Accounting Policies of Rain Industries Ltd. Company
Dec 31, 2022
Note 1: Corporate Overview
Rain Industries Limited (''the Company'') was incorporated on March 15, 1974 under the erstwhile Companies Act, 1956 and is domiciled in India with its registered office in Hyderabad, Telangana. The Company is engaged in sale of products, duty scripts and providing shared support services to its group companies. The Company''s equity shares are listed at BSE Limited and National Stock Exchange of India Limited in India.
Note 2: Significant Accounting Policies
a) Basis of preparation of standalone financial statements
(i) Statement of Compliance
The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) notified under Section 133 of Companies Act, 2013, (the ''Act'') and other relevant provisions of the Act.
The standalone financial statements have been prepared on a going concern basis. Relevant Ind AS effective as on the Company''s annual reporting date December 31, 2022 have been applied. The accounting policies are applied consistently to all the periods presented in the standalone financial statements.
The standalone financial statements were authorised for issue by the Company''s Board of Directors on February 27, 2023.
(ii) Functional and presentation currency
These Standalone financial statements are presented in Indian Rupees (H), which is also the Company''s functional currency. All amounts have been rounded-off to the nearest millions, unless otherwise indicated.
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(iii) Basis of measurement The standalone financial statements have been prepared on a historical cost basis, except for the following: |
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Items |
Measurement basis |
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Certain financial assets and liabilities (refer accounting policy regarding financial instruments) |
Fair value |
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Net defined benefit asset/liability |
Fair value of plan assets less present value of defined benefit plan |
In preparing these standalone financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Accounting estimates could change from period to period. Actual results may differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis and appropriate changes are made as management becomes aware of changes in circumstances surrounding the estimates. Revisions to accounting estimates are reflected in the period in which such changes are made and if material, their effects are disclosed in the standalone financial statements.
Assumptions and estimation uncertainties
Information about critical judgments in applying accounting policies, as well as estimates and assumptions that have the most significant effect to the carrying amounts of assets and liabilities within the next financial year, are included in the following notes:
- Measurement of defined benefit obligations: key actuarial assumptions used in measurement (refer note 31)
- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources (refer note 33)
- Recognition and recoverability of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used (refer note 28)
- Useful life of property, plant and equipment (refer note 2 (f))
- Impairment of non-financial assets (refer note 29 and 2 (g))
- Expected Credit loss - provision for doubtful debts (refer note 29.3)
- Assessment of functional currency (refer note 2(a)(ii))
Current and Non-current classification
All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle.
Assets
An asset is classified as current when it satisfies any of the following criteria:
i) It is expected to be realised in, or is intended for sale or consumption in, the Company''s normal operating cycle
ii) It is held primarily for the purpose of being traded
iii) It is expected to be realised within 12 months after the reporting date or
iv) It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria
i) It is expected to be settled in the Company''s normal operating cycle
ii) It is held primarily for the purpose of being traded
iii) It is due to be settled within 12 months after the reporting date or
iv) The Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of noncurrent financial liabilities. All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The Company''s operating cycle is within a period of 12 months.
(v) Measurement of fair value
Accounting policies and disclosures require measurement of fair value for both financial and nonfinancial assets.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs
All assets and liabilities for which fair value is measured or disclosed in the standalone financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
o Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
o Level 2 â Valuation techniques for which the
lowest level input that is significant to the fair value measurement is directly or indirectly observable
o Level 3 â Valuation techniques for which the
lowest level input that is significant to the fair value measurement is unobservable
For changes that have occurred between levels of hierarchy during the year, the Company re-assesses categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
Business combinations are accounted for using the acquisition method. The acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the acquisition date and determining whether control is transferred from one party to another. Control exists when the Company is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through power over the entity. In assessing control, potential voting rights are considered only if the rights are substantive.
The Company determines that it has acquired a business when the acquired set of activities and assets include an input and a substantive process that together significantly contribute to the ability to create outputs.
The acquired process is considered substantive if it is critical to the ability to continue producing outputs, and the inputs acquired include an organised workforce with the necessary skills, knowledge, or experience to perform that process or it significantly contributes to the ability to continue producing outputs and is considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs.
The consideration transferred for the business combination is generally measured at fair value as at the date the control is acquired, as are the net identifiable assets acquired. Any goodwill that arises is tested annual for impairment. Any gain on bargain purchase is recognised in OCI and accumulated in equity as capital reserve if there exists clear evidence of the underlying reasons for classifying the business combination as resulting in a bargain purchase; otherwise the gain is recognised directly in equity as capital reserve. Transaction costs are expenses as incurred, except to the extent related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships with the acquiree. Such amounts are generally recognised in profit or loss.
When the Company acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in statement of profit and loss or other comprehensive income, as appropriate.
Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured subsequently, and settlement is accounted for within equity. Other contingent consideration is remeasured at fair value at each reporting date and changes in the fair value of the contingent consideration are recognised in profit and loss.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted through goodwill during the measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date.
These adjustments are called as measurement period adjustments. The measurement period does not exceed one year from the acquisition date.
Business combinations arising from transfers of interest in entities that are under the control of the shareholder that controls the Company are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established; for this purpose comparatives are revised. The assets and liabilities acquired are recognised at their carrying amounts. The identity of the reserves is preserved and they appear in the standalone financial statements of the Company in the same form in which they appeared in the standalone financial statements of the acquired entity. The difference, if any, between the value of net assets and the consequent reduction in value of investment held by the Company is transferred to the capital reserve or to the accumulated balance of profit and loss.
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. Trade receivables and debt securities issued are initially recognised when they are originated. All other assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.
Recognition and initial measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
All financial assets not classified as measured at amortised cost or fair value through other comprehensive income (FVOCI) as described above are measured at fair value through profit or loss (FVTPL). This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is held at an individual asset level because this best reflects the way the business is managed and information is provided to management. The information considered includes:
- the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management''s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets.
- how the performance of the portfolio is evaluated and reported to the Company''s management.
- the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed.
- how managers of the business are compensated -e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
- the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL
Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, ''principal'' is defined as the fair value of the financial asset on initial recognition. ''Interest'' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:
- contingent events that would change the amount or timing of cash flows;
- terms that may adjust the contractual coupon rate, including variable interest rate features;
- prepayment and extension features; and
- terms that limit the Company''s claim to cash flows from specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual par-amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.
Equity investments
All equity investments within the scope of Ind AS 109 are measured at fair value. Equity instruments which
are held for trading and contingent consideration recognised by an acquirer in a business combination to which Ind AS 103 applies are classified as at FVTPL. For all other equity instruments, the Company may make an irrevocable election to present in OCI subsequent changes in the fair value. The Company makes such election on an instrument-by-instrument basis.
The classification is made upon initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to the statement of profit and loss, even on sale of investment.
However, on sale, the Company may transfer the cumulative gain or loss within equity. Equity investments designated as FVTOCI are not subject to impairment assessment.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognised in the statement of profit and loss.
Financial assets: Subsequent measurement and gains and losses
Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in statement of profit and loss.
Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in statement of profit and loss. Any gain or loss on derecognition is recognised in statement of profit and loss.
Debt investments at FVOCI: These assets are subsequently measured at fair value. Interest income under the effective interest method, foreign exchange gains and losses and impairment are recognised in statement of profit and loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to statement of profit and loss.
Equity investments at FVOCI: These assets are subsequently measured at fair value. Dividends are recognised as income in statement of profit and loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are not reclassified to statement of profit and loss.
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognised (i.e., removed from the Company''s balance sheet) when:
i) The contractual rights to receive cash flows from the asset have expired, or
ii) The Company has transferred its rights to receive contractual cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Initial recognition and measurement
All financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss, transaction costs that are directly attributable to its acquisition or issue. The Company''s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts.
Classification and Subsequent measurement
Financial liabilities are classified as measured at amortised cost or fair value through profit or loss. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the statement of profit and loss. All other financial liabilities are subsequently measured at amortised cost using the Effective Interest Rate method.
Derecognition
A financial liability is derecognised when the contractual obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability at fair value. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
Offsetting:
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or realise the asset and settle the liability simultaneously.
Ind AS 115 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to the customer.
Revenue from sale of goods and sale of duty scripts are recognised at the point in time when control of the goods is transferred to the customer. The revenue is measured on the basis of the consideration defined in the contract with a customer, including variable consideration, such as discounts, volume rebates, or other contractual reductions.
Revenue from services rendered is recognised when the related services are performed in accordance with contract terms.
Interest income or expense is recognised using the effective interest method on time proportion method.
Dividend income is recognised when the Company''s right to receive dividend is established, which is generally when shareholders approve the dividend.
f) Property, plant and equipment
Property, plant and equipment are stated at cost/ professional valuation less accumulated depreciation. Cost includes directly attributable to the acquisition of the items including its purchase price, import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located. Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increases the future benefits from the existing assets beyond its previously assessed standards of performance.
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. Any gain or loss on disposal of an item of property, plant and equipment is recognised in statement of profit and loss.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheet date are shown under other non-current assets as capital advances.
Depreciation on all the tangible fixed assets is provided using the straight-line method based on the useful life of the assets as prescribed by Schedule II to the Companies Act, 2013.
Depreciation is calculated on a pro-rata basis from the date of installation till the date the assets are sold or disposed.
Gains and losses on disposal of tangible assets are determined as the difference between net sales proceeds and the carrying amount and are presented in the statement of profit and loss.
Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in statement of profit and loss as incurred.
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Items |
Years |
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Buildings |
60 |
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Furniture and Fixtures |
10 |
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Office equipment |
3-5 |
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Vehicles |
10 |
The residual values, useful lives, and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
g) Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount.
For the purpose of impairment testing, assets are grouped together into the smallest group of assets (Cash Generating Unit or CGU) that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of an asset or CGU is the higher of its value in use and its fair value less costs of disposal. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. An impairment loss is recognised in the statement of profit and loss in the respective financial years, if the carrying amount of the assets or CGU exceeds its recoverable
amount. 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 as per requirement of Ind AS 36 - "Impairment of Assets".
h) Foreign Currency Transactions and Balances
Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transactions. Monetary assets and liabilities denominated in foreign currency are restated at the prevailing year end rates. The resultant gain/loss upon such restatement along with the gain/loss on account of foreign currency transactions are accounted in the statement of profit and loss. In respect of items covered by forward exchange contracts, the premium or discount arising at the inception of such a forward exchange contract is amortised as expense or income over the life of the contract. Any profit or loss arising on cancellation or renewal of such a forward contract is recognised in the statement of profit and loss.
i) Equity investments in subsidiaries
Non-current investments in subsidiaries are carried at cost less provision for diminution, other than temporary, if any, in the value of such investments.
j) Retirement and other employee benefits Defined contribution plans
The Company makes specified monthly contribution towards employee provident fund to Government administered provident fund scheme, which is a defined contribution scheme. The Company''s contribution is recognised as an expense in the statement of profit and loss during the period in which the employee renders the related service. The Company has no further obligations beyond its monthly contributions.
For defined benefit plans, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in
the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to statement of profit and loss in subsequent periods.
Past service costs are recognised in statement of profit and loss on the earlier of:
- The date of the plan amendment or curtailment, and
- The date that the Company recognises related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and nonroutine settlements; and
- Net interest expense or income.
When the benefits of a plan are changed or curtailed, the resulting change in the benefit that relates to the past service (''past service cost'') or the gain or loss on curtailment is recognised immediately in the statement of profit and loss. The Company recognises the gains and losses on the settlement of a defined benefit plan when settlement occurs.
Compensated Absences:
The employees of the Company are entitled to compensated absences. The employees can carry forward a portion of the unutilised accumulating compensated absences and utilise it in future periods or encash the leaves during the period of employment or retirement or at termination of employment. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the end of the reporting period. The Company recognises accumulated compensated absences based on actuarial valuation using the projected unit credit method. Non-accumulating compensated absences are recognised in the period in which the absences occur.
Employee benefits payable wholly within twelve months of receiving employee services are classified as shortterm employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognised as an expense as the related service is rendered by employees.
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company accounts for each lease component within the contract as a lease separately from nonlease 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.
The Company has elected not to apply the requirements of Ind AS 116 Leases to short term leases of all assets that have a lease term of 12 months or less. The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term.
In pursuance of the notification issued by the Ministry of corporate affairs dated July 24, 2020, the Company has elected to apply the practical expedient arising on account of Covid-19 not to account for the changes in the lease payments as a lease modification as it satisfies the conditions mentioned in the paragraph 46B of Ind AS 116.
At the inception of the lease the Group classifies each of its leases as either an operating lease or a finance lease. The Group 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.
If an arrangement contains lease and non-lease components, the Group applies Ind AS 115 Revenue from contracts with customers to allocate the consideration in the contract.
Borrowing costs include interest and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset up to the date of capitalisation of such asset is added to the cost of the assets.
Deferred finance costs consists of loan financing fees, which are being amortised over the life of the loan. Amortisation of deferred finance cost is included in other borrowing costs of statement of profit and loss. Other borrowings costs are recognised in the period in which they are incurred.
The earnings considered in ascertaining the Company''s Earnings Per Share (EPS) comprise net profit after tax (and includes the post-tax effect of any extra ordinary items). The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year. Dilutive potential equity shares are deemed to be converted as of the beginning of the year, unless they have been issued at a later date. The number of shares used for computing the diluted EPS is the weighted average number of shares outstanding during the year after considering the dilutive potential equity shares.
Current tax is determined based on the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised on timing differences being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods subject to consideration of prudence. Deferred tax assets on unabsorbed depreciation and carry forward of losses are recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised. The Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised. Deferred tax assets and liabilities have been measured using the tax rates and tax laws that have been enacted or substantially enacted by the Balance Sheet date.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that 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, except when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred 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 tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognised subsequently if new information about facts and circumstances change. Acquired deferred tax benefits recognised within the measurement period reduce goodwill related to that acquisition if they result from new information obtained about facts and circumstances existing at the acquisition date. If the carrying amount of goodwill is zero, any remaining deferred tax benefits are recognised in OCI/ capital reserve depending on the principle explained for bargain purchase gains. All other acquired tax benefits realised are recognised in statement of profit and loss.
o) Statement of Cash Flow and Cash & cash equivalents
Cash flows are reported using the indirect method, whereby net profit/ (loss) before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated.
For the purpose of the statement of cash flows, cash and cash equivalents consists of cash and short-term deposits, as defined below, net of outstanding bank overdrafts as they are considered an integral part of the Company''s cash management.
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.
p) Provisions and contingencies
A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation
at the end of the reporting period. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event based on a reliable estimate of such obligation.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Where the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.
Contingent liabilities are disclosed in the notes to the standalone financial statements. A contingent liability recognised in a business combination is initially measured at its fair value. Subsequently, it is measured at the higher of the amount that would be recognised in accordance with the requirements for provisions above or the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the requirements for revenue recognition.
The Company recognises a liability to make cash distributions to equity holders of the parent when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
Interim dividend is recorded as a liability on the date of declaration by the Board of Directors.
Dec 31, 2018
NOTE 1: CORPORATE OVERVIEW
Rain Industries Limited (''the Company'') was incorporated on March 15, 1974 under the erstwhile Companies Act, 1956 and is domiciled in India with its registered office in Hyderabad.
The Company is engaged in sale of products and providing shared support services to its group companies. The Company''s equity shares are listed at BSE Limited and National Stock Exchange of India Limited in India.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
a) Basis of preparation of Financial Statements
(i) Statement of Compliance
The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) notified under Section 133 of Companies Act, 2013, (the Act'') and other relevant provisions of the Act.
The standalone financial statements have been prepared on a going concern basis. Relevant Ind AS effective as on the Company''s annual reporting date December 31, 2018 have been applied. The accounting policies are applied consistently to all the periods presented in the financial statements. The standalone financial statements were authorized for issue by the Company''s Board of Directors on February 27 2019.
(ii) Functional and presentation currency
These Standalone financial statements are presented in Indian Rupees (''), which is also the Company''s functional currency. All amounts have been rounded-off to the nearest millions, unless otherwise indicated.
(iv) Use of estimates
In preparing these Standalone financial statements, management has made judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Accounting estimates could change from period to period. Actual results may differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis and appropriate changes are made as management becomes aware of changes in circumstances surrounding the estimates. Revisions to accounting estimates are reflected in the period in which such changes are made and if material, their effects are disclosed in the financial statements.
Assumptions and estimation uncertainties
Information about critical judgments in applying accounting policies, as well as estimates and assumptions that have the most significant effect to the carrying amounts of assets and liabilities within the next financial year, are included in the following notes:
- Measurement of defined benefit obligations: key actuarial assumptions (refer note 29)
- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources (refer note 31)
- Recognition and recoverability of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used (refer note 26);
- Useful life of property, plant and equipment (refer note 2 (f))
- Impairment of financial assets and non-financial assets (refer note 27 and 2 (g))
- Expected Credit loss - provision for doubtful debts (refer note 273)
- Assessment of functional currency (refer note 2(a)(ii)).
(v) Measurement of fair value
Accounting policies and disclosures require measurement of fair value for both financial and non-financial assets.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For changes that have occurred between levels of hierarchy during the year, the Company re-assesses categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
Current and Non-current classification
All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle.
Assets
An asset is classified as current when it satisfies any of the following criteria:
i) It is expected to be realized in, or is intended for sale or consumption in, the Company''s normal operating cycle
ii) It is held primarily for the purpose of being traded
iii) It is expected to be realized within 12 months after the reporting date or
iv) It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
i) It is expected to be settled in the Company''s normal operating cycle
ii) It is held primarily for the purpose of being traded
iii) It is due to be settled within 12 months after the reporting date or
iv) The Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. The Company''s operating cycle is within a period of 12 months.
contingent consideration is not within the scope of Ind AS 109, it is measured in accordance with the appropriate Ind AS. Contingent consideration that is classified as equity is not re-measured at subsequent reporting dates and subsequent its settlement is accounted for within equity.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted through goodwill during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognized at that date.
These adjustments are called as measurement period adjustments. The measurement period does not exceed one year from the acquisition date.
Business combinations arising from transfers of interest in entities that are under the control of the shareholder that controls the Company are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established; for this purpose comparatives are revised. The assets and liabilities acquired are recognized at their carrying amounts. The identity of the reserves is preserved and they appear in the financial statements of the Company in the same form in which they appeared in the financial statements of the acquired entity. The difference, if any, between the value of net assets and the consequent reduction in value of investment held by the Company is transferred to the capital reserve or to the accumulated balance of profit and loss.
c) Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial Assets
Recognition and initial measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
b) Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Company elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquirerâs identifiable net assets. Transaction costs related to acquisition are expensed as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their acquisition date fair values. For this purpose, the liabilities assumed include contingent liabilities representing present obligation and they are measured at their acquisition fair values irrespective of the fact that outflow of resources embodying economic benefits is not probable.
However, the following assets and liabilities acquired in a business combination are measured at the basis indicated below: -
Deferred tax assets or liabilities, and the assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with Ind AS 12- âIncome tax" and Ind AS 19 -"Employee Benefits" respectively. - Assets that are classified as held for sale in accordance with Ind AS 105- âNon-current Assets Held for Sale and Discontinued Operations" are measured in accordance with that standard. Reacquired rights are measured at a value determined based on the remaining contractual term of the related contract. Such valuation does not consider potential renewal of the reacquired right.
When the Company acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivates in host contracts by the acquiree. If the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognized in profit and loss or other comprehensive income, as appropriate.
Any contingent consideration to be transferred by the acquirer is recognized at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of Ind AS 109 - âFinancial Instrumentsâ, âis measured at fair value with changes in fair value recognized in profit or loss. If the money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.
In making this assessment, the Company considers:
- contingent events that would change the amount or timing of cash flows;
- terms that may adjust the contractual coupon rate, including variable interest rate features;
- prepayment and extension features; and
- terms that limit the Company''s claim to cash flows from specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a significant discount or premium to its contractual par-amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.
Financial assets: Subsequent measurement and gains and losses
Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit and loss.
Financial assets at amortized cost: These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit and loss.
All financial assets not classified as measured at amortized cost or Fair Value Through Other Comprehensive Income (FVOCI) as described above are measured at Fair Value Through Profit or Loss (FVTPL). This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets Business model assessment
The Company makes an assessment of the objective of the business model in which a financial asset is held at an individual asset level because this best reflects the way the business is managed and information is provided to management. The information considered includes:
- the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management''s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;
- how the performance of the portfolio is evaluated and reported to the Company''s management;
- the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;
- how managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and
- the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL
Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, ''principal'' is defined as the fair value of the financial asset on initial recognition. ''Interest'' is defined as consideration for the time value of
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit and loss.
Offsetting:
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or realise the asset and settle the liability simultaneously,
d) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, considering contractually defined terms of payment and excludes taxes or duties collected on behalf of the government.
Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of trade discounts and allowances.
Revenue from sale of duty scripts is recognized when the significant risks and rewards of ownership have been passed to the buyer, consideration can be reliably measured and its recovery is probable.
Revenue from services rendered is recognized when the related services are performed in accordance with contract terms.
In accordance with Indian Accounting Standard - 18 on Revenue and Schedule III of the Companies Act, 2013 unlike Excise Duties levies like GST are not part of revenue.
e) Other income
Interest income or expense is recognized using the effective interest method on time proportion method.
Debt investments at FVOCI: These assets are subsequently measured at fair value. Interest income under the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
Equity investments at FVOCI: These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are not reclassified to profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is primarily derecognized (i.e., removed from the Company''s balance sheet) when:
i) The rights to receive cash flows from the asset have expired, or
ii) The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Financial liabilities:
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, as appropriate. All financial liabilities are recognized 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 subsequently measured at amortized cost using the Effective Interest Rate method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognized in the Statement of Profit and Loss.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
g) Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. For the purpose of impairment testing, assets are grouped together into the smallest group of assets (Cash Generating Unit or CGU) that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. The recoverable amount of an asset or CGU is the greater of its value in use and its net selling price. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. An impairment loss is recognized in the Statement of Standalone Profit and Loss in the respective financial years, if the carrying amount of the assets or CGU exceeds its recoverable amount. 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 amortized historical cost as per requirement of Ind AS 36 - âImpairment of Assets''.''
h) Foreign Currency Transactions and Balances
Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transactions. Monetary assets and liabilities denominated in foreign currency are restated at the prevailing year end rates.
The resultant gain/loss upon such restatement along with the gain/loss on account of foreign currency transactions are accounted in the Statement of Profit and Loss. In respect of items covered by forward exchange contracts, the premium or discount arising at the inception of such a forward exchange contract is amortized as expense or income over the life of the contract. Any profit or loss arising on cancellation or renewal of such a forward contract is recognized in the Statement of Profit and Loss.
Dividend income is recognized when the Company''s right to receive dividend is established, which is generally when shareholders approve the dividend.
f) Property, plant and equipment
Property, plant and equipment are stated at cost/professional valuation less accumulated depreciation. Cost includes directly attributable to the acquisition of the items including its purchase price, import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, any directly attributable cost of bringing the item to its working condition for its intended use and estimated costs of dismantling and removing the item and restoring the site on which it is located. Subsequent expenditure related to an item of tangible fixed asset is capitalized only if it increases the future benefits from the existing assets beyond its previously assessed standards of performance.
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. Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheet date are shown under long-term loans and advances as capital advances.
Depreciation on all the tangible fixed assets is provided using the straight-line method based on the useful life of the assets as prescribed by Schedule II to the Companies Act, 2013.
Depreciation is calculated on a pro-rata basis from the date of installation till the date the assets are sold or disposed.
Gains and losses on disposal of tangible assets are determined as the difference between net sales proceeds and the carrying amount, and are presented in the Statement of Standalone Profit and Loss.
Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria losses on the settlement of a defined benefit plan when settlement occurs.
Compensated Absence Policy:
The employees of the Company are entitled to compensated absences. The employees can carry forward a portion of the unutilized accumulating compensated absences and utilize it in future periods or encash the leaves during the period of employment or retirement or at termination of employment. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the end of the reporting period. The Company recognizes accumulated compensated absences based on actuarial valuation using the projected unit credit method. Non-accumulating compensated absences are recognized in the period in which the absences occur.
Other long-term employee benefits
The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary as at December 31st every year using projected unit credit method on the additional amount expected to be paid/availed as a result of the unused entitlement that has accumulated at the balance sheet date. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.
Short-term employee benefits
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognized as an expense as the related service is rendered by employees.
k) Leases
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
Assets leased by the Company in its capacity as lessee where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases.
Such leases are capitalized at the inception of the lease
i) Equity investments in subsidiaries
Non-current investments in subsidiaries are carried at cost less provision for diminution, other than temporary, if any, in the value of such investments.
j) Retirement and other employee benefits Defined contribution plans
The Company makes specified monthly contribution towards employee provident fund to Government administered provident fund scheme, which is a defined contribution scheme. The Company''s contribution is recognized as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service. The Company has no further obligations beyond its monthly contributions.
Defined benefit plans
For defined benefit plans, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognized in profit or loss on the earlier of:
- The date of the plan amendment or curtailment, and
- The date that the Company recognizes related restructuring costs.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the Standalone statement of profit and loss:
- Service costs comprising current service costs, past-service costs, gains and losses on curtailments and no routine settlements; and
- Net interest expense or income.
When the benefits of a plan are changed or curtailed, the resulting change in the benefit that relates to the past service (''past service cost'') or the gain or loss on curtailment is recognized immediately in the Statement of profit or loss. The Company recognizes the gains and
n) Tax expense
Current tax is determined based on the amount of tax payable in respect of taxable income for the year. Deferred tax is recognized on timing differences being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods subject to consideration of prudence. Deferred tax assets on unabsorbed depreciation and carry forward of losses are not recognized unless there is a virtual certainty that there will be sufficient future taxable income available to realize such assets. Deferred tax assets and liabilities have been measured using the tax rates and tax laws that have been enacted or substantially enacted by the Balance Sheet date.
In case of tax payable as Minimum Alternative Tax (''MAT'') under the provisions of the Income tax Act, 1961, the credit available under the Act in respect of MAT paid is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal Income tax during the period for which the MAT credit can be carried forward for set-off against the normal tax liability. MAT credit recognized as an asset is reviewed at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that 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 utilized, except when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred 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 tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Standalone Profit and Loss on a straight-line basis over 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.
Profit or loss on sale and lease back arrangements resulting in operating leases are recognized, in case the transaction is established at fair value, else the excess over the fair value is deferred and amortized over the period for which the asset is expected to be used.
l) Borrowing Costs
Borrowing costs include interest and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction/development of the qualifying asset up to the date of capitalization of such asset is added to the cost of the assets.
Deferred finance costs consists of loan financing fees, which are being amortized over the life of the loan. Amortization of deferred finance cost is included in other borrowing costs of Statement of Profit and loss. Other borrowings costs are recognized in the period in which they are incurred.
m) Earnings Per Share
The earnings considered in ascertaining the Company''s Earnings Per Share (EPS) comprise net profit after tax (and includes the post-tax effect of any extra ordinary items).
The number of shares used in computing basic EPS is the weighted average number of shares outstanding during the year. Dilutive potential equity shares are deemed to be converted as of the beginning of the year, unless they have been issued at a later date. The number of shares used for computing the diluted EPS is the weighted average number of shares outstanding during the year after considering the dilutive potential equity shares.
period. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Provisions for onerous contracts, i.e., contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognized when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event based on a reliable estimate of such obligation.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Where the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.
Contingent liabilities are disclosed in the notes to the Standalone financial statements. A contingent liability recognized in a business combination is initially measured at its fair value. Subsequently, it is measured at the higher of the amount that would be recognized in accordance with the requirements for provisions above or the amount initially recognized less, when appropriate, cumulative amortization recognized in accordance with the requirements for revenue recognition.
q) Dividend declared
The Company recognizes a liability to make cash distributions to equity holders of the parent when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in equity,
r) Segment
Based on the "management approach" as defined in Ind AS 108, "Operating Segments'','' the Chief Operating Decision Maker (CODM) evaluates the Company performance and allocates resources based on an analysis
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity,
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognized subsequently if new information about facts and circumstances change. Acquired deferred tax benefits recognized within the measurement period reduce goodwill related to that acquisition if they result from new information obtained about facts and circumstances existing at the acquisition date. If the carrying amount of goodwill is zero, any remaining deferred tax benefits are recognized in OCI/capital reserve depending on the principle explained for bargain purchase gains. All other acquired tax benefits realised are recognized in profit or loss.
o) Statement of Cash Flows and Cash & cash equivalents
Cash flows are reported using the indirect method, whereby net profit/(loss) before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments.
The cash flows from operating, investing and financing activities of the Company are segregated.
For the purpose of the Standalone 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.
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.
p) Provisions and contingencies
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are measured at the present value of management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows, if any arising from contracts with customers. The Company intends to adopt the new standard effective January 1, 2019 using the modified retrospective method.
To identify the potential impact of the standard on the Company''s financial statements, the Company has analysed contracts of its relevant revenue streams.
The impact of the new standard is identified to be not materially affecting the current recognition and measurement of revenues, though there would be significant additional disclosure requirements for the Company to comply with. of various performance indicators by business segments. Accordingly, information has been presented along the business segments of ''Carbon'', Advanced Materials'' and ''Cements'' as its operating segments in the consolidated financial Statements
s) Standards issued but not yet effective
Ind AS 115 - Revenue from Contracts with Customers
In March, 2018 the Ministry of Corporate Affairs ("MCA") has notified Ind AS 115, Revenue from Contracts with Customers, which is effective for accounting periods beginning on or after April 1, 2018. This standard replaces existing revenue recognition rules with a single comprehensive model to use in accounting for revenue arising from contract with customers. Under Ind AS 115, revenue is recognized when the entity transfers control of promised goods or services to customers. An entity is
Dec 31, 2016
1. Corporate Information
Rain Industries Limited (''the Company'') was incorporated on March 1 5, 1 974 under the Companies Act, 1956. The Company is currently engaged in the business of trading in Carbon Products. The Company''s equity shares are Listed at BSE Limited and National Stock Exchange of India Limited in India.
2. Significant Accounting Policies
(a) Basis of accounting and preparation of financial statements
The financial statements have been prepared in accordance with accounting principles generally accepted in India (Indian GAAP). Indian GAAP comprises Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules, 2014, other pronouncements of the Institute of Chartered Accountants of India, the relevant provisions of the Companies Act, 2013 and guidelines issued by the Securities and Exchange Board of India (SEBI) (Collectively referred to as "IGAAP"). The financial statements are presented in Indian Rupees rounded off to the nearest Millions.
(b) Use of estimates
The preparation of the financial statements in conformity with the Indian GAAP requires the Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made.
(c) Current and non-current classification
All the assets and liabilities have been classified as current or noncurrent as per the Company''s normal operating cycle.
Assets
An asset is classified as current when it satisfies any of the following criteria:
i. It is expected to be realised in, or is intended for sale or consumption in, the Company''s normal operating cycle;
ii. It is held primarily for the purpose of being traded;
iii. It is expected to be realised within 12 months after the reporting date; or
iv. It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.
Current assets include the current portion of non-current financial assets. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
i. It is expected to be settled in the Company''s normal operating cycle;
ii. It is held primarily for the purpose of being traded;
iii. It is due to be settled within 12 months after the reporting date; or
iv. The company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The Company''s operating cycle is within a period of 12 months.
(d) Inventories
Traded goods are valued at lower of weighted average cost and net realisable value. Goods in transit are valued at cost or below.
(e) Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit/ (loss) before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from regular revenue generating, investing and financing activities of the company are segregated.
Cash and cash equivalents for the purpose of cash flow comprise cash at bank and in hand and short term investments with an original maturity of three months or less.
(f) Revenue Recognition
Sales are recognised on dispatch of goods and upon transfer of property in the goods to customers. Sales are inclusive of excise duty, as applicable.
Income from shared services (services provided to Group companies) is recognised by the Company on accrual basis. Income in excess of billings is disclosed under Other current assets as unbilled revenues.
(g) Other Income
Interest income is recognised using the time proportion method, based on the transactional interest rates.
Dividend income is recognised when the Company''s right to receive dividend is established.
(h) Fixed Assets, Depreciation, Impairment
Fixed Assets are stated at cost/professional valuation less accumulated depreciation. Cost includes freight, installation cost, duties and taxes, interest on specific borrowings utilised for financing the qualifying fixed assets and other incidental expenses.
Effective from January 01, 2015, the Company has charged Depreciation based on the revised remaining useful life of the assets as per the requirement of Schedule II of the Companies Act, 2013. Depreciation on fixed assets is provided using the straight-line method based on the useful life of the assets as prescribed by Schedule II to the Companies Act, 2013. Depreciation is calculated on a pro-rata basis from the date of installation till the date the assets are sold or disposed.
Individual assets costing rupees five thousand or below are fully depreciated in the year of acquisition and put to use.
All fixed assets are assessed for any indication of impairment at the end of each financial year. On such indication, the impairment loss being the excess of carrying value over the recoverable value of the assets is charged to the Statement of Profit and Loss in the respective financial years. The impairment loss recognised in prior years is reversed in cases where the recoverable value exceeds the carrying value, upon reassessment in the subsequent years.
(i) Foreign Currency Transactions
Transactions in foreign currency are recorded at the exchange rates prevailing on the date of the transactions. Monetary assets and liabilities denominated in foreign currency are restated at the prevailing year end rates. The resultant gain/ loss upon such restatement along with the gain/ loss on account of foreign currency transactions are accounted in the Statement of Profit and Loss. In respect of items covered by forward exchange contracts, the premium or discount arising at the inception of such a forward exchange contract is amortised as expense or income over the life of the contract. Any profit or loss arising on cancellation or renewal of such a forward contract is recognised in the Statement of Profit and Loss.
(j) Investment
Non-current investments are carried at cost less provision for diminution, other than temporary, if any, in the value of such investments. Current investments are carried at the lower of cost and fair value.
(k) Employee Benefits
Defined Contribution Plans
Contributions paid/payable under defined contribution plans are recognised in the Statement of Profit and Loss each year. Contribution plans comprises of Superannuation fund covered under a scheme administered and managed by ICICI Prudential Life Insurance Company Limited, and Provident Fund is administered and managed by the Government of India. The Company makes monthly contributions and has no further obligations under the plan beyond its contributions.
Defined Benefit Plans
The Company has a defined benefit Gratuity plan covering all its employees. Gratuity is covered under a scheme administered by Life Insurance Corporation of India (LIC). The liability as at the balance sheet date is provided based on an actuarial valuation carried out by an independent actuary, in accordance with Accounting Standard 15 on ''Employee Benefits'' (AS 15).
All actuarial gains and losses arising during the year are recognised in the Statement of Profit and Loss for the year.
Other Long-term Employee Benefits
Other long term employee benefits comprise compensated absences which is provided based on an actuarial valuation carried out in accordance with AS-15 at the end of the year.
Short-term Employee Benefits
Employee benefits payable wholly within twelve months of receiving employee services are classified as short-term employee benefits. These benefits include salaries and wages, bonus and ex-gratia. The undiscounted amount of short-term employee benefits to be paid in exchange for employee services is recognised as an expense as the related service is rendered by employees.
(l) Borrowing Costs
Borrowing costs include interest and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset is added to the cost of the assets.
(m) Leases
Assets leased by the Company in its capacity as lessee where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Leases that do not transfer substantially all the risks and rewards of ownership are classified as operating leases and recorded as expense as and when the payments are made over the lease term.
(n) Earnings Per Share
The earnings considered in ascertaining the company''s Earnings Per Share (EPS) comprise net profit after tax (and includes the post tax effect of any extra ordinary items). The number of shares used in computing Basic EPS is the weighted average number of shares outstanding during the year.
Dilutive potential equity shares are deemed to be converted as of the beginning of the year, unless they have been issued at a later date. The number of shares used for computing the diluted EPS is the weighted average number of shares outstanding during the year after considering the dilutive potential equity shares.
(o) Taxes on Income
Current tax is determined based on the amount of tax payable in respect of taxable income for the year. Deferred tax is recognised on timing differences being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods subject to consideration of prudence. Deferred tax assets on unabsorbed depreciation and carry forward of losses are not recognised unless there is a virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets and liabilities have been measured using the tax rates and tax laws that have been enacted or substantially enacted by the Balance Sheet date.
(p) Provisions and Contingencies
A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the notes to the financial statements.
(ii) Rights, preferences and restrictions attached to the equity shares
The Company has only one class of equity shares having a par value of Rs. 2 each per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the Shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to number of equity shares held by the shareholders.
The Board of Directors of the Company at their meeting held on August 13, 2016, had declared an Interim Dividend of Rs. 1/- per Equity Share i.e. 50% on face value of Rs. 2/- per Equity Share fully paid up for the financial year ending December 31, 2016 (31 December 2015: Rs. 1/-) and no further dividend has been recommended for the said year.
Dec 31, 2015
Note 1: Corporate Information
Rain Industries Limited ('the Company') was incorporated on March 15,
1974 under the Companies Act, 1956. The Company is currently engaged in
the business of trading in Carbon Products. The Company's equity shares
are Listed at BSE Limited and National Stock Exchange of India Limited
in India.
The Company's name was changed to Rain Industries Limited from Rain
Commodities Limited, pursuant to the approval received from the
Registrar of Companies, Hyderabad on July 8, 2013.
(a) Basis of accounting and preparation of financial statements
The financial statements have been prepared in accordance with
accounting principles generally accepted in India (Indian GAAP). Indian
GAAP comprises Accounting Standards specified under Section 133 of the
Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules,
2014, other pronouncements of the Institute of Chartered Accountants of
India, the relevant provisions of the Companies Act, 2013 and
guidelines issued by the Securities and Exchange Board of India (SEBI)
(Collectively) referred to as "IGAAP"). The financial statements are
presented in Indian Rupees Millions.
(b) Use of estimates
The preparation of the financial statements in conformity with the
Indian GAAP requires the Management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure
of contingent liabilities as at the date of the financial statements
and the reported amounts of revenue and expenses during the reported
period. Management believes that the estimates used in the preparation
of the financial statements are prudent and reasonable. Actual results
could differ from these estimates. Changes in estimates are reflected
in the financial statements in the period in which changes are made.
(c) Current and non-current classification
All the assets and liabilities have been classified as current or
noncurrent as per the Company's normal operating cycle.
Assets
An asset is classified as current when it satisfies any of the
following criteria:
i. It is expected to be realized in, or is intended for sale or
consumption in, the Company's normal operating cycle;
ii. It is held primarily for the purpose of being traded;
iii. It is expected to be realized within 12 months after the reporting
date; or
iv. It is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non- current financial
assets. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
i. It is expected to be settled in the Company's normal operating
cycle;
ii. It is held primarily for the purpose of being traded;
iii. It is due to be settled within 12 months after the reporting date;
or
iv. The company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
Current liabilities include current portion of non-current financial
liabilities. All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for
processing and their realization in cash or cash equivalents. The
Company's operating cycle is within a period of 12 months.
(d) Inventories
Traded goods are valued at lower of weighted average cost and net
realizable value. Goods in transit are valued at cost or below.
(e) Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit/
(loss) before tax is adjusted for the effects of transactions of a
non-cash nature and any deferrals or accruals of past or future cash
receipts or payments. The cash flows from regular revenue generating,
investing and financing activities of the company are segregated.
Cash and cash equivalents for the purpose of cash flow comprise cash at
bank and in hand and short term investments with an original maturity
of three months or less.
(f) Revenue Recognition
Sales are recognized on dispatch of goods and upon transfer of property
in the goods to customers. Sales are inclusive of excise duty, as
applicable.
Income from shared services (services provided to Group companies) is
recognized by the Company on accrual basis. Income in excess of
billings is disclosed under Other current assets as unbilled revenues.
(g) Other Income
Interest income is recognized using the time proportion method, based
on the transactional interest rates.
Dividend income is recognized when the Company's right to receive
dividend is established.
(h) Fixed Assets, Depreciation, Impairment
Fixed Assets are stated at cost/professional valuation less accumulated
depreciation. Cost includes freight, installation cost, duties and
taxes, interest on specific borrowings utilized for financing the
qualifying fixed assets and other incidental expenses.
Effective from January 01, 2015, the Company has charged Depreciation
based on the revised remaining useful life of the assets as per the
requirement of Schedule II of the Companies Act, 2013. Depreciation on
fixed assets is provided using the straight-line method based on the
useful life of the assets as prescribed by Schedule II to the Companies
Act, 2013. Depreciation is calculated on a pro-rata basis from the
date of installation till the date the assets are sold or disposed.
Individual assets costing rupees five thousand or below are fully
depreciated in the year of acquisition and put to use.
All fixed assets are assessed for any indication of impairment at the
end of each financial year. On such indication, the impairment loss
being the excess of carrying value over the recoverable value of the
assets is charged to the Statement of Profit and Loss in the respective
financial years. The impairment loss recognized in prior years is
reversed in cases where the recoverable value exceeds the carrying
value, upon reassessment in the subsequent years.
(i) Foreign Currency Transactions
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transactions. Monetary assets and
liabilities denominated in foreign currency are restated at the
prevailing year end rates. The resultant gain/ loss upon such
restatement along with the gain/ loss on account of foreign currency
transactions are accounted in the Statement of Profit and Loss. In
respect of items covered by forward exchange contracts, the premium or
discount arising at the inception of such a forward exchange contract
is amortized as expense or income over the life of the contract. Any
profit or loss arising on cancellation or renewal of such a forward
contract is recognized in the Statement of Profit and Loss.
(j) Investment
Long term investments are carried at cost less provision for
diminution, other than temporary, if any, in the value of such
investments. Current investments are carried at the lower of cost and
fair value.
(k) Employee Benefits
Defined Contribution Plans
Contributions paid/payable under defined contribution plans are
recognized in the Statement of Profit and Loss each year. Contribution
plans comprises of Superannuation fund covered under a scheme
administered and managed by ICICI Prudential Life Insurance Company
Limited, and Provident Fund is administered and managed by the
Government of India. The Company makes monthly contributions and has no
further obligations under the plan beyond its contributions.
Defined Benefit Plans
The Company has a defined benefit Gratuity plan covering all its
employees. Gratuity is covered under a scheme administered by Life
Insurance Corporation of India (LIC). The liability as at the balance
sheet date is provided based on an actuarial valuation carried out by
an independent actuary, in accordance with Accounting Standard 15 on
'Employee Benefits' (AS 15).
All actuarial gains and losses arising during the year are recognised
in the Statement of Profit and Loss of the year.
Other Long-term Employee Benefits
Other long term employee benefits comprise compensated absences which
is provided based on an actuarial valuation carried out in accordance
with AS-15 at the end of the year.
Short-term Employee Benefits
Employee benefits payable wholly within twelve months of receiving
employee services are classified as short-term employee benefits. These
benefits include salaries and wages, bonus and ex-gratia. The
undiscounted amount of short- term employee benefits to be paid in
exchange for employee services is recognized as an expense as the
related service is rendered by employees.
(l) Borrowing Costs
Borrowing costs include interest and exchange differences arising from
foreign currency borrowings to the extent they are regarded as an
adjustment to the interest cost. Borrowing costs, allocated to and
utilized for qualifying assets, pertaining to the period from
commencement of activities relating to construction / development of
the qualifying asset upto the date of capitalization of such asset is
added to the cost of the assets.
(m) Leases
Assets taken on lease where the Company acquires substantially the
entire risks and rewards incidental to ownership are classified as
finance leases. The amount recorded is the lesser of the present value
of minimum lease rental and other incidental expenses during the lease
term or the fair value of the assets taken on lease. The rental
obligations, net of interest charges are reflected as finance lease
obligations.
Leases that do not transfer substantially all the risks and rewards of
ownership are classified as operating leases and recorded as expense as
and when the payments are made over the lease term.
(n) Earnings Per Share
The earnings considered in ascertaining the company's Earnings Per
Share (EPS) comprise net profit after tax (and includes the post tax
effect of any extra ordinary items). The number of shares used in
computing Basic EPS is the weighted average number of shares
outstanding during the year.
Dilutive potential equity shares are deemed to be converted as of the
beginning of the year, unless they have been issued at a later date.
The number of shares used for computing the diluted EPS is the weighted
average number of shares outstanding during the year after considering
the dilutive potential equity shares.
(o) Taxes on Income
Current tax is determined based on the amount of tax payable in respect
of taxable income for the year. Deferred tax is recognized on timing
differences being the difference between the taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods subject to consideration of
prudence. Deferred tax assets on unabsorbed depreciation and carry
forward of losses are not recognized unless there is a virtual
certainty that there will be sufficient future taxable income available
to realize such assets. Deferred tax assets and liabilities have been
measured using the tax rates and tax laws that have been enacted or
substantially enacted by the Balance Sheet date.
(p) Provisions and Contingencies
A provision is recognized when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the notes to the financial statements.
Dec 31, 2014
(a) Basis of accounting and preparation of financial statements
The financial statements have been prepared under the historical cost
convention on an accrual basis, to comply with the generally accepted
accounting principles in India ("Indian GAAP"), the Accounting
Standards prescribed in the Companies (Accounting Standards) Rules,
2006 (as amended), the relevant provisions of the Companies Act, 1956,
the relevant provisions of the Companies Act, 2013 to the extent
applicable and the guidelines issued by the Securities and Exchange
Board of India (''SEBI''). The financial statements are presented in
Indian rupees rounded off to the nearest thousand.
(b) Use of estimates
The preparation of the financial statements in conformity with the
Indian GAAP requires the Management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure
of contingent liabilities as at the date of the financial statements
and the reported amounts of revenue and expenses during the reported
period. Management believes that the estimates used in the preparation
of the financial statements are prudent and reasonable. Actual results
could differ from these estimates. Changes in estimates are reflected
in the financial statements in the period in which changes are made.
(c) Current and non-current classification
All assets and liabilities are classified into current and non-current.
Assets
An asset is classified as current when it satisfies any of the
following criteria:
i. It is expected to be realised in, or is intended for sale or
consumption in, the company''s normal operating cycle;
ii. It is held primarily for the purpose of being traded;
iii. It is expected to be realised within 12 months after the
reporting date; or
iv. It is cash or cash equivalent unless it is restricted from being
exchanged or used to settle a liability for at least 12 months after
the reporting date.
Current assets include the current portion of non-current financial
assets. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the
following criteria:
i. It is expected to be settled in the company''s normal operating
cycle;
ii. It is held primarily for the purpose of being traded;
iii. It is due to be settled within 12 months after the reporting date;
or
iv. The company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the reporting
date. Terms of a liability that could, at the option of the
counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
Current liabilities include current portion of non-current financial
liabilities. All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for
processing and their realisation in cash or cash equivalents. The
Company''s operating cycle is within a period of 12 months.
(d) Inventories
Traded goods are valued at lower of weighted average cost and net
realisable value. Goods in transit are valued at cost or below.
(e) Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit/
(loss) before tax is adjusted for the effects of transactions of a
non-cash nature and any deferrals or accruals of past or future cash
receipts or payments. The cash flows from regular revenue generating,
investing and financing activities of the company are segregated.
Cash and cash equivalents for the purpose of cash flow comprise cash at
bank and in hand and short term investments with an original maturity
of three months or less.
(f) Revenue Recognition
Sales are recognised on dispatch of goods and upon transfer of property
in the goods to customers. Sales are inclusive of excise duty, as
applicable.
Income from shared services (services provided to Group companies) is
recognised by the Company on accrual basis. Income in excess of
billings is disclosed under Other current assets as unbilled revenues.
(g) Other Income
Interest income is recognised using the time proportion method, based
on the transactional interest rates.
Dividend income is recognised when the Company''s right to receive
dividend is established.
(h) Fixed Assets, Depreciation, Impairment
Fixed Assets are stated at cost/professional valuation less accumulated
depreciation. Cost includes freight, installation cost, duties and
taxes, interest on specific borrowings utilised for financing the
qualifying fixed assets and other incidental expenses.
Depreciation is provided on straight-line method at the rates specified
in the Schedule XIV to the Companies Act, 1956 or based on the
estimated economic useful lives whichever is higher.
Individual assets costing rupees five thousand or below are fully
depreciated in the year of acquisition and put to use.
All fixed assets are assessed for any indication of impairment at the
end of each financial year.
On such indication, the impairment loss being the excess of carrying
value over the recoverable value of the assets is charged to the
statement of profit and loss in the respective financial years. The
impairment loss recognised in prior years is reversed in cases where
the recoverable value exceeds the carrying value, upon reassessment in
the subsequent years.
(i) Foreign Currency Transactions
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transactions. Monetary assets and
liabilities denominated in foreign currency are restated at the
prevailing year end rates. The resultant gain/ loss upon such
restatement along with the gain/ loss on account of foreign currency
transactions are accounted in the statement of profit and loss. In
respect of items covered by forward exchange contracts, the premium or
discount arising at the inception of such a forward exchange contract
is amortised as expense or income over the life of the contract. Any
profit or loss arising on cancellation or renewal of such a forward
contract is recognised in the statement of profit and loss.
(j) Investment
Long term investments are carried at cost less provision for
diminution, other than temporary, if any, in the value of such
investments. Current investments are carried at the lower of cost and
fair value.
(k) Employee Benefits
Defined Contribution Plans
Contributions paid/payable under defined contribution plans are
recognised in the Statement of Profit and Loss each year. Contribution
plans comprises of Superannuation fund covered under a scheme
administered and managed by ICICI Prudential Life Insurance Company
Limited, and Provident Fund is administered and managed by the
Government of India. The Company makes monthly contributions and has no
further obligations under the plan beyond its contributions.
Defined Benefit Plans
The Company has a defined benefit Gratuity plan covering all its
employees. Gratuity is covered under a scheme administered by Life
Insurance Corporation of India (LIC). The liability as at the balance
sheet date is provided based on an actuarial valuation carried out by
an independent actuary, in accordance with Accounting Standard 15 on
''Employee Benefits'' (AS 15).
All actuarial gains and losses arising during the year are recognised
in the Statement of Profit and Loss of the year.
Other Long-term Employee Benefits
Other long term employee benefits comprise compensated absences which
is provided based on an actuarial valuation carried out in accordance
with AS-15 at the end of the year.
Short-term Employee Benefits
Employee benefits payable wholly within twelve months of receiving
employee services are classified as short-term employee benefits. These
benefits include salaries and wages, bonus and ex-gratia. The
undiscounted amount of short- term employee benefits to be paid in
exchange for employee services is recognised as an expense as the
related service is rendered by employees.
(l) Borrowing Costs
Borrowing costs include interest and exchange differences arising from
foreign currency borrowings to the extent they are regarded as an
adjustment to the interest cost. Borrowing costs, allocated to and
utilised for qualifying assets, pertaining to the period from
commencement of activities relating to construction/development of the
qualifying asset upto the date of capitalisation of such asset is added
to the cost of the assets.
(m) Leases
Assets taken on lease where the Company acquires substantially the
entire risks and rewards incidental to ownership are classified as
finance leases. The amount recorded is the lesser of the present value
of minimum lease rental and other incidental expenses during the lease
term or the fair value of the assets taken on lease. The rental
obligations, net of interest charges are reflected as finance lease
obligations.
Leases that do not transfer substantially all the risks and rewards of
ownership are classified as operating leases and recorded as expense as
and when the payments are made over the lease term.
(n) Earnings Per Share
The earnings considered in ascertaining the company''s Earnings Per
Share (EPS) comprise net profit after tax (and includes the post tax
effect of any extra ordinary items). The number of shares used in
computing Basic EPS is the weighted average number of shares
outstanding during the year.
Dilutive potential equity shares are deemed to be converted as of the
beginning of the year, unless they have been issued at a later date.
The number of shares used for computing the diluted EPS is the weighted
average number of shares outstanding during the year after considering
the dilutive potential equity shares.
(o) Taxes on Income
Current tax is determined based on the amount of tax payable in respect
of taxable income for the year. Deferred tax is recognised on timing
differences being the difference between the taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods subject to consideration of
prudence. Deferred tax assets on unabsorbed depreciation and carry
forward of losses are not recognised unless there is a virtual
certainty that there will be sufficient future taxable income available
to realise such assets. Deferred tax assets and liabilities have been
measured using the tax rates and tax laws that have been enacted or
substantially enacted by the balance sheet date.
(p) Provisions and Contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the notes to the financial statements.
(ii) Rights, preferences and restrictions attached to the equity shares
The Company has only one class of equity shares having a par value of
Rs. 2 each per share. Each holder of equity shares is entitled to one
vote per share. The dividend proposed by the Board of Directors is
subject to the approval of the Shareholders in the ensuing Annual
General Meeting. In the event of liquidation of the Company, the
holders of equity shares will be entitled to receive remaining assets
of the Company, after distribution of all preferential amounts. The
distribution will be in proportion to number of equity shares held by
the shareholders.
During the year ended December 31, 2014, the amount of per share
dividend recognised as distribution to equity shareholders was Rs. 1.00
(year ended December 31, 2013: Rs. 1.00)
Note:
(a) 10,000,000 equity shares of Rs. 2 each fully paid-up were bought
back from the shareholders pursuant to buyback of equity shares during
the period from November 14, 2011 to March 29, 2012.
(b) 2,471,293 equity shares of Rs. 2 each fully paid-up were bought
back from the shareholders pursuant to buyback of equity shares during
the period from October 22, 2012 to December 31, 2012.
(c) 5,355,923 equity shares of Rs. 2 each fully paid-up were bought
back from the shareholders pursuant to buyback of equity shares during
the period from January 1, 2013 to March 31, 2013.
*The amount in previous year represents the reversal of proposed final
dividend and tax on such dividend for the financial year ended December
31, 2012 on account of buy back of 5,355,923 equity shares during the
period from January 1, 2013 to March 25, 2013. The shareholders
approved the dividend in Annual General Meeting held on April 27, 2013
with the record date of April 18, 2013. Accordingly, the shares bought
back were not entitled for dividend and hence proposed dividend on such
shares have been reversed as at December 31, 2013.
Notes:
(i) Term loan with the original amount of US$ 40 Million borrowed from
IDBI Bank Limited, Dubai branch is secured by a pari passu:
(a) First charge on all immovable and movable properties present and
future of the Company and Rain Cement Limited, a wholly owned
subsidiary; and
(b) Second charge on all current assets of the Company and Rain Cements
Limited, a wholly owned subsidiary Company.
(ii) Term loan of US$ 20 Million borrowed from IDBI Bank Limited, Dubai
branch, in the current financial year is secured by a pari passu:
(a) First charge on all immovable and movable properties present and
future of Rain Cements Limited, a wholly owned subsidiary Company.
(iii) Term loan with the original amount of US$ 40 Million, carries
interest of 3 months Libor plus 400 basis points and Term loan of US$
20 Million carries interest of 6 months Libor plus 350 basis points.
(iv) The term loans availed by the Company have been utilised for the
purpose of investment in its wholly owned subsidiary company which is
engaged in the business of Calcined Petroleum Coke, in accordance with
the sanctioned terms.
The Ministry of Micro, Small and Medium Enterprises has issued an
Office Memorandum dated August 26, 2008 which recommends that the Micro
and Small Enterprises should mention in their correspondence with its
customers the Entrepreneurs Memorandum Number as allocated after filing
of the Memorandum. Accordingly, the disclosure in respect of the
amounts payable to such enterprises as at December 31, 2014 has been
made in the financial statements based on information received and
available with the Company. Further in view of the management, the
impact of interest, if any, that may be payable in accordance with the
provisions of the Act is not expected to be material. The Company has
not received any claim for interest from any supplier under the said
Act.
Note:
A) The term loan of US$ 20 Million (original amount) carries interest
of 3 months Libor plus 425 basis points and balance as on December 31,
2014 is repayable by Rain Commodities (USA) Inc. as below:
(a) 32% of the original amount in 4 equal quarterly installments from
December 30, 2014 to September 30, 2015
(b) 12% of the original amount on December 30, 2015 and
(c) 24% of the original amount on March 30, 2016
B) The term loan of US$ 20 Million, provided during the current year,
carries interest of 6 months Libor plus 400 basis points. This loan is
repayable by Rain Commodities (USA) Inc. as bullet payment on April 24,
2017.
Dec 31, 2012
(a) Basis of accounting and preparation of financial statements
The financial statements have been prepared under the historical cost
convention on an accrual basis, to comply with the generally accepted
accounting principles in India ("Indian GAAP"), the Accounting
Standards notified under the Companies (Accounting Standards) Rules,
2006 (as amended) and the relevant provisions of the Companies Act,
1956.
(b) Use of estimates
The preparation of the financial statements in conformity with the
Indian GAAP requires the management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure
of contingent liabilities as at the date of the financial statements
and the reported amounts of revenue and expenses during the reported
period. Management believes that the estimates used in the preparation
of the financial statements are prudent and reasonable. Actual results
could differ from these estimates. Changes in estimates are reflected
in the financial statements in the period in which changes are made.
(c) Revenue Recognition
Sales are recognized on dispatch of goods and upon transfer of property
in the goods to customers. Sales are inclusive of excise duty, as
applicable.
(d) Other Income
Dividend income is recognized when the Company''s right to receive
dividend is established.
Interest income is recognized using the time proportion method, based
on the transactional interest rates.
(e) Fixed Assets, Depreciation, Impairment
Fixed Assets are stated at cost/professional valuation less accumulated
depreciation. Cost includes freight, installation cost, duties and
taxes, interest on specific borrowings utilized for financing the
qualifying fixed assets and other incidental expenses.
Depreciation is provided on straight-line method at the rates specified
in the Schedule XIV to the Companies Act, 1956 or based on the
estimated economic useful lives whichever is higher.
Individual assets costing rupees five thousand or below are fully
depreciated in the year of acquisition and put to use.
All fixed assets are assessed for any indication of impairment at the
end of each financial year. On such indication, the impairment loss
being the excess of carrying value over the recoverable value of the
assets is charged to the Statement of Profit and Loss in the respective
financial years. The impairment loss recognized in prior years is
reversed in cases where the recoverable value exceeds the carrying
value, upon reassessment in the subsequent years.
(f) Inventories
Traded goods are valued at lower of weighted average cost and net
realizable value. Goods in transit are valued at cost or below.
(g) Foreign Currency Transactions
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transactions. Monetary assets and
liabilities denominated in foreign currency are restated at the
prevailing year end rates. The resultant gain/ loss upon such
restatement along with the gain/ loss on account of foreign currency
transactions are accounted in the Statement of Profit and Loss. In
respect of items covered by forward exchange contracts, the premium or
discount arising at the inception of such a forward exchange contract
is amortised as expense or income over the life of the contract. Any
profit or loss arising on cancellation or renewal of such a forward
contract is recognized in the statement of profit and loss.
(h) Investment
Long term investments are carried at cost less provision for
diminution, other than temporary, if any, in the value of such
investments. Current investments are carried at the lower of cost and
fair value.
(i) Employee Benefits
Defined Contribution Plans
Contributions paid/payable under defined contribution plans are
recognized in the Statement of Profit and Loss each year. Contribution
plans comprises Superannuation covered under a scheme administered and
managed by ICICI Prudential Life Insurance Company Limited, and
Provident Fund is administered and managed by the Government of India.
The Company makes monthly contributions and has no further obligations
under the plan beyond its contributions.
Defined Benefit Plans
The Company has a defined benefit Gratuity plan covering all its
employees. Gratuity is covered under a scheme administered by Life
Insurance Corporation of India (LIC). The liability as at the balance
sheet date is provided based on an actuarial valuation carried out by
an independent actuary, in accordance with Accounting Standard 15 on
''Employee Benefits'' (AS 15).
Other Long Term Employee Benefits
Other long term employee benefits comprise compensated absences which
is provided based on an actuarial valuation carried out in accordance
with AS-15 at the end of the year.
(j) Earnings per share
The earnings considered in ascertaining the company''s Earnings Per
Share (EPS) comprise net profit after tax (and includes the post tax
effect of any extra ordinary items). The number of shares used in
computing Basic EPS is the weighted average number of shares
outstanding during the year.
Dilutive potential equity shares are deemed to be converted as of the
beginning of the year, unless they have been issued at a later date.
The number of shares used for computing the diluted EPS is the weighted
average number of shares outstanding during the year after considering
the dilutive potential equity shares.
(k) Taxes on Income
Current tax is determined based on the amount of tax payable in respect
of taxable income for the year. Deferred tax is recognized on timing
differences being the difference between the taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods subject to consideration of
prudence. Deferred tax assets on unabsorbed depreciation and carry
forward of losses are not recognized unless there is a virtual
certainty that there will be sufficient future taxable income available
to realize such assets. Deferred tax assets and liabilities have been
measured using the tax rates and tax laws that have been enacted or
substantially enacted by the balance sheet date.
(l) Borrowing Costs
Borrowing costs include interest and exchange differences arising from
foreign currency borrowings to the extent they are regarded as an
adjustment to the interest cost. Borrowing costs, allocated to and
utilised for qualifying assets, pertaining to the period from
commencement of activities relating to construction/development of the
qualifying asset upto the date of capitalisation of such asset is added
to the cost of the assets.
(m) Provisions and contingencies
A provision is recognized when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
wil be required to settle the obligation in respect of which a reliable
estimate can be made. Provisions (excluding retirement benefits) are
not discounted to their present value and are determined based on the
best estimate required to settle the obligation at the Balance Sheet
date. These are reviewed at each Balance Sheet date and adjusted to
reflect the current best estimates. Contingent liabilities are
disclosed in the notes to the financial statements.
Dec 31, 2011
I. Basis of preparation of Financial Statements
Rain Commodities Limited ('the Company') follows the accrual basis of
accounting. The financial statements are prepared on historical cost
basis and to comply with accounting principles generally accepted in
India, the Accounting Standards notified under Companies (Accounting
Standards) Rules, 2006 and the relevant provisions of the Companies
Act, 1956.
II. Significant Accounting Policies
a) Use of Estimates
The preparation of the financial statements in conformity with the
generally accepted accounting principles requires that the management
makes estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent liabilities as at the
date of the financial statements and the reported amounts of revenue
and expenses during the reported period. Actual results could differ
from those estimates.
b) Revenue Recognition
Sales are recognized on dispatch of goods to customers and upon
transfer of title in goods to customers. Gross sales include excise
duty and sales tax recovered and are net of trade discounts.
c) Dividend Income
Dividend income is recognized when the Company's right to receive
dividend is established.
d) Interest Income
Interest income is recognized using the time proportion method, based
on the transactional interest rates.
e) Fixed Assets, Depreciation and Impairment
Fixed assets are stated at cost less accumulated depreciation. Cost
includes freight, installation cost, duties and taxes, interest on
specific borrowings utilized for financing the assets and other
incidental expenses.
Depreciation is provided on straight line method at the rates specified
in Schedule XIV to the Companies Act, 1956 or based on the estimated
economic useful lives whichever is higher.
Individual assets costing Rs.5,000 or below are entirely depreciated in
the year of acquisition and put to use.
All Fixed assets are assessed for any indication of impairment, at the
end of each financial year. On such indication, the impairment loss,
being the excess of carrying value over the recoverable value of the
assets, is charged to the Profit and Loss Account in the respective
financial years. The impairment loss recognized in the prior years is
reversed in cases where the recoverable value exceeds the carrying
value, upon reassessment in the subsequent years.
f) Inventories
Inventories are valued at cost or below. Raw materials cost is computed
on the basis of weighted average cost per unit of measurement after
providing for obsolescence, if any. Finished goods and work in progress
are valued at lower of cost and net realisable value. Cost is
determined on a weighted average basis and comprises material, labour
and applicable overhead expenses. Stores and spares are valued at cost
determined on weighted average basis, or below.
Goods in transit are valued at cost or below. Traded goods are valued
at lower of weighted average cost and net realizable value.
g) Earnings Per Share (EPS)
The earnings considered in ascertaining the Company's EPS comprises the
net profit after tax. The number of shares used in computing basic EPS
is the weighted average number of shares outstanding during the year.
Dilutive potential equity shares are deemed to be converted as of the
beginning of the year, unless they have been issued at a later date.
The number of shares used for computing the diluted EPS is the weighted
average number of shares outstanding during the year after considering
the dilutive potential equity shares.
h) Taxes on Income
Current tax is determined based on the amount of tax payable in respect
of taxable income for the year. Deferred tax is recognised on timing
differences being the differences between the taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods subject to consideration of
prudence. Deferred tax assets are not recognized unless there is
virtual certainty that there will be sufficient future taxable income
available to realize such asset. Deferred tax assets and liabilities
have been computed on the timing differences applying the enacted tax
rates.
i) Foreign Currency Transactions
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transactions. Monetary assets and
liabilities denominated in foreign currency are restated at the
prevailing year end rates. The resultant gain/ loss upon such
restatement along with the gain/loss on account of foreign currency
transactions are accounted in the Profit and Loss account.
j) Investments
Long term investments are stated at cost less provision for diminution,
other than temporary, if any, in the value of such investments. Current
investments are carried at the lower of cost and fair value.
Dec 31, 2010
A) Use of Estimates
The preparation of the financial statements in conformity with the
generally accepted accounting principles requires that the management
makes estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent liabilities as at the
date of the financial statements and the reported amounts of revenue
and expenses during the reported period. Actual results could differ
from those estimates.
b) Revenue Recognition
Sales are recognized on dispatch of goods to customers and upon
transfer of title in goods to customers. Gross sales include excise
duty and sales tax recovered and are net of trade discounts.
c) Fixed Assets, Depreciation, Impairment
Fixed assets are stated at cost less accumulated depreciation. Cost
includes freight, installation cost, duties and taxes, interest on
specific borrowings utilized for financing the assets and other
incidental expenses.
Depreciation is provided on straight line method at the rates specified
in Schedule XIV to the Companies Act, 1956 or based on the estimated
economic useful lives which ever is higher.
Individual assets costing Rs.5,000 or below are entirely depreciated in
the year of acquisition and put to use.
All Fixed assets are assessed for any indication of impairment, at the
end of each financial year.
On such indication, the impairment loss, being the excess of carrying
value over the recoverable value of the assets, is charged to the
Profit and Loss Account in the respective financial years. The
impairment loss recognized in the prior years is reversed in cases
where the recoverable value exceeds the carrying value, upon
reassessment in the subsequent years.
d) Inventories
Inventories are valued at cost or below. Raw materials cost is computed
on the basis of weighted average cost per unit of measurement after
providing for obsolescence, if any. Finished goods and work in progress
are valued at lower of cost and net realisable value. Cost is
determined on a weighted average basis and comprises material, labour
and applicable overhead expenses. Stores and spares are valued at cost
determined on weighted average basis, or below.
Goods in transit are valued at cost or below.
Traded goods are valued at lower of weighted average cost and net
realizable value.
e) Employee Benefits
Defined contribution Plans
Contributions paid/payable under defined contribution plans are
recognised in the Profit and Loss Account each year. Contribution plans
comprises Provident Fund, administered and managed by the Government of
India. The Company makes monthly contributions and has no further
obligations under the plan beyond its contributions.
Defined Benefit Plans
The Company has a defined benefit Gratuity plan covering all its
employees. Gratuity is covered under a Scheme of Life Insurance
Corporation of India (LIC) . The liability as at the Balance Sheet date
is provided for based on the actuarial valuation carried out by an
independent actuary, in accordance with Accounting Standard 15 on
Employee Benefits (AS -15).
Other long term employee benefits
Other long term employee benefits comprise of compensated absences
which is provided for based on the actuarial valuation carried out in
accordance with revised AS-15 at the end of the year.
f) Earnings Per Share (EPS)
The earnings considered in ascertaining the Companys EPS comprises the
net profit after tax. The number of shares used in computing basic EPS
is the weighted average number of shares outstanding during the year.
Dilutive potential equity shares are deemed to be converted as of the
beginning of the year, unless they have been issued at a later date.
The number of shares used for computing the diluted EPS is the weighted
average number of shares outstanding during the year after considering
the dilutive potential equity shares.
g) Taxes on Income
Current tax is determined based on the amount of tax payable in respect
of taxable income for the year. Deferred tax is recognised on timing
differences being the differences between the taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods subject to consideration of
prudence. Deferred tax assets are not recognized unless there is
virtual certainty that there will be sufficient future taxable income
available to realize such asset. Deferred tax assets and liabilities
have been computed on the timing differences applying the enacted tax
rates.
h) Foreign Currency Transactions
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transactions. Monetary assets and
liabilities denominated in foreign currency are restated at the
prevailing year end rates. The resultant gain/ loss upon such
restatement along with the gain/ loss on account of foreign currency
transactions are accounted in the Profit and Loss account.
i) Investments
Long term investments are stated at cost less provision for diminution,
other than temporary, if any, in the value of such investments.
III. Scheme of Arrangement amongst the Company, Rain Cements Limited
(RCL) [Formerly Rain CII Carbon (India) Limited] and Rain CII Carbon
(Vizag) Limited (RCCVL) [Formerly Rain Calciner Limited]
The Company along with its subsidiaries is engaged in the business of
manufacture and sale of cement and calcined petroleum coke and
generation of power. The rationale for Scheme of Arrangement was as
follows:
1. The nature of risk and returns associated with the Cement and CPC
businesses carried on by the Company itself or through its
subsidiaries, is distinct from each other and consequently each
business or undertaking is capable of attracting different set of
investors, strategic partners, lenders and other stakeholders.
2. Demerger of the cement business undertaking would assist in
induction of joint venture partner and pursue inorganic and organic
growth opportunities in cement business.
3. The Scheme would assist in creation of a global holding company in
USA for the CPC business to enable fund raising, through either equity
and / or debt, and to pursue inorganic and organic growth
opportunities.
Pursuant to the Scheme of Arrangement amongst the Company, RCL and
RCCVL, (the Scheme) as approved by the shareholders of the Company in
the Extraordinary General Meeting held on July 29, 2010 and
subsequently sanctioned by the Honble High Court of Judicature, Andhra
Pradesh at Hyderabad on December 29, 2010, the Cement business of the
Company has been transferred to and vested in RCL with effect from
April 1, 2010.
The Scheme has been accordingly given effect to in these financial
statements.
In accordance with the Scheme all the assets, liabilities, duties and
obligations pertaining to the cement business were transferred to and
vested in RCL with effect from April 1, 2010 for a consideration of Rs.
850,000 (Rupees Eighty Five Crores only) to be discharged by RCL by
cash on or before March 31, 2011. In case of non-receipt of
consideration before the due date, interest shall be charged on delayed
receipt at mutually agreed rate of interest.
Dec 31, 2009
A) Basis of Accounting
The Company follows the accrual basis of accounting. The financial
statements are prepared on historical cost basis and to comply in all
material aspects with accounting principles generally accepted in
India, the Accounting Standards notified under Companies (Accounting
Standards) Rules, 2006 and the relevant provisions of the Companies
Act, 1956.
b) Use of Estimates
The preparation of the financial statements in conformity with the
generally accepted accounting principles requires that the management
makes estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent liabilities as at the
date of the financial statements and the reported amounts of revenue
and expenses during the reported period. Actual results could differ
from those estimates.
c) Revenue Recognition
Sales are recognised on despatch of goods to customers. Gross sales
include excise duty and sales tax recovered and are net of trade
discounts.
d) Fixed Assets and Depreciation
Fixed assets are stated at actual cost less accumulated depreciation.
Cost includes material cost, freight, installation cost, duties and
taxes and other incidental expenses.
Depreciation on buildings and plant and machinery is computed on
straight line method - at the rates specified in Schedule XIV to the
Companies Act, 1956 or based on the remaining estimated economic useful
lives determined by an independent valuer, whichever is higher.
Software is amortized evenly over a three-year period. Depreciation on
other assets is computed on straight line method at the rates specified
in schedule XIV to the Companies Act,1956.
The cost of land used for mining is amortised over the estimated period
of mining reserves.
Individual assets costing Rs.5,000/- or below are entirely depreciated
in the year of acquisition and put to use.
All fixed assets are assessed for any indication of impairment, at the
end of each financial year. On such indication, the impairment loss,
being the excess of carrying value over the recoverable value of the
assets, is charged to the Profit and Loss Account in the respective
financial years. The impairment loss recognized in the prior years is
reversed in cases where the recoverable value exceeds the carrying
value, upon reassessment in the subsequent years.
e) Inventories
Inventories are valued at cost or below. Raw materials cost is computed
on the basis of weighted average cost per unit of measurement after
providing for obsolescence, if any. Finished goods and work in progress
are valued at lower of cost and net realisable value. Cost is
determined on a weighted average basis and comprises material, labour
and applicable overhead expenses. Stores and spares are valued at cost
on weighted average basis or below.
Goods in transit are valued at cost or below.
f) Employee Benefits
Defined contribution Plans
Contributions paid/payable under defined contribution plans are
recognised in the Profit and Loss Account each year. Contribution plans
comprises of Provident Fund, administered and managed by the Government
of India. The Company makes monthly contributions and has no further
obligations under the plan beyond its contributions.
Defined Benefit Plans
The Company has a defined benefit Gratuity plan covering all its
employees. Gratuity is covered under a Scheme of Life Insurance
Corporation of India (LIC) and contributions in respect of such scheme
are recognised in the Profit and Loss Account. The liability as at the
Balance Sheet date is provided for based on the actuarial valuation
carried out in accordance with Accounting Standard 15 on Employee
Benefits (AS -15).
Other long term employee benefits
Other long term employee benefits comprise of compensated absences
which is provided for based on the actuarial.valuation carried out in
accordance with revised AS-15 at the end of the year.
g) Earnings Per Share (EPS)
The earnings considered in ascertaining the Companys EPS comprises the
net profit aftertax. The number of shares used in computing basic EPS
is the weighted average number of shares outstanding during the year.
Dilutive potential equity shares are deemed to be converted as of the
beginning of the year, unless they have been issued at a later date.
The number of shares used for computing the diluted EPS is the weighted
average number of shares outstanding during the year after considering
the dilutive potential equity shares.
h) Taxes on Income
Current tax is determined based on the amount of tax payable in respect
of taxable income for
the year. Deferred tax is recognised -on timing differences being the
differences between the taxable income and accounting income that
originate in one period and are capable of . reversal in one or more
subsequent periods subject to consideration of prudence. Deferred tax
assets are not recognized unless there is virtual certainty that there
will be sufficient future taxable income available to realize such
asset. Deferred tax assets and liabilities have been computed on the
timing differences applying the enacted tax rates.
i) Foreign Currency Transactions
Transactions in foreign currency are recorded at the exchange rates
prevailing on the date of the transactions. Monetary assets and
liabilities denominated in foreign currency are restated at the
prevailing year end rates. The resultant gain/ loss upon such
restatement along with the realized gain/loss on account of foreign
currency transactions are accounted in the Profit and Loss account.
j) Investments
Long term investments are stated at cost less provision for diminution,
other than temporary, if any, in the value of such investments.
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