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Accounting Policies of Premier Explosives Ltd. Company

Mar 31, 2023

Significant accounting policies

This note provides a list of the significant accounting policies
adopted in the preparation of these Standalone financial
statements. These policies have been consistently applied to all
the years presented, unless otherwise stated.

2.1 Basis of preparation of standalone financial statements(i) Compliance with Ind AS

The Standalone 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 as amended from time to time and other relevant
provisions of the Act.

(ii) Historical cost convention

The Standalone financial statements have been prepared
as a going concern on accrual basis of accounting. The
company has adopted historical cost basis for assets
and liabilities except for certain items which have been
measured on a different basis and such basis is disclosed
in the relevant accounting policy.

(iii) Current and non-current classification

An asset is classified as current, if

(i) It is expected to be realized or sold or consumed in
the company''s normal operating cycle;

(ii) It is held primarily for the purpose of trading;

(iii) It is expected to be realized within twelve months
after the reporting period; or

(iv) It is cash or a cash equivalent unless it is 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 classified as current, if

(i) It is expected to be settled in normal operating
cycle;

(ii) It is held primarily for the purpose of trading;

(iii) It is expected to be settled within twelve months
after the reporting period;

(iv) It has 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.

Deferred tax assets and liabilities are classified as non¬
current assets and liabilities.

All assets and liabilities have been classified as current
or non-current as per company''s operating cycle and
other criteria set out in Schedule-III of the Companies
Act, 2013. Based on the nature of business, the Company
has ascertained its operating cycle as 12 months for the
purpose of current or non-current classification of assets
and liabilities.

2.2 Segment reporting

Operating segments are reported in a manner consistent with
the internal reporting provided to the Chief Operating Decision
Maker, who is responsible for allocating resources and assessing
performance of the operating segments. Managing Director
has been identified as being the Chief Operating Decision
Maker. The company is engaged in the business of "High Energy
Materials" and has only one reportable segment in accordance
with Ind AS 108 "Operating Segment".

In accordance with paragraph 4 of Ind AS 108- " Operating
Segments" the company has disclosed segment information
only on the basis of consolidated standalone financial
statements.

2.3 Functional and presentation currency

(i) Functional and presentation currency

Items included in the standalone financial statements
of the company are measured using the currency of
the primary economic environment in which the entity
operates (''the functional currency''). The standalone

financial statements are presented in Indian rupee (INR),
which is company''s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the
functional currency using the exchange rates at the dates
of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and
from the translation of monetary assets and liabilities
denominated in foreign currencies at year end exchange
rates are generally recognised in statement of profit and
loss. Non-monetary items that are measured in terms of
historical cost in a foreign currency, using the exchange
rate at the date of the transaction. 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. For example, translation
differences on non- monetary assets and liabilities such
as equity instruments held at fair value through profit or
loss are recognised in statement of profit and loss as part
of the fair value gain or loss and translation differences
on non-monetary assets such as equity investments
classified as Fair value through other comprehensive
income (FVOCI) are recognised in other comprehensive
income.

2.4 Critical estimates and judgements

The preparation of standalone financial statements requires the
use of accounting estimates which, by definition, will seldom
equal the actual results. Management also needs to exercise
judgement in applying the Company''s accounting policies.

This note provides an overview of the areas that involved a
higher degree of judgement 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 judgements is included in relevant notes together with
information about the basis of calculation for each affected line
item in the standalone financial statements.

The areas involving critical estimates or judgements are

• Estimation of current tax expense and payable

• Estimation of defined benefit obligation [ refer note: 25(a)
(ii)]

• Estimation of expected credit loss on financial assets [
refer note: 32(A)]

• Estimation of useful life of property, plant and equipment
[ refer note: 2.6]

• Estimation of useful life of intangible asset [ refer note:
2.7]

• Estimation of Variable consideration [ refer note :2.5]

2.5 Revenue recognition

Sale of Products - Recognition & Measurement

Revenue from the sale of products is recognised at the point

in time when the products are delivered to the customer (as it
considered as that customer has obtained the control / legal
title has been transferred) as per the terms of the contract.
Revenue is measured based on the transaction price, which is
the consideration, adjusted for volume discounts, service level
credits, performance bonuses, price concessions and incentives,
if any, as specified in the contract with the customer. Revenue
also excludes taxes collected from customers.

The Company''s customers pay for products received in
accordance with payment terms that are customary in the
industry and do not have significant financing components.

For revenues disaggregated by geography and timing of
recognition [refer note 21]

In determining the transaction price for the sale of goods or
rendering of services, the Company considers the effects of
variable consideration and provisional pricing, considering
contractually defined terms of payment and excluding taxes or
duties collected on behalf of the government.

Variable consideration

• Liquidated damages and penalties are accounted
as per the contract terms wherever there is a delay /
default attributable to the Company and when there
is a reasonable certainty with which the same can be
estimated.

• The Company estimates provision for powder factor on
revenue from sale of products to certain customers which
is generally the percentage of blast output achieved at
the time of blasting of the products at the customer
''s site. Powder factor is based on the agreement with
customer, volume of output achieved at the site, which
is measured at a later date. Accordingly, the provision is
made based on the likely powder factor to be achieved
on current sales of products, which is reduced from the
revenue for the period.

Sale of Services- Recognition & Measurement

Revenue from operations and maintenance services are
recognised on output basis measured by efforts expended,
number of transactions processed, etc.

Some contracts include multiple deliverables, such as the sale
of products required for maintenance services. It is therefore
accounted for as a separate performance obligation. The
revenue from sale of products is recognised at a point in time
when the product is delivered, the legal title has been passed
and the customer has accepted the product.

Dividend income

Dividend income on investments is accounted for when the
right to receive the payment is established, which is generally
when shareholders approve the dividend. Dividend income is
included in Other income in the Statement of profit and loss.

Interest income

Interest income on all financial assets measured at amortised
cost, interest income is recognised using the effective interest

rate (EIR) method, is recognised in the statement of profit and
loss as part of other income.

Interest income is calculated by applying the effective interest
rate to the gross carrying amount of the financial asset except
for financial assets that subsequently become credit impaired.
For credit impaired financial assets, the effective interest rate is
applied to the net carrying amount of the financial asset (after
deduction of the expected credit loss).

2.6 Property, plant and equipment

Freehold land is carried at deemed cost. On transition to Ind AS,
the company has elected the option of fair value as deemed
cost of land as at April 01,2016.

All other items of property, plant and equipment are stated
at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of
the items. On transition to Ind AS, the company has elected to
continue with the carrying value of all its property, plant and
equipment recognised as at April 01,2016 measured as per the
previous GAAP and use that carrying value as the deemed cost
of the Property, plant and equipment. The cost comprises the
purchase price and directly attributable costs of bringing the
asset to its working condition for its intended use.

Subsequent costs are included in the asset''s carrying amount
or recognised as a separate asset, as appropriate in property,
plant and equipment the cost of replacing part of such an item
when the cost is incurred if the recognised criteria are met. The
carrying amount of any component accounted for as separate
asset is derecognised when replaced. All other repairs and
maintenance are charged to profit or loss during the reporting
period in which they are incurred.

An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefit is expected
to arise from the continued use of the asset. Any gain or loss
arising on de-recognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying
amount of the item) is recognised in profit and loss in the period
the item is derecognised.

Advances paid towards the acquisition of property, plant and
equipment outstanding at each Balance sheet date is classified
as capital advances under other non-current assets and the cost
of assets not ready to use before such date are disclosed under
''Capital work-in-progress''

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

Depreciation methods, estimated useful lives and residual
value

Depreciation is computed on a straight-line method to allocate
their cost, net of their residual values, over their estimated
useful lives in the manner prescribed in Schedule II of the Act.

The Company reviews the residual value, useful lives and
depreciation method annually and, if expectations differ from
previous estimates, the change is accounted for as a change in

accounting estimate on a prospective basis. The residual values
are not more than 5% of the original cost of the asset. Property,
plant and equipment individually costing '' 5,000 or below
are fully depreciated in the year of purchase. Depreciation on
additions /deletions is calculated on a monthly pro-rata basis.

2.7 Intangible assets and amortisation

Intangible assets including software licenses of enduring
nature and contractual rights acquired separately are measured
on initial recognition at cost. Following initial recognition,
intangible assets are carried at cost less accumulated
amortization and accumulated impairment losses, if any. Cost
comprises the purchase price and any directly attributable cost
of bringing the asset to its working condition for its intended
use.

(i) Computer software

Costs associated with maintaining software are
recognised as an expense as incurred. Development costs
that are directly attributable to the design and testing of
identifiable and unique software products controlled by
the Company are recognised as intangible assets when
the following criteria are met:

- it is technically feasible to complete the software so
that it will be available for use

- the expenditure attributable to the software during
its development can be reliably measured.

(ii) Transfer of Technology

Separately acquired transfer of technology are shown
at historical cost. They have a finite useful life and
are subsequently carried at cost less accumulated
amortisation and impairment losses.

(iii) Other Licence

Separately acquired licence are shown at historical cost.
Following initial recognition, intangible assets are carried
at cost less accumulated amortization and accumulated
impairment losses, if any.

(iv) Amortisation methods and periods

The company amortises intangible assets using the
straight-line method over the following periods:

• Computer software - 3 years based on their
estimated useful lives.

• Transfer of Technology - is amortised over the
license period.

• Other Licence - 5 years.

All intangible assets are tested for impairment. The
estimated useful life and amortisation method are
reviewed at the end of each reporting period, with the
effect of any changes in estimate being accounted for
on a prospective basis. Amortisation expenses and
impairment losses and reversal of impairment losses are
taken to the Statement of profit and loss. Thus, after initial
recognition, an intangible asset is carried at its cost less
accumulated amortisation and/or impairment losses.

2.8 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 amount of proceeds, net of direct costs of the
capital issue.

2.9 Financial instruments

Classification, initial recognition and measurement

A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument
of another entity. Financial instruments are recognised on
the balance sheet when the Company becomes a party to the
contractual provisions of the instrument.

(i) Financial assets

Classification

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 entity''s business model
for managing the financial assets and the contractual
terms of the cash flows.

For assets measured at fair value, gains and losses will
either be recorded in profit or loss or other comprehensive
income. For investments in debt instruments, this will
depend on the business model in which the investment
is held. For investments in equity instruments, this
will depend on whether the Company has made an
irrevocable election at the time of initial recognition to
account for the equity investment at fair value through
other comprehensive income.

The Company reclassifies debt investments when and
only when its business model for managing those assets
changes.

At initial recognition, the Company measures a financial
asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss, transaction costs
that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets
carried at fair value through profit or loss are expensed in
profit or loss.

Subsequent measurement - Debt instruments

Subsequent measurement of debt instruments depends
on the Company''s business model for managing the asset
and the cash flow characteristics of the asset. There are
three measurement categories into which the company
classifies its debt instruments

At amortised cost

Financial assets having contractual terms that give rise on
specified dates to cash flows that are solely payments of
principal and interest on the principal outstanding and
that are held within a business model whose objective is
to hold such assets in order to collect such contractual
cash flows are classified in this category. Subsequently,
these are measured at amortised cost using the effective
interest method less any impairment losses.

At fair value through other comprehensive income
(FVOCI)

Assets that are held for collection of contractual cash
flows and for selling the financial assets, where the asset''s
cash flows represent solely taken through OCI, except for
the recognition of impairment gains or losses, interest
income and foreign exchange gains and losses which are
recognised in profit and loss. When the financial asset
is derecognised, the cumulative gain or loss previously
recognised in OCI is reclassified from equity to profit
and loss and recognised in other gains/(losses). Interest
income from these financial assets is included in other
income using effective interest rate method. Foreign
exchange gains/ (losses) and impairment expenses are
presented as separate line item in statement of profit and
loss.

At fair value through profit or loss (FVTPL)

Assets that do not meet the criteria for amortised cost
or FVOCI measured at fair value through profit or loss.
A gain or loss on a debt instrument that is subsequently
measured at fair value through profit or loss is recognised
in profit or loss and presented net within other gains/
(losses) in the period in which it arises. Interest income
from these financial assets is included in other income.

Investment in subsidiaries and joint ventures

Investment in subsidiaries and joint ventures are
measured at cost less impairment as per Ind AS 27.

Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise
cash at banks and on hand and short-term deposits with
an original maturity of three months or less, which are
subject to an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and
cash equivalents consist of cash and short-term deposits,
as defined above, net of outstanding bank overdrafts as
they are considered an integral part of the Company''s
cash management.

Trade receivables

Trade receivables are recognised initially at fair value
and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.

(ii) Financial liabilities

Classification, initial recognition and measurement

Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, or payables, as appropriate. All financial
liabilities are recognised initially at fair value and, in the
case of loans and borrowings and payables, net of directly
attributable transaction costs. The Company''s financial
liabilities include trade and other payables, loans and
borrowings including bank overdrafts.

Subsequent measurement

Financial liabilities are carried at amortised cost using the
effective interest method. For trade and other payables
maturing within one year from the balance sheet date,
the carrying amounts approximate fair value due to the
short maturity of these instruments.

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. 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 their fair value and subsequently
measured at amortised cost using the effective interest
method.

Loans and borrowings

Borrowings are initially recognised at fair value, net of
transaction costs incurred. Borrowings are subsequently
measured at amortised cost. Any difference between the
proceeds (net of transaction costs) and the redemption
amount is recognised in profit or loss over the period of
the borrowings using the effective interest method. Fees
paid on the establishment of loan facilities are recognised
as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn
down. In this case, the fee is deferred until the draw
down occurs. To the extent there is no evidence that it
is probable that some or all of the facility will be drawn
down, the fee is capitalised as a prepayment for liquidity
services and amortised over the period of the facility to
which it relates.

Buyers credit

The Company enters into arrangements whereby financial
institutions make direct payments to suppliers for raw
materials. The financial institutions are subsequently
repaid by the Company at a later date providing working
capital timing benefits. These are normally settled up to
twelve months, where these arrangements are for raw
materials with a maturity of up to twelve months.

Packing credit

The company enters into arrangements whereby
financial institutions will provide working capital based
on the export order. These are normally settled up to
twelve months.

Derecognition of financial instruments

The Company derecognises a financial asset when the
contractual rights to the cash flows from the asset expire,
or when it transfers the financial asset and substantially
all the risks and rewards of ownership of the asset to
another party. On de-recognition of a financial asset
the difference between the carrying amount and the
consideration received is recognised in the statement of
profit and loss.

The company derecognises financial liabilities when, and
only when, the Company''s obligations are discharged,
cancelled or have expired. On de-recognition of a financial
liability the difference between the carrying amount of
the financial liability derecognised and the consideration
paid and payable is recognised in the statement of profit
and loss.

Offsetting financial instruments

Financial assets and liabilities are offset and the net
amount is reported in the balance sheet where there
is a legally enforceable right to offset the recognised
amounts and there is an intention to settle on a net basis
or realise the asset and settle the liability simultaneously.
The legally enforceable right must not be contingent on
future events and must be enforceable in the normal
course of business and in the event of default, insolvency
or bankruptcy of the counterparty.

2.10 Impairment of assets
Financial assets

The Company assesses at each date of balance sheet whether
a financial asset or a group of financial assets is impaired. In
accordance with Ind AS 109, the Company uses ''Expected Credit
Loss'' (ECL) model for evaluating impairment of financial assets
other than those measured at fair value through profit and loss
(FVTPL).The impairment methodology applied depends on
whether there has been a significant increase in credit risk.

Expected credit losses are measured through a loss allowance
at an amount equal to

- The 12-months expected credit losses (expected credit
losses that result from those default events on the
financial instrument that are possible within 12 months
after the reporting date); or

- Full lifetime expected credit losses (expected credit losses
that result from all possible default events over the life of
the financial instrument).

For trade receivables Company applies ''simplified approach''
which requires expected lifetime losses to be recognised
from initial recognition of the receivables. The Company uses
historical default rates to determine impairment loss on the
portfolio of trade receivables. At every reporting date these
historical default rates are reviewed and changes in the forward
looking estimates are analysed.

For other assets, the Company uses 12 month ECL to provide for
impairment loss where there is no significant increase in credit

risk. If there is significant increase in credit risk full lifetime ECL
is used.

Non-financial assets

Property, plant & equipment and intangible assets

Property, plant and equipment and intangible assets with finite
life are evaluated for recoverability when there is any indication
that their carrying amounts may not be recoverable. If any such
indication exists, the recoverable amount (i.e. higher of the fair
value less cost to sell and the value-in-use) is determined on an
individual asset basis unless the asset does not generate cash
flows that are largely independent of those from other assets.
In such cases, the recoverable amount is determined for the
cash generating unit (CGU) to which the asset belongs. If the
recoverable amount of an asset or CGU is estimated to be less
than its carrying amount, the carrying amount of the asset or
CGU is reduced to its recoverable amount. An impairment loss
is recognised in the profit or loss.

2.11 Borrowing costs

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

Borrowing costs include exchange differences arising from
foreign currency borrowings to the extent they are regarded as
an adjustment to the interest cost.

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

All other borrowing costs are charged to the statement of profit
and loss for the period for which they are incurred.

2.12 Inventories

(i) Raw materials and stores and spares are valued at lower
of cost, calculated on First-in-First-Out ("FIFO") basis, and
net realisable value. Items held for use in the production
of inventories are not written down below cost if the
finished products in which these will be incorporated are
expected to be sold at or above cost.

(ii) Finished goods and work-in-progress are valued at lower
of cost and net realisable value. Cost includes materials,
labour and a proportion of appropriate overheads based
on normal operating capacity.

(iii) Cost of inventories also includes all other costs incurred
in bringing the inventories to their present location
and condition. Costs are assigned to individual items of
inventory on the basis of first-in-first-out basis.

(iv) Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make
the sale.

(v) Scrap is valued at net realisable value. Obsolete, defective
and unserviceable inventories are duly provided for.

2.13 Taxation

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 for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the end of
the reporting period. Management periodically evaluates
positions taken in tax returns with respect to situations in
which applicable tax regulations is subject to interpretation.
It establishes provisions, where appropriate , on the basis of
amounts expected to be paid to the 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 amounts in
the standalone 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
asset is realized, 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 utilize those
temporary differences and losses.

Deferred tax liabilities are not recognised for temporary
differences between the carrying amount and tax bases of
investments in subsidiaries where the Company is able to
control the timing of the reversal of the temporary differences
and it is probable that the differences will not reverse in the
foreseeable future.

Deferred tax assets are not recognised for temporary differences
between the carrying amount and tax bases of investments in
subsidiaries where it is not probable that the differences will
reverse in the foreseeable future and taxable profit will not
be available against which the temporary difference can be
utilized.

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 entity has a legally enforceable right to offset and
intends either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.

Current and deferred tax are recognised in profit or 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.

Deferred tax assets include Minimum Alternative Tax (MAT)
paid in accordance with the tax laws in India, which is likely
to give future economic benefits in the form of availability of

set off against future income tax liability. Accordingly, MAT is
recognised as deferred tax asset in the Balance sheet when the
asset can be measured reliably and it is probable that the future
economic benefit associated with the asset will be realised.

2.14 LeasesAs a lessee

The Company accounts for each lease component within the
contract as a lease separately from non-lease components of
the contract and allocates the consideration in the contract to
each lease component on the basis of the relative stand-alone
price of the lease component and the aggregate stand-alone
price of the non-lease components.

The Company recognises right-of-use asset representing
its right to use the underlying asset for the lease term at the
lease commencement date. The cost of the right-of-use asset
measured at inception shall comprise of the amount of the
initial measurement of the lease liability adjusted for any
lease payments made at or before the commencement date
less any lease incentives received, plus any initial direct costs
incurred and an estimate of costs to be incurred by the lessee in
dismantling and removing the underlying asset or restoring the
underlying asset or site on which it is located. The right-of-use
assets is subsequently measured at cost less any accumulated
depreciation, accumulated impairment losses, if any and
adjusted for any remeasurement of the lease liability. The right-
of-use assets is depreciated using the straight-line method
from the commencement date over the shorter of lease term
or useful life of right-of-use asset. The estimated useful lives of
right-of use assets are determined on the same basis as those of
property, plant and equipment. Right-of-use assets are tested
for impairment whenever there is any indication that their
carrying amounts may not be recoverable. Impairment loss, if
any, is recognised in the statement of profit and loss.

The Company measures the lease liability at the present value
of the lease payments that are not paid at the commencement
date of the lease. The lease payments are discounted using
the interest rate implicit in the lease, if that rate can be readily
determined. If that rate cannot be readily determined, the
Company uses incremental borrowing rate. For leases with
reasonably similar characteristics, the Company, on a lease by
lease basis, may adopt either the incremental borrowing rate
specific to the lease or the incremental borrowing rate for the
portfolio as a whole. The lease payments shall include fixed
payments, variable lease payments, residual value guarantees,
exercise price of a purchase option where the Company is
reasonably certain to exercise that option and payments of
penalties for terminating the lease, if the lease term reflects the
lessee exercising an option to terminate the lease. The lease
liability is subsequently remeasured by increasing the carrying
amount to reflect interest on the lease liability, reducing the
carrying amount to reflect the lease payments made and
remeasuring the carrying amount to reflect any reassessment
or lease modifications or to reflect revised in-substance fixed
lease payments. The company recognises the amount of the
re-measurement of lease liability due to modification as an
adjustment to the right-of-use asset and statement of profit
and loss depending upon the nature of modification. Where
the carrying amount of the right-of-use asset is reduced to zero
and there is a further reduction in the measurement of the lease
liability, the Company recognises any remaining amount of the
re-measurement in statement of profit and loss.

Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition
exemption to its short-term leases of vehicles, and office
buildings (i.e., those leases that have a lease term of 12 months
or less from the commencement date and do not contain a
purchase option). It also applies the lease of low-value assets
recognition exemption to leases of office equipment that are
considered to be low value. Lease payments on short-term
leases and leases of low-value assets are recognised as expense
on a straight-line basis over the lease term.

As a lessor

At the inception of the lease the Company classifies each of
its leases as either an operating lease or a finance lease. The
Company recognises lease payments received under operating
leases as income on a straight-line basis over the lease term. In
case of a finance lease, finance income is recognised over the
lease term based on a pattern reflecting a constant periodic rate
of return on the lessor''s net investment in the lease. When the
Company is an intermediate lessor it accounts for its interests
in the head lease and the sub-lease separately. It assesses the
lease classification of a sub-lease with reference to the right-of-
use asset arising from the head lease, not with reference to the
underlying asset. If a head lease is a short term lease to which
the Company applies the exemption described above, then it
classifies the sub-lease as an operating lease.


Mar 31, 2018

1 Significant accounting policies

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.

Compliance with Ind AS

The 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 are the first financial statements of the company under Ind AS. Refer note 33 for an explanation of how the transition from previous GAAP to Ind AS was carried out in accordance with Ind AS 101 First-time Adoption of Indian Accounting Standards with the date of transition as April 1, 2016 and its effects on the company’s financial position, financial performance and cash flows.

1.1 Basis of preparation of financial statements

The financial statements have been prepared as a going concern on accrual basis of accounting. The company has adopted historical cost basis for assets and liabilities except for certain items which have been measured on a different basis and such basis is disclosed in the relevant accounting policy. The financial statements are presented in Indian Rupees (INR). All amounts have been rounded off to the nearest lakhs with two decimal places, unless otherwise indicated.

Current and non-current classification

An asset is classified as current, if

(i) It is expected to be realised or sold or consumed in the company’s normal operating cycle;

(ii) It is held primarily for the purpose of trading;

(iii) It is expected to be realised within twelve months after the reporting period; or

(iv) It is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current, if

(i) It is expected to be settled in normal operating cycle;

(ii) It is held primarily for the purpose of trading;

(iii) It is expected to be settled within twelve months after the reporting period;

(iv) It has no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

Deferred tax assets and liabilities are classified as non current only. All other assets and liabilities are classified as non-current.

All assets and liabilities have been classified as current or non-current as per company’s operating cycle and other criteria set out in Schedule-III of the Companies Act, 2013. Based on the nature of business, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.

1.2 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments. The company is engaged in the business of “High Energy Materials” and has only one reportable segment in accordance with Ind AS 108 “Operating Segment”.

1.3 Functional and presentation currency

(i) 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 (‘the functional currency’). The financial statements are presented in Indian rupee (INR), which is company’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in statement of profit and loss. Non-monetary items that are measured in terms of historical cost in a foreign currency, using the exchange rate at the date of the transaction. 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. For example, translation differences on non- monetary assets and liabilities such as equity instruments held at fair value through profit or loss are recognised in statement of profit and loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equity investments classified as Fair value through other comprehensive income (FVOCI) are recognised in other comprehensive income.

1.4 Use of estimates, assumptions and judgements

The preparation of financial statements in conformity with Ind AS requires management of the Company to make estimates and assumptions and judgements that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the results of operations during the reporting periods. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in the current and future periods.

Following are the areas that involved a higher degree of judgement 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 judgements 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 judgements are

- Estimation of defined benefit obligation [refer note: 24 (a)(ii)]

- Estimation of expected credit loss on financial assets [refer note: 10(b)]

1.5 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty and net of returns, trade allowances, rebates, value added taxes, goods and service tax (GST) and amounts collected on behalf of third parties.

Revenue is recognised when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the activities as described below.

Sale of goods

Timing of recognition & measurement:

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer as per the terms of the contracts, usually on delivery of the goods and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns allowances, trade discounts, volume rebates and powder factor deductions.

Sale of services

Timing of recognition & measurement:

Revenue recognition is based on the terms and conditions as per the contracts entered into / understanding with the customers. All revenues from services, as rendered, are recognised when persuasive evidence of an arrangement exists, the sale price is fixed or determinable and collectability is reasonably assured and are reported net of sales incentives and discounts based on the terms of the contract and applicable indirect taxes.

Dividend income

Dividend income on investments is accounted for when the right to receive the payment is established, which is generally when shareholders approve the dividend. Dividend income is included in Other Income in the Statement of Profit and Loss.

Interest income

Interest income from debt instruments is recognised using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.

1.6 Property, plant and equipment Recognition and measurement

The initial cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes, and any directly attributable costs of bringing an asset to working condition and location for its intended use. It also includes the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Items such as spares are capitalised when they meet the definition of property, plant and equipment. If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. Likewise, expenditure towards major inspections and overhauls are identified as a separate component and depreciated over the period till the expected next overhaul.

Subsequent expenditure

Subsequent expenditure related to an item of property, plant and equipment is added to its book value only if it increases the future economic benefits from the existing asset beyond its previously assessed standard of performance / life. All other expenses on existing property, plant and equipment, including day-today repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

Derecognition

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefit is expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is recognised in profit and loss in the period the item is derecognised.

Depreciation expense

Depreciation is computed on a straight line basis so as to write off cost of assets over the useful lives of tangible fixed assets in the manner prescribed in Schedule II of the Act. The Company reviews the residual value, useful lives and depreciation method annually and, if expectations differ from previous estimates, the change is accounted for as a change in accounting estimate on a prospective basis. Property, plant and equipment individually costing Rs. 5,000 or below are fully depreciated in the year of purchase. Depreciation on additions /deletions is calculated on a monthly pro-rata basis.

Leasehold land is amortised over the lease period.

Transition to Ind AS

On transition to Ind AS, the Company has elected the option of fair value as deemed cost for Land, as on the date of transition. All other items of property, plant and equipment use the carrying value measured as per the previous GAAP as the deemed cost as at April 1, 2016.

1.7 Intangible assets and amortisation

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.

These assets are amortised over a period of 3 years, which is based on their estimated useful life. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Transition to Ind AS

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

1.8 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 amount of proceeds, net of direct costs of the capital issue.

1.9 Financial instruments

Classification, initial recognition and measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments are recognised on the balance sheet when the Company becomes a party to the contractual provisions of the instrument.

(i) Financial assets

Classification

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 entity’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.

The Company reclassifies debt investments when and only when its business model for managing those assets changes.

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Subsequent measurement - Debt instruments

Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the company classifies its debt instruments:

a) At amortised cost

Financial assets having contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding and that are held within a business model whose objective is to hold such assets in order to collect such contractual cash flows are classified in this category. Subsequently, these are measured at amortised cost using the effective interest method less any impairment losses.

b) At fair value through other comprehensive income (FVOCI)

Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows on specified dates that are solely payment of principal and interest on the principal amount outstanding and selling financial assets.

c) At fair value through profit or loss (FVTPL)

Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets at fair value through profit or loss are immediately recognised in profit or loss.

Investment in subsidiaries and joint ventures

Investment in subsidiaries and Joint ventures are measured at cost less impairment as per Ind AS 27.

Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company’s cash management.

Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

(ii) Financial liabilities

Classification, initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, or payables, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.

Subsequent measurement:

Financial liabilities are carried at amortised cost using the effective interest method. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

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 90 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 their fair value and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Derecognition of financial instruments

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. On de-recognition of a financial asset the difference between the carrying amount and the consideration received is recognised in the statement of profit and loss.

The company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or have expired. On de-recognition of a financial liability the difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in the statement of profit and loss.

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the counterparty.

1.10 Impairment of assets Financial assets

The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. In accordance with Ind AS 109, the Company uses ‘Expected Credit Loss’ (ECL) model for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).

Expected credit losses are measured through a loss allowance at an amount equal to

- The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or

- Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).

For trade receivables Company applies ‘simplified approach’ which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.

For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.

Non-financial assets

Property, plant & equipment and intangible assets

Property, plant and equipment and intangible assets with finite life are evaluated for recoverability when there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs. If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of the asset or CGU is reduced to its recoverable amount. An impairment loss is recognised in the profit or loss.

1.11 Borrowing costs

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

Borrowing costs include exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

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

All other borrowing costs are charged to the statement of profit and loss for the period for which they are incurred.

21.12 Inventories

(i) Raw materials and stores and spares are valued at lower of cost, calculated on weighted average basis, and net realisable value. Items held for use in the production of inventories are not written down below cost if the finished products in which these will be incorporated are expected to be sold at or above cost.

(ii) Finished goods and work-in-progress are valued at lower of cost and net realisable value. Cost includes materials, labour and a proportion of appropriate overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a weighted average basis.

(iii) Cost of inventories also includes all other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Scarp is valued at net realisable value. Obsolete, defective and unserviceable inventories are duly provided for.

1.13 Taxation

Tax expense comprises of current tax and deferred tax. Current tax is measured at the amount expected to be paid to / recovered from the tax authorities, based on estimated tax liability computed after taking credit for allowances and exemption in accordance with the applicable tax laws.

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the income taxes are recognised in other comprehensive income or directly in equity, respectively.

Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the Company intends to settle the asset and liability on a net basis.

Deferred income taxes

Deferred tax is recognised using the balance sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.

Deferred income tax asset are recognised to the extent it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled.

Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is probable evidence that the Company will pay normal income tax after the tax holiday period.

Deferred tax assets and liabilities are offset when it relates to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.

The Company recognises interest levied and penalties related to income tax assessments in interest expenses.

Minimum alternate tax (MAT)

Minimum alternate tax (MAT) paid as per Indian Income Tax Act, 1961 is in the nature of unused tax credit which can be carried forward and utilised when the Company will pay normal income tax during the specified period. Deferred tax asset on such tax credit is recognised to the extent that it is probable that the unused tax credit can be utilised in the specified future period. The net amount of tax recoverable from, or payable to, the taxation authority is included as part of assets or liabilities in the balance sheet.

1.14 Leases

As a lessee

Leases of property, plant and equipment where the company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor’s expected inflationary cost increases.

As a lessor

Lease income from operating leases where the company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.

1.15 Provisions, contingent liabilities and contingent assets

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, 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. The expense relating to any provision is presented in the statement of profit and loss net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as other finance expense.

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 measures reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

A contingent asset is not recognised unless it becomes virtually certain that an inflow of economic benefits will arise. When an inflow of economic benefits is probable, contingent assets are disclosed in the financial statements.

Provisions, Contingent liabilities and contingent assets are reviewed at each balance sheet date.

1.16 Discontinued operations

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit and loss.

1.17 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. The liabilities are presented as current employee benefit obligations in the balance sheet.

(ii) Other long-term employee benefit obligations

The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the appropriate market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or 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 twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

(iii) Post-employment obligations

The company operates the following post-employment schemes

(a) Defined benefit plans such as gratuity and;

(b) Defined contribution plans such as provident fund.

(a) Defined benefit plans - Gratuity obligations

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

The present value of the defined benefit obligation denominated in INR 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 benefits which are denominated in currency other than INR, the cash flows are discounted using market yields determined by reference to high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and 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 change in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.

(b) Defined contribution plans

The Company pays provident fund contributions to publicly administered funds as per applicable regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due.

(c) State plans

Employer’s contribution to Employees’ State Insurance is charged to statement of profit and loss.

1.18 Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period. Proposed dividend is recognised as a liability in the period in which it is declared by the Company, usually when approved by shareholders in a general meeting or paid.

1.19 Research and development expenditure

Revenue expenditure pertaining to research is charged to the statement of profit and loss. Product development costs are charged to the statement of profit and loss unless a product’s technological and commercial feasibility has been established, in which case such expenditure is capitalised.

1.20 Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

1.21 Investment property

Property that is held for long-term rental yields or for capital appreciation or both, and that is not used in the production of goods and services or for the administrative purposes, is classified as Investment property and is measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.

1.22 Recent accounting pronouncements

a) Ind AS 115- Revenue from Contract with Customers

On March 28, 2018, Ministry of Corporate Affairs (MCA) has notified the Ind AS 115, Revenue from Contract 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 standard permits two possible methods of transition

- Retrospective approach - under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

- Cumulative catch-up approach - under this approach the standard will be applied retrospectively with cumulative effect of initially applying the standard

The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018.

The company will adopt the standard from April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ended March 31, 2018 will not be retrospectively adjusted. No material effect is expected on adoption of this standard.


Mar 31, 2013

1. Basis of preparation

The financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on an accrual basis in all material respects with the Accounting Standards notified by the Companies (Accounting Standards) Rules, 2006 (as amended), other pronouncements of the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year.

The financial statements are presented in Indian rupees rounded off to the nearest lakh.

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 Revised Schedule VI to the Companies Act, 1956. Based on the nature of products and time between acquisition of assets for processing and their realization in cash and cash equivalents, the company has ascertained its operating cycle as 12 months for the purpose of current/non- current classification of assets and liabilities.

2. Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities on the date of financial statements and reported amounts of revenues and expenses for the year. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Difference between actual results and estimates are recognised in the period in which the results are known / materialised.

3. Fixed assets

(i) Fixed assets are stated at cost of acquisition which includes inland freight, duties and taxes and incidental expenses related to acquisition and net of CENVAT wherever applicable. In respect of projects involving construction, related pre-operational expenses form part of the cost of the assets capitalised.

(ii) Revenue expenditure incurred during the construction period of the project is shown under "Unallocated Expenditure Pending Capitalisation" till the commencement of the commercial production or their intended use and the same is capitalised by allocating to relevant assets in the ratio of their direct costs.

4. Impairment of assets

The company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Statement of Profit and Loss. If at the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of amortised historical cost.

5. Depreciation

(i) Depreciation is charged under straight line method in accordance with rates specified in Schedule XIV of the Companies Act, 1956.

(ii) Depreciation has been provided at one hundred percent for assets costing less than Rs.5,000/-.

(iii) Leasehold land is amortised over the lease period.

6. Intangible assets and amortisation

Cost relating to intangible assets, which are acquired, is capitalised and amortised over a period of 3 years, which is based on their estimated useful life.

7. Inventories

(i) Raw materials and stores and spares are valued at lower of cost, calculated on weighted average basis, and net realisable value. Items held for use in the production of inventories are not written down below cost if the finished product in which these will be incorporated are expected to be sold at or above cost.

(ii) Finished goods and work-in-progress are valued at lower of cost and net realisable value. Cost includes materials, labour and a proportion of appropriate overheads based on normal operating capacity. Cost of finished goods includes excise duty. Cost is determined on a weighted average basis.

(iii) Scarp is valued at net realisable value.

(iv) Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

8. Borrowing costs

(i) Borrowing cost includes interest, ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

(ii) Borrowing costs directly attributable to acquisition or construction of Fixed Assets which necessarily take a substantial period of time to get ready for their intended use, incurred till the time of commencement of commercial production or their intended use are capitalized. All other borrowing costs are expensed in the period they occur.

9. Investments

(i) Investments that are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long term investments.

(ii) Current investments are carried at lower of cost and fair value determined on individual investment basis.

(iii) Long-term investments are carried at cost of acquisition. Provision is made for decline, other than temporary, in the value of investments.

(iv) On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of profit and loss .

10. 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 readily measured.

(i) Domestic sales

Gross revenue includes excise duty and adjustments for price variation and liquidated damages and recognised on dispatch of products from the factories of the company.

(ii) Export sales

Revenue from export sales is recognised when the significant risks and rewards of ownership are transferred to the customers which is based upon the terms of the applicable contract.

(iii) Service income

Service income is recognised as per the terms of the contracts with customers when the related services are performed or the agreed milestones are achieved.

(iv) Interest

Revenue is recognised on an accrual basis and on a time proportion basis taking into account the amount outstanding and the applicable rate.

(v) Dividend

Revenue is recognised when the shareholders'' right to receive payment is established by the balance sheet date.

11. Excise duty

Excise duty recovered is included in "Gross Sales". Excise duty on sales is shown as an item of expense and deducted from gross sales. Value of closing stock of finished goods includes excise duty paid / payable on such stocks wherever applicable.

12. Employee benefits

Short term employee benefits

Short term employee benefits are recognised as an expense as per the company''s scheme based on expected obligation on undiscounted basis.

Long term employee benefits

(i) Defined contribution plans

Provident fund: Contribution to provident fund is made at the prescribed rates to the Employees Provident Fund Scheme of the Central Government and is charged to the Statement of profit and loss.

(ii) State plans

Employer''s contribution to Employee''s State Insurance is charged to Statement of profit and loss.

(iii) Defined benefit plans

a) Gratuity

i) The Company makes contribution to a scheme administered by the Life Insurance Corporation of India (''LIC'') to discharge gratuity liabilities to the employees. Annual contribution to the fund as determined by the LIC is charged to Statement of profit and loss in the year of contribution. The shortfall between the accumulated funds available with LIC and liability as determined on the basis of an actuarial valuation is provided for at the year-end. The actuarial gains / losses are taken to the Statement of profit and loss.

b) Leave encashment

ii) The company records its unavailed leave liability based on actuarial valuation using projected unit credit method.

c) Actuarial gains / losses arising during the year are recognised in the Statement of profit and loss.

(iv) Terminal benefits are recognised as an expense as and when incurred.

13. Foreign exchange transactions

(i) Initial Recognition: Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and foreign currency at the date of the transaction.

(ii) Conversion: Foreign currency monetary items are reported at year-end rates. Non-monetary items which are carried in terms of historical cost denominated in foreign currency are reported using the exchange rate at the date of the transaction.

(iii) Exchange difference: Exchange differences arising on the settlement of monetary items or on reporting monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognised as income or as expense in the year in which they arise.

(iv) Forward exchange contracts not intended for trading purpose: In case of forward exchange contracts, difference between forward rate and the exchange rate on the date of transaction is recognised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as expense for the year.

14. Research and development

Revenue expenditure on research and development is charged to the Statement of profit and loss. Capital expenditure on research and development is shown as an addition to fixed assets.

15. Operating leases

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term.

16. Taxation

(i) Tax expense (or tax saving), the aggregate of current year tax and deferred tax, is charged (or credited) to the Statement of profit and loss.

(ii) Current year tax

The provision for taxation is based on assessable profits of the company as determined under the Income Tax Act, 1961. The company also provides for such disallowances made on completion of assessments pending appeals, as considered appropriate depending on the merits of each case.

(iii) Deferred tax

Deferred Income Taxes are recognised for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

In the situations where the company is entitled to tax holiday under Income tax Act, 1961 no deferred tax is recognised in respect of timing differences which reverse during the tax holiday period, to the extent company''s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognised in the year in which timing difference originate.

Unrecognised deferred tax assets of earlier years are reassessed and recognized to the extent that it has become reasonably certain or virtually certain, as the case may be that future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

(iv) Minimum Alternate Tax (MAT) Credit

MAT credit is recognised, as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified year. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognised as an asset in accordance with the recommendation contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal income tax during the specified period.

17. Provisions, Contingent liabilities and Contingent assets

(i) Provisions, involving substantial degree of estimation in measurement, are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.

(ii) Contingent liabilities, which are possible or present obligations that may but probably will not require outflow of resources, are not recognised but are disclosed in the Notes to the financial statements.

(iii) Contingent assets are neither recognised nor disclosed in the financial statements.

18. Earnings per share

(i) The basic earnings per share (EPS) is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

(ii) For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

19. Proposed dividend

A provision is made in the books of account for the dividend proposed by the Board, pending approval at the Annual General Meeting.

20. Cash and cash equivalents

Cash and cash equivalents comprise of cash at bank and in hand and short-term investments with an original maturity of three months or less.


Mar 31, 2012

1. Accounting convention

The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with notified accounting standards issued by the Companies (Accounting Standard) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

2. Fixed assets

(i) Fixed assets are stated at cost of acquisition which includes inland freight, duties and taxes and incidental expenses related to acquisition and net of CENVAT wherever applicable. In respect of projects involving construction, related pre-operative expenses form part of the value of the assets capitalised.

(ii) Revenue expenditure incurred during the construction period of the project is shown under "Unallocated Expenditure Pending Capitalisation" till the commencement of the commercial production or their intended use and the same is capitalised by allocating to relevant assets in the ratio of their direct costs.

3. Depreciation

(i) Depreciation is charged in the accounts under straight line method in accordance with rates specified in Schedule XIV of the Companies Act, 1956.

(ii) Depreciation has been provided at one hundred percent for assets costing less than Rs.5,000/-.

(iii) Leasehold land is amortised over the lease period.

4. Intangible assets and amortisation

Cost relating to intangible assets, which are acquired, is capitalised and amortised over a period of 3 years, which is based on their estimated useful life.

5. Inventories

(i) Inventories are valued at cost and net realisable value whichever is lower except the scrap which is valued at net realisable value. Cost is determined using weighted average cost method.

(ii) Stationery, uniforms and canteen expenses are charged off to the revenue at the time of purchase.

6. Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised as a part of cost of such asset till such time as the asset is ready for its intended use.

Other borrowing costs are recognised as expense for the period.

7. Investments

(i) Investments are classified into current and long-term investments.

(ii) Current investments are valued at lower of cost and fair value.

(iii) Long-term investments are valued at cost of acquisition. Provision is made for decline, other than temporary, in the value of investments.

(iv) On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of profit and loss.

8. 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 readily measured.

(i) Domestic sales

Gross revenue includes excise duty and adjustments for price variation and liquidated damages and recognised on dispatch of products from the factories of the company.

(ii) Export sales

Revenue from export sales is recognised when the significant risks and rewards of ownership are transferred to the customers which is based upon the terms of the applicable contract.

(iii) Service income

Service income is recognised as per the terms of the contracts with customers when the related services are performed or the agreed milestones are achieved.

(iv) Interest

Revenue is recognised on an accrual basis and on a time proportion basis taking into account the amount outstanding and the applicable rate.

(v) Dividend

Revenue is recognised when the shareholders' right to receive payment is established by the balance sheet date.

9. Excise duty

Excise duty recovered is included in "Gross Sales". Excise duty on despatches is shown as an item of expense and deducted from gross sales. Value of closing stock of finished goods includes excise duty paid / payable on such stocks wherever applicable.

10. Employee benefits

Short term employee benefits

Short term employee benefits are recognised as an expense as per the company's scheme based on expected obligation on undiscounted basis.

Long term employee benefits

(i) Defined contribution plans

Provident fund: Contribution to provident fund is made at the prescribed rates to the Employees Provident Fund Scheme of the Central Government and is charged to the Statement of profit and loss.

(ii) State plans

Employer's contribution to Employee's State Insurance is charged to Statement of profit and loss.

(iii) Defined benefit plans

a) Gratuity

The Company makes contribution to a scheme administered by the Life Insurance Corporation of India ('LIC') to discharge gratuity liabilities to the employees. Annual contribution to the fund as determined by the LIC is expensed in the year of contribution. The shortfall between the accumulated funds available with LIC and liability as determined on the basis of an actuarial valuation is provided for at the year-end. The actuarial gains / losses are immediately taken to the Statement of profit and loss.

b) Leave encashment

The company records its unavailed leave liability based on actuarial valuation using projected unit credit method.

c) Actuarial gains / losses arising during the year are recognised in the Statement of profit and loss.

(iv) Terminal benefits are recognised as an expense as and when incurred.

11. Foreign exchange transactions

Transactions in foreign exchange, other than those covered by forward contracts, are accounted for at the exchange rates prevailing on the date of transactions. Assets and liabilities remaining unsettled at the end of the year other than those covered by forward contracts are translated at the closing rate. Realised gains and losses on foreign exchange transactions are recognised in the Statement of profit and loss.

12. Research and development

Revenue expenditure on research and development is charged to the Statement of profit and loss. Capital expenditure on research and development is shown as an addition to fixed assets.

13. Operating leases

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term.

14. Taxation

(i) Tax expense (or tax saving) is the aggregate of current year tax, deferred tax charged (or credited) to the Statement of profit and loss.

(ii) Current year tax

The provision for taxation is based on assessable profits of the company as determined under the Income Tax Act, 1961. The company also provides for such disallowances made on completion of assessments pending appeals, as considered appropriate depending on the merits of each case.

(iii) Deferred tax

Deferred Income Taxes are recognized for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognized and carried forward only to the extent that it has become a reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(iv) Minimum Alternate Tax (MAT) Credit

MAT credit is recognised, as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified year. In the year in which the Minimum Alternative Tax (MAT) credit becomes eligible to be recognised as an asset in accordance with the recommendation contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the profit and loss account and shown as MAT Credit Entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal income tax during the specified period.

15. Provisions, Contingent liabilities and Contingent assets

(i) Provisions, involving substantial degree of estimation in measurement, are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources.

(ii) Contingent liabilities, which are possible or present obligations that may but probably will not require outflow of resources, are not recognised but are disclosed in the Notes to the financial statements.

(iii) Contingent assets are neither recognised nor disclosed in the financial statements.

16. Earnings per share

(i) The basic earnings per share is calculated considering the weighted average number of equity shares outstanding during the year.

(ii) The diluted earnings per share is calculated considering the effects of potential equity shares on net profit after tax for the year and weighted average number of equity shares outstanding during the year.

17. Proposed dividend

A provision is made in the books of account for the dividend proposed by the directors, pending approval at the Annual General Meeting.

18. Use of estimates

Preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known / materialised.


Mar 31, 2011

1 Accounting convention

The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with notified accounting standards issued by the Companies (Accounting Standard ) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

2 Fixed assets

Fixed assets are stated at cost of acquisition which includes inland freight, duties and taxes and incidental expenses related to acquisition and net of CENVAT wherever applicable. In respect of projects involving construction, related pre-operational expenses form part of the value of the assets capitalised.

3 Depreciation

(i) Depreciation is charged in the accounts under Straight Line Method in accordance with rates specified in Schedule XIV of the Companies Act, 1956.

(ii) Depreciation has been provided at one hundred percent for assets costing less than Rs.5,000/-.

(iii) Leasehold land is amortised over the lease period.

4 Intangible assets and amortisation

Cost relating to intangible assets, which are acquired, is capitalised and amortised over a period of 3 years, which is based on their estimated useful life.

5 Inventories

(i) Inventories are valued at cost and net realisable value whichever is lower except the scrap which is valued at net realisable value. Cost is determined using weighted average cost method.

(ii) Stationery, uniforms and canteen expenses are charged off to the revenue at the time of purchase.

6 Borrowing costs

Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised as a part of cost of such asset till such time as the asset is ready for its intended use.

7 Investments

Long term investments are valued at cost. Provision is made for decline, other than temporary, in value of investments.

8 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 readily measured.

(i) Sales

Gross sales include excise duty and adjustments for price variation and liquidated damages.

(ii) Interest

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the applicable rate.

(iii) Dividend

Revenue is recognised when the shareholders right to receive payment is established by the balance sheet date.

9 Excise duty

Excise duty recovered is included in "Gross Sales". Excise duty on despatches is shown as an item of expense and deducted from gross sales. The value of closing stock of finished goods includes excise duty paid / payable on such stocks.

10 Employee benefits

(i) Defined contribution plans

Provident fund: Contribution to provident fund is made at the prescribed rates to the Employees Provident Fund Scheme of the Central Government and is charged to the Profit and Loss Account.

(ii) State plans

Employers contribution to Employees State Insurance is charged to Profit and Loss Account.

(iii) Defined benefit plans

a) Gratuity:

The Company makes contribution to a scheme administered by the Life Insurance Corporation of India (LIC) to discharge gratuity liabilities to the employees. Annual contribution to the fund as determined by the LIC is expensed in the year of contribution. The shortfall between the accumulated funds available with LIC and liability as determined on the basis of an actuarial valuation is provided for at the year- end. The actuarial gains / losses are immediately taken to profit and loss account.

b) Leave encashment:

The company records its unavailed leave liability based on actuarial valuation using projected unit credit method.

(iv) Short term employee benefits

Short term employee benefits are recognised as an expense as per the companys scheme based on expected obligation on undiscounted basis.

11 Foreign exchange transactions

Transactions in foreign exchange, other than those covered by forward contracts, are accounted for at the exchange rates prevailing on the date of transactions. Assets and liabilities remaining unsettled at the end of the year other than those covered by forward contracts are translated at the closing rate. Realised gains and losses on foreign exchange transactions are recognised in the Profit and Loss Account.

12 Research and development

Revenue expenditure on research and development is charged to the Profit and Loss Account. Capital expenditure on research and development is shown as an addition to fixed assets.

13 Operating leases

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight- line basis over the lease term.

14 Taxation

Tax expense (or tax saving) is the aggregate of current year tax, deferred tax charged (or credited) to the Profit and Loss Account for the year.

(i) Current year charge

The provision for taxation is based on assessable profits of the company as determined under the Income Tax Act, 1961. The company also provides for such disallowances made on completion of assessments pending appeals, as considered appropriate depending on the merits of each case.

(ii) Deferred tax

Deferred income taxes are recognised for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in income using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised and carried forward only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

15 Contingent liabilities

These are disclosed by way of notes on the balance sheet. Provision is made in the accounts in respect of those contingencies which are likely to materialise into liability after the year end, till the finalisation of accounts and have material effect on the position stated in the balance sheet.

16 Provisions

A provision is recognised when there is a present obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

17 Earning per share

Earning per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

18 Use of estimates

Preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known/materialised.


Mar 31, 2010

(a) Accounting convention:

The financial statements are prepared under the historical cost convention on an accrual basis and in accordance with notified accounting standards issued by the Companies (Accounting Standard ) Rules, 2006 and the relevant provisions of the Companies Act, 1956.

(b) Fixed assets :

Fixed assets are stated at cost of acquisition which includes inland freight, duties and taxes and incidental expenses related to acquisition and net of CENVAT wherever applicable. In respect of project involving construction, related pre-operational expenses form part of the value of the assets capitalised. Revalued fixed assets are stated at the fair market value as per the valuation of registered valuers .The increase in value of such assets on revaluation is credited to the revaluation reserve account.

(c) Depreciation :

(i) Depreciation is charged in the accounts under Straight Line Method in accordance with rates specified in Schedule XIV of the Companies Act, 1956

(ii) Additional depreciation is charged on the increased amount of assets due to revaluation to the Revaluation Reserve created on the revaluation of the said assets

(iii) Depreciation has been provided at one hundred percent for assets of cost less than Rs.5,000/- (iv) Leasehold Land is amortised over the lease period.

(d) Intangible assets and amortisation :

Cost relating to Intangible assets, which are acquired, are capitalised and amortised over the period of 3 years, which is based on their estimated useful life.

(e) Inventories:

(i) Inventories are valued at cost and net realisable value whichever is lower except the scrap whicherver is valued at net realisable value. Cost is determined using weighted average cost method.

(ii) Stationery, uniforms and canteen expenses are charged off to the revenue at the time of purchase.

(f) Borrowing costs:

Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised as a part of cost of such asset till such time as the asset is ready for its intended use.

(g) Investments:

Long term investments are valued at cost. Provision is made for decline, other than temporary, in value of investments.

(h) 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 readily measured.

(i) Sales :

Gross sales includes excise duty and adjustments for price variation and liquidated damages.

(ii) Interest:

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the applicable rate.

(iii) Dividend:

Revenue is recognised when the shareholders right to receive payment is established by the balance sheet date.

(i) Excise duty :

Excise duties recovered are included in "Gross sales". Excise duty on despatches is shown as an item of expense and deducted from Gross sales. The value of closing stock of finished goods includes excise duty paid/payable on such stocks.

(j) Employee benefits :

Defined contribution plans:

Provident fund: Contribution to provident fund is made at the prescribed rates to the Employees Provident Fund Scheme by the Central Government and is charged to the Profit and Loss Account

Defined benefit plans:

(i) Gratuity: The Company makes contribution to a scheme administered by the Life Insurance Corporation of India (LIC) to discharge gratuity liabilities to the employees. Annual contribution to the fund as determined by the LIC is expensed in the year of contribution. The shortfall between the accumulated funds available with LIC and liability as determined on the basis of an actuarial valuation is provided for at the year end. The Actuarial gains/losses are immediately taken to profit and loss account.

(ii) Leave encashment: The Company records its unavailed leave liability based on actuarial valuation using projected unit credit method

Short term employee benefits:

Short term employee benefits are recognised as an expense as per the companys scheme based on expected obligation on undiscounted basis

State plans: Employers contribution to Employees State Insurance is charged to Profit and Loss Account

(l) Research and development:

Revenue Expenditure on Research and Development is charged to the Profit and Loss Account. Capital Expenditure on Research and Development is shown as an addition to fixed assets

(m) Operating leases :

Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term.

(n) Taxation :

Tax expense (tax saving) is the aggregate of Current year Tax, Deferred Tax charged (or credited) to the Profit and Loss Account for the year.

(i) Current year charge

The provision for taxation is based on assessable profits of the Company as determined under the Income Tax Act, 1961. The Company also provides for such disallowances made on completion of assessments pending appeals, as considered appropriate depending on the merits of each case

(ii) Deferred tax

Deferred income taxes are recognised for the future tax consequences attributable to timing differences between the financial statement determination of income and their recognition for tax purposes. The effect on deferred tax assets and liabilities of a change in tax rates is recognised in income using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised and carried forward only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

(o) Contingent liabilities :

These are disclosed by way of Notes on the Balance Sheet. Provision is made in the accounts in respect of those contingencies which are likely to materialise into liability after the year end, till the finalisation of accounts and have material effect on the position stated in the Balance Sheet.

(p) Provisions :

A provision is recognised when there is a present obligation as a result of past event. It is probable that an outflow of resources will be required to settle the obligation and in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

(q) Earnings per share :

Earnings Per Share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

(r) Use of estimates :

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known/materialised.

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