Mar 31, 2019
1.1 Basis of Preparation Compliance with Indian Accounting Standards (Ind AS):
The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Section 133 of the 2013 Act read with the Companies (Indian Accounting Standards) Rules 2015 and other relevant provisions of the 2013 Act.
The financial statements are prepared under historical cost convention except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
All the assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle. Based on the nature of the products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current / noncurrent classification of assets and liabilities.
1.2 Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in India requires the management to make judgements, estimates and assumptions that effect the reported amount of assets and liabilities as of the Balance Sheet date, reported amount of revenues and expenses for the year and disclosure of contingent liabilities as of the Balance Sheet date. These estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
Although these estimates are based on the managementâs best knowledge of current events and actions, uncertainty about the assumptions and estimates may result in outcomes requiring a material adjustment to the carrying amount of assets or liabilities in future periods. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.â
1.3 Property, Plant and Equipment
Property, Plant and Equipment are stated at cost less accumulated depreciation and impairment in value, if any. Cost includes purchase price, (inclusive of import duties and non - refundable purchase taxes, after deducting trade discounts and rebates), other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and an initial estimate of the costs of dismantling, removing the item and restoring the site on which it is located, if any.
If the Company has acquired a Property, Plant and Equipment on deferred term basis and terms are beyond normal credit terms, property plant and equipment will be recognized on cash price equivalent, i.e. discounted amount.
The cost of Assets not ready for use as at the Balance Sheet date are disclosed under Capital Work-In-Progress.
The cost of replacement spares/ major inspection relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. When parts of an item of property plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.â
Depreciation
Depreciation on Property , Plant and Equipment (Tangible assets) is generally computed on a pro-rata basis on the basis of the estimated life specified in Schedule II of the Companies Act, 2013 under Straight line method. The useful life of assets prescribed in Schedule II to the Companies Act, 2013 are considered for the purpose of Computation of Depreciation. However, If the managementâs estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on an annual review is different from that envisaged in the aforesaid schedule, depreciation is provided at a such rate based on the useful life / remaining useful life as technically advised. Accordingly, depreciation is provided based on the useful life indicated below which is different from that stated in Schedule II to the Companies Act,2013.
Depreciation charge on additions / deletions is restricted to the period of use. Depreciation methods, useful lives and residual values are reviewed annually.
1.4 Investment Property
Investment property is measured initially at its cost, including related transaction costs. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the company and the cost of the item can be measured reliably.
The fair value of investment property is disclosed in the notes. Fair values are determined based on the Guideline Value published by the relevant revenue authority.
1.5 Intangible Assets
Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized on a straight line basis over their estimated useful life as given below.
Amortization method and useful lives are reviewed annually.
1.6 Impairment
Assessment is done annually as to whether there is any indication that an asset (tangible and intangible) may be impaired. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets, is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the asset / cash generating unit is made. Assets whose carrying value exceeds their recoverable amount are written down to the recoverable amount. Recoverable amount is higher of an assetâs or cash generating unitâs fair value less cost to sell and its value in use. 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. Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased. In such cases, impairment losses are reversed to the extent the assets carrying amount does not exceed, the carrying amount that would have been determined if no impairment loss had previously been recognized.
1.7 Borrowing Cost
Borrowing costs that are attributable to the acquisition / construction / production of qualifying assets (assets which require substantial period of time to get ready for its intended use) are capitalized as part of the cost of that asset. All other borrowing costs are charged to revenue.
1.8 Inventories
Inventories are stated at lower of weighted average cost and net realizable value. Cost of inventories comprises of purchase cost, cost of conversion and other cost including manufacturing overheads incurred in bringing the inventory to present location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
1.9 Foreign Currency Transaction Initial Recognition
On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the Functional currency and the foreign currency at the date of the transaction.
Subsequent Recognition
As at the reporting date, non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. All non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
All monetary assets and liabilities in foreign currency are reinstated at the end of accounting period.
Exchange differences on reinstatement of all monetary items are recognized in the Statement of Profit and Loss.
Derivative Financial instruments and Hedge Accounting
The Company is exposed to foreign currency risk arising out of Foreign currency revenue, receivables, cash balances, forecasted cash flows, payables and foreign currency loans. The Company has a detailed foreign currency risk mitigation policy in place, including the use of derivatives like the forward currency contracts/ options contracts to hedge forecasted cash flows denominate in Foreign currency. The objective of the same is to mitigate the impact of foreign currency exchange fluctuations caused by transacting in foreign currency in case of future cash flows or highly probable forecast transactions. The Company enters into various foreign currency derivative contracts with Banks in the form of Forward currency contracts (âHedging instrumentâ) and recognize the financial assets / liabilities (âhedged itemâ) through formal documentation of the hedging relationship in line with the Companyâs Foreign currency risk management policy.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss.
Amounts previously recognized in other comprehensive income and accumulated in equity relating to effective portion as described above, are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognized hedged item.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting.
1.10 Revenue Recognition
Note for adoption of Ind AS 115
The company has applied Ind AS 115 âRevenue from contracts with customersâ with effect from April 01, 2018. The performance obligations under all sales contracts are satisfied at a point of time. Ind AS 115 did not have a material impact on the amount or timing of recognition of reported revenue.
Sale of goods
The Company derives revenues primarily from sale of Engine Valves, Guides and Tappets. Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties.
Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the probable consideration expected to be received in exchange for those products or services. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
The Company accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the rateable allocation of the discounts/ incentives to each of the underlying performance obligation that corresponds to the progress by the customer towards earning the discount/ incentive. Also, when the level of discount/pricing incentives varies with increases in levels of revenue transactions, the company recognizes the liability based on its estimate of the customerâs future purchases. If it is probable that the criteria for the discount will not be met, or if the amount thereof cannot be estimated reliably, then discount/pricing incentives is not recognized until the payment is probable and the amount can be estimated reliably. The company recognizes changes in the estimated amount of obligations for discounts/pricing incentives in the period in which the change occurs.
Revenue from services has been recognised as and when the service has been performed.
Other Income
Interest : Interest income is recognized on effective interest method taking into account the amount outstanding and the rate applicable.
Export Incentives : Export incentives including Duty Drawback and entitlements under Merchandise Exports from India Scheme (MEIS) are accounted on accrual basis.
Dividend : Dividend income is recognized when the right to receive dividend is established.
1.11 Insurance Claims
Insurance claims are accounted for on the basis of claims lodged with insurance Company and to the extent that there is a reasonable certainty in realizing the claims.
1.12 Employee Benefits
1. Short - Term employee benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits and recognized in the period in which the employee renders the related service.
2. Defined Contribution Plans Provident Fund
Contribution towards provident fund for employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis.
Superannuation Fund
This is a defined contribution Plan. The Company contributes sum equivalent to certain specified percentages of the eligible annual salaries based on the options exercised by the eligible employees to Superannuation Fund administered by Life Insurance Corporation of India (LIC).The Company has no further obligations for future superannuation benefits other than its annual contribution and recognizes such contribution as expense as and when due.
3. Defined Benefit Plan Gratuity
The Company provides for gratuity, a defined benefit plan (the âGratuity Planâ) administered by LIC covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employeeâs salary and the tenure of employment. The Companyâs liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses / gains are recognized in the other comprehensive income in the year in which they arise. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss.
4. Other Long term employee benefits Compensated Absence
Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end.
Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the year end are treated as other long term employee benefits. The Companyâs liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses / gains are recognized in the Profit and Loss Statement in the year in which they arise.
1.13 Taxes on Income
Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the relevant prevailing tax laws. Tax expenses relating to the items in profit and loss shall be treated as current tax as part of profit and loss and those relating to items in other comprehensive income (OCI) shall be recognized as part of the part of OCI.
Deferred tax is recognized for all the temporary differences between the carrying amounts of assets and liabilities in the financial statements and corresponding tax bases used in computation of taxable profit. Deferred tax assets are recognized and carried forward only to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilized. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. At each Balance Sheet date, the Company re-assesses unrecognized deferred tax assets, if any and the same is recognized to the extent it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against liabilities representing current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation law.
Minimum Alternate Tax (MAT) credit 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 specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period. MAT shall be treated as part of deferred tax assets.
1.14 Financial instruments Initial recognition
The company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instruments. All financial assets and liabilities are recognized at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through profit or loss, are added to the fair value on initial recognition.
Subsequent measurement
i. Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
ii. Financial assets at fair value through profit or loss
A financial asset which is not classified in the above category is subsequently fair valued through profit or loss.
iii. Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Derecognition of financial instruments
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under IND AS 109. A financial liability (or a part of a financial liability) is derecognized from the Companyâs Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
Impairment
All financial assets classified as at amortized cost shall be tested for impairment under Ind AS 109 and measured using Expected Credit Loss (ECL) model.â
1.15 Fair Value
The Company measures financial instruments at fair value in accordance with the accounting policies mentioned above. 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.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy that categorizes into three levels, described as follows, the inputs to valuation techniques used to measure value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).
Level 1 â quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 â inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3 âinputs that are unobservable for the asset or liability
1.16 Government Grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. All government grants are initially recognized by way of setting up as deferred income. Government grants relating to income are subsequently recognized in the profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are subsequently recognized in profit or loss on a systematic basis over the expected life of the related depreciable assets. Grants recognized in Profit and Loss as above are presented within other income.
1.17 Research & Development Expenditure
Expenditure on research is recognized as an expense when it is incurred. Expenditure on development which does not meet the criteria for recognition as an intangible asset is recognized as an expense when it is incurred.
Items of property, plant and equipment and acquired Intangible assets utilized for Research and Development are capitalized and depreciated in accordance with the policies stated for property, plant and equipment and intangible assets.
1.18 Provisions and Contingent Liabilities Provisions : Provisions are recognized when there is a present obligation as result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value unless the effect of time value of money is material. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent Liabilities : Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.
1.19 Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Companyâs earnings per share is the net profit for the period after deducting equity dividends and any attributable tax thereto for the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2018
1. Summary of Significant accounting policies
1.1 Basis of Preparation
Compliance with Indian Accounting Standards (Ind AS):
The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Section 133 of the 2013 Act read with the Companies (Indian Accounting Standards) Rules 2015 and other relevant provisions of the 2013 Act.
Upto the year ended 31 March, 2016, the Company prepared the financial statements in accordance with the requirements of the previous GAAP, which includes standards notified under the Companies (Accounting Standards) Rules, 2006 and other relevant provisions of the 2013 Act.
These are the Companyâs first Ind AS financial statements. The date of transition to the Ind AS is 01 April, 2016. Refer Note 32.1 for details of the first-time adoption exceptions and exemptions availed by the Company.
The financial statements are prepared under historical cost convention except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below.
All the assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle. Based on the nature of the products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current / non-current classification of assets and liabilities.
1.2 Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in India requires the management to make judgements, estimates and assumptions that effect the reported amount of assets and liabilities as of the Balance Sheet date, reported amount of revenues and expenses for the year and disclosure of contingent liabilities as of the Balance Sheet date. These estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
Although these estimates are based on the managementâs best knowledge of current events and actions, uncertainty about the assumptions and estimates may result in outcomes requiring a material adjustment to the carrying amount of assets or liabilities in future periods.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
1.3 Property, Plant and Equipment
Property, Plant and Equipment are stated at cost less accumulated depreciation and impairment in value, if any. Cost includes purchase price, (inclusive of import duties and non - refundable purchase taxes, after deducting trade discounts and rebates), other costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and an initial estimate of the costs of dismantling, removing the item and restoring the site on which it is located, if any.
If the Company has acquired a Property, Plant and Equipment on deferred term basis and terms are beyond normal credit terms, property plant and equipment will be recognized on cash price equivalent, i.e. discounted amount.
The cost of Assets not ready for use as at the Balance Sheet date are disclosed under Capital Work-In-Progress.
The cost of replacement spares/ major inspection relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. When parts of an item of property plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Depreciation
Depreciation on Property , Plant and Equipment (Tangible assets) is generally computed on a pro-rata basis on the basis of the estimated life specified in Schedule II of the Companies Act, 2013 under Straight line method. The useful life of assets prescribed in Schedule II to the Companies Act, 2013 are considered for the purpose of Computation of Depreciation. However, If the managementâs estimate of the useful life of a fixed asset at the time of acquisition of the asset or of the remaining useful life on an annual review is different from that envisaged in the aforesaid schedule, depreciation is provided at a such rate based on the useful life / remaining useful life as technically advised. Accordingly, depreciation is provided based on the useful life indicated below which is different from that stated in Schedule II to the Companies Act, 2013.
Depreciation charge on additions / deletions is restricted to the period of use. Depreciation methods, useful lives and residual values are reviewed annually.
1.4 Investment Property
Investment property is measured initially at its cost, including related transaction costs. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably.
The fair value of investment property is disclosed in the notes. Fair values are determined based on the Guideline Value published by the relevant revenue authority.
1.5 Intangible Assets
Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized on a straight line basis over their estimated useful life as given below.
Amortization method and useful lives are reviewed annually.
1.6 Impairment
Assessment is done annually as to whether there is any indication that an asset (tangible and intangible) may be impaired. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets, is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the asset / cash generating unit is made. Assets whose carrying value exceeds their recoverable amount are written down to the recoverable amount. Recoverable amount is higher of an assetâs or cash generating unitâs fair value less cost to sell and its value in use. 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. Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased. In such cases, impairment losses are reversed to the extent the assets carrying amount does not exceed, the carrying amount that would have been determined if no impairment loss had previously been recognized.
1.7 Borrowing Cost
Borrowing costs that are attributable to the acquisition / construction / production of qualifying assets (assets which require substantial period of time to get ready for its intended use) are capitalized as part of the cost of that asset. All other borrowing costs are charged to revenue.
1.8 Inventories
I nventories are stated at lower of weighted average cost and net realizable value. Cost of inventories comprises of purchase cost, cost of conversion and other cost including manufacturing overheads incurred in bringing the inventory to present location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
1.9 Foreign Currency Transaction Initial Recognition
On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the Functional currency and the foreign currency at the date of the transaction.
Subsequent Recognition
As at the reporting date, non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. All non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
All monetary assets and liabilities in foreign currency are reinstated at the end of accounting period.
Exchange differences on reinstatement of all monetary items are recognized in the Statement of Profit and Loss.
Derivative Financial instruments and Hedge Accounting
The Company is exposed to foreign currency risk arising out of foreign currency revenue, receivables, cash balances, forecasted cash flows, payables and foreign currency loans. The Company has a detailed foreign currency risk mitigation policy in place, including the use of derivatives like the forward currency contracts/ options contracts to hedge forecasted cash flows denominate in Foreign currency. The objective of the same is to mitigate the impact of foreign currency exchange fluctuations caused by transacting in foreign currency incase of future cash flows or highly probable forecast transactions. The Company enters into various foreign currency derivative contracts with Banks in the form of Forward currency contracts (âHedging instrumentâ) and recognize the financial assets / liabilities (âhedged itemâ) through formal documentation of the hedging relationship in line with the Companyâs Foreign currency risk management policy.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income and accumulated under the heading of cash flow hedging reserve. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss.
Amounts previously recognized in other comprehensive income and accumulated in equity relating to effective portion as described above, are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognized hedged item.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting.
1.10 Revenue Recognition
Sale of goods
Revenue from sales is recognized when the substantial risks and rewards of ownership in the goods are transferred to the buyer as per the terms of the contract. Revenue is measured at the fair value of consideration received or receivable, net of trade discounts, rebates, goods and service tax and sales taxes.
Other Income
Interest: Interest income is recognized on effective interest method taking into account the amount outstanding and the rate applicable.
Export Incentives : Export incentives including Duty Drawback and entitlements under Merchandise Exports from India Scheme (MEIS) are accounted on accrual basis.
Dividend : Dividend income is recognized when the right to receive dividend is established.
1.11 Insurance Claims
Insurance claims are accounted for on the basis of claims lodged with insurance company and to the extent that there is a reasonable certainty in realizing the claims.
1.12 Employee Benefits
1. Short - Term employee benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as shortterm employee benefits and recognized in the period in which the employee renders the related service.
2. Defined Contribution Plans Provident Fund
Contribution towards provident fund for employees is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis.
Superannuation Fund
This is a defined contribution Plan. The Company contributes sum equivalent to certain specified percentages of the eligible annual salaries based on the options exercised by the eligible employees to Superannuation Fund administered by Life Insurance Corporation of India (LIC). The Company has no further obligations for future superannuation benefits other than its annual contribution and recognizes such contribution as expense as and when due.
3. Defined Benefit Plan Gratuity
The Company provides for gratuity, a defined benefit plan (the âGratuity Planâ) administered by LIC covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employeeâs salary and the tenure of employment. The Companyâs liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses / gains are recognized in the other comprehensive income in the year in which they arise. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss.
4. Other Long term employee benefits
Compensated Absence
Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end.
Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the year end are treated as other long term employee benefits. The Companyâs liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses / gains are recognized in the Profit and Loss Statement in the year in which they arise.
1.13 Taxes on Income
Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the relevant prevailing tax laws. Tax expenses relating to the items in profit and loss shall be treated as current tax as part of profit and loss and those relating to items in other comprehensive income (OCI) shall be recognized as part of the OCI.
Deferred tax is recognized for all the temporary differences between the carrying amounts of assets and liabilities in the financial statements and corresponding tax bases used in computation of taxable profit. Deferred tax assets are recognized and carried forward only to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilized. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. At each Balance Sheet date, the Company re-assesses unrecognized deferred tax assets, if any and the same is recognized to the extent it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against liabilities representing current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation law.
Minimum Alternate Tax (MAT) credit 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 specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period. MAT shall be treated as part of deferred tax assets.
1.14 Financial instruments
Initial recognition
The Company recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instruments. All financial assets and liabilities are recognized at fair value on initial recognition. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through profit or loss, are added to the fair value on initial recognition.
Subsequent measurement
i. Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
ii. Financial assets at fair value through profit or loss
A financial asset which is not classified in the above category is subsequently fair valued through profit or loss.
iii. Financial liabilities
Financial liabilities are subsequently carried at amortized cost using the effective interest method.
For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Derecognition of financial instruments
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under IND AS 109. A financial liability (or a part of a financial liability) is derecognised from the Companyâs Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.
Impairment
All financial assets classified as at amortized cost shall be tested for impairment under Ind AS 109 and measured using Expected Credit Loss (ECL) model.
1.15 Fair Value
The Company measures financial instruments at fair value in accordance with the accounting policies mentioned above. 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.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy that categorizes into three levels, described as follows, the inputs to valuation techniques used to measure value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).
Level 1 â quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 â inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3 â inputs that are unobservable for the asset or liability
2.16 Government Grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. All government grants are initially recognized by way of setting up as deferred income. Government grants relating to income are subsequently recognized in the profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are subsequently recognized in profit or loss on a systematic basis over the expected life of the related depreciable assets. Grants recognized in Profit and Loss as above are presented within other income.
1.17 Research & Development Expenditure
Expenditure on research is recognized as an expense when it is incurred. Expenditure on development which does not meet the criteria for recognition as an intangible asset is recognized as an expense when it is incurred.
Items of property, plant and equipment and acquired Intangible assets utilized for Research and Development are capitalized and depreciated in accordance with the policies stated for property, plant and equipment and intangible assets.
1.18 Provisions and Contingent Liabilities
Provisions : Provisions are recognized when there is a present obligation as result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are not discounted to its present value unless the effect of time value of money is material. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent Liabilities : Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. When there is a possible obligation or a present obligation in respect of which likelihood of outflow of resources embodying economic benefits is remote, no provision or disclosure is made.
1.19 Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Companyâs earnings per share is the net profit for the period after deducting equity dividends and any attributable tax thereto for the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
Mar 31, 2017
1. SIGNIFICANT ACCOUNTING POLICIES System of Accounting
1.1 The financial statements are prepared in accordance with the Generally Accepted Accounting Principles in India (''Indian GAAP'') to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies Act, 2013. The financial statements have been prepared under the historical cost convention on accrual basis, except for certain financial instruments which are measured at fair value.
1.2 The preparation of financial statements requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expense during the year. Examples of such estimates include allowance for uncollectible accounts receivables, future obligations under employees benefit plans, useful life of depreciable fixed assets, accounting for employee cost pending execution of agreements with workmen unions etc. Actual results could differ due to changes in these estimates and the difference between the actual result and the estimates are recognized in the period in which the results are known / materialize.
1.3 Property, Plant and Equipment (PPE) and Depreciation
Property, Plant and Equipment are stated at cost. None of the Property, Plant and Equipment has been revalued. Direct expenses incurred in connection with project prior to the commencement of commercial production are treated as part of project cost and capitalized as part of Property, Plant and Equipment.
Depreciation
I n respect of Property, Plant and Equipment (other than freehold land and capital work-in-progress) acquired during the year, depreciation / amortization is charged on a straight line basis so as to write off the cost of the assets over the useful lives and for the assets acquired prior to April 1, 2014 is depreciated over the remaining useful life based on evaluation.
I n the case of Second hand assets and certain Plant & Machinery, depreciation is calculated taking into account the estimated useful life of the assets.
Assets costing individually up to Rs. 10,000/- shall be depreciated fully in the year of capitalization with a residual value of Re.1/-
1.4 Impairment:
If an asset is carried at a value more than the recoverable amount through use or sale of the asset, such impairment of asset is recognized as expenditure of the year. If such impairment ceases to exist then the same is recognized as income of that year.
1.5 Intangible Assets
Intangible Assets are stated at cost less accumulated amortization and Impairment, if any. Intangible Assets are amortized over their estimated useful lives on a straight line basis. Direct expenses incurred in connection with Internally generated Intangible Assets are Capitalized. Software licenses and other Intangible Assets are amortized over their estimated useful life of 3 years.
1.6 Inventories
Raw materials, work in progress and finished goods are valued at lower of cost and net realizable value. Other items of inventory are valued at cost. Cost is determined on Weighted Average basis. Cost includes conversion and other costs incurred in bringing the inventories to the present location and condition.
1.7 Foreign Currency Transactions Transaction and Translation
Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at year end exchange rates. Exchange differences arising on settlement and translation of monetary items other than for acquisition of fixed assets, at the yearend are recognized as income or expense in the year in which they arise.
Premium or discount on forward / option contracts is amortized over the life of such contracts and is recognized as income or expense in the Profit and Loss account.
Exchange differences arising on settlement / translation of long term monetary items utilized for acquisition of fixed assets are adjusted to carrying cost of fixed assets.
1.8 Derivative instruments and Hedge accounting :
The Company is exposed to foreign currency fluctuations on foreign currency assets and forecasted cash flows denominated in foreign currency. The Company limits the effects of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives. The Company enters into forward contract and option contracts, where the counterparty is a bank. The changes in the fair values of forward contracts and options designated as effective cash flow hedges are recognized directly in ''Hedge Reserve Account'' being part of the shareholders'' funds and reclassified into the profit and loss account upon the occurrence of the hedged transactions. The changes in fair value relating to the ineffective portion of the cash flow hedges and forward contracts / options not designated as cash flow hedges are recognized in the profit and loss account as they arise.
1.9 Borrowing Costs
Borrowing costs that are attributable to the acquisition or construction of qualifying assets requires a substantial period of time are capitalised as a part of the cost of the asset if they will result in future economic benefit to the company. All other borrowing costs are charged to revenue.
1.10 Taxes on Income
Provision for Current tax (inclusive of Minimum Alternate Tax) is made based on the tax liability computed on taxable income in accordance with relevant tax rates and tax laws
Deferred tax, being tax on timing difference between taxable income and accounting income that originate in one year and are capable of reversal in one or more subsequent years, has been recognized.
Deferred tax assets, excluding assets arising from loss/depreciation carried forward, are not recognized unless there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In case of carried forward loss/depreciation, it is recognized only if virtual certainty exists.
1.11 Research & Development
Revenue expenditure is charged under natural heads in Profit and Loss Account.
Capital expenditure is shown as addition to fixed assets under natural heads.
1.12 Employee Benefits
1.12.1 Defined Benefit Plan : Gratuity : (Funded)
In accordance with applicable laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity Plan) covering all staff, workers and officers. The liability is determined based on year end actuarial valuation using projected unit credit method, with actuarial valuations being carried out at each Balance Sheet date. The Gratuity Plan provides for, at retirement or termination of employment, an amount based on the respective employees last drawn salary and the years of employment with the Company. The Company provides the gratuity benefit through annual contributions to a Gratuity trust which in turn mainly contributes to Life Insurance Corporation of India (LIC) for this purpose. Under this plan the settlement obligation remains with the Gratuity trust. Life Insurance Corporation of India administers the plan and determines the contribution premium required to be paid by the trust.
1.12.2 Leave encashment liability : (Unfunded)
In accordance with applicable rules, the liability for leave encashment (defined benefit plan (Unfunded)) was actuarially valued and provided in the books of accounts, covering all staff, workers and officers.
1.12.3 Provident Fund :
I n addition to the above benefits, all employees are entitled to Provident Fund benefits as per the law. For certain category of employees the Company administers the benefits through a recognized Provident Fund Trust. For other employees contributions are made to the regional Provident Fund Commissioners as per law. The Government mandates the annual yield to be provided to the employees on their corpus. For the first category of employees (covered by the Trust), the company has an obligation to make good the shortfall, if any, between the yield on the investments of the trust and the yield mandated by the Government.
1.12.4 Superannuation :
Defined Contribution Plan where contributions are made to a Trust which in turn contributes to LIC.
Apart from being covered under the Gratuity Plan described above, the employees of the Company who are Assistant Managers and above have the option to participate in a defined contribution Superannuation plan maintained by the Company. The Company has no further obligations under the plan except making contributions based on a specified percentage of each covered employee''s salary.
1.13 Revenue Recognition
1.13.1 Sales are net of sales returns and trade discounts and exclude all taxes and levies.
1.13.2 Export Incentive Benefits are accounted on the following basis:
a) Duty drawback entitlement is accounted on accrual basis.
b) Merchandise Exports from India Scheme (MEIS) is accounted on accrual basis.
1.14 Insurance claims:
Insurance claims are accounted for on the basis of claims lodged with insurance company and to the extent that there is a reasonable certainty in realizing the claims.
1.15 Dividends:
The final dividend on shares is recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company''s Board of Directors.
The Company has not issued any securities convertible into equity/preference shares.
2.4 The Company has only one class of shares i.e. equity shares having a par value of Rs,.10/- per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to shareholding.
3.1 The Board of Directors, in their meeting held on May 18, 2017 have recommended a final dividend of Rs, 2.50/- per equity share amounting to Rs, 1,67,97,480/- on Equity Shares of Rs, 10/- each for the year 2016-17, subject to the approval of the Shareholders. Dividend Distribution Tax on the same amounts to Rs, 34,19,631/-. This final dividend on shares will be recorded as a liability on the date of approval by the Shareholders in the ensuing annual general meeting.
4.1 Notes on Secured Long Term Borrowings
4.1.1 Term loans are secured by Pari-passu basis first charge on the company''s immovable and movable fixed assets (other than Property situated at Peenya and Tumkur) both present and future.
There has been no default as on Balance Sheet date in repayment of loans and interest.
4.3 Notes on Unsecured Long Term Borrowings
4.3.1 The company is entitled for deferment of sales tax for a period of 14 years from 1996 to 2010 and the first year loan is repayable during March 2010 and the second year''s loan is repayable in the year 2011 and the amount deferred in year 2010 is repayable in the year 2024.The company should continue to be in operation and there should not be any change in location or management of the company until the loan is fully repaid.
8.1 Short term borrowings amounting to Rs, 7.11 Crores (Rs, 24.98 Crores) from State Bank of India are secured by hypothecation of raw materials, work in progress, finished goods, stores & spares and book debts of the company''s Tumkur Unit and also secured by first charge on land and buildings and plant and machineries of the company''s Peenya Unit and Tumkur Unit.
8.2 Other Short term borrowings amounting toRs, 28.16 Crores (Rs, 30.09 Crores) from banks are secured by hypothecation of raw materials, work in progress, finished goods, stores & spares and book debts of the company on Pari-passu basis (other than Property situated at Peenya Unit and Tumkur Unit).
Mar 31, 2015
1.1 The financial statements are prepared in accordance with the
Generally Accepted Accounting Principles in India (''Indian GAAP'') to
comply with the Accounting Standards specif ed under Section 133 of the
Companies Act, 2013, read with Rule 7 of the Companies Act, 2013. The
financial statements have been prepared under the historical cost
convention on accrual basis, except for certain financial instruments
which are measured at fair value.
1.2 The preparation of financial statements requires the management of
the Company to make estimates and assumptions that affect the reported
balances of assets and liabilities and disclosures relating to the
contingent liabilities as at the date of the financial statements and
reported amounts of income and expense during the year. Examples of
such estimates include allowance for uncollectible accounts
receivables, future obligations under employees benefit plans, useful
life of depreciable fixed assets, accounting for employee cost pending
execution of agreements with workmen unions etc. Actual results could
differ due to changes in these estimates and the difference between the
actual result and the estimates are recognised in the period in which
the results are known / materialise.
1.3 Fixed Assets, Impairment & Depreciation
Fixed assets are stated at cost. None of the fixed assets has been
revalued. Expenses incurred in connection with project prior to the
commencement of commercial production are treated as part of project
cost and capitalised as part of fixed assets.
If an asset is carried at a value more than the recoverable amount
through use or sale of the asset, such impairment of asset is
recognized as expenditure of the year. If such impairment ceases to
exist then the same is recognized as income of that year.
1.4 In respect of fixed assets (other than freehold land and capital
work-in-progress) acquired during the year, depreciation / amortisation
is charged on a straight line basis so as to write off the cost of the
assets over the useful lives and for the assets acquired prior to April
1, 2014 is depreciated over the remaining usefule life based on
evaluation.
In the case of Second hand assets and certain Plant & Machinery,
depreciation is calculated taking into account the estimated useful
life of the assets.
Assets costing individually up to Rs. 10,000/- shall be depreciated
fully in the year of capitalisation with a residual value of Re.1/-
1.5 Inventories
Raw materials, work in progress and finished goods are valued at lower
of cost and net realisable value. Other items of inventory are valued
at cost. Cost is determined on Weighted Average basis. Cost includes
conversion and other costs incurred in bringing the inventories to the
present location and condition.
1.6 Foreign Currency Transactions Transaction and Translation
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction. Foreign currency monetary
assets and liabilities are translated at year end exchange rates.
Exchange differences arising on settlement and translation of monetary
items other than for acquisition of fixed assets, at the year end are
recognised as income or expense in the year in which they arise.
Premium or discount on forward / option contracts is amortised over the
life of such contracts and is recognised as income or expense in the
Profit and Loss account.
Exchange differences arising on settlement / translation of long term
monetary items utilized for acquisition of fixed assets are adjusted to
carrying cost of fixed assets.
Derivative instruments and Hedge accounting :
1.7 The Company is exposed to foreign currency fluctuations on foreign
currency assets and forecasted cash flows denominated in foreign
currency. The Company limits the effects of foreign exchange rate
fluctuations by following established risk management policies including
the use of derivatives. The Company enters into forward contract and
option contracts, where the counterparty is a bank.
Pursuant to ICAI Announcement "Accounting for Derivatives" on the early
adoption of Accounting Standard AS 30 "Financial Instruments :
Recognition and Measurement", the Company has early adopted the
standard and accordingly, the changes in the fair values of forward
contracts and options designated as cash flow hedges are recognised
directly in ''Hedge Reserve Account'' being part of the shareholders''
funds and reclassif ed into the Profit and loss account upon the
occurrence of the hedged transactions. The changes in fair value
relating to the ineffective portion of the cash flow hedges and forward
contracts/ options not designated as cash flow hedges are recognised in
the Profit and loss account as they arise.
1.8 Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets requires a substantial period of time
are capitalised as a part of the cost of the asset if they will result
in future economic benefit to the company. All other borrowing costs
are charged to revenue.
1.9 Taxes on Income
Provision for Current tax (inclusive of Minimum Alternate Tax) is made
based on the tax liability computed on taxable income in accordance
with relevant tax rates and tax laws Deferred tax, being tax on timing
difference between taxable income and accounting income that originate
in one year and are capable of reversal in one or more subsequent
years, has been recognized.
Deferred tax assets, excluding assets arising from loss / depreciation
carried forward, are not recognized unless there is reasonable
certainty that suff cient future taxable income will be available
against which such deferred tax assets can be realized. In case of
carried forward loss/depreciation, it is recognized only if virtual
certainty exists.
1.10 Research & Development
Revenue expenditure is charged under natural heads in Profit and Loss
Account.
Capital expenditure is shown as addition to fixed assets under natural
heads.
1.11 Employee Benefi ts Defi ned Benefit Plan :
Gratuity : (Funded)
In accordance with applicable laws, the Company provides for gratuity,
a def ned benefit retirement plan (Gratuity Plan) covering all staff,
workers and off cers. The liability is determined based on year end
actuarial valuation using projected unit credit method, with actuarial
valuations being carried out at each Balance Sheet date. The Gratuity
Plan provides for, at retirement or termination of employment, an
amount based on the respective employees last drawn salary and the
years of employment with the Company. The Company provides the gratuity
benef t through annual contributions to a Gratuity trust which in turn
mainly contributes to Life Insurance Corporation of India (LIC) for
this purpose. Under this plan the settlement obligation remains with
the Gratuity trust. Life Insurance Corporation of India administers the
plan and determines the contribution premium required to be paid by the
trust.
Leave encashment liability : (Unfunded)
In accordance with applicable rules, the liability for leave encashment
(defined benefit plan (Unfunded)) was actuarially valued and provided
in the books of accounts, covering all staff, workers and off cers.
Provident Fund :
In addition to the above benefits, all employees are entitled to
Provident Fund benef ts as per the law. For certain category of
employees the Company administers the benef ts through a recognised
Provident Fund Trust. For other employees contributions are made to the
regional Provident Fund Commissioners as per law. The Government
mandates the annual yield to be provided to the employees on their
corpus. For the first category of employees (covered by the Trust), the
company has an obligation to make good the shortfall, if any, between
the yield on the investments of the trust and the yield mandated by the
Government.
Superannuation :
Def ned Contribution Plan where contributions are made to a Trust which
in turn contributes to LIC
Apart from being covered under the Gratuity Plan described above, the
employees of the Company who are Assistant Managers and above have the
option to participate in a def ned contribution Superannuation plan
maintained by the Company. The Company has no further obligations
under the plan except making contributions based on a specified
percentage of each covered employees salary.
1.12 Pre-operative Expenditure
All expenditure incurred prior to commencement of business / Expansion
of business activities is carried forward as pre-operative expenditure
and included in Capital Work in Progress and is capitalised along with
the cost of f xed assets on commencement of Business.
1.13 Revenue Recognition
1.13.1 Sales are net of sales returns and trade discounts and exclude
all taxes and levies.
1.13.2 Export Incentive Beneifts are accounted on the following basis:
a) Duty drawback entitlement is accounted on accrual basis.
b) Status Holder Incentive Script (SHIS) is accounted on receipt of
script
c) Duty Entitlement Pass Book (DEPB) scheme is accounted on sale /
utilisation of licence
1.14 Insurance claims are accounted for on the basis of claims lodged
with insurance company and to the extent that there is a reasonable
certainty in realising the claims.
The Company has not issued any securities convertible into equity /
preference shares.
2.4 The Board of Directors, in their meeting on May 22, 2015 proposed a
f nal dividend of Rs. 2.5/- per equity share. The proposal is subject
to approval of shareholders at the ensuing Annual General Meeting.
2.5 The Company has only one class of shares i.e. equity shares having
a par value of Rs.10/- per share. Each shareholder is eligible for one
vote per share held. The dividend if any proposed by the Board of
Directors is subject to the approval of the shareholders in the Annual
General Meeting. In the event of liquidation, the equity shareholders
are eligible to receive the remaining assets of the Company after
distribution of all preferential amounts, in proportion to
shareholding.
2.7 Pursuant to clause 5.1 of the Scheme of Amalgamation, 15,68,000
Equity Shares of Rs. 10/- each were allotted on 04-May-2015, to the
Shareholders of Kar Mobiles Ltd. in the ratio of 7 fully paid up Equity
Shares of Rs. 10/- each of the Company for every 10 Shares of Rs.10/-
each held in Kar Mobiles Ltd. These newly allotted shares rank Pari
Passu with the existing equity shares of the company in all respects
including dividend.
Mar 31, 2013
1.1 The financial statements are prepared under the historical cost
convention, on the accrual basis of accounting in accordance with the
Companies Act, 1956 and comply with the applicable Accounting Standards
notified under Section 211(3C) of the Companies Act, 1956 and issued by
the Institute of Chartered Accountants of India (ICAI).
1.2 The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts. Estimates
include allowance for uncollectible accounts receivables, future
obligations under employees benefit plans, useful life of fixed assets,
accounting for employee cost pending execution of agreements with
workmen unions etc. The actual amounts (crystallized after preparation
of financial statements) may differ from these estimates.
1.3 Fixed Assets, Impairment & Depreciation
Fixed assets are stated at cost. None of the fixed assets has been
revalued. Expenses incurred in connection with project prior to the
commencement of commercial production are treated as part of project
cost and capitalised as part of fixed assets.
If an asset is carried at a value more than the recoverable amount
through use or sale of the asset, such impairment of asset is
recognized as expenditure of the year. If such impairment ceases to
exist then the same is recognized as income of that year.
1.4 Depreciation is provided on straight line method at the rates
specified in Schedule-XIV to the Companies Act, 1956 except for :
a) Assets acquired upto 31.03.1995 Â On written down value method.
b) Assets of following categories based on useful life acquired on or
after 01.04.1996
Assets Useful Life Years
1 Vehicles 5
2 Furniture & Fittings 5
3 Office Equipments 3
4 Licence 3
1.5 In case of second hand assets, depreciation is calculated taking
into account the estimated useful life of the assets.
1.6 Inventories
Raw materials, work in progress and finished goods are valued at lower
of cost and net realisable value.
Other items of inventory are valued at cost. Cost is determined on
Weighted Average basis. Cost includes conversion and other costs
incurred in bringing the inventories to the present location and
condition.
1.7 Foreign Currency Transactions
Transaction and Translation
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction. Foreign currency monetary
assets and liabilities are translated at year end exchange rates.
Exchange differences arising on settlement and translation of monetary
items other than for acquisition of fixed assets, at the year end are
recognised as income or expense in the year in which they arise.
Premium or discount on forward / option contracts is amortised over the
life of such contracts and is recognised as income or expense in the
Profit and Loss account.
Exchange differences arising on settlement / translation of long term
monetary items utilized for acquisition of fixed assets are adjusted to
carrying cost of fixed assets.
1.8 Derivative instruments and Hedge accounting
The Company is exposed to foreign currency fluctuations on foreign
currency assets and forecasted cash flows denominated in foreign
currency. The Company limits the effects of foreign exchange rate
fluctuations by following established risk management policies
including the use of derivatives. The Company enters into forward
contract and option contracts, where the counterparty is a bank.
Pursuant to ICAI Announcement "Accounting for Derivatives" on the early
adoption of Accounting Standard AS 30 "Financial Instruments :
Recognition and Measurement", the Company has early adopted the
standard and accordingly, the changes in the fair values of forward
contracts and options designated as cash flow hedges are recognised
directly in ''Hedge Reserve Account'' being part of the shareholders''
funds and reclassified into the profit and loss account upon the
occurrence of the hedged transactions. The changes in fair value
relating to the ineffective portion of the cash flow hedges and forward
contracts / options not designated as cash flow hedges are recognised
in the profit and loss account as they arise.
1.9 Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets requires a substantial period of time
are capitalised as a part of the cost of the asset if they will result
in future economic benefit to the company. All other borrowing costs
are charged to revenue.
1.10 Taxes on Income
Provision for Current tax (inclusive of Minimum Alternate Tax) is made
based on the tax liability computed on taxable income in accordance
with relevant tax rates and tax laws.
Deferred tax, being tax on timing difference between taxable income and
accounting income that originate in one year and are capable of
reversal in one or more subsequent years, has been recognized.
Deferred tax assets, excluding assets arising from loss/depreciation
carried forward, are not recognized unless there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. In case of
carried forward loss/ depreciation, it is recognized only if virtual
certainty exists.
1.11 Research & Development
Revenue expenditure is charged under natural heads in Profit and Loss
Account.
Capital expenditure is shown as addition to fixed assets under natural
heads.
1.12 Employee Benefits Defined Benefit Plan :
Gratuity : (Funded)
In accordance with applicable laws, the Company provides for gratuity,
a defined benefit retirement plan (Gratuity Plan) covering all staff,
workers and officers. The Gratuity Plan provides for, at retirement or
termination of employment, an amount based on the respective employees
last drawn salary and the years of employment with the Company. The
Company provides the gratuity benefit through annual contributions to a
Gratuity trust which in turn mainly contributes to Life Insurance
Corporation of India (LIC) for this purpose. Under this plan the
settlement obligation remains with the Gratuity trust. Life Insurance
Corporation of India administers the plan and determines the
contribution premium required to be paid by the trust.
Leave encashment liability : (Unfunded)
In accordance with applicable rules, the liability for leave encashment
(defined benefit plan (Unfunded)) was actuarially valued and provided
in the books of accounts, covering all staff, workers and officers.
Provident Fund :
In addition to the above benefits, all employees are entitled to
Provident Fund benefits as per the law. For certain category of
employees the Company administers the benefits through a recognised
Provident Fund Trust. For other employees contributions are made to the
regional Provident Fund Commissioners as per law. The Government
mandates the annual yield to be provided to the employees on their
corpus. For the first category of employees (covered by the Trust), the
company has an obligation to make good the shortfall, if any, between
the yield on the investments of the trust and the yield mandated by the
Government.
Superannuation :
Defined Contribution Plan where contributions are made to a Trust which
in turn contributes to LIC.
Apart from being covered under the Gratuity Plan described above, the
employees of the Company who are Assistant Managers and above have the
option to participate in a defined contribution Superannuation plan
maintained by the Company. The Company has no further obligations
under the plan except making annual contributions based on a specified
percentage of each covered employees salary.
1.13 Pre-operative Expenditure
All expenditure incurred prior to commencement of business / Expansion
of business activities is carried forward as pre-operative expenditure
and included in Capital Work in Progress and is capitalised along with
the cost of fixed assets on commencement of Business.
1.14 Revenue Recognition
1.14.1 Sales are net of sales returns and trade discounts and exclude
all taxes and levies.
1.14.2 Export Incentive Beneifts are accounted on the following basis:
a) Duty drawback entitlement is accounted on accrual basis.
b) Status Holder Incentive Script (SHIS) is accounted on receipt of
script
c) Duty Entitlement Pass Book (DEPB) scheme is accounted on sale /
utilisaiton of licence
1.15 Insurance claims are accounted for on the basis of claims lodged
with insurance company and to the extent that there is a reasonable
certainity in realising the claims.
Mar 31, 2012
1.1 The financial statements are prepared under the historical cost
convention, on the accrual basis of accounting in accordance with the
Companies Act, 1956 and comply with the applicable Accounting Standards
notified under Section 211(3C) of the Companies Act, 1956 and issued by
the Institute of Chartered Accountants of India (ICAI).
1.2 The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts. Estimates
include allowance for uncollectible accounts receivables, future
obligations under employees benefit plans, useful life of fixed assets,
accounting for employee cost pending execution of agreements with
workmen unions etc. The actual amounts (crystallized after preparation
of financial statements) may differ from these estimates.
1.3 Fixed Assets, Impairment & Depreciation
Fixed assets are stated at cost. None of the fixed assets has been
revalued. Expenses incurred in connection with project prior to the
commencement of commercial production are treated as part of project
cost and capitalised as part of fixed assets.
If an asset is carried at a value more than the recoverable amount
through use or sale of the asset, such impairment of asset is
recognized as expenditure of the year. If such impairment ceases to
exist then the same is recognized as income of that year.
1.4 Depreciation is provided on straight line method at the rates
specified in Schedule-XIV to the Companies Act, 1956 except for :
a) Assets acquired upto 31.03.1995 - On written down value method.
b) Assets of following categories based on useful life acquired on or
after 01.04.1996
Assets Useful Life Years
1 Vehicles 5
2 Furniture & Fittings 5
3 Office Equipments 3
4 Licence 3
1.5 In case of second hand assets, depreciation is calculated taking
into account the estimated useful life of the assets.
1.6 Inventories
Raw materials, work in progress and finished goods are valued at lower
of cost and net realisable value. Other items of inventory are valued
at cost. Cost is determined on Weighted Average basis. Cost includes
conversion and other costs incurred in bringing the inventories to the
present location and condition.
1.7 Foreign Currency Transactions
Transaction and Translation
Transactions in foreign currencies are recorded at the exchange rates
prevailing on the date of the transaction. Foreign currency monetary
assets and liabilities are translated at year end exchange rates.
Exchange differences arising on settlement and translation of monetary
items other than for acquisition of fixed assets, at the year end are
recognised as income or expense in the year in which they arise.
Premium or discount on forward / option contracts is amortised over the
life of such contracts and is recognised as income or expense in the
Profit and Loss account.
Exchange differences arising on settlement / translation of long term
monetary items utilized for acquisition of fixed assets are adjusted to
carrying cost of fixed assets.
Derivative instruments and Hedge accounting :
1.8 The Company is exposed to foreign currency fluctuations on foreign
currency assets and forecasted cash flows denominated in foreign
currency. The Company limits the effects of foreign exchange rate
fluctuations by following established risk management policies
including the use of derivatives. The Company enters into forward
contract and option contracts, where the counterparty is a bank.
Pursuant to ICAI Announcement "Accounting for Derivatives" on the
early adoption of Accounting Standard AS 30 "Financial Instruments :
Recognition and Measurement", the Company has early adopted the
standard and accordingly, the changes in the fair values of forward
contracts and options designated as cash flow hedges are recognised
directly in 'Hedge Reserve Account' being part of the
shareholders' funds and reclassified into the profit and loss account
upon the occurrence of the hedged transactions. The changes in fair
value relating to the ineffective portion of the cash flow hedges and
forward contracts / options not designated as cash flow hedges are
recognised in the profit and loss account as they arise.
1.9 Borrowing Costs
Borrowing costs that are attributable to the acquisition or
construction of qualifying assets requires a substantial period of time
are capitalised as a part of the cost of the asset if they will result
in future economic benefit to the company. All other borrowing costs
are charged to revenue.
1.10 Taxes on Income
Provision for Current tax (inclusive of Minimum Alternate Tax) is made
based on the tax liability computed on taxable income in accordance
with relevant tax rates and tax laws.
Deferred tax, being tax on timing difference between taxable income and
accounting income that originate in one year and are capable of
reversal in one or more subsequent years, has been recognized.
Deferred tax assets, excluding assets arising from loss/depreciation
carried forward, are not recognized unless there is reasonable
certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realized. In case of
carried forward loss/depreciation, it is recognized only if virtual
certainty exists.
1.11 Research & Development
Revenue expenditure is charged under natural heads in Profit and Loss
Account.
Capital expenditure is shown as addition to fixed assets under natural
heads.
1.12 Employee Benefits Defined Benefit Plan :
Gratuity : (Funded)
In accordance with applicable laws, the Company provides for gratuity,
a defined benefit retirement plan (Gratuity Plan) covering all staff,
workers and officers. The Gratuity Plan provides for, at retirement or
termination of employment, an amount based on the respective employees
last drawn salary and the years of employment with the Company. The
Company provides the gratuity benefit through annual contributions to a
Gratuity trust which in turn mainly contributes to Life Insurance
Corporation of India (LIC) for this purpose. Under this plan the
settlement obligation remains with the Gratuity trust. Life Insurance
Corporation of India administers the plan and determines the
contribution premium required to be paid by the trust.
Leave encashment liability : (Unfunded)
In accordance with applicable rules, the liability for leave encashment
(defined benefit plan (Unfunded)) was actuarially valued and provided
in the books of accounts, covering all staff, workers and officers.
Provident Fund :
In addition to the above benefits, all employees are entitled to
Provident Fund benefits as per the law. For certain category of
employees the Company administers the benefits through a recognised
Provident Fund Trust. For other employees contributions are made to the
regional Provident Fund Commissioners as per law. The Government
mandates the annual yield to be provided to the employees on their
corpus. For the first category of employees (covered by the Trust), the
company has an obligation to make good the shortfall, if any, between
the yield on the investments of the trust and the yield mandated by the
Government.
Superannuation :
Defined Contribution Plan where contributions are made to a Trust which
in turn contributes to LIC.
Apart from being covered under the Gratuity Plan described above, the
employees of the Company who are Assistant Managers and above also
participate in a defined contribution Superannuation plan maintained by
the Company. The Company has no further obligations under the plan
except making annual contributions based on a specified percentage of
each covered employees salary.
1.13 Pre-operative Expenditure
All expenditure incurred prior to commencement of business / expansion
of business activities is carried forward as pre-operative expenditure
and included in Capital Work in Progress and is capitalised along with
the cost of fixed assets on commencement of business.
1.14 Revenue Recognition
1.14.1 Sales are net of sales returns and trade discounts and exclude
all taxes and levies.
1.14.2 Duty drawback entitlement is accounted on accrual basis.
1.15 Insurance claims are accounted for on the basis of claims lodged
with insurance company and to the extent that there is a reasonable
certainity in realising the claims.
Mar 31, 2011
1 System of Accounting
1.1 The financial statements are prepared under the historical cost
convention, on the accrual basis of accounting in accordance with the
Companies Act, 1956 and comply with the applicable Accounting Standards
notified under Section 211(3C) of the Companies Act, 1956 and issued by
the Institute of Chartered Accountants of India (ICAI).
1.2 The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts. Estimates
include allowance for uncollectible accounts receivables, future
obligations under employees benefit plans, useful life of fixed assets,
accounting for employee cost pending execution of agreements with
workmen unions etc. The actual amounts (crystallized after preparation
of financial statements) may differ from these estimates.
2 Fixed Assets, Impairment & Depreciation
2.1 Fixed assets are stated at cost. None of the fixed assets has been
revalued. Expenses incurred in connection with project prior to the
commencement of commercial production are treated as part of project
cost and capitalised as part of fixed assets.
2.2 If an asset is carried at a value more than the recoverable amount
through use or sale of the asset, such impairment of asset is
recognized as expenditure of the year. If such impairment ceases to
exist then the same is recognized as income of that year.
2.3.1 Depreciation is provided on straight line method at the rates
specified in Schedule-XIV to the Companies Act, 1956 except for:
a) Assets acquired upto 31.03.1995 - On written down value method.
b) Assets of following categories based on useful life acquired on or
after 01.04.1996
2.3.2 In case of second hand assets, depreciation is calculated taking
into account the estimated useful life of the assets.
3 Inventories
3.1 Raw materials, work in progress and finished goods are valued at
lower of cost and net realisable value. Other items of inventory are
valued at cost. Cost is determined on Weighted Average basis. Cost
includes conversion and other costs incurred in bringing the
inventories to the present location and condition.
4 Foreign Currency Transactions Transaction and Translation:
4.1 Transactions in foreign currencies are recorded at the exchange
rates prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities are translated at year end exchange
rates. Exchange differences arising on settlement and translation of
monetary items other than for acquisition of fixed assets, at the year
end are recognised as income or expense in the year in which they
arise.
4.2 Premium or discount on forward / option contracts is amortised over
the life of such contracts and is recognised as income or expense in
the Profit and Loss account.
4.3 Exchange differences arising on settlement / translation of long
term monetary items utilized for acquisition of fixed assets are
adjusted to carrying cost of fixed assets.
Derivative instruments and Hedge accounting:
4.4 The Company is exposed to foreign currency fluctuations on foreign
currency assets and forecasted cash flows denominated in foreign
currency. The Company limits the effects of foreign exchange rate
fluctuations by following established risk management policies
including the use of derivatives. The Company enters into forward
contract and option contracts, where the counterparty is a bank.
Pursuant to ICAI Announcement "Accounting for Derivatives" on the early
adoption of Accounting Standard AS 30 "Financial Instruments :
Recognition and Measurement", the Company has early adopted the
standard and accordingly, the changes in the fair values of forward
contracts and options designated as cash flow hedges are
recognised directly in Hedge Reserve Account1 being part of the
shareholders funds and reclassified into the profit and loss account
upon the occurrence of the hedged transactions. The changes in fair
value relating to the ineffective portion of the cash flow hedges and
forward contracts / options not designated as cash flow hedges are
recognised in the profit and loss account as they arise.
5. Borrowing Costs
5.1 Borrowing costs that are attributable to the acquisition or
construction of qualifying assets requires a substantial period of time
are capitalised as a part of the cost of the asset if they will result
in future economic benefit to the company. All other borrowing costs
are charged to revenue.
6. Taxes on Income
6.1 Provision for Current tax (inclusive of Minimum Alternate Tax) is
made based on the tax liability computed on taxable income in
accordance with relevant tax rates and tax laws.
6.2 Deferred tax, being tax on timing difference between taxable income
and accounting income that originate in one year and are capable of
reversal in one or more subsequent years, has been recognized.
6.3 Deferred tax assets, excluding assets arising from
loss/depreciation carried forward, are not recognized unless there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized. In
case of carried forward loss/ depreciation, it is recognized only if
virtual certainty exists.
7. Research & Development
7.1 Revenue expenditure is charged under natural heads in Profit and
Loss Account.
7.2 Capital expenditure is shown as addition to fixed assets under
natural heads.
8. Employee Benefits
8.1 Defined Benefit Plan
Gratuity (Funded)
In accordance with applicable laws, the Company provides for gratuity,
a defined benefit retirement plan (Gratuity Plan) covering all staff,
workers and officers. The Gratuity Plan provides for, at
retirement or termination of employment, an amount based on the
respective employees last drawn salary and the years of employment with
the Company. The Company provides the gratuity benefit through annual
contributions to a Gratuity trust which in turn mainly contributes to
Life Insurance Corporation of India (LIC) for this purpose. Under this
plan the settlement obligation remains with the Gratuity trust. Life
Insurance Corporation of India administers the plan and determines the
contribution premium required to be paid by the trust.
Leave encashment liability (Unfunded)
In accordance with applicable rules, the liability for leave encashment
(defined benefit plan (Unfunded)) was actuarially valued and provided
in the books of accounts, covering all staff, workers and officers.
8.2 Defined Contribution Plan Provident Fund :
In addition to the above benefits, all employees are entitled to
Provident Fund benefits as per the law. For certain category of
employees the Company administers the benefits through a recognised
Provident Fund Trust. For other employees contributions are made to the
regional Provident Fund Commissioners as per law. The Government
mandates the annual yield to be provided to the employees on their
corpus. For the first category of employees (covered by the Trust), the
company has an obligation to make good the shortfall, if any, between
the yield on the investments of the trust and the yield mandated by the
Government.
Superannuation : Defined Contribution Plan where contributions are made
to a Trust which in turn contributes to LIC
Apart from being covered under the Gratuity Plan described above, the
employees of the Company who are Assistant Managers and above also
participate in a defined contribution Superannuation plan maintained by
the Company. The Company has no further obligations under the plan
except making annual contributions based on a specified percentage of
each covered employees salary.
9. Pre-operative Expenditure
9.1 All expenditure incurred prior to commencement of business /
Expansion of business activities is carried forward as pre-operative
expenditure and included in Capital Work in Progress and is capitalised
along with the cost of fixed assets on commencement of Business.
10. Revenue Recognition
10.1 Sales are net of sales returns and trade discounts and exclude all
taxes and levies.
Mar 31, 2010
1 System of Accounting
1.1 The financial statements are prepared under the historical cost
convention, on the accrual basis of accounting in accordance with the
Companies Act, 1956 and comply with the applicable Accounting Standards
notified under Section 211(3C) of the Companies Act, 1956 and issued by
the Institute of Chartered Accountants of India (ICAI).
1.2 The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts. Estimates
include allowance for uncollectible accounts receivables, future
obligations under employees benefit plans, useful life of fixed assets,
accounting for employee cost pending execution of agreements with
workmen unions etc. The actual amounts (crystallized after preparation
of financial statements) may differ from these estimates.
2 Fixed Assets, Impairment & Depreciation
2.1 Fixed assets are stated at cost. None of the fixed assets has been
revalued. Expenses incurred in connection with project prior to the
commencement of commercial production are treated as part of project
cost and capitalised as part of fixed assets.
2.2 If an asset is carried at a value more than the recoverable amount
through use or sale of the asset, such impairment of asset is
recognized as expenditure of the year. If such impairment ceases to
exist then the same is recognized as income of that year.
2.3.1 Depreciation is provided on straight line method at the rates
specified in Schedule-XIV to the Companies Act, 1956 except for :
a) Assets acquired upto 31.03.1995 -On written down value method.
b) Assets of following categories based on useful life acquired on or
after 01.04.1996
2.3.2 In case of second hand assets, depreciation is calculated taking
into account the estimated useful life of the assets.
3 Inventories
3.1 Raw materials, work in progress and finished goods are valued at
lower of cost and net realisable value. Other items of inventory are
valued at cost. Cost is determined on Weighted Average basis. Cost
includes conversion and other costs incurred in bringing the
inventories to the present location and condition.
4 Foreign Currency Transactions Transaction and Translation:
4.1 Transactions in foreign currencies are recorded at the exchange
rates prevailing on the date of the transaction. Foreign currency
monetary assets and liabilities are translated at year end exchange
rates. Exchange differences arising on settlement and translation of
monetary items other than for acquisition of fixed assets, at the year
end are recognised as income or expense in the year in which they
arise.
4.2 Premium or discount on forward / option contracts is amortised over
the life of such contracts and is recognised as income or expense in
the Profit and Loss account.
4.3 Exchange differences arising on settlement / translation of long
term monetary items utilized for acquisition of fixed assets are
adjusted to carrying cost of fixed assets.
Derivative instruments and Hedge accounting:
4.4 The Company is exposed to foreign currency fluctuations on foreign
currency assets and forecasted cash flows denominated in foreign
currency. The Company limits the effects of foreign exchange rate
fluctuations by following established risk management policies
including the use of derivatives. The Company enters into forward
contract and option contracts, where the counterparty is a bank.
Pursuant to ICAI Announcement "Accounting for Derivatives" on the early
adoption of Accounting Standard AS 30 "Financial Instruments :
Recognition and Measurement", the Company has early adopted the
standard and accordingly, the changes in the fair values of forward
contracts
and options designated as cash flow hedges are recognised directly in
Hedge Reserve Account being part of the shareholders funds and
reclassified into the profit and loss account upon the occurrence of
the hedged transactions. The changes in fair value relating to the
ineffective portion of the cash flow hedges and forward contracts /
options not designated as cash flow hedges are recognised in the profit
and loss account as they arise.
5. Borrowing Costs
5.1 Borrowing costs that are attributable to the acquisition or
construction of qualifying assets requires a substantial period of time
are capitalised as a part of the cost of the asset if they will result
in future economic benefit to the company. All other borrowing costs
are charged to revenue.
6. Taxes on Income
6.1 Provision for Current tax (inclusive of Minimum Alternate Tax) is
made based on the tax liability computed on taxable income in
accordance with relevant tax rates and tax laws.
6.2 Deferred tax, being tax on timing difference between taxable income
and accounting income that originate in one year and are capable of
reversal in one or more subsequent years, has been recognized.
6.3 Deferred tax assets, excluding assets arising from
loss/depreciation carried forward, are not recognized unless there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized. In
case of carried forward loss/ depreciation, it is recognized only if
virtual certainty exists.
7. Research & Development
7.1 Revenue expenditure is charged under natural heads in Profit and
Loss Account.
7.2 Capital expenditure is shown as addition to fixed assets under
natural heads.
8. Employee Benefits 8.1 Defined Benefit Plan
Gratuity (Funded)
In accordance with applicable laws, the Company provides for gratuity,
a defined benefit retirement plan (Gratuity Plan) covering all staff,
workers and officers. The Gratuity Plan provides for, at
retirement or termination of employment, an amount based on the
respective employees last drawn salary and the years of employment with
the Company. The Company provides the gratuity benefit through annual
contributions to a Gratuity trust which in turn mainly contributes to
Life Insurance Corporation of India (LIC) for this purpose. Under this
plan the settlement obligation remains with the Gratuity trust. Life
Insurance Corporation of India administers the plan and determines the
contribution premium required to be paid by the trust.
Leave encashment liability (Unfunded)
In accordance with applicable rules, the liability for leave encashment
(defined benefit plan (Unfunded)) was actuarially valued and provided
in the books of accounts, covering all staff, workers and officers.
8.2 Defined Contribution Plan Provident Fund :
In addition to the above benefits, all employees are entitled to
Provident Fund benefits as per the law. For certain category of
employees the Company administers the benefits through a recognised
Provident Fund Trust. For other employees contributions are made to the
regional Provident Fund Commissioners as per law. The Government
mandates the annual yield to be provided to the employees on their
corpus. For the first category of employees (covered by the Trust), the
company has an obligation to make good the shortfall, if any, between
the yield on the investments of the trust and the yield mandated by the
Government.
Superannuation : Defined Contribution Plan where contributions are made
to a Trust which in turn contributes to LIC
Apart from being covered under the Gratuity Plan described above, the
employees of the Company who are Assistant Managers and above also
participate in a defined contribution Superannuation plan maintained by
the Company. The Company has no further obligations under the plan
except making annual contributions based on a specified percentage of
each covered employees salary.
9. Pre-operative Expenditure
9.1 All expenditure incurred prior to commencement of business /
Expansion of business activities is carried forward as pre-operative
expenditure and included in Capital Work in Progress and is capitalised
along with the cost of fixed assets on commencement of Business.
10. Revenue Recognition
10.1 Sales are net of sales returns and trade discounts and exclude all
taxes and levies.