the assets.

The residual values are not more than 5% of the original cost of the asset. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Profit and Loss.

(c) Investment properties

Property that is held for long-term rental yields or for capital appreciation or for both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction cost and where applicable borrowing costs. Subsequent expenditure is capitalised to assets carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance cost are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.

Depreciation methods, estimated useful lives and residual value

Investment property consists of Freehold Land, Building (including Other Assets such as Plant & Equipment, Office Equipment and Furniture & Fixture), which is depreciated using the written down value method over the estimated useful lives of the assets, based on technical evaluation done by management’s expert, which are lower than those specified by Schedule II to the Companies Act, 2013, in order to reflect the actual usage of the assets.

* Other assets mainly comprise of Plant & Equipment, Office Equipment and Furniture & Fixture forming an integral part of Building.

The residual values are not more than 5% of the original cost of the asset. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Profit and Loss.

On transition to Ind AS

Under the previous GAAP (Indian GAAP), building and other assets (plant & equipment, furniture & fixtures, office equipment,) was carried in the balance sheet at cost, less accumulated depreciation and accumulated impairment losses, if any and freehold land was carried at revalued amount. For investment property, Ind AS 101 gives the option either to carry the previous GAAP carrying value or apply the provisions of Ind AS 40 retrospectively. The Company has opted to apply Ind AS 40 retrospectively as at the transition date.

(d) Intangible Assets

Intangible assets are stated at cost less accumulated amortisation and impairment losses, if any. Cost comprises the acquisition price and any attributable / allocable incidental cost of bringing the asset to its working condition for its intended use.

On transition to Ind AS

On the date of transition to Ind AS, the Company has elected to continue with the carrying value of intangible assets recognised as at April 1, 2016 measured as per previous GAAP and use that carrying value as the deemed cost of intangible assets.

Amortisation

Intangible assets are amortised on written down value method over the estimated useful life. The method of amortisation and useful life is reviewed at the end of each accounting year with the effect of any changes in the estimate being accounted for on a prospective basis.

Useful life considered for amortisation of intangible assets for various assets class are as follows :

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.

(e) 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) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or Companies of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

(f) Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

(i) Financial Assets

The Company classifies its financial assets in the following measurement categories:

- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

- those measured at amortised cost

The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows.

Initial Recognition & 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

For purposes of subsequent measurement financial assets are classified in following categories:

- Debt instruments at fair value through profit and loss (FVTPL)

- Debt instruments at fair value through other comprehensive income (FVTOCI)

- Debt instruments at amortised cost

- Equity instruments

Where assets are measured at fair value, gains and losses are either recognised entirely in the statement of profit and loss (i.e. fair value through profit or loss), or recognised in other comprehensive income (i.e. fair value through other comprehensive income). For investment in debt instruments, this will depend on the business model in which the investment is held. For investment in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for equity instruments at FVTOCI.

Debt instruments at amortised cost

A Debt instrument is measured at amortised cost if both the following conditions are met:

a) Business Model Test: The objective is to hold the debt instrument to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realize its fair value changes).

b) Cash flow characteristics test: The contractual terms of the debt instrument give rise on specific dates to cash flows that are solely payments of principal and interest on principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of EIR. EIR is the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset.

Debt instruments at fair value through OCI

A Debt instrument is measured at fair value through other comprehensive income if following criteria are met:

a) Business Model Test: The objective of financial instrument is achieved by both collecting contractual cash flows and for selling financial assets.

b) Cash flow characteristics test: The contractual terms of the debt instrument give rise on specific dates to cash flows that are solely payments of principal and interest on principal amount outstanding.

Debt instrument included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the other comprehensive income (OCI), except for the recognition of interest income, impairment gains or losses and foreign exchange gains or losses which are recognised in Statement of Profit and Loss. On derecognition of asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to Statement of Profit and Loss. Interest earned whilst holding FVTOCI financial asset is reported as interest income using the EIR method.

Debt instruments at FVTPL

FVTPL is a residual category for financial instruments. Any financial instrument which does not meet the criteria for amortised cost or FVTOCI is classified as at FVTPL. A gain or loss on a Debt instrument that is subsequently measured at FVTPL and is not a part of a hedging relationship is recognised in statement of profit or loss and presented net in the Statement of Profit and Loss within other gains or losses in the period in which it arises. Interest income from these Debt instruments is included in other income.

Equity Instruments

For all equity instruments, the Company may make an irrevocable election to present in other comprehensive income all subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.

If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity. Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the Statement of Profit and loss.

Derecognition

A financial asset is derecognised only when:

- the rights to receive cash flows from the asset have expired, or

- the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass through” arrangement and either:

(a) The Company has transferred the rights to receive cash flows from the financial assets or

(b) The Company has retained the contractual right to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the Company has transferred an asset, the Company evaluates whether it has transferred substantially all the risks and rewards of the ownership of the financial assets. In such cases, the financial asset is derecognised. Where the entity has not transferred substantially all the risks and rewards of the ownership of the financial assets, the financial asset is not derecognised.

Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 40 details how the Company determines whether there has been a significant increase in credit risk.

For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to e recognise from initial recognition of the receivables.

(ii) Financial Liabilities

The measurement of financial liabilities depends on their classification, as described below:

Trade and other payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 120 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at fair value and subsequently measured at amortised cost using EIR method.

Borrowings

Borrowings are initially recognised at fair value, net of transaction cost incurred. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortization process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the statement of profit and loss.

Lease Deposits

Lease deposits received are financial liability and need to be measured at fair value on initial recognition. The difference between the fair value and the nominal value of deposits is considered as rent in advance and recognised over the lease term on a straight line basis. Unwinding of discount is treated as interest expense (finance cost) for deposits received and is accrued as per the EIR method.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.

(iii) 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 re-measured at their fair value with changes in fair value recognised in the Statement of Profit and Loss in the period when they arise.

(iv) 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, to realize the assets and settle the liabilities simultaneously.

(g) Fair Value Measurement

The Company measures financial instruments at fair value at each balance sheet date.

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.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

All assets and liabilities for which fair value is measured or disclosed in the Financial Statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

- Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

- Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

- Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

(h) Taxes

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 at the end of the reporting period. The Company periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretations. It establishes provisions where appropriate on the basis of amount expected to be paid to tax authorities.

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 statement. 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 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 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.

(i) Employee Benefits

(i) Short-term obligations

Liabilities for wages and salaries, including nonmonetary 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) Other long-term employee benefit obligations

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 an 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.

(iii) Post-employment obligations

The Company operates the following postemployment schemes:

(a) defined benefit plans such as gratuity and

(b) defined contribution plans such as provident fund, Employee State Insurance Corporation(ESIC).

Gratuity Obligations

The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit 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. They are included in retained earnings in the statement of changes in equity and in the balance sheet.

Defined Contribution plans

Defined Contribution Plans such as Provident Fund and ESIC are charged to the Statement of Profit and Loss as an expense, when an employee renders the related services. If the contribution payable to scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset.

(j) Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes 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.

(k) Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing:

- the profit attributable to owners of the Company

- by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares.

Diluted earnings per share

Diluted earnings per share adjust the figures used in the determination of basic earnings per share to take into account:

- the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

(l) Assets held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.

An impairment loss is recognised for any initial or subsequent write down of the asset to fair value less cost to sell. A gain is recognised for any subsequent increase in fair value less cost to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised at the date de-recognition.

Non-current assets are not depreciated or amortised while they are classified as held for sale. Assets and liabilities classified as held for sale are presented separately as current items in the balance sheet.

(m) Borrowing Cost

General and specific borrowing costs that are directly attributable to the acquisition/construction of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowing pending their expenditure on qualifying assets is deducted from the borrowing cost eligible for capitalisation.

Other borrowing costs are expensed in the period in which they are incurred.

(n) Foreign currency translation

Functional and presentation currency

Items included in the Financial Statements of the Company are measured using the currency of the primary economic environment in which the entity operates (i.e. functional currency). The Financial Statements are presented in Indian rupee (INR), which is Company’s functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates are generally recognised in profit or loss.

Foreign exchange differences regarded as an adjustment to borrowing cost are presented in the Statement of Profit and Loss, within finance costs. All other foreign exchange gains and losses are presented in the Statement of profit and loss on a net basis within other income or other expenses.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

(o) Provisions & contingent liabilities 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 the amount can be reliably estimated. 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

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 or a reliable estimate of the amount cannot be made. 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.

(p) Leases

Company as a 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 or 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.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognised as an expense in the Statement of Profit or Loss account 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.

Company as a lessor

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. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

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.

(q) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. Refer Note 35 for segment information presented.

(r) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. 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.

Rental Income

License fee/Lease income and income incidental to it, arising from operating leases on investment properties is accounted for on a straight-line basis over the lease terms, unless there is another systematic basis which is more representative of the time pattern of the lease.

Revenue from common area maintenance service is recognised at value of service and is disclosed net of indirect taxes, if any.

Other operating revenue comprises of income from car parking charges and other recoveries from customers as per the terms and conditions agreed with them.

Interest income

Interest income from debt instruments is recognised using the effective interest rate method.

Insurance claims and scrap sales are accounted for in the books on an accrual basis.

(s) ESOP

The Company offers ESOP under which options to subscribe for the Company’s share have been granted to certain employees and senior management. The shares have been issued at fair value as on the grant date. These shares are vested before the transition date.

Employee welfare trust financed through interest free loan by the Company and warehousing the shares which have not vested yet, for distribution to employees of the Company, has been consolidated on line by line basis by reducing from equity share capital of the Company the face value of such treasury shares held by the trust.

(t) 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.

(u) Critical estimates and judgements

The preparation of Financial Statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgments is included in relevant notes together with information about the basis of calculation for each affected line item in the Financial Statements.

The areas involving critical estimates or judgments are:

- Estimation of defined benefit obligation (Note 37)

- Estimation of Useful life of Property, plant and equipment, Investment property and intangibles (Note 2, 3 and 4)

- Estimation of taxes (Note 7, 18 and 30)

- Estimation of provision and contingent liabilities (Note 17 and 32)

- Estimation of fair value measurement of financial assets and liabilities (Note 39)

Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the group and that are believed to be reasonable under the circumstances.

(v) Standard issued but not effective

The amendments to standards that are issued, but not yet effective, up to the date of issuance of the Company’s Financial Statements are disclosed below.

Ind AS 115 - Revenue from Contracts with Customers

Ind AS 115, is effective for periods beginning on or after April 01, 2018. Ind AS 115 sets out the requirements for recognising revenue that apply to all contracts with customers (except for contracts that are within the scope of the Standards on leases, insurance contracts and financial instruments). Ind AS 115 replaces the previous revenue Standards: Ind AS 18 Revenue and Ind AS 11 Construction Contracts, and the related appendices.

The standard establishes a comprehensive framework for determining when to recognise revenue and how much revenue to recognise. Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. The core principle in that framework is that a Company should recognise revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the fair value of consideration to which the Company expects to be entitled in exchange for those goods or services.


Mar 31, 2017

1.1 BASIS FOR PREPARATION OF FINANCIAL STATEMENTS :

The Financial Statements are prepared in accordance with Generally Accepted Accounting Principles (‘GAAP’) in India under the historical cost convention on accrual basis except if specifically stated otherwise. These Financial Statements have been prepared to comply in all material respects with the Accounting Standards specified under section 133 of the Companies Act, 2013 read with rules 7 of Companies (Accounts) Rules, 2014.

1.2 ACCOUNTING POLICIES :

a. Fixed Assets :

Fixed Assets are stated at cost or revalued amount wherever applicable. Cost comprises of cost of acquisition, cost of improvements, borrowing costs and any other cost attributable in bringing the assets to the condition required for their intended use.

b. Depreciation and Amortization :

i. Depreciation on fixed assets has been provided on written down value method based on the useful life specified in Schedule II of the Companies Act, 2013.

ii. Intangible Assets are amortized over the estimated useful life of the asset.

c. Borrowing Cost :

Borrowing costs include interest and other charges incurred in connection with the borrowing of funds and is recognized as an expense for the year in which it is incurred, except for borrowing costs attributable to the acquisition/construction of qualifying assets, and incurred till all the activities necessary to prepare the qualifying asset for its intended use are complete, which are capitalized as the cost of that asset

d. Forward Contracts:

The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates: In relation to forward contracts entered into to hedge the underlying liability pertaining to capital projects till the time all the activities necessary to prepare the qualifying asset for its intended use, the premium or discount arising at the inception of such contracts are adjusted towards the cost of the project. For forward contracts taken thereafter, the premium or discount arising at the inception of such contracts is amortized as expense or income over the life of the contract.

e. Taxes on Income :

Current Tax

Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961.

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on accounting for Credit Available in respect of Minimum Alternative TAX under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as ‘MAT Credit Entitlement’.

Deferred Tax

Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted on the balance sheet date. Deferred tax assets in a situation where unabsorbed depreciation and carry forward business loss exists, are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax assets, other than in a situation of unabsorbed depreciation and carry forward business loss, are recognized only if there is reasonable certainty that they will be realized.

f. Employee Stock Compensation Cost :

The Company measures the compensation cost relating to employee stock options in accordance with the SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share Based Payment. The cost of equity settled transactions is measured using the intrinsic value method. The compensation cost, if any is amortized over the vesting period.

g. Foreign Currency Transactions :

i. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii. Monetary items denominated in foreign currencies at the yearend are restated at year end rates.

iii. Non monetary foreign currency items are carried at cost.

iv. Any income or expense on account of exchange difference either on settlement or on translation is recognized in the statement of profit and loss.

h. Employee Benefits :

i. Defined Benefit Plan :

The Company provides’ for gratuity liability based on the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

ii. Defined Contribution Plans :

Company’s contribution paid/payable for Provident Fund, ESIC and Pension Fund for the year is recognized in the statement of Profit and Loss.

iii. Long Term Employee benefits :

Long term compensated absences are provided as per the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

iv. Short Term Employee benefits :

Short term benefits are recognized as an expense in the statement of profit and loss of the year in which the related services are rendered.

v. Actuarial gains/losses :

Actuarial gains/losses are immediately recognized in the statement of profit and loss and are not deferred.

i. Revenue Recognition:

i. License fee income and income incidental to it, are accounted for on an accrual basis .

ii. Insurance claims and scrap sales are accounted for in the books on an accrual basis.

iii. Interest income is accounted on an accrual basis. j. Leave & License :

Leave & License payments are recognized as an expense in the statement of profit and loss.

Leave & License income is recognized based on the terms of the agreement.

Initial direct costs incurred specifically to earn revenue from Leave & License agreements are amortized over the lock in period of respective licensees.

b. Rights, Preferences and Restrictions attached to the shares

Equity Shares

i. The Company has only one class of equity share having a par value of ''10/-.

Each holder of equity shares is entitled to one vote per share. The Shareholders have the right to receive interim dividends declared by the Board of Directors and final dividends proposed by the Board of Directors and approved by the Shareholders.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the Shareholders.

The Shareholders have all other rights as available to equity Shareholders as per the provisions of the Companies Act, 2013, read together with the Memorandum of Association & Articles of Association of the Company, as applicable.

ii. During the financial year 2013-14, the Company had allotted 1,76,34,798 equity shares of ''10/- each @ premium of ''33.76 per share to Promoters and Others on a preferential basis in compliance with SEBI (ICDR) Regulations.

d. Share Issued to Nirlon Employees Stock Option Trust

In accordance with Nirlon ESOP 2012, during the financial year 2013-14 the Company had issued 7,17,656 shares of ''10/- each at a premium of ''31.30 per share to Nirlon Employees Stock Option Trust. As on March 31, 2017, 7,08,000 (previous year 6,80,000) options have been exercised equal to 7,08,000 number of shares. Nirlon ESOP Plan 2012

Pursuant to the Resolution passed by the Shareholders of the Company by way of postal ballot on May 23, 2012, the Company granted 7,15,000 stock options to its employees at an issue price of ''41.30 per share on May 30, 2012 in accordance with Nirlon ESOP 2012. Each option entitles the holder to purchase one Equity Share of the Company at the issue price.

The weighted average contractual life for the stock options was 5 years and they vested at the rate of 15%, 20%, 25%, 40% at the end of 15 months, 30 months, 42 months, 54 months respectively from the date of grant. During the year 2014-15, the Nomination and Remuneration committee has vide its Resolution dated February 9, 2015, accelerated the vesting period for all the unvested options to February 15, 2015 and accelerated the exercise period for all the options upto September 30, 2016. Accordingly all the options granted have been already vested. Further, the Board of Directors vide their circular Resolution dated October 8, 2016 extended the exercise period for all the options granted upto September 30, 2017.

Details regarding the number of stock options are as follows :

a. The Board of Directors, at their Meeting held on April 27, 2017 have proposed a dividend of 7.50 % i.e '' 0.75 per equity share on the face value of '' 10/- (previous year Rs, 0.75 per equity share of Rs, 10/- each). The proposal is subject to the approval of Shareholders at the ensuing Annual General Meeting. Dividend amounting to Rs, 675.88 lakh (previous year Rs, 675.88 lakh) and dividend distribution tax thereon amounting to Rs, 137.62 lakh (previous year Rs,137.62 lakh) is appropriated during the year.

The loan from HDFC Ltd is secured by a charge in the nature of an equitable mortgage by deposit of title deeds of land situated at Goregaon, Mumbai together with buildings and structures standing thereon, both present and future, and right, title and interest in the license fee receivables.

# The amount of each installment is subject to change based on changes in Interest rates & other factors.

* The terms of repayment for Loan 3 will be finalized once the same is securitized, as done for Loans 1 & 2.

In respect of Deferred tax assets on unabsorbed depreciation, the same has been recognized based on the current tax laws entailing the benefit over the lifetime of the Company, against any taxable source of income.

The Buyers Credit facility provided by HDFC Bank is repayable on demand. The amount is secured by way of earmarking, facilities to this extent, (vide a letter of undertaking from HDFC Ltd to HDFC Bank) out of the total facility granted by HDFC Ltd to the Company. Refer Note 2.3 for security provided to HDFC Ltd.

4. Buildings include building constructed on Leasehold Land at Worli, Mumbai having a written down value of '' 47.60 lakh (Previous year ''56.62 lakh), being the share of the Company in the property which is jointly owned with Nirlon Foundation Trust

5. Based on valuation reports submitted by I.H. Shah & Associates, Approved Valuers, the land at Goregaon had been revalued on April 1, 1984, June 30, 2006 and March 31, 2012 on the basis of assessment of their market value

6. Amount written up on revaluation of freehold land (including FSI purchased) as on March 31, 2017 ''1,17,537.12 lakh (previous year ''1,17,537.12 lakh)

a. Property tax write back is on account of the earlier years on account of assessment as per Capital Value system.

b. Mesne profit received from Pfizer Ltd. under the consent terms filed before the Small Causes Court Rs,163.70 lakh less expenses incurred thereon of Rs,30.20 lakh.

c. Excise duty of Rs,110.53 lakh and interest thereon of Rs,236.59 lakh based on the Supreme Court order received during the year 2015-16 in relation to manufacture of Nylon Tyrecord Yarn and Fabrics for the period April 1999 to June 2000.

d. Liquidated damages of Rs,13.45 lakh and interest thereon of Rs,5.35 lakh on delayed payment of Provident Fund dues for the period January 2000 to February 2007.


Mar 31, 2016

1.1 Basis for preparation of financial statements :

The financial statements are prepared in accordance with Generally Accepted Accounting Principles (‘GAAP'') in India under the historical cost convention on accrual basis except if specifically stated otherwise. These financial statements have been prepared to comply in all material respects with the Accounting Standards specified under section 133 of the Companies Act, 2013 read with rules 7 of Companies (Accounts) Rules, 2014.

1.2 Accounting Policies :

a. Fixed Assets :

Fixed Assets are stated at cost or revalued amount wherever applicable. Cost comprises of cost of acquisition, cost of improvements, borrowing costs and any other cost attributable in bringing the assets to the condition required for their intended use.

b. Depreciation and Amortization :

i) Depreciation on fixed assets has been provided on the written down value method based on the useful life specified in Schedule II of the Companies Act, 2013.

ii) Intangible Assets are amortized over the estimated useful life of the asset.

c. Borrowing Cost :

Borrowing costs include interest and other charges incurred in connection with the borrowing of funds and is recognized as an expense for the year in which it is incurred, except for borrowing costs attributable to the acquisition / construction of qualifying assets, and incurred till all the activities necessary to prepare the qualifying asset for its intended use are complete, which are capitalized as the cost of that asset.

d. Forward Contracts:

The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates :

In relation to forward contracts entered into to hedge the underlying liability pertaining to capital projects till the time all the activities necessary to prepare the qualifying asset for its intended use, the premium or discount arising at the inception of such contracts are adjusted towards the cost of the project. For forward contracts taken thereafter, the premium or discount arising at the inception of such contracts is amortized as expense or income over the life of the contract.

e. Taxes on Income Current Tax

Provision for Income Tax is determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on accounting for Credit Available in respect of Minimum Alternative TAX under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as “MAT Credit Entitlement”.

Deferred Tax

Deferred tax is recognized on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted on the balance sheet date.

Deferred tax assets in a situation where unabsorbed depreciation and carry forward business loss exists, are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax assets, other than in a situation of unabsorbed depreciation and carry forward business loss, are recognized only if there is reasonable certainty that they will be realized.

f. Employee Stock Compensation Cost :

The Company measures the compensation cost relating to employee stock options in accordance with the SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share Based Payment. The cost of equity settled transactions is measured using the intrinsic value method. The compensation cost, if any is amortized over the vesting period.

g. Foreign Currency Transactions :

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii) Monetary items denominated in foreign currencies at the yearend are restated at year end rates.

iii) Non monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the statement of profit and loss.

h. Employee Benefits :

i) Defined Benefit Plan :

The Company provides for gratuity liability based on the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

ii) Defined Contribution Plans :

Company''s contribution paid / payable for Provident Fund, ESIC and Pension Fund for the year is recognized in the statement of Profit and Loss.

iii) Long Term Employee benefits :

Long term compensated absences are provided as per the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

iv) Short Term Employee benefits :

Short term benefits are recognized as an expense in the statement of profit and loss of the year in which the related services are rendered.

v) Actuarial gains / losses :

Actuarial gains / losses are immediately recognized in the statement of profit and loss and are not deferred.

i. Revenue Recognition:

i) License fee income and income incidental to it is accounted for on an accrual basis.

ii) Insurance claims and scrap sales are accounted for in the books on an accrual basis.

iii) Interest income is accounted on an accrual basis. j. Leave & License :

Leave & License payments are recognized as an expense in the statement of profit and loss.

Leave & License income is recognized based on the terms of the agreement.

Initial direct costs incurred specifically to earn revenue from Leave & License agreements are amortized over the lock in period of respective licensees.

b. Rights, Preferences and Restrictions attached to the shares Equity shares

i) The Company has only one class of equity shares having a par value of Rs, 10 / -.

Each holder of equity shares is entitled to one vote per share. The shareholders have the right to receive interim dividends declared by the Board of Directors and final dividend proposed by the Board of Directors and approved by the shareholders.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders. The shareholders have all other rights as are available to equity shareholders as per the provisions of the Companies Act, 2013, read together with the Memorandum of Association & Articles of Association of the Company, as applicable.

d. Shares Issued to Nirlon Employees Stock Option Trust

In accordance with Nirlon ESOP 2012, during the financial year 2013-14 the Company had issued 7,17,656 shares of Rs, 10 each at a premium of Rs, 31.3 per share to the Nirlon Employees Stock Option Trust. The Company had provided a loan of Rs, 296.39 lakh to the Trust for subscribing such shares. As on 31st March, 2016, 6,80,000 (previous year 6,80,000) options have been exercised equal to 6,80,000 number of shares. In accordance with the provision of the Guidance Note on Accounting for Employee Share-based payments, the outstanding loan amount given to the Trust is disclosed as recoverable under the head ‘Share Capital & Securities Premium Reserves''.

Nirlon ESOP Plan 2012

Pursuant to the Resolution passed by the Shareholders of the Company by way of postal ballot on May 23, 2012, the Company granted 7,15,000 stock options to its employees at an issue price of Rs, 41.30 per share on May 30, 2012 in accordance with Nirlon ESOP 2012. Each option entitles the holder to purchase one Equity Share of the Company at the issue price.

The weighted average contractual life for the stock options was 5 years and they vested at the rate of 15%, 20%, 25%, 40% at the end of 15 months, 30 months, 42 months, 54 months respectively from the date of grant. During the year 2014-15, the Nomination and Remuneration committee has vide its Resolution dated February 9, 2015, accelerated the vesting period for all the unvested options to February 15, 2015 and accelerated the exercise period for all the options upto September 30, 2016. Accordingly all the options granted have been already vested.

(a) The Board of Directors, in their meeting held on 28th April 2016 has proposed a dividend of 7.50% i.e Rs, 0.75 per equity share on the face value of Rs, 10 / - (previous year Rs, 0.75 per equity share of Rs, 10 / - each) . The proposal is subject to the approval of shareholders at the ensuing Annual General Meeting. Dividend amounting to Rs, 675.88 lakh (previous year Rs, 675.88 lakh) and dividend distribution tax thereon amounting to Rs, 137.62 lakh (previous year Rs, 137.62 lakh) is appropriated during the year.

(b) At the AGM held on 23rd September, 2014, the shareholders approved the dividend for the year 2013-14 on a prorata basis on the equity shares issued during the year 2013-14. However, subsequently, the Bombay Stock Exchange informed the company that the dividend should not be on a prorata basis as equity shares issued during the year 2013-14 rank pari passu in all respects with the then existing equity shares of the company. Accordingly, the differential dividend of Rs, 115.33 lakh and tax thereon of Rs, 19.61 lakh aggregating to Rs, 134.94 lakh has also been appropriated during the year 2014-15 by debiting the same to surplus.

The loan from HDFC Ltd is secured by a charge in the nature of an equitable mortgage by deposit of title deeds of land situated at Goregaon, Mumbai together with buildings and structures standing thereon, both present and future, and right, title and interest in the license fee receivables.

# The amount of e ach installment is subject to change based on changes in Interest rates & other factors.

* The terms of repayment for Loan 3 will be finalised once the same is securitised, as done for Loans 1 & 2.

In respect of deferred tax assets on unabsorbed depreciation, the same has been recognized based on the current tax laws entailing the benefit over the lifetime of the Company, against any taxable source of income.

The Buyers Credit facility provided by HDFC Bank is repayable on demand. The amount is secured by way of earmarking facilities to this extent, (vide a letter of undertaking from HDFC Ltd to HDFC Bank) out of the total facility granted by HDFC Ltd to the Company. Refer Note 2.3 for security provided to HDFC Ltd.


Mar 31, 2015

A) Fixed Assets :

Fixed Assets are stated at cost or revalued amount wherever applicable. Cost comprises of cost of acquistion, cost of improvements, borrowing costs and any other cost attributable in bringing assets to the condition for their intended use.

b) Depreciation and Amortization :

i) Depreciation on fixed assets has been provided on the written down value method based on the useful life specified in Schedule II of the Companies Act, 2013.

ii) Intangible Assets are amortised over the estimated useful life of the asset.

c) Borrowing Cost :

Borrowing costs includes interest and other charges incurred in connection with the borrowing of funds and is recognised as an expense for the year in which it is incurred, except for borrowing costs attributable to the acquisition/construction of qualifying assets and incurred till all the activities necessary to prepare the qualifying asset for its intended use, which are capitalised as the cost of that asset.

d) Forward Contracts:

The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates.

In relation to forward contracts entered into to hedge the underlying liability pertaining to capital projects till the time all the activities necessary to prepare the qualifying asset for its intended use, the premium or discount arising at the inception of such contracts are adjusted towards the cost of the project. For forward contracts taken thereafter, the premium or discount arising at the inception of such contracts is amortised as expense or income over the life of the contract.

e) Taxes on Income:

Current Tax

Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on accounting for Credit Available in respect of MAT under the Income-tax Act, 1961, the said asset is created by way of credit to the Statement of Profit and Loss and shown as "MAT Credit Entitlement".

Deferred Tax

Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted on the Balance Sheet date.

Deferred tax assets in a situation where unabsorbed depreciation and carry forward business loss exists, are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax assets, other than in a situation of unabsorbed depreciation and carry forward business loss, are recognized only if there is reasonable certainty that they will be realized.

f) Employee Stock Compensation Cost :

The Company measures the compensation cost relating to employee stock options in accordance with the SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share Based Payment. The cost of equity settled transactions is measured using the intrinsic value method. The compensation cost, if any is amortised over the vesting period.

g) Foreign Currency Transactions :

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates.

iii) Non monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the statement of profit and loss.

h) Employee Benefits :

i) Defined Benefit Plan :

The Company provides' for gratuity liability based on the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

ii) Defined Contribution Plans :

The Company's contribution paid/payable for Provident Fund, ESIC and Pension Fund for the year is recognised in the Statement of Profit and Loss.

iii) Long Term Employee Benefits :

Long term compensated absences are provided as per the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

iv) Short Term Employee Benefits :

Short term benefits are recognised as an expense in the Statement of Profit and Loss of the year in which the related services are rendered.

v) Actuarial gains/losses :

Actuarial gains/losses are immediately recognised in the Statement of Profit and Loss and are not deferred.

i) Revenue Recognition:

i) License fee income and income incidental to it, are accounted for on an accrual basis.

ii) Insurance claims and scrap sales are accounted for in the books on an accrual basis.

iii) Interest income is accounted on an accrual basis.

j) Leave & License :

Leave & License payments are recognised as an expense in the Statement of Profit and Loss.

Leave & License income is recognised based on the terms of the agreement.

Initial direct costs incurred specifically to earn revenue from Leave & Licenses are amortised over the lock in period of the respective licensees.


Mar 31, 2014

1.1 Basis for Preparation of the Financial Statements :

The Financial Statements are prepared in accordance with Generally Accepted Accounting Principles (''GAAP'') in India under the historical cost convention on accrual basis.These Financial Statements have been prepared to comply in all material respects with the Accounting Standards notified under the Companies, (Accounting Standards), Rules, 2006, (as amended) and other relevant provisions of the Companies Act, 1956.

1.2 Accounting Policies :

a. Fixed Assets :

Fixed Assets are stated at cost or revalued amount wherever applicable. Cost comprises of cost of acquistion, cost of improvements, borrowing costs and any other cost attributable in bringing assets to the condition for their intended use.

b. Depreciation and Amortization :

i) Depreciation on Fixed Assets has been provided on written down value method at the rates specified in Schedule XIV of the Companies Act, 1956.

ii) Intangible Assets are amortised over the estimated useful life of the asset.

iii) Depreciation and amortization on the revalued portion of Fixed Assets is adjusted against the Revaluation Reserve.

c. Borrowing Cost :

Borrowing cost includes interest and other charges incurred in connection with the borrowing of funds and is recognised as an expense for the year in which it is incurred, except for borrowing costs attributable to the acquisition/construction of qualifying assets, and incurred for all the activities necessary to prepare the qualifying asset for its intended use, which are capitalised as the cost of that asset.

d. Forward Contracts :

The Company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates.

In relation to forward contracts entered into to hedge the underlying liability pertaining to capital projects for the time all the activities necessary to prepare the qualifying asset for its intended use, the premium or discount arising at the inception of such contracts are adjusted towards the cost of the project. For forward contracts taken thereafter, the premium or discount arising at the inception of such contracts is amortised as expense or income over the life of the contract.

e. Taxes on Income :

Current Tax

Provision for Income Tax is determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on accounting for Credit Available in respect of MAT under the Income-tax Act, 1961, the said asset is created by way of credit to the Statement of Profit and Loss and shown as "mAt Credit Entitlement".

Deferred Tax

Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted on the Balance Sheet date.

Deferred tax assets in a situation where unabsorbed depreciation and carry forward business losses exist, are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax assets, other than in situations of unabsorbed depreciation and carried forward business losses, are recognized only if there is reasonable certainty that they will be realized.

f. Employee Stock Compensation Cost:

The Company measures the compensation cost relating to employee stock options in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share Based Payment. The cost of equity settled transactions is measured using the intrinsic value method. The compensation cost, if any is amortised over the vesting period.

g. Foreign Currency Transactions :

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates.

iii) Non monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

h. Employee Benefits :

i) Defined Benefit Plan

The Company provides for gratuity liability based on the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

ii) Defined Contribution Plans

The Company''s contribution paid/payable for Provident Fund, ESIC and Pension Fund for the year is recognised in the Statement of Profit and Loss.

iii) Long Term Employee Benefits

Long term compensated absences are provided as per the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

iv) Short Term Employee Benefits

Short term benefits are recognised as an expense in the Statement of Profit and Loss for the year in which the related services are rendered.

v) Actuarial Gains/Losses

Actuarial Gains/Losses are immediately recognised in the Statement of Profit and Loss and are not deferred.

i. Revenue Recognition :

i) License fee income and income incidental to it, are accounted for on an accrual basis .

ii) Insurance claims and scrap sales are accounted for in the books on an accrual basis.

iii) Interest income is accounted on an accrual basis.

j. Leave & License :

Leave & License payments are recognised as an expense in the Statement of Profit and Loss.

Leave & License income is recognised based on the terms of the agreement.

Initial direct costs incurred specifically to earn revenue from licensing are amortised over the lock in period of respective licensees.


Mar 31, 2013

1.1 Basis for preparation of the Financial Statements :

The Financial Statements are prepared in accordance with Generally Accepted Accounting Principles (''GAAP'') in India under the historical cost convention on an accrual basis.

1.2 Accounting Policies :

a. Fixed Assets :

Fixed Assets are stated at cost or revalued amount wherever applicable. Cost comprises of cost of acquistion, cost of improvements, borrowing costs and any other cost attributable in bringing assets to the condition for their intended use.

b. Depreciation and Amortization :

i) Depreciation on Fixed Assets has been provided on the written down value method at the rates specified in Schedule XIV of the Companies Act, 1956.

ii) Intangible Assets are amortised over the estimated useful life of the asset.

iii) Depreciation and amortization on the revalued portion of Fixed Assets are adjusted against the Revaluation Reserve.

c. Borrowing Cost :

Borrowing costs includes interest and other charges incurred in connection with the borrowing of funds and is recognised as an expense for the year in which it is incurred, except for borrowing costs attributable to the acquistion/construction of qualifying assets and incurred till the commencement of the commercial use of the assets, which are capitalised as the cost of that asset.

d. Foreign Currency Transactions :

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates.

iii) Non monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

v) Premiums or Discounts arising at the inception of forward contracts entered into to hedge the underlying liability in relation to Capital Projects are adjusted towards the cost of the Project.

e. Taxes on Income:

Current Tax

Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax

Deferred tax is recognised on timing differences, being the difference between the taxable income and accounting income that originates in one period and is capable of reversal in one or more subsequent periods.

f. Employee Benefits :

i) Defined Benefit Plan

The Company provides for gratuity liability based on the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

ii) Defined Contribution Plans

The Company''s contribution paid /payable for Provident Fund, ESIC and Pension Fund for the year is recognised in the Statement of Profit and Loss.

iii) Long Term Employee Benefits

Long term compensated absences are provided as per the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

iv) Short Term Employee Benefits

Short term benefits are recognised as an expense in the Statement of Profit and Loss of the year in which the related service is rendered.

v) Actuarial Gains/Losses

Actuarial gains/losses are immediately recognised in the Statement of Profit and Loss and are not deferred.

g. Revenue Recognition:

i) License fee income and income incidental to it, are accounted for on an accrual basis.

ii) Insurance claims and scrap sales are accounted for in the books on an accrual basis.

iii) Interest income is accounted on an accrual basis.

h. Leave & License :

Leave & License payments are recognised as an expense in the Statement of Profit and Loss.

Leave & License income is recognised based on the terms of the agreement.

Initial direct costs incurred specifically to earn revenue from Leave & Licenses are amortised over the lock in period of the respective licensees.


Mar 31, 2012

1.1 Basis for preparation of Financial Statements :

The Financial Statements are prepared in accoardance with Generally Accepted Accounting Principles ('GAAP') in India under the historical cost convention on accrual basis.

1.2 Accounting Policies :

a. Fixed Assets :

Fixed Assets are stated at cost or revalued amount wherever applicable. Cost comprises of cost of acquistion, cost of improvements, borrowing costs and any other cost attributable in bringing assets to the condition for its intended use.

b. Depreciation and Amortization :

i) Depreciation on fixed assets has been provided on written down value method at the rates specified in Schedule XIV of the Companies Act, 1956.

ii) Depreciation and amortization on the revalued portion of Fixed Assets is adjusted against the Revaluation Reserve.

c. Borrowing Cost :

Borrowing costs includes interest and other charges incurred in connection with the borrowing of funds and is recognised as an expense for the year in which it is incurred, except for borrowing costs attributable to the acquistion/construction of qualifying assets and incurred till the commencement of the commercial use of the assets, which are capitalised as the cost of that asset.

d. Investments :

Long term investments are stated at Cost less permanent diminution in value, if any. Current investments are stated at the lower of cost or fair value.

e. Foreign Currency Transactions :

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates.

iii) Non monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the Statement of Profit and Loss.

f. Inventory Valuation :

Stores and spares, are valued at cost on a weighted average basis.

g. Taxes on Income: Current Tax

Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax

Deferred tax is recognised on timing differences, being the difference between the taxable income and accounting income that originates in one period and is capable of reversal in one or more subsequent periods.

h. Employee Benefits :

i) Defined Benefit Plan

The Company provides for gratuity liability based on the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

ii) Defined Contribution Plans

The Company's contribution paid/payable for Provident Fund, ESIC and Pension Fund for the year is recognised in the Statement of Profit and Loss.

iii) Long Term Employee benefits

Long term compensated absences are provided as per the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

iv) Short Term Employee benefits

Short term benefits are recognised as an expense in the Statement of Profit and Loss of the year in which the related services are rendered.

v) Actuarial gains/losses

Actuarial gains/losses are immediately recognised in the Statement of Profit and Loss and are not deferred.

i. Revenue Recognition:

i) License fee income and income incidental to it, are accounted for on an accrual basis.

ii) Insurance claims and scrap sales are accounted for in the books on an accrual basis.

iii) Interest income is accounted on an accrual basis.

iv) Processing charges received include excise duty recovered.

j. Leave & License :

Leave & License payments are recognised as an expense in the Statement of Profit and Loss.

Leave & License income is recognised based on the terms of the agreement.

Initial direct costs incurred specifically to earn revenue from Leave & License agreements are amortised over the lock in period of the respective license agreements.


Mar 31, 2011

1. Basis for preparation of financial statements :

The financial statements are prepared in accoardance with Generally Accepted Accounting Principles ('GAAP') in India under the historical cost convention on accrual basis.

2. Accounting Policies :

a. Fixed Assets :

Fixed Assets are stated at cost or revalued amount wherever applicable. Cost comprises of cost of acquistion, cost of improvements, borrowing costs and any other cost attributable in bringing assets to the condition for their intended use.

b. Depreciation :

i) Depreciation on fixed assets has been provided on the written down value method at the rates specified in Schedule XIV of the Companies Act, 1956.

ii) Depreciation on the revalued portion of Fixed Assets is adjusted against the Revaluation Reserve.

c. Borrowing Cost :

Borrowing costs includes interest and other charges incurred in the connection with the borrowing of the funds, and is recognised as an expense for the year in which it is incurred, except for borrowing costs attributable to the acquistion / contruction of qualifying assets and incurred till the commencement of the commerical use of the asset which are capitalised as cost of that asset.

d. Investments :

Long term investments are stated at cost less permanent diminution in value, if any. Current investments are stated at lower of cost or fair value.

e. Foreign Currency Transactions :

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates.

iii) Non monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the profit and loss account except in cases where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of Fixed Assets.

f. Inventory Valuation :

Raw materials, Packing materials and Stores and Spares, are valued at cost on a weighted average basis. Materials in transit and semi finished goods are valued at cost.

Finished goods are valued at cost including excise duty or net realisable value, whichever is lower.

g. Taxes on Income:

Current Tax :

Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax:

Deferred tax is recognised on timing differences, being the difference between the taxable income and accounting income that originates in one period and is capable of reversal in one or more subsequent periods.

h. Employee Benefits :

i) Defined Benefit Plan :

The Company provides for gratuity liability based on the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

ii) Defined Contribution Plans :

Company's contribution paid/payable for Provident Fund, ESIC and Pension Fund for the year is recognised in the Profit and Loss Account.

iii) Long Term Employee benefits :

Long term compensated absences are provided as per the actuarial valuation by an independent actuary which is determined using the projected unit credit method.

iv) Short Term Employee benefits :

Short term benefits are recognised as an expense in the profit and loss account of the year in which the related services is rendered.

v) Actuarial gains/losses :

Actuarial gains/losses are immediately recognised in the profit and loss account and are not deferred.

i. Revenue Recognition:

i) Sales and processing charges received include excise duty recovered and excludes sales tax.

ii) Insurance claims, sale of production waste/scrap are accounted for in the books on an accrual basis.

iii) Interest income is accounted on an accrual basis.

iv) License fee income and income incidental to it, are accounted for on an accrual basis .

j. Leave & License :

Leave & License payments are recognised as an expense in the profit and loss account.

Leave & License income is recognised based on the terms of the agreement.

Initial direct costs incurred specifically to earn revenue from Leave & Licenses are amortised over the lock in period of respective licensees.


Mar 31, 2010

A. Fixed Assets :

Fixed Assets are stated at cost /revalued amount whereever applicable. Cost comprises of cost of acquistion, cost of improvements, borrowing costs and any attributable cost of bringing assets to the condition for its intended use. Cost also includes direct expenses incurred upto the date of capitalistion / comission. The cost of Fixed Assets includes additions on account of revaluation of land and buildings done as on 30th June, 2006.

b. Borrowing Cost :

Borrowing costs include interest,fees and other charges incurred in the connection with the borrowing of the funds and is considered as a revenue expenditure for the year in which it is incurred except for borrowing cost attributable to the acquistion / improvement of qualifying capital assets and incurred till the commencement of the commercial use of the asset and which is capitalised as cost of that asset.

All the revenue expenses related to the construction/ development of Nirlon Knowledge Park have been capitalised.

c. Investments :

Investments, being long term, are stated at Cost less permanent diminution in value, if any. Current investment is stated at lower of cost or fair value.

d. Foreign Currency Transactions :

i) Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of the transaction.

ii) Monetary items denominated in foreign currencies at the year end are restated at year end rates.

iii) Non monetary foreign currency items are carried at cost.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognised in the profit and loss account except in cases where they relate to acquisition of fixed assets, in which case they are adjusted to the carrying cost of such assets.

e. Inventory Valuation :

Raw materials, packing materials and stores and spares, are valued on a weighted average basis. Materials in transit and semi finished goods are valued at cost.

Finished goods are valued at cost including excise duty or net realisable value, whichever is lower.

f. Depreciation :

i) Depreciation on fixed assets has been provided at the rates specified in Schedule XIV of the Companies Act, 1956.

Method of providing Depreciation

a) Continuous Process Plants SLM

b) Other Assets WDV

c) The cost of leasehold land is amortised over the period of the lease.

ii) Depreciation on a revalued portion of Fixed Assets is provided on a basis consistent with the policy for book depreciation and the same is directly adjusted against the Revaluation Reserve.

g. Taxes on Income:

Current Tax:

Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961.

Deferred Tax Provision:

Deferred tax is recognised on timing differences, being the difference between the taxable income and accounting income that originates in one period and is capable of reversal in one or more subsequent periods.

h. Employee Benefits :

1) Defined Benefit plan

The Company provides for retirement/post retirements benefits in the form of gratuity. The Company’s liablity towards these benefits is determined using the projected cost method.These benefits are provided based on the acturial valuation on the balance sheet date by an independent actuary.

2) i) Retirement Benefit in the form of Provident

Fund (Defined Contribution Plan) is accounted on an accrual basis and is charged to the Profit and Loss Account for the year.

ii) Retirement benefit in the form of Pension is charged to Profit and Loss Account for the year.

iii) Long term Leave Benefits are provided as per the acturial valuation as on the balance sheet date by an independent actuary using the project unit credit method.

iv) Short term benefits are recognised as an expense in the Profit and Loss Account of the year in which the related services is rendered.

3) Termination benefits

Compensation paid under Voluntary Retirement Scheme is amortised over three years.

i. Revenue Recognition:

i) Sales and processing charges received include excise duty recovered from customers and excludes sales tax.

ii) Insurance claims, sale of production waste/scrap are accounted for in the books on an accrual basis.

iii) Rent/license fee income (excluding Service Tax) and expenses and income incidental to it, are accounted for on an accrual basis.

iv) Overdue Interest receivable from customers is accounted as and when realised.

j. Marketing fees:

Marketing fees are amortised over the lock-in-period of each Licensee.

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