Accounting Policies of Relaxo Footwears Ltd. Company
Mar 31, 2023
Note No. 28: Company Information
Relaxo Footwears Limited (âthe Companyâ) is a Public Limited Company incorporated in India with its registered office at Aggarwal City Square, Plot No.10, Manglam Place, District Centre, Sector 3, Rohini, Delhi-110085. Its shares are listed at BSE Limited and National Stock Exchange of India Ltd. The Company is a market leader in the Footwear Industry. The Company has âstate of the art'' manufacturing facilities at Bahadurgarh (Haryana), Bhiwadi (Rajasthan) and Haridwar (Uttarakhand). For details of promoters shareholding and shareholders holding more than 5% shares in the Company, refer note no. 12.
The financial statements for the year ended March 31, 2023 are authorised for issue by the Board of Directors at their meeting held on May 10, 2023.
Note No. 29: Significant Accounting Policies
a. Statement of Compliance
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (âInd ASâ) notified under section 133 of the Companies Act, 2013 (âthe Actâ) read with Companies (Indian Accounting Standards) Rules, 2015 and subsequent amendments thereto along with other provisions of the Act and relevant guidelines issued by the Securities and Exchange Board of India (âSEBIâ).
b. Basis of Preparation of Financial Statements
The financial statements have been prepared on going concern basis and on accrual method of accounting. Historical cost is used in preparation of financial statements except following assets and liabilities which have been measured at fair value.
⢠Certain financial assets and liabilities, including derivative financial instruments and Investments
⢠Defined benefit plan
⢠Employee share based payment
Classification of Current or Non-Current Assets and Liabilities All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013 and Ind AS 1 âPresentation of financial statementsâ.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
Assets
An asset is classified as current when it satisfies any of the following criteria
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria
⢠Expected to be settled in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The Company classifies all other liabilities as noncurrent.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
Figures have been rounded off to the nearest crore of rupees upto two decimal places, unless otherwise stated. The figure 0.00 wherever stated represents amount less than H50,000.
c. Recent Accounting Pronouncements
The Ministry of Corporate Affairs (âMCAâ) vide notification dated March 31, 2023, notified certain amendments to Ind AS. These amendments are applicable w.e.f. April 1 ,2023.
The Company does not foresee any significant impact in its financial statements due to these amendments.
d. Significant Accounting Judgements, Estimates and Assumptions
The preparation of financial statements in conformity with Ind AS requires the Company''s management to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities recognised in the financial statements that are not readily apparent from other sources. The judgements, estimates and associated assumptions are based on historical experience and other factors including
Significant Accounting Policies
estimation of effects of uncertain future events that are considered to be relevant, however actual results may differ from these estimates.
The following are the critical judgements, estimations & assumptions that have been made by the management in the process of applying the Company''s accounting policies.
⢠Management uses judgement in deciding whether individual item or group of items are material in the financial statements. Materiality is judged by reference to the size and nature of the item. The deciding factor is whether omission, misstatement or obscuring the information could individually or collectively influence the economic decision that users make on the basis of the financial statements.
⢠Tax expense is calculated using applicable tax rate and laws that have been enacted or substantially enacted. In arriving at taxable profit and all tax bases of assets and liabilities, the Company determines the taxability based on tax enactments, relevant judicial pronouncements and tax expert opinions and makes appropriate provisions which includes an estimation of the likely outcome of any open tax assessments/litigations. Any difference is recognised on closure of assessment or in the period in which they are agreed.
⢠Defined benefit obligations are measured at fair value for financial reporting purposes. Fair value determined by actuary is based on actuarial assumptions. Management judgement is required to determine such actuarial assumptions. Such assumptions are reviewed annually using the best information available with the management.
⢠When the fair value of financial assets and financial liabilities recorded in these financial statements cannot be measured based on quoted price in active markets, their fair value is measured using valuation techniques. The inputs to these valuation techniques are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include consideration of inputs such as liquidity risk, credit risk and volatility etc.
⢠The Company makes allowances for doubtful trade receivables (Expected Credit Loss Allowance) based on a provision matrix which takes into account historical credit loss experience and adjusted for current estimates.
⢠The determination of depreciation and amortisation charge depends on the useful lives for which judgements and estimations are required. The residual values, useful lives, and method of depreciation/amortisation of property, plant and equipment and intangible assets
are reviewed at each financial year end and adjusted prospectively, if appropriate.
⢠Inventories are stated at the lower of cost and net realisable value. In estimating the net realisable value of inventories the Company makes an estimate of future selling prices and costs necessary to make the sale.
⢠Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/claims/litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
⢠The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116 âLeasesâ. Identification of a lease requires significant judgment in assessing the lease term (including anticipated renewals) and the applicable discount rate.
⢠The contracts with customers include transfer of promised goods to the customers. Judgement is required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as rebates and discounts etc. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period.
e. Property, Plant and Equipment (PPE)
Property, Plant and Equipment are stated at cost less accumulated depreciation and impairment loss, if any. Freehold land is disclosed at cost less impairment, if any. The cost comprises its purchase price, other non- refundable taxes, duties and any directly attributable costs of bringing the asset to its working condition for its intended use.
Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the Company and the cost of the item can be measured reliably.
The Company identifies and determines cost of each component of the asset separately, if the component has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset.
The present value of the expected cost for decommissioning of an asset, if any, after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
The cost of self-constructed assets includes the cost of materials, direct labour, borrowing costs and any other costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management. Advances given towards acquisition / construction of property, plant and equipment outstanding at each reporting date are disclosed as capital advances under other non-current assets. Other indirect expenses incurred related to project, net of income earned during the project development stage prior to its intended use, are considered as pre-operative expense and disclosed under capital work-in-progress.
An item of property, plant and equipment and any significant part initially recognised, is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
f. Intangible Assets
Intangible assets are stated at cost less accumulated amortisation and impairment loss , if any. The cost comprises its purchase price, other non- refundable taxes, duties and any directly attributable costs of bringing the asset to its working condition for its intended use.
Intangible assets under development are shown separately at cost incurred in bringing the asset to its present condition.
Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the Company and the cost of the item can be measured reliably.
Revenue expenditure pertaining to research is charged to the statement of profit and loss. Development costs of products are also charged to the statement of profit and loss unless a product''s commercial feasibility has been established, in which case such expenditure is capitalised.
Intangible asset initially recognised, is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
g. Leases
The Company as a lessee
The Company assesses whether the contract is or contains a lease, if the contract involves:
(a) The use of an identified asset,
(b) The right to obtain substantially all the economic benefits from use of the identified asset, and
(c) The right to direct the use of the identified asset.
Lease Liabilities
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless this is not readily determinable, in which case the Company''s incremental borrowing rate on commencement of the lease is used.
Principal payment of lease liabilities have been classified within financing activities.
Right-of-use Assets
Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for
⢠Lease payments made at or before commencement of the lease
⢠Initial direct costs incurred and
⢠The amount of any provision recognised where the Company is contractually required to dismantle, remove or restore the leased asset.
Subsequently, the right-of-use assets are measured at cost less any accumulated depreciation and accumulated impairment losses, if any.
Right-of-use assets are depreciated on a straight-line basis over the remaining term of the lease or useful life of the assets whichever is shorter.
Right-of-use assets are tested for impairment whenever there is any indication that their carrying amount may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
Modifications to a lease agreement beyond the original terms and conditions are generally accounted for as a remeasurement of the lease liability with a corresponding adjustment to the right-of-use asset. Any gain or loss on modification is recognised in the statement of profit and loss.
h. Inventories
Raw Materials including packing material, stores and spares are valued at lower of cost and net realisable value. The cost of purchase consists of the purchase price including non-
refundable taxes, duties, freight inward and other costs incurred in bringing the inventories to their present location and condition. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase.
Materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on moving weighted average basis.
Work- in- Progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials and labour costs and a proportion of manufacturing overheads based on normal operating capacity.
Stock-in-Trade is valued at moving weighted average basis and comprises all costs of purchase, non-refundable taxes, duties and all other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
i. Impairment of Non-Financial Assets
The carrying amount of assets are reviewed at each reporting date if there is any indication of impairment based on internal and external factors.
An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. An asset''s recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transaction can be identified, an appropriate valuation model is used.
A previously recognised impairment loss is further provided or reversed depending on changes in circumstances.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss is recognised as income immediately.
j. Financial Instruments
Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments.
Financial Assets
Initial Recognition and Measurement All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial assets. These include trade receivables, cash & cash equivalents, bank balances other than cash & cash equivalents and other financial assets.
Classification and Subsequent Measurement Financial assets are subsequently measured at amortised cost or fair value through other comprehensive income or fair value through profit or loss depending on its business model for managing those financial assets and the asset contractual cash flow characteristics.
Financial Assets at Amortised Cost
A financial asset is subsequently measured at amortised 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.
Financial Assets at Fair Value through Other Comprehensive Income (FVTOCI)
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets 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. The company may make an irrevocable election to present subsequent changes in the fair value of equity investment not held for trading in other comprehensive income.
Financial Assets at Fair Value through Profit or Loss (FVTPL) A financial asset which is not classified in any of the above categories is subsequently measured at fair value through profit or loss.
Derecognition
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expires or
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity and does not retain control of the asset.
Impairment of Financial Assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. The Company recognises a loss allowance for expected credit losses on financial assets. In case of trade receivables, the Company follows the simplified approach permitted by Ind AS 109 âFinancial Instrumentsâ for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risk. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.
Financial Liabilities
Initial Recognition and Measurement
Financial liabilities include borrowings, lease liability, trade
payables and other financial liabilities.
All financial liabilities are recognised initially at fair value and in the case of borrowings and trade payables, net of directly attributable transaction costs.
Classification and Subsequent Measurement The financial liabilities are classified as either âfinancial liabilities at fair value through profit or loss'' or âfinancial liabilities at amortised cost.
Financial liabilities at Fair Value through Profit or Loss Financial liabilities are classified at fair value through profit or loss when the financial liability is held for trading or are designated upon initial recognition as fair value through profit or loss. It includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships. All changes in the fair value of such liability are recognised in the statement of profit and loss.
Financial liabilities at Amortised Cost Other financial liabilities (including borrowings and trade payables etc.) are subsequently measured at amortised cost using effective interest method.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. Any gain or loss arising on derecognition is included in the statement of profit and loss when the liability is derecognised.
Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
Effective Interest Method (EIR)
Financial assets and liabilities are subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
Derivative Financial Instruments
The Company uses derivative financial instruments, such as forward contracts to hedge its foreign currency. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken to statement of profit and loss.
Financial Liabilities and Equity Instruments
Classification as Debt or Equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definition of a financial liabilities and an equity instrument.
Equity Instruments
An Equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by Company are recognised at the proceeds received. Transaction costs related to issue of equity instruments is reduced from equity. Dividend paid on equity instruments is directly reduced from equity.
k. Foreign Currency Transactions and Translations
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (âthe functional currency''). The Company''s financial statements are presented in Indian rupee (H) which is also the Company''s functional and presentation currency.
Foreign currency transactions are recorded on initial recognition in the functional currency, using the exchange rate between the functional & foreign currency prevailing at the date of transaction.
Monetary assets and liabilities at the reporting date are translated at the rate prevailing on reporting date. The difference thereon and also the exchange difference on settlement of foreign currency transactions during the year is recognised as income or expense in statement of profit and loss.
Non-monetary items are carried at historical cost and reported using the exchange rate at the date of transaction.
l. Cash and Cash Equivalents
Cash and cash equivalents comprise of balances with banks, cash on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of change in value.
m. Government grants
Government grants and subsidies are recognised when there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with.
Where the government grant/subsidy relates to revenue, it is recognised as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate. Government grant and subsidy receivable against an expense are deducted from such expense.
Where the grant/subsidy relates to an asset, government grant and subsidy receivable against an asset are deducted from the carrying value of such asset.
n. Income Taxes
Income tax expense represents the sum of current and deferred tax. Tax expense is recognised in the statement of profit and loss except to the extent that it relates to items recognised directly in equity or other comprehensive income, in such case the tax expense is also recognised directly in equity or in other comprehensive income. Any subsequent change in income tax on items initially recognised in equity or other comprehensive income is also recognised in equity or other comprehensive income, such change could be for change in tax rate.
Current Tax
Current tax is measured at the amount expected to be paid to or recovered from the tax authorities in accordance with the provisions of Income Tax Act, 1961 including the relevant
transfer pricing regulations prescribed thereunder, read with applicable judicial precedents or interpretations, wherever relevant.
Current tax assets and liabilities are offset when there is a legally enforceable right to set-off the recognised amounts and there is an intention to settle the asset and the liability on a net basis.
Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the balance sheet and the corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet approach.
Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, carry forward tax losses and allowances to the extent it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised.
Deferred tax asset and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted at the reporting date.
The carrying amount of deferred tax asset is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilised.
Deferred tax assets and liabilities are offset when there is legally enforceable right to set-off current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.
o. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when there is a present obligation (legal or constructive) as a result of past event and 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. The expense relating to any provision is presented in the statement of profit and loss, net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as part of finance costs.
Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
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 the 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.
A contingent asset is disclosed, where an inflow of economic benefits is probable. Contingent assets are not recognised in financial statements since this may result in the recognition of income that will never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognised.
p. Revenue from Contracts with Customers
The Company derives revenues primarily from the following major sources.
⢠Sale of footwear and related products
⢠Sale of generated wind power
The Company recognises revenue from sale of footwear and related products at a point in time when control of the goods is transferred to the customer and the revenue can be reliably measured, regardless of when payment is being made. No element of financing is present as the sales are generally made with a credit term of 0-30 days, which is consistent with market practice. The performance obligation in contracts are considered fulfilled in accordance with the terms agreed with the respective customers.
The Company recognises revenue from sale of generated wind power at a point in time on the basis of net power delivered as per power purchase agreement signed with the Discom(s).
The transaction price is the amount of consideration which the Company expects to be entitled in exchange for transferring promised goods to a customer.
The consideration promised in a contract with a customer may include fixed consideration, variable consideration (if reversal is less likely in future), or both.
Revenue is disclosed net of goods and services tax (GST), rebates, discounts, returns and claims as applicable.
q. Other Operating Revenue
Other operating revenue include revenue arising from a Company''s operating activities, i.e., either its principal or ancillary revenue-generating activities, but which is not revenue arising from sale of products or rendering of services. The other operating revenue of the company includes revenue from scrap sales, export incentives, franchisee fees etc.
Export incentives are recognised as income on accrual basis to the extent its realisation is certain.
r. Other Income
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.
Difference between the sale price and carrying value of investment is recognised in other income.
Other income is recognised on accrual basis in the financial statements, except when there is uncertainty of collection.
s. Employee Benefits
All employee benefits like salaries, wages etc. payable wholly within twelve months of rendering the service are classified as short-term employee benefits. A liability is recognised for the amount expected to be paid when there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Contribution towards provident fund and employee state insurance is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as defined contribution plans as the Company does not carry any further obligations, apart from the contributions made on a monthly basis. Such contributions are charged to the statement of profit and loss for the period of service rendered by the employees.
The Company has a defined benefit gratuity plan and pays annual contribution to Life Insurance Corporation of India (âLICâ) through a Trust, namely Relaxo Footwears Limited Employees Group Gratuity Scheme. Company''s liability is determined using the projected unit credit method at the end of each year.
Remeasurement comprises of actuarial gains and losses on the defined benefit obligation, the return on plan assets excluding amounts included in net interest on the net
defined benefit liability/(asset), as well as any changes in the effect of the asset ceiling excluding the amount included in net interest are recognised in the period in which they occur, directly in other comprehensive income.
Compensated absences which are expected to be availed or encashed within twelve 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 leaves as the additional amount expected to be paid as a result of the unused entitlement as at the year end.
Compensated absences which are expected to be availed or encashed beyond twelve months from the end of the year are treated as other long term employee benefits. The Company''s liability is actuarially determined (using the projected unit credit method) at the end of each year.
Actuarial gains/losses on compensated absences are immediately taken to the statement of profit and loss.
t. Employee Share Based Payment
Employees of the Company receive part remuneration in the form of share-based payments in consideration of the services rendered. The Company recognises compensation expense relating to share based payments in accordance with Ind AS 102 âShare based Paymentâ. Stock options granted by the Company to its employees are accounted as equity settled options. Accordingly, the estimated fair value of options granted that is determined on the date of grant, is charged to statement of profit and loss on a proportionate basis over the vesting period of options which is the requisite service period, with a corresponding increase in equity.
u. Borrowing Costs
Borrowing cost includes interest and ancillary costs incurred in connection with the arrangement of borrowings and charged to statement of profit and loss on the basis of effective interest rate (EIR).
Borrowing cost includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing cost that are attributable to the acquisition or construction of a qualifying asset are capitalised as part of
the cost of such asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use.
All other borrowing costs are expensed in the period in which they occur.
v. Depreciation and Amortisation
Depreciation is provided pro- rata to the period of use on Straight Line Method (SLM) based on the estimated useful lives of the assets, which have been determined as per Schedule II of Companies Act, 2013.
Intellectual Property Rights are amortised over their useful life. Computer software and licenses are amortised over the period of five years on straight line basis.
The residual values, useful lives and methods of depreciation of assets is reviewed at each financial year end and adjusted prospectively, if appropriate.
Lease hold improvements are depreciated on straight line basis over shorter of the asset''s useful life and their initial agreement period.
w. Earnings Per Share
Basic earnings per share is computed by dividing the profit after tax for the year by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events i.e. bonus issue, share splits and further issue of share capital.
Diluted earnings per share is computed by dividing the profit after tax for the year attributable to equity shareholders by the weighted-average number of equity shares outstanding during the year and adjusted for the effects of all dilutive potential equity shares.
x. Dividend Payments
Final dividend is recognised, when it is approved by the shareholders and the distribution is no longer at the discretion of the Company. However, Interim dividend is recorded as a liability on the date of declaration by the Company''s Board of Directors.
Mar 31, 2022
Note No. 28: Company Information
Relaxo Footwears Limited (âthe Company'') is a Public Limited Company incorporated in India with its registered office at Aggarwal City Square, Plot No.10, Manglam Place, District Centre, Sector 3, Rohini, Delhi-110085. Its shares are listed at BSE Limited and National Stock Exchange of India Ltd. For details regarding Company''s principal shareholders refer note no. 12. The Company is a market leader in the Footwear Industry. The Company has âstate of the art'' manufacturing facilities at Bahadurgarh (Haryana), Bhiwadi (Rajasthan) and Haridwar (Uttarakhand).
The financial statements for the year ended March 31, 2022 are authorised for issue by the Board of Directors at their meeting held on May 11, 2022.
Note No. 29: Significant Accounting Policies
a. Statement of Compliance
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (âthe Actâ) read with Companies (Indian Accounting Standards) Rules, 2015 and subsequent amendments thereto along with other provisions of the Act and relevant guidelines issued by the Securities and Exchange Board of India (SEBI).
b. Basis of Preparation of Financial Statements
The financial statements have been prepared on going concern basis and on accrual method of accounting. Historical cost is used in preparation of financial statements except following assets and liabilities which have been measured at fair value.
⢠Certain financial assets and liabilities, including derivative financial instruments and Investments
⢠Defined benefit plan
⢠Employee share based payment
Classification of Current or Non-Current Assets and Liabilities All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013 and Ind AS 1 âPresentation of financial statementsâ.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
Assets
An asset is classified as current when it satisfies any of the following criteria
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria
⢠Expected to be settled in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The Company classifies all other liabilities as noncurrent.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
Figures have been rounded off to the nearest crore of rupees upto two decimal places, unless otherwise stated. The figure 0.00 wherever stated represents amount less than H50,000.
c. Significant Accounting Judgements, Estimates and Assumptions
The preparation of financial statements in conformity with Ind AS requires the Company''s management to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities recognised in the financial statements that are not readily apparent from other sources. The judgements, estimates and associated assumptions are based on historical experience and other factors including estimation of effects of uncertain future events that are considered to be relevant, however actual results may differ from these estimates.
The following are the critical judgements, estimations & assumptions that have been made by the management in the process of applying the Company''s accounting policies.
⢠Management uses judgement in deciding whether individual item or group of items are material in the financial statements. Materiality is judged by reference to the size and nature of the item. The deciding factor is whether omission, misstatement or obscuring the information could individually or collectively influence the economic decision that users make on the basis of the financial statements.
⢠Tax expense is calculated using applicable tax rate and laws that have been enacted or substantially enacted. In arriving at taxable profit and all tax bases of assets and liabilities, the Company determines the taxability based on tax enactments, relevant judicial pronouncements and tax expert opinions and makes appropriate provisions which includes an estimation of the likely outcome of any open tax assessments / litigations. Any difference is recognised on closure of assessment or in the period in which they are agreed.
⢠Defined benefit obligations are measured at fair value for financial reporting purposes. Fair value determined by actuary is based on actuarial assumptions. Management judgement is required to determine such actuarial assumptions. Such assumptions are reviewed annually using the best information available with the management.
⢠When the fair value of financial assets and financial liabilities recorded in these financial statements cannot be measured based on quoted price in active markets, their fair value is measured using valuation techniques. The inputs to these valuation techniques are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include consideration of inputs such as liquidity risk, credit risk and volatility etc.
⢠The Company makes allowances for doubtful trade receivables (Expected Credit Loss Allowance) based on a provision matrix which takes into account historical credit loss experience and adjusted for current estimates.
⢠The determination of depreciation and amortisation charge depends on the useful lives for which judgements and estimations are required. The residual values, useful lives, and method of depreciation/amortisation of property, plant and equipment and intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
⢠Inventories are stated at the lower of cost and net realisable value. In estimating the net realisable value of inventories the Company makes an estimate of future selling prices and costs necessary to make the sale.
⢠Management judgement is required for estimating
the possible outflow of resources, if any, in respect of contingencies / claims / litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
⢠The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116 âLeasesâ. Identification of a lease requires significant judgment in assessing the lease term (including anticipated renewals) and the applicable discount rate.
⢠The contracts with customers include transfer of promised goods to the customers. Judgement is required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as rebates and discounts etc. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period.
d. Property, Plant and Equipment (PPE)
Property, Plant and Equipment are stated at cost, net of accumulated depreciation and impairment loss, if any. Freehold land is disclosed at cost less impairment, if any. The cost comprises its purchase price, other non- refundable taxes, duties and any directly attributable costs of bringing the asset to its working condition for its intended use.
Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the Company and the cost of the item can be measured reliably.
The Company identifies and determines cost of each component of the asset separately, if the component has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset.
The present value of the expected cost for decommissioning of an asset, if any, after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
The cost of self-constructed assets includes the cost of materials, direct labour, borrowing costs and any other costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management. Advances given towards acquisition / construction of property, plant and equipment
outstanding at each reporting date are disclosed as capital advances under other non-current assets. Other indirect expenses incurred related to project, net of income earned during the project development stage prior to its intended use, are considered as pre-operative expense and disclosed under capital work-in-progress.
An item of property, plant and equipment and any significant part initially recognised, is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
Intangible assets are carried at cost less accumulated amortisation and impairment loss, if any. The cost comprises its purchase price, other non- refundable taxes, duties and any directly attributable costs of bringing the asset to its working condition for its intended use.
Intangible assets under development are shown separately at cost incurred in bringing the asset to its present condition.
Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the Company and the cost of the item can be measured reliably.
Revenue expenditure pertaining to research is charged to the statement of profit and loss. Development costs of products are also charged to the statement of profit and loss unless a product''s commercial feasibility has been established, in which case such expenditure is capitalised.
Intangible asset initially recognised, is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
The Company as a lessee
The Company assesses whether the contract is or contains a lease, if the contract involves:
(a) The use of an identified asset,
(b) The right to obtain substantially all the economic benefits from use of the identified asset, and
(c) The right to direct the use of the identified asset.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless this is not readily determinable, in which case the Company''s incremental borrowing rate on commencement of the lease is used.
Payment of Principal lease liabilities have been classified within financing activities.
Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for
⢠Lease payments made at or before commencement of the lease
⢠Initial direct costs incurred and
⢠The amount of any provision recognised where the Company is contractually required to dismantle, remove or restore the leased asset.
Subsequently, the right-of-use asset is measured at cost less any accumulated depreciation and accumulated impairment losses, if any.
Right-of-use assets are depreciated on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.
Right-of-use asset is tested for impairment whenever there is any indication that their carrying amount may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
Modifications to a lease agreement beyond the original terms and conditions are generally accounted for as a remeasurement of the lease liability with a corresponding adjustment to the Right-of-use Assets. Any gain or loss on modification is recognised in the Statement of Profit and Loss.
g. Inventories
Raw Materials including packing material, stores and spares are valued at lower of cost and net realisable value. The cost of purchase consists of the purchase price including nonrefundable taxes, duties, freight inward and other costs incurred in bringing the inventories to their present location and condition. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase.
Materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on moving weighted average basis.
Work- in- Progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials and labour costs and a proportion of manufacturing overheads based on normal operating capacity.
Stock-in-Trade is valued at moving weighted average basis and comprises all costs of purchase, non-refundable taxes, duties and all other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
h. Impairment of Non-Financial Assets
The carrying amount of assets are reviewed at each reporting date if there is any indication of impairment based on internal and external factors.
An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. An asset''s recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transaction can be identified, an appropriate valuation model is used.
A previously recognised impairment loss is further provided or reversed depending on changes in circumstances.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss is recognised as income immediately.
i. Financial Instruments
Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments.
Initial Recognition and Measurement All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial assets. These include trade receivables, cash & cash equivalents, bank balances other than cash & cash equivalents and other financial assets.
Classification and Subsequent Measurement Financial assets are subsequently measured at amortised cost or fair value through other comprehensive income or fair value through profit or loss depending on its business model for managing those financial assets and the asset contractual cash flow characteristics.
Financial Assets at Amortised Cost
A financial asset is subsequently measured at amortised 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.
Financial Assets at Fair Value through Other Comprehensive Income (FVTOCI)
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets 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. The company has made an irrevocable election to present subsequent changes in the fair value of equity investment not held for trading in other comprehensive income.
Financial Assets at Fair Value through Profit or Loss (FVTPL) A financial asset which is not classified in any of the above categories is subsequently measured at fair value through profit or loss. Dividend and interest income on financial assets at fair value through profit or loss is recognised as dividend and interest income respectively and included in âother income.
Derecognition
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity and does not retain control of the asset.
Impairment of Financial Assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. The Company recognises a loss allowance for expected credit losses on financial assets. In case of trade receivables, the Company follows the simplified approach permitted by Ind AS 109 âFinancial Instrumentsâ for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risk. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.
Initial Recognition and Measurement
Financial liabilities include borrowings, lease liability and
trade payables etc.
All financial liabilities are recognised initially at fair value and in the case of borrowings and trade payables, net of directly attributable transaction costs.
Classification and Subsequent Measurement The financial liabilities are classified as either âfinancial liabilities at fair value through profit or loss'' or âfinancial liabilities at amortised cost''.
Financial liabilities at Fair Value through Profit or Loss Financial liabilities are classified at fair value through profit or loss when the financial liability is held for trading or are designated upon initial recognition as fair value through profit or loss. It includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships. All changes in the fair value of such liability are recognised in the statement of profit and loss.
Financial liabilities at Amortised Cost Other financial liabilities (including borrowings and trade payables etc.) are subsequently measured at amortised cost using effective interest method.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. Any gain or loss arising on derecognition is included in the statement of profit and loss when the liability is derecognised.
Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
Effective Interest Method (EIR)
Financial assets and liabilities are subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
Derivative Financial Instruments
The Company enters into contracts that are effective as hedges from an economic perspective, but they do not qualify for hedge accounting. The Company uses derivative financial instruments, such as forward contracts, currency and interest rate swaps to hedge its foreign currency and interest rate risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken to statement of profit and loss.
Financial Liabilities and Equity Instruments
Classification as Debt or Equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definition of a financial liabilities and an equity instrument.
Equity Instruments
An Equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by Company are recognised at the proceeds received. Transaction costs related to issue of equity instruments is reduced from equity. Dividend paid on equity instruments is directly reduced from equity.
j. Foreign Currency Transactions and Translations
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (âthe functional currency''). The Company''s financial statements are presented in Indian rupee (H) which is also the Company''s functional and presentation currency.
Foreign currency transactions are recorded on initial recognition in the functional currency, using the exchange rate between the functional & foreign currency prevailing at the date of transaction.
Monetary current assets and liabilities at the reporting date are translated at the rate prevailing on reporting date. The difference thereon and also the exchange difference on settlement of foreign currency transactions during the year is recognised as income or expense in statement of profit and loss.
Non-monetary items are carried at historical cost and reported using the exchange rate at the date of transaction.
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of change in value.
Grants and subsidies from the government are recognised when there is reasonable assurance that the grant / subsidy will be received and all attaching conditions will be complied with.
Where the government grant / subsidy relates to revenue, it is recognised as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate. Government grant and subsidy receivable against an expense are deducted from such expense.
Where the grant / subsidy relates to an asset, government grant and subsidy receivable against an asset are deducted from the carrying value of such asset.
Income tax expense represents the sum of current and deferred tax (including MAT). Tax expense is recognised in the statement of profit and loss except to the extent that it relates to items recognised directly in equity or other comprehensive income, in such case the tax expense is also recognised directly in equity or in other comprehensive income. Any subsequent change in income tax on items initially recognised in equity or other comprehensive income is also recognised in equity or other comprehensive income, such change could be for change in tax rate.
Current tax provision is measured on the basis of taxable income computed in accordance with the provisions of the Income Tax Act, 1961.
Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the balance sheet and the corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet approach.
Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, carry forward tax losses and allowances to the extent it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised.
Deferred tax asset and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted at the reporting date.
The carrying amount of deferred tax asset is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilised.
Tax credit is recognised in respect of Minimum Alternate Tax (MAT) paid in terms of section 115 JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and the same is reviewed at each reporting date.
Deferred tax assets and liabilities are offset when there is legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on net basis, or to realise the asset and settle the liability simultaneously.
n. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when there is a present obligation (legal or constructive) as a result of past event and 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. The expense relating to any provision is presented in the statement of profit and loss, net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as part of finance costs.
Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
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 the 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.
A contingent asset is disclosed, where an inflow of economic benefits is probable. Contingent assets are not recognised in financial statements since this may result in the recognition of income that will never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognised.
o. Revenue from Contracts with Customers
The Company derives revenues primarily from the following major sources.
⢠Sale of footwear and related products
⢠Sale of generated wind power
The Company recognises revenue from sale of footwear and related products at a point in time when control of the goods is transferred to the customer.
The transaction price is the amount of consideration which the Company expects to be entitled in exchange for transferring promised goods to a customer.
The consideration promised in a contract with a customer may include fixed consideration, variable consideration (if reversal is less likely in future), or both.
The Company recognises revenue from sale of generated wind power at a point in time on the basis of net power delivered as per power purchase agreement signed with the Discom(s).
Revenue is disclosed net of goods and services tax (GST), rebates, discounts, returns and claims as applicable.
Other operating revenue include revenue arising from a Company''s operating activities, i.e., either its principal or ancillary revenue-generating activities, but which is not revenue arising from sale of products or rendering of services.
The other operating revenue of the company includes revenue from scrap sales, export incentives, franchisee fees etc.
Dividend income is recognised when the right to receive the payment is established. Interest is recognised using the effective interest rate (EIR) method. Difference between the sale price and carrying value of investment is recognised in statement of profit and loss as profit or loss on sale / redemption.
All employee benefits like salaries, wages etc. payable wholly within twelve months of rendering the service are classified as short-term employee benefits. A liability is recognised for the amount expected to be paid when there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Contribution towards provident fund and employee state insurance is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as defined contribution plans as the Company does not carry any further obligations, apart from the contributions made on a monthly basis. Such contributions are charged to the statement of profit and loss for the period of service rendered by the employees.
The Company has a defined benefit gratuity plan and pays annual contribution to Life Insurance Corporation of India (LIC) through a Trust, namely Relaxo Footwears Limited Employees Group Gratuity Scheme. Company''s liability is determined using the projected unit credit method at the end of each year.
Remeasurement comprises of the actuarial gains and losses on the defined benefit obligation, the difference between the actual total return on assets and the interest income on plan assets calculated based on the discount rate used to determine the defined benefit obligation, as well as any changes in the effect of the asset ceiling excluding the amount included in net interest are recognised in the period in which they occur, directly in other comprehensive income.
Compensated absences which are expected to be availed or encashed within twelve 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 leaves as the additional amount expected to be paid as a result of the unused entitlement as at the year end.
lives of the assets, which have been determined as per Schedule II of Companies Act, 2013.
Intellectual Property Rights are amortised over their useful life. Computer software and licenses are amortised over the period of five years on straight line basis.
The residual values, useful lives and methods of depreciation of property, plant and equipment is reviewed at each financial year end and adjusted prospectively, if appropriate.
Lease hold improvements are depreciated on straight line basis over shorter of the asset''s useful life and their initial agreement period.
v. Earnings Per Share
Basic earnings per share is computed by dividing the profit after tax for the year by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events i.e. bonus issue, share splits and further issue of share capital.
Diluted earnings per share is computed by dividing the profit after tax for the year attributable to equity shareholders by the weighted-average number of equity shares outstanding during the year and adjusted for the effects of all dilutive potential equity shares.
w. Dividend Payments
Final dividend is recognised, when it is approved by the shareholders and the distribution is no longer at the discretion of the Company. However, Interim dividends are recorded as a liability on the date of declaration by the Company''s Board of Directors.
x. Recent Accounting Pronouncements
The Ministry of Corporate Affair (MCA) vide notification dated 23rd March, 2022, notified certain amendments to Ind AS. These amendments are applicable w.e.f April 1, 2022.
The Company has evaluated the amendments and there is no impact on its financial statements.
Compensated absences which are expected to be availed or encashed beyond twelve months from the end of the year are treated as other long term employee benefits. The Company''s liability is actuarially determined (using the projected unit credit method) at the end of each year.
Actuarial gains/losses on compensated absences are immediately taken to the statement of profit and loss.
s. Employee Share Based Payment
Employees of the Company receive part remuneration in the form of share-based payments in consideration of the services rendered. The Company recognises compensation expense relating to share based payments in accordance with Ind AS 102 âShare based Paymentâ. Stock options granted by the Company to its employees are accounted as equity settled options. Accordingly, the estimated fair value of options granted that is determined on the date of grant, is charged to statement of profit and loss on a proportionate basis over the vesting period of options which is the requisite service period, with a corresponding increase in equity.
Borrowing cost includes interest and ancillary costs incurred in connection with the arrangement of borrowings and charged to statement of profit and loss on the basis of effective interest rate (EIR).
Borrowing cost includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing cost that are attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use.
All other borrowing costs are expensed in the period in which they occur.
u. Depreciation and Amortisation
Depreciation is provided pro- rata to the period of use on Straight Line Method (SLM) based on the estimated useful
Mar 31, 2021
Note 29: Company Information
Relaxo Footwears Limited (âthe Company'') is a Public Limited Company incorporated in India with its registered office at Aggarwal City Square, Plot No.10, Manglam Place, District Centre, Sector 3, Rohini, Delhi-110085. Its shares are listed at BSE Limited and National Stock Exchange of India Ltd. For details regarding Company''s principal shareholders refer note no. 13. The Company is a market leader in the Footwear Industry. The Company has âstate of the art'' manufacturing facilities at Bahadurgarh (Haryana), Bhiwadi (Rajasthan) and Haridwar (Uttarakhand).
The financial statements for the year ended March 31, 2021 are authorised for issue by the Board of Directors at their meeting held on May 20, 2021.
Note 30: Significant Accounting Policies
a. Statement of Compliance
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 (âthe Actâ) read with Companies (Indian Accounting Standards) Rules, 2015 and subsequent amendments thereto along with other provisions of the Act and relevant guidelines issued by the Securities and Exchange Board of India (SEBI).
b. Basis of Preparation of Financial Statements
The financial statements have been prepared on going concern basis and on accrual method of accounting. Historical cost is used in preparation of financial statements except following assets and liabilities which have been measured at fair value.
⢠Certain financial assets and liabilities, including derivative financial instruments
⢠Defined benefit plan
⢠Employee share based payment
Classification of Current or Non-Current Assets and Liabilities All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013 and Ind AS 1 âPresentation of financial statementsâ.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
Assets
An asset is classified as current when it satisfies any of the following criteria
⢠Expected to be realised or intended to be sold or consumed in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Expected to be realised within twelve months after the reporting period, or
⢠Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria
⢠Expected to be settled in normal operating cycle
⢠Held primarily for the purpose of trading
⢠Due to be settled within twelve months after the reporting period, or
⢠There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. The Company classifies all other liabilities as noncurrent.
Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
Figures have been rounded off to the nearest crore of rupees upto two decimal places, unless otherwise stated. The figure 0.00 wherever stated represents amount less than H 50,000.
c. Significant Accounting Judgements, Estimates and Assumptions
The preparation of financial statements in conformity with Ind AS requires the Company''s management to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities recognised in the financial statements that are not readily apparent from other sources. The judgements, estimates and associated assumptions are based on historical experience and other factors including estimation of effects of uncertain future events that are considered to be relevant, however actual results may differ from these estimates.
The following are the critical judgements, estimations & assumptions that have been made by the management in
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⢠Management uses judgement in deciding whether individual item or group of items are material in the financial statements. Materiality is judged by reference to the size and nature of the item. The deciding factor is whether omission, misstatement or obscuring the information could individually or collectively influence the economic decision that users make on the basis of the financial statements.
⢠Tax expense is calculated using applicable tax rate and laws that have been enacted or substantially enacted. In arriving at taxable profit and all tax bases of assets and liabilities, the Company determines the taxability based on tax enactments, relevant judicial pronouncements and tax expert opinions and makes appropriate provisions which includes an estimation of the likely outcome of any open tax assessments / litigations. Any difference is recognised on closure of assessment or in the period in which they are agreed.
⢠Defined benefit obligations are measured at fair value for financial reporting purposes. Fair value determined by actuary is based on actuarial assumptions. Management judgement is required to determine such actuarial assumptions. Such assumptions are reviewed annually using the best information available with the management.
⢠When the fair value of financial assets and financial liabilities recorded in these financial statements cannot be measured based on quoted price in active markets, their fair value is measured using valuation techniques. The inputs to these valuation techniques are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include consideration of inputs such as liquidity risk, credit risk and volatility etc.
⢠The Company makes allowances for doubtful trade receivables (Expected Credit Loss Allowance) based on a provision matrix which takes into account historical credit loss experience and adjusted for current estimates.
⢠The determination of depreciation and amortisation charge depends on the useful lives for which judgements and estimations are required. The residual values, useful lives, and method of depreciation/amortisation of property, plant and equipment and intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
⢠Inventories are stated at the lower of cost and net realisable value. In estimating the net realisable value of inventories the Company makes an estimate of future selling prices and costs necessary to make the sale.
⢠Management judgement is required for estimating
the possible outflow of resources, if any, in respect of contingencies / claims / litigations against the Company as it is not possible to predict the outcome of pending matters with accuracy.
⢠The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116 âLeasesâ. Identification of a lease requires significant judgment in assessing the lease term (including anticipated renewals) and the applicable discount rate.
⢠The contracts with customers include transfer of promised goods to the customers. Judgement is required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as rebates and discounts etc. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period.
i. Property, Plant and Equipment (PPE)
Property, Plant and Equipment are stated at cost, net of accumulated depreciation and impairment loss, if any. Freehold land is disclosed at cost less impairment, if any. The cost comprises its purchase price, other non- refundable taxes, duties and any directly attributable costs of bringing the asset to its working condition for its intended use.
Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the Company and the cost of the item can be measured reliably.
The Company identifies and determines cost of each component of the asset separately, if the component has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset.
The present value of the expected cost for decommissioning of an asset, if any, after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
The cost of self-constructed assets includes the cost of materials, direct labour, borrowing costs and any other costs directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management. Advances given towards acquisition / construction of property, plant and equipment
outstanding at each reporting date are disclosed as capital advances under other non-current assets. Other indirect expenses incurred related to project, net of income earned during the project development stage prior to its intended use, are considered as pre-operative expense and disclosed under capital work-in-progress.
An item of property, plant and equipment and any significant part initially recognised, is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
Intangible assets are carried at cost less accumulated amortisation and impairment loss, if any. The cost comprises its purchase price, other non- refundable taxes, duties and any directly attributable costs of bringing the asset to its working condition for its intended use.
Intangible assets under development are shown separately at cost incurred in bringing the asset to its present condition.
Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the Company and the cost of the item can be measured reliably.
Revenue expenditure pertaining to research is charged to the statement of profit and loss. Development costs of products are also charged to the statement of profit and loss unless a product''s commercial feasibility has been established, in which case such expenditure is capitalised.
Intangible asset initially recognised, is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.
The Company as a lessee
The Company assesses whether the contract is or contains a lease, if the contract involves:
(a) The use of an identified asset,
(b) The right to obtain substantially all the economic benefits from use of the identified asset, and
(c) The right to direct the use of the identified asset.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless this is not readily determinable, in which case the Company''s incremental borrowing rate on commencement of the lease is used.
Payment of Principal lease liabilities have been classified within financing activities.
Right-of-use Assets
Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for
⢠Lease payments made at or before commencement of the lease
⢠Initial direct costs incurred and
⢠The amount of any provision recognised where the Company is contractually required to dismantle, remove or restore the leased asset.
Subsequently, the right-of-use asset is measured at cost less any accumulated depreciation and accumulated impairment losses, if any.
Right-of-use assets are depreciated on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.
Right-of-use asset is tested for impairment whenever there is any indication that their carrying amount may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.
Modifications to a lease agreement beyond the original terms and conditions are generally accounted for as a remeasurement of the lease liability with a corresponding adjustment to the Right-of-use Assets. Any gain or loss on modification is recognised in the Statement of Profit and Loss.
g. Inventories
Raw Materials including packing material, stores and spares are valued at lower of cost and net realisable value. The cost of purchase consists of the purchase price including nonrefundable taxes, duties, freight inward and other costs incurred in bringing the inventories to their present location and condition. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase.
Financial Assets
Initial Recognition and Measurement All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial assets. These include trade receivables, cash & cash equivalents, bank balances other than cash & cash equivalents and other financial assets.
Classification and Subsequent Measurement Financial assets are subsequently measured at amortised cost or fair value through other comprehensive income or fair value through profit or loss depending on its business model for managing those financial assets and the asset contractual cash flow characteristics.
Financial Assets at Amortised Cost
A financial asset is subsequently measured at amortised 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.
Financial Assets at Fair Value through Other Comprehensive Income (FVTOCI)
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets 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. The company has made an irrevocable election to present subsequent changes in the fair value of equity investment not held for trading in other comprehensive income.
Financial Assets at Fair Value through Profit or Loss (FVTPL) A financial asset which is not classified in any of the above categories is subsequently measured at fair value through profit or loss. Dividend and interest income on financial assets at fair value through profit or loss is recognised as dividend and interest income respectively and included in âother income.
Derecognition
The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity and does not retain control of the asset.
Materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on moving weighted average basis.
Work- in- Progress and finished goods are valued at lower of cost and net realisable value. Cost includes direct materials and labour costs and a proportion of manufacturing overheads based on normal operating capacity.
Stock-in-Trade is valued at moving weighted average basis and comprises all costs of purchase, non-refundable taxes, duties and all other costs incurred in bringing the inventories to their present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
h. Impairment of Non-Financial Assets
The carrying amount of assets are reviewed at each reporting date if there is any indication of impairment based on internal and external factors.
An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. An asset''s recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less cost of disposal, recent market transactions are taken into account. If no such transaction can be identified, an appropriate valuation model is used.
A previously recognised impairment loss is further provided or reversed depending on changes in circumstances.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss is recognised as income immediately.
Financial assets and financial liabilities are recognised when a Company becomes a party to the contractual provisions of the instruments.
Impairment of Financial Assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. The Company recognises a loss allowance for expected credit losses on financial assets. In case of trade receivables, the Company follows the simplified approach permitted by Ind AS 109 âFinancial Instrumentsâ for recognition of impairment loss allowance. The application of simplified approach does not require the Company to track changes in credit risk. The Company calculates the expected credit losses on trade receivables using a provision matrix on the basis of its historical credit loss experience.
Financial Liabilities
Initial Recognition and Measurement
Financial liabilities include borrowings, lease liability and
trade payables etc.
All financial liabilities are recognised initially at fair value and in the case of borrowings and trade payables, net of directly attributable transaction costs.
Classification and Subsequent Measurement The financial liabilities are classified as either âfinancial liabilities at fair value through profit or loss'' or âfinancial liabilities at amortised cost''.
Financial liabilities at Fair Value through Profit or Loss Financial liabilities are classified at fair value through profit or loss when the financial liability is held for trading or are designated upon initial recognition as fair value through profit or loss. It includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships. All changes in the fair value of such liability are recognised in the statement of profit and loss.
Financial liabilities at Amortised Cost Other financial liabilities (including borrowings and trade payables etc.) are subsequently measured at amortised cost using effective interest method.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. Any gain or loss arising on derecognition is included in the statement of profit and loss when the liability is derecognised.
Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company currently has a legally enforceable right
to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
Effective Interest Method (EIR)
Financial assets and liabilities are subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
Derivative Financial Instruments
The Company enters into contracts that are effective as hedges from an economic perspective, but they do not qualify for hedge accounting. The Company uses derivative financial instruments, such as forward contracts, currency and interest rate swaps to hedge its foreign currency and interest rate risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken to statement of profit and loss.
Financial Liabilities and Equity Instruments
Classification as Debt or Equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definition of a financial liabilities and an equity instrument.
Equity Instruments
An Equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by Company are recognised at the proceeds received. Transaction costs related to issue of equity instruments is reduced from equity. Dividend paid on equity instruments is directly reduced from equity.
j. Foreign Currency Transactions and Translations
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (âthe functional currency''). The Company''s financial statements are presented in Indian rupee (INR) which is also the Company''s functional and presentation currency.
Foreign currency transactions are recorded on initial recognition in the functional currency, using the exchange rate between the functional & foreign currency prevailing at the date of transaction.
Monetary current assets and liabilities at the reporting date are translated at the rate prevailing on reporting date. The difference thereon and also the exchange difference on settlement of foreign currency transactions during the year is recognised as income or expense in statement of profit and loss.
Non-monetary items are carried at historical cost and reported using the exchange rate at the date of transaction.
k. Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant risk of change in value.
l. Government grants
Grants and subsidies from the government are recognised when there is reasonable assurance that the grant / subsidy will be received and all attaching conditions will be complied with.
Where the government grant / subsidy relates to revenue, it is recognised as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate. Government grant and subsidy receivable against an expense are deducted from such expense.
Where the grant / subsidy relates to an asset, government grant and subsidy receivable against an asset are deducted from the carrying value of such asset.
m. Income Taxes
Income tax expense represents the sum of current and deferred tax (including MAT). Tax expense is recognised in the statement of profit and loss except to the extent that it relates to items recognised directly in equity or other comprehensive income, in such case the tax expense is also recognised directly in equity or in other comprehensive income. Any subsequent change in income tax on items initially recognised in equity or other comprehensive income is also recognised in equity or other comprehensive income, such change could be for change in tax rate.
Current tax provision is measured on the basis of taxable income computed in accordance with the provisions of the Income Tax Act, 1961.
Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the balance sheet and the corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet approach.
Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, carry forward tax losses and allowances to the extent it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised.
Deferred tax asset and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted at the reporting date.
The carrying amount of deferred tax asset is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilised.
Tax credit is recognised in respect of Minimum Alternate Tax (MAT) paid in terms of section 115 JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and the same is reviewed at each reporting date.
Deferred tax assets and liabilities are offset when there is legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on net basis, or to realise the asset and settle the liability simultaneously.
n. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when there is a present obligation (legal or constructive) as a result of past event and 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. The expense relating to any provision is presented in the statement of profit and loss, net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as part of finance costs.
Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.
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 the 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.
A contingent asset is disclosed, where an inflow of economic benefits is probable. Contingent assets are not recognised in financial statements since this may result in the recognition of income that will never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognised.
o. Revenue from Contracts with Customers
The Company derives revenues primarily from the following major sources.
⢠Sale of footwear and related products
⢠Sale of generated wind power
The Company recognises revenue from sale of footwear and related products at a point in time when control of the goods is transferred to the customer.
The transaction price is the amount of consideration which the Company expects to be entitled in exchange for transferring promised goods to a customer.
The consideration promised in a contract with a customer may include fixed consideration, variable consideration (if reversal is less likely in future), or both.
The Company recognises revenue from sale of generated wind power at a point in time on the basis of net power delivered as per power purchase agreement signed with the Discom(s).
Revenue is disclosed net of goods and services tax (GST), rebates, discounts, returns and claims as applicable.
Other operating revenue include revenue arising from a Company''s operating activities, i.e., either its principal or ancillary revenue-generating activities, but which is not revenue arising from sale of products or rendering of services.
The other operating revenue of the company includes revenue from scrap sales, export incentives, franchisee fees etc.
Dividend income is recognised when the right to receive the payment is established. Interest is recognised using the effective interest rate (EIR) method. Difference between the sale price and carrying value of investment is recognised in statement of profit and loss as profit or loss on sale / redemption.
All employee benefits like salaries, wages etc. payable wholly within twelve months of rendering the service are classified as short-term employee benefits. A liability is recognised for the amount expected to be paid when there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Contribution towards provident fund and employee state insurance is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as defined contribution plans as the Company does not carry any further obligations, apart from the contributions made on a monthly basis. Such contributions are charged to the statement of profit and loss for the period of service rendered by the employees.
The Company has a defined benefit gratuity plan and pays annual contribution to Life Insurance Corporation of India (LIC) through a Trust, namely Relaxo Footwears Limited Employees Group Gratuity Scheme. Company''s liability is determined using the projected unit credit method at the end of each year.
Remeasurement comprises of the actuarial gains and losses on the defined benefit obligation, the difference between the actual total return on assets and the interest income on plan assets calculated based on the discount rate used to determine the defined benefit obligation, as well as any changes in the effect of the asset ceiling excluding the amount included in net interest are recognised in the period in which they occur, directly in other comprehensive income.
Compensated absences which are expected to be availed or encashed within twelve 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 leaves as the additional amount expected to be paid as a result of the unused entitlement as at the year end.
Compensated absences which are expected to be availed or encashed beyond twelve months from the end of the year are treated as other long term employee benefits. The Company''s liability is actuarially determined (using the projected unit credit method) at the end of each year.
Actuarial gains/losses on compensated absences are immediately taken to the statement of profit and loss.
s. Employee Share Based Payment
Employees of the Company receive part remuneration in the form of share-based payments in consideration of the services rendered. The Company recognises compensation expense relating to share based payments in accordance with Ind AS 102 âShare based Paymentâ. Stock options granted by the Company to its employees are accounted as equity settled options. Accordingly, the estimated fair value of options granted that is determined on the date of grant, is charged to statement of profit and loss on a proportionate basis over the vesting period of options which is the requisite service period, with a corresponding increase in equity.
Borrowing cost includes interest and ancillary costs incurred in connection with the arrangement of borrowings and charged to statement of profit and loss on the basis of effective interest rate (EIR).
Borrowing cost includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing cost that are attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use.
All other borrowing costs are expensed in the period in which they occur.
u. Depreciation and Amortisation
Depreciation is provided pro- rata to the period of use on Straight Line Method (SLM) based on the estimated useful lives of the assets, which have been determined as per Schedule II of Companies Act, 2013.
Intellectual Property Rights are amortised over their useful life. Computer software and licenses are amortised over the period of five years on straight line basis.
The residual values, useful lives and methods of depreciation
of property, plant and equipment is reviewed at each financial year end and adjusted prospectively, if appropriate.
Lease hold improvements are depreciated on straight line basis over shorter of the asset''s useful life and their initial agreement period.
Basic earnings per share is computed by dividing the profit after tax for the year by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events i.e. bonus issue, share splits and further issue of share capital.
Diluted earnings per share is computed by dividing the profit after tax for the year attributable to equity shareholders by the weighted-average number of equity shares outstanding during the year and adjusted for the effects of all dilutive potential equity shares.
Final dividend is recognised, when it is approved by the shareholders and the distribution is no longer at the discretion of the Company. However, Interim dividends are recorded as a liability on the date of declaration by the Company''s Board of Directors.
(. Recent Accounting Pronouncements
On 24th July, 2020 the Ministry of Corporate Affair (MCA) vide notification dated 24th July, 2020, notifying the following amendments to Ind AS.
⢠Amendment to Ind AS 116 âLeasesâ on COVID-19 related rent concessions
The amendment provides a practical expedient which permits a lessee not to assess whether a COVID-19 related rent concession is a lease modification. A lessee that makes this election shall account for any change in lease payments resulting from the rent concession the same way it would account for the change applying this Standard if the change were not a lease modification. The Company has applied practical expedient as per amendment to Ind AS 116 âLeasesâ on COVID-19 related rent concessions and recognised gain of H 10.24 crores in other income refer note no. 22.
⢠Amendment to Ind AS 1 âPresentation of Financial Statementsâ and Ind AS 8 âAccounting Policies, Changes in Accounting Estimates and Errorsâ on definition of term âmaterial''
The intention of amendment is not to change the underlying âmateriality'' concept rather it provides broader
guidance and makes it easy to understand the meaning of term âmaterial''. As per amendment, Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements.
This amendment does not have material impact on the Company.
⢠Amendments to other Ind AS
There is no material impact on the financial statements due to amendments to Ind AS 103 âBusiness Combinationsâ, Ind AS 10 âEvents after the Reporting
Periodâ, Ind AS 37 âProvisions, Contingent Liabilities and Contingent Assetsâ, Ind AS 107 âFinancial Instruments Disclosuresâ and Ind AS 109 - âFinancial Instrumentsâ.
⢠Amendments to Schedule III of the Companies Act, 2013
On March 24, 2021, the Ministry of Corporate Affairs ("MCA") through a notification, amended Schedule III of the Companies Act, 2013. The amendments revise Division I, II and III of Schedule III and are applicable from April 1, 2021. The amendments are extensive and the Company will evaluate the same to give effect to them as required by law.
Mar 31, 2018
a. Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind A5) notified underthe Companies (Indian Accounting Standards) Rules, 2015 as amended by Companies (Indian Accounting Standards) Rules, 2016.
For all periods up to and including the year ended 31st March, 2017, the Company prepared its financial statements in accordance with accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).
These financial statements are the first financial statements of the Company under Ind AS. Refer Note 56 for an explanation of how the transition from previously applicable Indian GAAP (hereinafter referred to as âIGAAPâ) to Ind AS has affected the financial position, financial performance and cash flows of the Company.
The financial statements have been prepared on the historical cost basis except for following assets and liabilities which have been measured atfairvalue amount
i) Certain financial assets and liabilities (including derivative instruments),
ii) Defined benefit plans
iii) Equity settled share based payments
All assets and liabilities have been classified as current or noncurrent as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current/ non-current classification of assets and liabilities.
Deferred tax assets and liabilities are classified as non-current assets/liabilities.
b. Significant Accounting Judgements, Estimates and Assumptions
The preparation of financial statements in conformity with Ind AS requires the Companyâs Management to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities recognised in the financial statements that are not readily apparent from other sources. The judgements, estimates and associated assumptions are based on historical experience and other factors including estimation of effects of uncertain future events that are considered to be relevant. Actual results may differ from these estimates.
The following are the critical judgements , estimations & assumptions that have been made by the Management in the process of applying the Companyâs accounting policies.
- Tax expense is calculated using applicable tax rate and laws that have been enacted or substantially enacted. In arriving at taxable profit and all tax bases of assets and liabilities, the Company determines the taxability based on tax enactments, relevant judicial pronouncements and tax expert opinions, and makes appropriate provisions which includes an estimation of the likely outcome of any open tax assessments / litigations. Any difference is recognised on closure of assessment or in the period in which they are agreed.
- Defined benefit obligations are measured at fair value for financial reporting purposes. Fairvalue determined by actuary is based on actuarial assumptions. Management judgement is required to determine such actuarial assumptions. Such assumptions are reviewed annually using the best information available with the Management.
- When the fairvalue of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted price in active markets, theirfairvalue is measured using valuation techniques .The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include consideration of inputs such as liquidity risk, credit risk and volatility.
- The Company makes allowances for doubtful trade receivables based on a provision matrix which takes into account historical credit loss experience and adjusted for current estimates.
- The determination of depreciation and amortisation charge depends on the useful lives for which judgements and estimations are required. The residual values, useful lives, and method of depreciation / amortisation of property, plant and equipment and intangible assets are reviewed at each financial year end and adjusted prospectively, if appropriate.
- Inventories are stated at the lower of cost and net realisable value. In estimating the net realisable value of inventories the Company makes an estimate of future selling prices and costs necessary to make the sale.
- Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/claims/ litigation against the company as it is not possible to predict the outcome of pending matters with accuracy.
c. Property, Plant and Equipment (PPE)
Property, Plant and Equipment are stated at cost, net of accumulated depreciation/amortisation and impairment, if any. The cost comprises its purchase price including import duties and other non- refundable taxes, and any directly attributable cost of bringing the asset to its working condition for its intended use. Trade discounts and rebates are deducted in arriving at the purchase price.
On transition to Ind AS, the Company has elected optional exemption under Ind AS 101 to continue with the carrying amount of all of its Property, Plant and Equipment (Including Capital work-in-progress) recognised as at 1st April ,2016 measured under ICAAP as the deemed cost of the Property, Plant and Equipment.
Freehold land is disclosed at cost less impairment, if any. Cost comprises of purchase price and directly attributable cost of acquisition/bringing the asset to its working condition for its intended use.
Subsequent expenditure related to an item of Property, Plant & Equipment is added to its carrying amount only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance
The Company identifies and determines cost of each component of the asset separately, if the component has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset.
The present value of the expected cost for decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
Project under which assets are not ready for their intended use and other capital work-in-progress, are carried at cost comprising direct cost and directly attributable expenses. Advances given towards acquisition / construction of fixed assets outstanding at each Balance Sheet date are disclosed as Capital Advances under Other Non-Current Assets. Expenses incurred related to project, net of income earned during the project development stage prior to its intended use, are considered as pre-operative expense and disclosed under Capital Work-in-Progress.
An item of Property, Plant and Equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognised.
d. Intangible Assets
Intangible assets are carried at cost less accumulated amortisation and impairment loss, if any. The cost of an intangible asset comprises its purchase price including import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use.
On transition to Ind AS, the Company has elected optional exemption under Ind AS 101 to continue with the carrying amount of Intangible Assets recognised as at 1st April, 2016 measured under ICAAP as the deemed cost of the Intangible Assets.
Intangible Assets under development are shown separately at cost incurred in bringing the asset to its present condition.
Subsequent expenditure on an intangible asset after its purchase / completion is recognised as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in such case such expenditure is added to the carrying amount of the asset.
Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a productâs commercial feasibility has been established, in which case such expenditure is capitalised.
Intangible asset initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is derecognised.
e. Depreciation and Amortisation
Depreciation is provided pro- rata to the period of use on Straight Line Method (SLM) based on the estimated useful lives of the assets, which have been determined as per Schedule II of Companies Act, 2013. The useful lives in respect of the below assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013, which are as under
The useful lives of above assets have been assessed by the management considering the technical study, technological obsolence, actual usage, historical data regarding breakdown, maintenance and industry data available on record. Components having use full ives different from the life of parent assets are depreciated over the useful life of the components within overall useful life of the parent asset.
Leasehold lands accounted under finance lease are amortised over the period of lease except where the lease is renewable.
Leasehold improvements are amortised on straight line basis over the period of lease or useful life whichever is lower.
Intellectual Property Rights are amortised over their useful life. Computer Software and Licences are being amortised over the period of five years on straight line basis.
f. Impairment of Non-Financial Assets
The carrying amount of assets are reviewed at each Balance Sheet date to assess if there is any indication of impairment based on internal and external factors. An impairment loss on such assessment will be recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount of the assets is net selling price or value in use, whichever is higher. While assessing value in use, the estimated future cash flows are discounted to the present value by using weighted average cost of capital. A previously recognised impairment loss is further provided or reversed depending on changes in the circumstances and to the extent that carrying amount of the assets does not exceed the carrying amount that will be determined if no impairment loss had previously been recognised.
Impairment losses, are recognised in the Statement of Profit and Loss.
g. Financial Instruments
Classification:
The Company classifies its financial assets in the following measurement categories
i) Those to be measured subsequently at fair value (either through Other Comprehensive Income, or through profit or loss)
ii) Those measured at amortised cost
The classification depends the business model of the entity for managing financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or Other Comprehensive Income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through Other Comprehensive Income.
Initial recognition and measurement
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in the Statement of Profit and Loss.
Subsequent measurement
After initial recognition, financial assets are measured at
i) Fair value either through Other Comprehensive Income (FVTOCI) or through profit or loss (FVTPL)or,
ii) Amortised cost
Debt instruments
Subsequent measurement of debt instruments depends on the business model of the Company for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:
Measured at amortised cost
Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows that are solely payments of principal and interest, are subsequently measured at amortised cost using the EIR method.
Measured at fair value through Other Comprehensive Income (OCI)
Financial assets that are held within a business model whose objective is achieved by both, selling financial assets and collecting contractual cash flows that are solely payments of principal and interest, are subsequently measured at fair value through Other Comprehensive Income (FVTOCI) . Fair value movements are recognised in the Other Comprehensive Income (OCI). Interest income measured using the EIR method and impairment losses, if any are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain/ (loss) previously recognised in the Other Comprehensive Income (OCI) is reclassified from the equity to other income in the Statement of Profit and Loss.
Measured at fair value through profit or loss
A financial asset not classified as either amortised cost or through Other Comprehensive Income (FVTOCI), is classified as fairvalue through profit or loss (FVTPL). Such financial assets are measured at fair value with all changes in fairvalue, including interest income and dividend income if any, recognised as other income in the Statement of Profit and Loss.
Equity Instruments
All equity investments in scope of Ind AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at Fair Value through Profit or Loss (FVTPL). For all other equity instruments, the Company may make an irrevocable election to present in other comprehensive income subsequent changes in the fairvalue. The Company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as at Fair Value through other comprehensive income (FVTOCI), then all fair value changes on the instrument, excluding dividends, are recognised in the OCI. There is no recycling of the amounts from OCI to profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
Equity instruments included within the Fair Value through Profit or Loss (FVTPL) category are measured at fairvalue with all changes recognised in the Statement of Profit and Loss.
Derecognition
The Company derecognises a financial asset other than Fair Value through other comprehensive income (FVTOCI), when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.
If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay.
On de-recognition of a financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable is recognised in the Statement of profit and loss.
Impairment
The Company applies Expected Credit Loss ( ECL ) model for measurement and recognition of impairment loss on the financial assets.
ECL is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original EIR.
ECL impairment loss allowance (or reversal) recognised during the period is recognised as income/expense in the Statement of Profit and Loss.
Reclassification
The Company determines classification of financial assets on initial recognition. After initial recognition, no reclassification is made for financial assets.
Financial liabilities
Classification as Debt or Equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
Initial recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities are initially measured at the fair value.
Subsequent measurement
Financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Financial liabilities carried at fairvalue through profit or loss are measured at fairvalue with all changes in fairvalue recognized in the Statement of Profit and Loss.
De-recognition
A financial liability is de-recognised when the obligation specified in the contract is discharged, cancelled or expires.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the Balance Sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company orthe counterparty.
h. Fair Value Measurement
The Company measures financial instruments at fairvalue at each Balance Sheet date.
Fairvalue is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either
- In the Principal market for asset or liability, or
- In the absence of a Principal market, in the most advantageous market for the asset or liability.
The Principal or the most advantageous market must be accessible by the Company.
A fair value measurement of a non- financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to mea5urefair value, maximising the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fairvalue hierarchy, described as follows
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2 Inputs other than quoted prices included within Level 1 that are observable forthe asset or liability, either directly or indirectly.
Level B Unobservable inputs for the asset or liability.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to fairvalue measurement as a whole) at the end of each reporting period.
i. Inventories
Raw Materials, Packing Materials, Stores and Spares are valued at lower of cost and net realisable value. The costs of inventories comprise all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. The costs of purchase consist of the purchase price including duties and taxes (other than those subsequently recoverable from the taxing authorities), freight inward and other expenditure directly attributable to the acquisition. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase.
Materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on moving weighted average basis.
Stock-in-Trade is valued at moving weighted average basis and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
Work- in- Progress and Finished Goods are valued at lower of cost and net realisable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
j. Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the amount can be reliably measured. Revenue is measured at fair value of consideration received or receivable.
Revenue from sale of goods is recognised when ownership in the goods is transferred to the buyer for a price, when significant risks and rewards of ownership have been transferred to the buyer and no effective control, is retained by the Company. Sale of goods are stated net of trade discounts and volume rebates, and include excise duty wherever applicable.
Revenue from energy generated through Wind Power Generation Plant is recognised on the basis of net power delivered as per power purchase agreement signed with Discom(s).
Interest is recognised using the Effective Interest rate (EIR) method.
Dividend income is recognised when the right to receive the payment is established.
Export incentives are recognised in the Statement of Profit and Loss when the right to receive credit as perthe terms of the scheme is established in respect of exports made and when there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.
k. Borrowing Costs
Borrowing cost includes interest and ancillary costs incurred in connection with the arrangement of borrowings and charged to Statement of Profit and Loss on the basis of effective interest rate.
Borrowing cost includes exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.
Borrowing cost that are attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use.
All other borrowing costs are expensed in the period in which they occur.
I. Earnings Per Share
Basic earnings per share is computed by dividing the profit aftertax by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the year is adjusted for events i.e. bonus issue, share splits and further issue of share capital.
Diluted earnings per share is computed by dividing the profit after tax for the period attributable to equity shareholders by the weighted-average number of shares outstanding during the period and adjusted forthe effects of all dilutive potential equity shares.
m. Leases
Leases in which a significant portion of the risk and rewards of ownership are retained by the lessor are classified as operating lease. Payments made under operating leases (net of any incentives received from the lessor) are charged in the Statement of Profit and Loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate expected inflationary cost increases forthe lessor.
n. Employee Share Based Payments
The fair value of options granted under Share Based Payment plan is recognised as an employee benefit expense with corresponding increase in equity in accordance with recognition and measurement principles as prescribed in Ind AS 102 Share Based Payments. Thetotal expense is recognised overthe vesting period.
o. Taxes
Current Tax
Income tax expense represents the sum of current and deferred tax (including MAT). Tax expense is recognised in the Statement of Profit and Loss except to the extent that it relates to items recognised directly in equity or other comprehensive income, in such case the tax expense is also recognised directly in equity or in other comprehensive income. Any subsequent change in income tax on items initially recognised in equity or other comprehensive income is also recognised in equity or other comprehensive income, such change could be for change in tax rate.
Current tax provision is measured on the basis of taxable income computed in accordance with the provisions of the Income Tax Act, 1961.
Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the Balance Sheet and the corresponding tax bases used in the computation of taxable profit and are accounted for using the balance sheet approach.
Deferred tax liabilities are recognised for all taxable temporary difference and deferred tax assets are recognised for all deductible temporary differences, carryforward tax losses and allowances to the extent it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised.
Deferred tax asset and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted at the reporting date.
The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available against which the temporary differences can be utilised.
Tax credit is recognised in respect of Minimum Alternate Tax (MAT) paid in terms of section 115 JAA of the Income Tax Act, 1961 based on convincing evidence that the Company will pay normal income tax within statutory time frame and the same is reviewed at each balance sheet date.
p. Foreign Currency Transaction
Functional and Presentation Currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ). The Companyâs financial statements are presented in Indian rupee which is also the Companyâs functional and presentation currency.
Initial Recognition
Foreign currency transactions are recorded on initial recognition in the functional currency, using the exchange rate between the functional & foreign currency prevailing at the date of transaction.
Subsequent Recognition
Monetary current assets and liabilities at the Balance Sheet date are translated at the rate prevailing on Balance Sheet date. The difference thereon and also the exchange difference on settlement of foreign currency transactions during the year is recognised as income or expense in Statement of Profit and Loss.
Non-monetary items are carried at historical cost and reported using the exchange rate at the date of transaction.
Derivative Financial Instruments
The Company uses derivative financial instruments, such as forward contracts and interest rate swaps to hedge its foreign currency and interest rate risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured atfairvalue.
Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fairvalue is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken to Statement of Profit and Loss.
q. Cash Flow Statement
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to insignificant riskof changes in value.
Cash flows are reported using the indirect method as set out in Ind AS 7 âStatement of Cash Flowsâ, whereby profit or (loss) and tax is adjusted forthe effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, Investing and financing activities of the Company are segregated.
r. Employee Benefits
Contribution towards provident fund and employee state insurance is made to the regulatory authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Plans as the company does not carry any further obligations, apart from the contributions made on a monthly basis. Such contributions are charged to the Statement of Profit and Loss forthe period of service rendered by the employees.
The Company has a defined benefit gratuity plan. The Company funds the Plan through annual contributions to Life Insurance Corporation of India under its Employee Croup Gratuity Scheme. Companyâs liability is actuarially determined (using the Projected Unit Credit Method) at the end of each year.
Re-measurements, comprising of actuarial gains and losses, the effect of asset ceiling, excluding amounts included in the net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Accumulated leaves, which are expected to be availed or encashed within twelve 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 leaves as the additional amount expected to be paid as a result of the unused entitlement as at the year end.
Accumulated leaves, which are expected to be availed or encashed beyond twelve months from the end of theyear 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.
s. Provisions and Contingent Liabilities
Provisions are recognised when there is a present obligation (legal or constructive) as a result of past event and 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. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
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 the 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, is termed as a contingent liability.
t. Corporate Social Responsibility (CSR)
Pursuant to the requirements of section 135 of the Company Act 2013 and rules thereon and guidance note on âAccounting for expenditure on Corporate Social Responsibility activitiesâ issued by ICAI, with effect from 1st April, 2015, Contribution towards CSR is recognised as an expense in the Statement of Profit and Loss in the period in which it is paid.
u. Dividend
The Company recognises a liability to make cash distribution to equity holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the shareholders. A corresponding amount is recognised directly in equity.
v. Recent Accounting Pronouncements
In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying following IndAS
- IndAS 115-Revenue from Contracts with Customers
- Amendments to Ind AS 21- The Effects of Foreign Exchange Rates.
The above are applicable to the Company from 1st April, 2018. The Company is evaluating the effects of the new Ind AS/amendments on its Financial Statements.
Mar 31, 2017
(a) Basis of Preparation of Financial Statements
The Financial Statements have been prepared in accordance with the historical cost convention under accrual basis of accounting as per Indian Generally Accepted Accounting Principles (Indian GAAP). All the Accounting Standards (AS) specified in Companies (Accounting Standard) Rules, other pronouncement of ICAI, guidelines issued by SEBI, provisions of the Companies Act, 2013 as applicable are complied.
Use of Estimates
Indian GAAP enjoins management to make estimates and assumptions that affect reported amount of assets, liabilities, revenue, expenses and contingent liabilities pertaining to year, the financial statement relate to. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Presentation and Disclosure of Financial Statements
All assets and liabilities have been classified as current or non-current as per the Companyâs normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013. Based on the nature of products and the time between acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months for the purpose of current/ noncurrent classification of assets and liabilities.
(b) Tangible Fixed Assets
Tangible fixed assets are held with the intention of being used for the purpose of producing goods or providing services and is not held for sale in the normal course of business.
Tangible fixed assets are stated at historical cost of acquisition i.e. cost less accumulated depreciation and impairment loss, if any.
The cost of asset comprises its purchase price including import duties and other non- refundable taxes, and any directly attributable cost of bringing the asset to its working condition for its intended use; any trade discounts and rebates are deducted in arriving at the purchase price.
Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance.
Project under which assets are not ready for their intended use and other capital work-in-progress, are carried at cost comprising direct cost and directly attributable expenses. Advances given towards acquisition/construction of fixed assets outstanding at each Balance Sheet date are disclosed as Capital Advances under âLong Term Loans and Advances.
Gains or losses arising from disposal of tangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the assets. Such Gains or losses are recognized in the statement of profit and loss when the assets are disposed off.
(c) Intangible Assets
Intangible assets are carried at cost less accumulated amortization and impairment loss, if any. The cost of an intangible asset comprises its purchase price including import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use.
Intangible Assets under development are shown separately at cost incurred in bringing the asset to its present condition.
Subsequent expenditure on an intangible asset after its purchase / completion is recognized as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in such case such expenditure is added to the cost of the asset. Revenue expenditure pertaining to research is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a productâs technological feasibility has been established, in which case such expenditure is capitalised. Fixed assets utilised for research and development are capitalised and depreciated in accordance with the policies stated for Tangible Fixed Assets and Intangible Assets.
Gains or losses arising from disposal of intangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the assets. Such Gains or losses are recognized in the statement of profit and loss when the assets are disposed off.
(d) Depreciation and Amortization
Depreciation is provided pro-rata to the period of use on Straight Line Method (SLM) based on the estimated useful lives of the assets, which have been determined as per Schedule II of Companies Act, 2013. The useful lives in respect of the below assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013, which areas under:
The useful lives of above assets have been assessed by the management considering the technical study, technological obsolence, actual usage, historical data regarding breakdown, uses and maintenance and industry data available on record. Components having useful lives different from the life of parent assets are depreciated over the useful life of the components.
Leasehold lands are amortized over the period of lease except where the lease is renewable. Cost of leasehold improvements is amortized over the period of lease and any further addition is amortized over the balance lease period.
Intangible assets are amortized on straight line basis. Intellectual Property Rights and Technical Know- how are amortized over their useful life, not exceeding ten years. Computer Software and Licences are being amortized over the period of five years.
(e) Impairment of Assets
Any impairment loss is recognized to the extent, the carrying amount of assets exceed their recoverable amount. Recoverable amount is higher of an assetâs net selling price 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.
(f) Investments
Investments which are readily realizable and is intended to be held for not more than one year from the date on which such investment is made, are classified as current investments.
The Carrying amount for current investments is the lower of cost and fair value. Investments other than current investments are classified as Long Term Investments. Long Term Investments are stated at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.
On disposal of investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.
(g) Valuation of Inventories
Raw Materials, Packing Materials, Consumables, Stores and Spares
These are valued at lower of cost and net realizable value. The costs of inventories comprise all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. The costs of purchase consist of the purchase price including duties and taxes (other than those subsequently recoverable from the taxing authorities), freight inward and other expenditure directly attributable to the acquisition. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase.
However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost is determined on weighted average basis.
Work- in- Progress and Finished Goods These are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty wherever applicable.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
(h) Cash Flow Statement Cash and Cash Equivalents
Cash and Cash equivalents comprise cash on hand and balances with Banks other than earmarked balances.
Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit or (loss) before extraordinary items and tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated.
(i) Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured and there exists reasonable certainty of its recovery.
Sale of Goods
Sales are recognized when the substantial risks and rewards of ownership in the goods are transferred to the buyer upon supply of goods and are recognized net of trade discounts, returns, sales taxes and excise duty. Income from Energy Generation
Revenue from energy generated through Wind Power Generation Plant is recognized on the basis of net power delivered as per power purchase agreement signed with Discom(s).
Interest Income
Interest income is accounted on a time proportion basis taking into account the amounts invested and the rate of interest.
Dividend Income
Dividend income is recognized when the right to receive is established.
(j) Government Grants
Government grants in the nature of promotersâ contribution like investment subsidy, where no repayment is ordinarily expected in respect thereof, are treated as capital reserve under shareholdersâ fund. Grant/ Subsidy received against specific fixed asset is reduced from the cost of fixed asset.
Export benefits are accounted for in the year of export based on eligibility with certainty in receiving the same,
(k) Foreign Currency Transaction Initial Recognition
On initial recognition, all foreign currency transactions are recorded by applying the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
Subsequent Recognition
Monetary current assets and liabilities at the year-end are translated at the rate prevailing on Balance Sheet date. The difference thereon and also the exchange difference on settlement of foreign currency transactions during the year is recognized as income or expense in Statement of Profit and Loss.
Non-monetary items are carried at historical cost and reported using the exchange rate at the date of transaction.
Forward Exchange Contracts
The premium or discount arising at the inception of forward exchange contract, which is not intended for trading or speculation purposes is amortized and recognized as an expense/ income over the life of the contract. Exchange difference on such contracts is recognized in the statement of profit and loss in the period in which the exchange rates change. Any gain or loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or expense for the period.
Derivative Transactions
All outstanding derivative contracts in respect of firm commitments are fair valued at every year end, on a mark-to market basis and any loss on valuation is recognized in the statement of profit and loss, on each contract basis. Any gain on mark-to-market valuation on respective contract is not recognized by the Company, keeping in view the principle of prudence as enunciated in AS 1, âDisclosure of Accounting Policiesâ. Any reduction in fair value or reversal of such reduction is included in statement of profit and loss.
(I) Employee Benefits
Defined Contribution Plan
Provident Fund and Employee State Insurance
Contribution towards provident fund and employee state insurance 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. Such contributions are charged to the Statement of Profit and Loss for the period of service rendered by the employees.
Defined Benefit Plan
Leave Encashment (Compensated Absences) and Gratuity
Accumulated leaves, which are expected to be availed or encashed within twelve 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 leaves as the additional amount expected to be paid as a result of the unused entitlement as at the year end.
Accumulated leaves, which are expected to be availed or encashed beyond twelve months from the end of the year 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 Statement of Profit and Loss in the year in which they arise.
In case of Gratuity, the company funds the benefits through annual contributions to Life Insurance Corporation of India under its Employee Group Gratuity Scheme. Companyâs liabilities towards Gratuity are actuarially determined, at each year end. Actuarial gain or loss is recognized in the statement of profit and loss. Obligation is measured at the present value of estimated future cash flows using a discounted rate by reference to market yields at the Balance Sheet date on Government Bonds.
(m) Employee Share Based Payments
The Company follows Intrinsic Value method for valuation of Employee Stock Option in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share Based Payments, issued by the Institute of Chartered Accountants of India.
(n) Borrowing Costs
Borrowing cost includes interest and ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised as part of the cost of such asset till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use.
The capitalization rate is the weighted average of the borrowing costs applicable to the borrowings of the Company that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset.
All other borrowing costs are expensed in the period in which they occur.
(o) Leases
Leases in which a significant portion of the risk and rewards of ownership are retained by the lessor are classified as operating leases. Lease rentals are expensed with reference to lease terms and other considerations.
(p) Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the year is adjusted for events i.e. bonus issue, share splits and further issue of share capital.
Diluted earnings per share is computed by dividing the profit/ (loss) after tax (including the post-tax effect of extraordinary items, if any) for the period attributable to equity shareholders by the weighted-average number of shares outstanding during the period and adjusted for the effects of all dilutive potential equity shares.
(q) Tax on Income
Current tax is determined on the basis of estimated taxable income computed in accordance with the provisions of Income Tax Act, 1961.
Deferred tax is recognized on timing difference between the book and taxable profit for the year and quantified using the tax rates and law enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognized and carried forwarded only to the extent that there is a reasonable certainty that asset will be realized in future.
Minimum Alternative 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. In the period/year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal Income Tax during the specified period.
(r) Provisions and Contingent Liabilities Provisions
Provisions are recognized when there is a present obligation as a result of past event and 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. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
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 the 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, is termed as a contingent liability. Material contingent liabilities are disclosed by way of notes.
Contingent assets are neither recognized nor disclosed in the Financial Statements.
(s) Prior Period Items and Changes in Accounting Estimates
Prior period items as well as changes in accounting estimates having material impact on the current period financial statements of the company are disclosed separately.
(t) Corporate Social Responsibility
Pursuant to the requirements of section 135 of the Company Act 2013 and rules thereon and guidance note on âAccounting for expenditure on Corporate Social Responsibility activitiesâ issued by ICAI, with effect from April 1, 2015, CSR expenditure is recognized as an expense in the Statement of Profit and Loss in the period in which it is incurred.
(u) Measurement of EBITDA
The Company has opted to present earnings before interest, tax, depreciation, amortization and exceptional items (EBITDA) as a separate line item on the face of the Statement of the Profit and Loss. In its measurement, the Company does not include interest, tax, depreciation, amortization and exceptional items.
Mar 31, 2016
1. Company Information
Relaxo Footwears Limited (''the Company'') is a Public Limited Company
registered in India and is listed at Bombay Stock Exchange (BSE) and
National Stock Exchange (NSE). Company is one of the leading players
in the Footwear Industry engaged in manufacturing and trading of
Footwear and related Products. The company has ''state of the art''
manufacturing facilities at Bahadurgarh (Haryana), Bhiwadi (Rajasthan)
and Haridwar (Uttarakhand). The selling arrangements are through its
Wholesale, Export, Modern Trade and Company operated Retail Network.
(a) Basis of Preparation of Financial Statements
The Financial Statements have been prepared in accordance with the
historical cost convention under accrual basis of accounting as per
Indian Generally Accepted Accounting Principles (Indian GAAP). All the
Accounting Standards (AS) specified in Companies (Accounting Standard)
Rules, other pronouncement of ICAI, guidelines issued by SEBI,
provisions of the Companies Act, 2013 as applicable are complied.
Use of Estimates
Indian GAAP enjoins management to make estimates and assumptions that
affect reported amount of assets, liabilities, revenue, expenses and
contingent liabilities pertaining to year, the financial statement
relate to. The Management believes that the estimates used in
preparation of the financial statements are prudent and reasonable.
These estimates are reviewed at each balance sheet date and adjusted to
reflect the current best estimates.
Presentation and Disclosure of Financial Statements
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule III to the Companies Act, 2013. Based
on the nature of products and the time between acquisition of assets
for processing and their realisation in cash and cash equivalents, the
Company has ascertained its operating cycle as twelve months for the
purpose of current/ non-current classification of assets and
liabilities.
(b) Tangible Fixed Assets
Tangible fixed assets are held with the intention of being used for the
purpose of producing goods or providing services and is not held for
sale in the normal course of business.
Tangible fixed assets are stated at historical cost of acquisition i.e.
cost less accumulated depreciation and impairment loss, if any.
The cost of asset comprises its purchase price including import duties
and other non-refundable taxes, and any directly attributable cost of
bringing the asset to its working condition for its intended use; any
trade discounts and rebates are deducted in arriving at the purchase
price.
Subsequent expenditure related to an item of fixed asset is added to
its book value only if it increases the future benefits from the
existing asset beyond its previously assessed standard of performance.
Grant/ subsidy received is reduced from the cost of specific fixed
asset.
Project under which assets are not ready for their intended use and
other capital work-in-progress, are carried at cost comprising direct
cost and directly attributable expenses.
(c) Intangible Assets
Intangible assets are carried at cost less accumulated amortisation and
impairment loss, if any. The cost of an intangible asset comprises its
purchase price including import duties and other taxes (other than
those subsequently recoverable from the taxing authorities), and any
directly attributable expenditure on making the asset ready for its
intended use.
Intangible Assets under development are shown separately and at the
cost incurred in bringing the asset to its present condition.
Subsequent expenditure on an intangible asset after its purchase /
completion is recognised as an expense when incurred unless it is
probable that such expenditure will enable the asset to generate future
economic benefits in excess of its originally assessed standards of
performance and such expenditure can be measured and attributed to the
asset reliably, in such case such expenditure is added to the cost of
the asset.
Revenue expenditure pertaining to research is charged to the Statement
of Profit and Loss. Development costs of products are also charged to
the Statement of Profit and Loss unless a product''s technological
feasibility has been established, in which case such expenditure is
capitalised. Fixed assets utilised for research and development are
capitalised and depreciated in accordance with the policies stated for
Tangible Fixed Assets and Intangible Assets.
(d) Depreciation and Amortisation
Depreciation is provided pro-rata to the period of use on Straight Line
Method (SLM) based on the estimated useful lives of the assets, which
have been determined as per Schedule II of Companies Act, 2013, except
in case of Plant and Machinery and Moulds wherein the useful life is
taken as thirty years and six years respectively. The life of Plant and
Machinery and Moulds has been assessed considering the technical study,
technological obsolence, actual usage, historical data regarding
breakdown, uses and maintenance and industry data available on record.
Components having useful lives different from the life of parent assets
are depreciated over the useful life of the components.
Leasehold lands are amortized over the period of lease except where the
lease is renewable. Cost of leasehold improvements is amortized over
the period of lease and any further addition is amortized over the
balance lease period.
Intangible assets are amortised on straight line basis. Trade Marks and
Technical Know-how are amortised over their useful life, not exceeding
ten years. Softwares are being amortised over the period of five years.
(e) Impairment of Assets
Any impairment loss is recognized to the extent, the carrying amount of
assets exceed their recoverable amount. Recoverable amount is higher
of an asset''s net selling price 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.
(f) Investments
Investments which are readily realizable and is intended to be held for
not more than one year from the date on which such investment is made,
are classified as current investments.
Investments other than current investments are classified as Long Term
Investments. Long Term Investments are stated at cost. However,
provision for diminution in value is made to recognize a decline other
than temporary in the value of the investments. Cost of investment
includes acquisition charges such as brokerage, fees and duties.
(g) Valuation of Inventories
Raw Materials, Packing Materials, Consumables, Stores and Spares
These are valued at lower of cost and net realizable value. The costs
of inventories comprise all costs of purchase and other costs incurred
in bringing the inventories to their present location and condition.
The costs of purchase consist of the purchase price including duties
and taxes (other than those subsequently recoverable from the taxing
authorities), freight inward and other expenditure directly
attributable to the acquisition. Trade discounts, rebates and other
similar items are deducted in determining the costs of purchase.
However, materials and other items held for use in the production of
inventories are not written down below cost if the finished products in
which they will be incorporated are expected to be sold at or above
cost. Cost is determined on weighted average basis.
Work- in- Progress and Finished Goods
These are valued at lower of cost and net realizable value. Cost
includes direct materials and labour and a proportion of manufacturing
overheads based on normal operating capacity. Cost of finished goods
includes excise duty wherever applicable.
(h) Cash Flow Statement Cash and Cash Equivalents
Cash and Cash equivalents comprise cash on hand and balances with Banks
other than earmarked balances.
Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit
or (loss) before extraordinary items and tax is adjusted for the effects
of transactions of a non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are segregated.
(i) Revenue Recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
reliably measured and there exists reasonable certainty of its
recovery.
Sale of Goods
Sales are recognised when the substantial risks and rewards of
ownership in the goods are transferred to the buyer upon supply of
goods and are recognised net of trade discounts, returns, sales
taxes and excise duty.
Income from Energy Generation
Revenue from energy generated through Windmills is recognized on the
basis of net power delivered as per power purchase agreement signed
with Discom(s).
Interest Income
Interest income is accounted on a time proportion basis taking into
account the amounts invested and the rate of interest.
Dividend Income
Dividend income is recognised when the right to receive is established.
(j) Government Grants
Government grants in the nature of promoters'' contribution like
investment subsidy, where no repayment is ordinarily expected in
respect thereof, are treated as capital reserve under shareholders''
fund.
Grant/Subsidy received against specific fixed asset is reduced from the
cost of fixed asset.
Export benefits are accounted for in the year of export based on
eligibility with certainty in receiving the same.
(10 Foreign Currency Transaction
Initial Recognition
On initial recognition, all foreign currency transactions are recorded
by applying the exchange rate between the reporting currency and the
foreign currency at the date of the transaction.
Subsequent Recognition
Monetary current assets and liabilities at the year-end are translated
at the rate prevailing on Balance Sheet date. The difference thereon
and also the exchange difference on settlement of foreign currency
transactions during the year is recognized as income or expense in
Statement of Profit and Loss.
Non-monetary items are carried at historical cost and reported using
the exchange rate at the date of transaction.
Forward Exchange Contracts
The premium or discount arising at the inception of forward exchange
contract, which is not intended for trading or speculation purposes is
amortized and recognized as an expense/income over the life of the
contract. Exchange difference on such contracts is recognized in the
statement of profit and loss in the period in which the exchange rates
change. Any gain or loss arising on cancellation or renewal of such
forward exchange contract is also recognized as income or expense for
the period.
Derivative Transactions
All outstanding derivative contracts in respect of firm commitments are
fair valued at every year end, on a mark-to market basis and any loss
on valuation is recognised in the statement of profit and loss, on each
contract basis. Any gain on mark-to-market valuation on respective
contract is not recognised by the Company, keeping in view the
principle of prudence as enunciated in AS 1, ''Disclosure of Accounting
Policies''. Any reduction in fair value or reversal of such reduction is
included in statement of profit and loss.
(I) Employee Benefits
Defined Contribution Plan
Provident Fund and Employee State Insurance
Contribution towards provident fund and employee state insurance 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. Such
contributions are charged to the Statement of Profit and Loss for the
period of service rendered by the employees.
Defined Benefit Plan
Leave Encashment (Compensated Absences) and Gratuity
Accumulated leaves, which are expected to be availed or encashed within
twelve 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 leaves as the additional amount expected
to be paid as a result of the unused entitlement as at the year end.
Accumulated leaves, which are expected to be availed or encashed beyond
twelve months from the end of the year are treated as other long term
employee benefits. The company''s liability is actuarially determined
(using the Projected Unit Credit Method) at the end of each year.
Actuarial losses/ gains are recognised in the Statement of Profit and
Loss in the year in which they arise.
In case of Gratuity, the company funds the benefits through annual
contributions to Life Insurance Corporation of India under its Employee
Group Gratuity Scheme. Company''s liabilities towards Gratuity are
actuarially determined, at each year end. Actuarial gain or loss is
recognised in the statement of profit and loss. Obligation is measured
at the present value of estimated future cash flows using a discounted
rate by reference to market yields at the Balance Sheet date on
Government Bonds.
(m) Employee Share Based Payments
The Company follows Intrinsic Value method for valuation of Employee
Stock Option in accordance with the SEBI (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance
Note on Accounting for Employee Share Based Payments, issued by the
Institute of Chartered Accountants of India.
(n) Borrowing Costs
General and specific borrowing costs directly attributable to the
acquisition, construction or production of qualifying assets, are added
to the cost of those assets, until such assets are ready for their
intended use. All other borrowing costs are recognised in statement of
profit and loss in the period in which they are incurred.
(o) Leases
Leases in which a significant portion of the risk and rewards of
ownership are retained by the lessor are classified as operating
leases. Lease rentals are expensed with reference to lease terms and
other considerations.
(p) Earnings Per Share
Basic earnings per share is computed by dividing the profit/ (loss)
after tax (including the post-tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the period. The weighted average number of equity shares outstanding
during the year is adjusted for events i.e. bonus issue, share splits
and further issue of share capital.
Diluted earnings per share is computed by dividing the profit / (loss)
after tax (including the post-tax effect of extraordinary items, if
any) for the period attributable to equity shareholders by the
weighted-average number of shares outstanding during the period and
adjusted for the effects of all dilutive potential equity shares.
(q) Tax on Income
Current tax is determined on the basis of estimated taxable income
computed in accordance with the provisions of Income Tax Act, 1961.
Deferred tax is recognized on timing difference between the book and
taxable profit for the year and quantified using the tax rates and law
enacted or substantively enacted as on the Balance Sheet date.
Deferred tax assets are recognized and carried forwarded only to the
extent that there is a reasonable certainty that asset will be realized
in future.
Minimum Alternative 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. In the
period/year in which the MAT credit becomes eligible to be recognised
as an asset in accordance with the recommendations contained in
Guidance Note issued by the Institute of Chartered Accountants of
India, the said asset is created by way of credit to the Statement of
Profit and Loss and shown as MAT Credit Entitlement. The Company
reviews the same at each balance sheet date and writes down the
carrying amount of MAT Credit Entitlement to the extent there is no
longer convincing evidence to the effect that company will pay normal
Income Tax during the specified period.
(r) Provisions and Contingent Liabilities
Provisions
Provisions are recognized when there is a present obligation as a
result of past event and 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.
These estimates are reviewed at each balance sheet date and adjusted to
reflect the current best estimates.
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 the 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, is termed
as a contingent liability. Material contingent liabilities are
disclosed byway of notes.
Contingent assets are neither recognised nor disclosed in the Financial
Statements.
(s) Prior Period Items and Changes in Accounting Estimates
Prior period items as well as changes in accounting estimates having
material impact on the current period financial statements of the
company are disclosed separately.
Mar 31, 2015
(a) Basis of Preparation of Financial Statements
The Financial Statements have been prepared in accordance with the
historical cost convention under accrual basis of accounting as per
Indian Generally Accepted Accounting Principles (Indian GAAP). All the
Accounting Standards (AS) specified in Companies (Accounting Standard)
Rules, other pronouncement of ICAI, guidelines issued by SEBI,
provisions of the Companies Act, 2013 as applicable are complied.
Use of Estimates
Indian GAAP enjoins management to make estimates and assumptions that
affect reported amount of assets, liabilities, revenue, expenses and
contingent liabilities pertaining to year, the financial statement
relate to. The Management believes that the estimates used in
preparation of the financial statements are prudent and reasonable.
Future results could differ due to these estimates and the differences
between the actual results and the estimates are recognised in the
period in which the results are known / materialise.
Presentation and Disclosure of Financial Statements
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule III to the Companies Act, 2013. Based
on the nature of products and the time between 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.
(b) Tangible Fixed Assets
Tangible fixed assets are held with the intention of being used for the
purpose of producing goods or providing services and is not held for
sale in the normal course of business.
Tangible fixed assets are stated at historical cost of acquisition i.e.
cost less accumulated depreciation and impairment loss, if any.
The cost of asset comprises its purchase price including import duties
and other taxes (other than those subsequently recoverable from the
taxing authorities), and any directly attributable expenditure on
making the asset ready for its intended use.
Grant/ subsidy received is reduced from the cost of specific fixed
assets.
Project under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost and directly attributable expenses.
(c) Intangible Assets
Intangible assets are carried at cost less accumulated amortisation and
impairment loss, if any. The cost of an intangible asset comprises its
purchase price including import duties and other taxes (other than
those subsequently recoverable from the taxing authorities), and any
directly attributable expenditure on making the asset ready for its
intended use.
Subsequent expenditure on an intangible asset after its purchase /
completion is recognised as an expense when incurred unless it is
probable that such expenditure will enable the asset to generate future
economic benefits in excess of its originally assessed standards of
performance and such expenditure can be measured and attributed to the
asset reliably, in such case such expenditure is added to the cost of
the asset.
Intangible Assets under development are shown separately and at the
cost incurred in bringing the asset to its present condition.
Revenue expenditure pertaining to research is charged to the Statement
of Profit and Loss. Development costs of products are also charged to
the Statement of Profit and Loss unless a product''s technological
feasibility has been established, in which case such expenditure is
capitalised. Fixed assets utilised for research and development are
capitalised and depreciated in accordance with the policies stated for
Tangible Fixed Assets and Intangible Assets.
(d) Depreciation and Amortisation
Company is using Straight Line Method (SLM) of depreciation and the
assets are depreciated equally over the useful life of the asset
determined as per Schedule II of Companies Act, 2013, except in case of
Plant and Machinery and Moulds wherein the useful life is taken as
thirty years and six years respectively.The life of Plant and Machinery
and Moulds has been assessed considering the technical study,
technological obsolence, actual usage, historical data regarding
breakdown, uses and maintenance and industry data available on record.
The value of leasehold land granted for longer period is not amortized,
except value of leasehold land of windmills, which is amortised over
the period of lease. Cost of leasehold improvements are amortised over
the period of lease.
Intangible assets are amortised on straight line basis. The Trade
Marks are amortised over their useful life or ten years whichever is
lower. Softwares are being amortised over the period of five years on
straight line basis.
(e) Impairment of Assets
Any impairment loss is recognized to the extent, the carrying amount of
assets exceed their recoverable amount. Recoverable amount is higher of
an asset''s net selling price 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.
(f) Investments
Investments which are readily realizable and is intended to be held for
not more than one year from the date on which such investment is made,
are classified as current investments.
Investments other than current investments are classified as Long Term
Investments. Long Term Investments are stated at cost. However,
provision for diminution in value is made to recognize a decline other
than temporary in the value of the investments. Cost of investment
includes acquisition charges such as brokerage, fees and duties.
(g) Valuation of Inventories
Raw Materials, Packing Materials, Consumables, Spares and Fuel
These are valued at lower of cost and net realizable value. The costs
of inventories comprise all costs of purchase and other costs incurred
in bringing the inventories to their present location and condition.
The costs of purchase consist of the purchase price including duties
and taxes (other than those subsequently recoverable from the taxing
authorities),freight inward and other expenditure directly attributable
to the acquisition.Trade discounts, rebates and other similar items are
deducted in determining the costs of purchase.
However, materials and other items held for use in the production of
inventories are not written down below cost if the finished products in
which they will be incorporated are expected to be sold at or above
cost. Cost is determined on weighted average basis.
Work- in- Progress and Finished Goods
These are valued at lower of cost and net realizable value. Cost
includes direct materials and labour and a proportion of manufacturing
overheads based on normal operating capacity. Cost of finished goods
includes excise duty wherever applicable.
(h) Cash Flow Statement
Cash and Cash Equivalents
Cash and Cash equivalents comprise cash on hand and balances with Banks
other than earmarked balances.
Cash Flow Statement
Cash flows are reported using the indirect method, whereby net profit
or (loss) before extraordinary items and tax is adjusted for the
effects of transactions of a non-cash nature and any deferrals or
accruals of past or future cash receipts or payments. The cash flows
from operating, investing and financing activities of the Company are
segregated.
(i) Revenue Recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the company and the revenue can be
reliably measured and there exists reasonable certainty of its
recovery.
Sale of Goods
Sales are recognised when the substantial risks and rewards of
ownership in the goods are transferred to the buyer upon supply of
goods and are recognised net of trade discounts, returns, sales taxes
and excise duty.
Interest Income
Interest income is accounted on a time proportion basis taking into
account the amounts invested and the rate of interest.
Dividend Income
Dividend income is recognised when the right to receive is established.
(j) Government Grants
Government grants in the nature of promoters'' contribution like
investment subsidy,where no repayment is ordinarily expected in respect
thereof, are treated as capital reserve under shareholders'' fund.
Grant/ Subsidy received against specific fixed assets is reduced from
the cost of fixed assets.
Export benefits are accounted for in the year of exports based on
eligibility with certainty in receiving the same.
(k) Foreign Currency Transaction
Initial Recognition
On initial recognition, all foreign currency transactions are recorded
by applying the exchange rate between the reporting currency and the
foreign currency at the date of the transaction, to the foreign
currency amount.
Subsequent Recognition
Monetary current assets and liabilities at the year-end are translated
at the rate prevailing on Balance Sheet date. The difference thereon
and also the exchange difference on settlement of foreign currency
transactions during the year are recognized as income or expenses in
Statement of Profit and Loss.
Non-monetary items are carried at historical cost and reported using
the exchange rate at the date of transaction.
Forward Exchange Contracts
Premium/ discount on forward exchange contracts, which are not intended
for trading or speculation purposes, are amortized over the period of
the contracts if such contracts relate to monetary items as at the
Balance Sheet date.
Derivative Transactions
Derivative transactions are considered as off-balance sheet items and
cash flows arising thereon are recognized in the books of account on
principle of Prudence as prescribed in the Accounting Standard (AS)-1
issued by the Institute of Chartered Accountants of India.
(l) Employee Benefits
Provident Fund, Employee State Insurance and Gratuity
Contribution towards provident fund and employee state insurance for
employee 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. Such
contributions are charged to the Statement of Profit and Loss for the
period of service rendered by the employee.
In case of gratuity, the company funds the benefits through annual
contributions to Life Insurance Corporation of India under its
Employees Group Gratuity Scheme, 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 yearly basis.
Leave Encashment (Compensated Absences)
Accumulated leaves, 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 leaves as the additional amount expected to be
paid as a result of the unused entitlement as at the year end.
Accumulated leaves, which are expected to be availed or encashed beyond
12 months from the end of the year are treated as other long term
employee benefits. The company''s liability is actuarially determined
(using the Projected Unit Credit Method) at the end of each year.
Actuarial losses/ gains are recognised in the Statement of Profit and
Loss in the year in which they arise.
(m) Employee Share Based Payments
The Company follows Intrinsic Value method for valuation of Employee
Stock Option in accordance with the SEBI (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance
Note on Accounting for Employee Share Based Payments, issued by the
Institute of Chartered Accountants of India.
(n) Borrowing Costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost.
Costs in connection with the borrowing of funds to the extent not
directly related to the acquisition of qualifying assets are charged to
the Statement of Profit and Loss in the period in which they are
incurred.
Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date, asset
is ready for its intended use.
(o) Leases
Leases in which a significant portion of the risk and rewards of
ownership are retained by the lessor are classified as operating
leases. Lease rentals are expensed with reference to lease terms and
other considerations.
(p) Earnings Per Share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post-tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the period.
Diluted earnings per share is computed by dividing the profit/ (loss)
after tax (including the post-tax effect of extraordinary items, if
any) for the period attributable to equity shareholders by the
weighted- average number of shares outstanding during the period and
adjusted for the effects of all dilutive potential equity shares.
(q) Tax on Income
Current tax is determined on the basis of estimated taxable income
computed in accordance with the provisions of Income Tax Act, 1961.
Deferred tax is recognized on timing difference between the book and
taxable profit for the year and quantified using the tax rates and law
enacted or substantively enacted as on the Balance Sheet date.
Deferred tax assets are recognized and carried forwarded only to the
extent that there is a reasonable certainty that asset will be realized
in future.
Minimum Alternative 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. In the period/
year in which the MAT credit becomes eligible to be recognised as an
asset in accordance with the recommendations contained in Guidance Note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of credit to the Statement of Profit and Loss
and shown as MAT Credit Entitlement. The Company reviews the same at
each balance sheet date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the effect that company will pay normal Income Tax during the
specified period.
(r) Provisions and Contingent Liabilities Provisions
Provisions are recognized when there is a present obligation as a
result of past event and 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.
These estimates are reviewed at each balance sheet date and adjusted to
reflect the current best estimates.
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
present obligation that arises from the 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, is termed as a
contingent liability. Material contingent liabilities are disclosed by
way of notes.
Contingent assets are neither recognised nor disclosed in the Financial
Statements.
(s) Prior Period Items and Changes in Accounting Estimates
Prior period items as well as changes in accounting estimates having
material impact on the current period financial statements of the
company are disclosed separately.
Mar 31, 2014
The Financial Statements have been prepared in accordance with the
historical cost convention under accrual basis of accounting as per
Indian Generally Accepted Accounting Principles (Indian GAAP). All the
Accounting Standards (AS) specified in Companies (Accounting Standard)
Rules, other pronouncement of ICAI, guidelines issued by SEBI,
provisions of the Companies Act, 1956 and notifed provisions of
Companies Act, 2013 as applicable are complied.
Indian GAAP enjoins management to make estimates and
assumptions that affect reported amount of assets, liabilities,
revenue, expenses and contingent liabilities pertaining to year, the
financial statement relate to. The Management believes that the
estimates used in preparation of the financial statements are prudent
and reasonable. Future results could differ due to these estimates and
the differences between the actual results and the estimates are
recognised in the period in which the results are known / materialise.
All assets and liabilities have been classifed as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Revised Schedule VI to the Companies Act, 1956.
Based on the nature of products and the time between 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 classifcation of assets
and liabilities.
27.2.2 Valuation of Inventories
Raw Materials, Packing Materials, Consumables, Spares and Fuel
These are valued at lower of cost and net realizable value. The costs
of inventories comprise all costs of purchase and other costs incurred
in bringing the inventories to their present location and condition.
The costs of purchase consist of the
^
purchase price including duties and taxes, freight inward and other
expenditure directly attributable to the acquisition. Trade discounts,
rebates and other similar items are deducted in determining the costs
of purchase.
However, materials and other items held for use in the production of
inventories are not written down below cost if the fnished products in
which they will be incorporated are expected to be sold at or above
cost. Cost is determined on weighted average basis.
Work- in- Progress and Finished Goods
These are valued at lower of cost and net realizable value. Cost
includes direct materials and labour and a proportion of manufacturing
overheads based on normal operating capacity. Cost of fnished goods
includes excise duty.
27.2.3 Cash Flow Statements
Cash and Cash Equivalents
Cash and Cash equivalents comprise cash on hand and balances with Banks
other than earmarked balances.
Cash Flow Statement
Cash flows are reported using the indirect method, whereby net Profit or
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of a non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from operating,
investing and fnancing activities of the Company are segregated.
27.2.4 Prior Period Items & Changes in Accounting Estimates
Prior period items as well as changes in accounting estimates having
material impact on the current period financial statements of the
company are disclosed separately.
27.2.5 Depreciation Accounting
Depreciation has been provided on straight-line method (SLM) at the
rates and in the manner prescribed in Schedule XIV of the Companies
Act, 1956.
The value of leasehold land has been granted for longer period and is
therefore, not amortized, except value of leasehold land of Windmill,
which is amortised over the period of lease. Cost of leasehold
improvements are amortised over the period of lease.
27.2.6 Revenue Recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will fow to the company and the revenue can be
reliably measured and there exists reasonable certainty of its
recovery.
Sale of Goods
Sales are recognised when the substantial risks and rewards of
ownership in the goods are transferred to the buyer upon supply of
goods and are recognised net of trade discounts, returns, sales taxes
and including excise duty. It does not include inter-divisional/
inter-unit transfers.
Sale of Services
Revenue from services rendered is recognised when the services are
rendered and related costs are incurred.
Interest Income
Interest income is accounted on a time proportion basis taking into
account the amounts invested and the rate of interest.
Dividend Income
Dividend income is recognised when the right to receive is established.
27.2.7 Tangible Fixed Assets
Fixed assets are held with the intention of being used for the purpose
of producing goods or providing services and is not held for sale in
the normal course of business.
Fixed assets are stated at historical cost of acquisition i.e. cost
less accumulated depreciation.
All cost including interest relating to qualifying fixed assets till the
time, asset is ready for its intended use is capitalized.
Grant/ subsidy received have been reduced from the cost of Specific fixed
assets.
Project under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost and directly attributable expenses.
27.2.8 Intangible Assets
Intangible assets are carried at cost less accumulated amortisation.
The cost of an intangible asset comprises its purchase price including
import duties and other taxes (other than those subsequently
recoverable from the taxing authorities), and any directly attributable
expenditure on making the asset ready for its intended use. Intangible
assets are amortised on straight line basis.
Subsequent expenditure on an intangible asset after its purchase /
completion is recognised as an expense when incurred unless it is
probable that such expenditure will enable the asset to generate future
economic benefits in excess of its originally assessed standards of
performance and such expenditure can be measured and attributed to the
asset reliably, in which case such expenditure is added to the cost of
the asset.
Intangible Assets under development are shown separately and at the
cost incurred in bringing the asset in its present condition.
The Trade Marks are amortized over their useful life or ten years
whichever is lower.
Softwares are being amortized over the period of five years on straight
line basis.
Revenue expenditure pertaining to research is charged to the Statement
of Profit and Loss. Development costs of products are also charged to
the Statement of Profit and Loss unless a product''s technological
feasibility has been established, in which case such expenditure is
capitalised. Fixed assets utilised for research and development are
capitalised and depreciated in accordance with the policies stated for
Tangible Fixed Assets and Intangible Assets.
27.2.9 Foreign Currency Transaction
Initial Recognition
On initial recognition, all foreign currency transactions are recorded
by applying the exchange rate between the reporting currency and the
foreign currency at the date of the transaction, to the foreign
currency amount.
Subsequent Recognition
Monetary current assets and liabilities at the year-end are translated
at the rate prevailing on Balance Sheet date. The difference thereon
and also the exchange difference on settlement of foreign currency
transactions during the year are recognized as income or expenses in
Statement of Profit and Loss.
Non-monetary items are carried at historical cost and reported using
the exchange rate at the date of transaction.
Forward Exchange Contracts
Premium/ discount on forward exchange contracts, which are not intended
for trading or speculation purposes, are amortized over the period of
the contracts if such contracts relate to monetary items as at the
Balance Sheet date.
Derivative Transactions
Derivative transactions are considered as off-balance sheet items and
cash flows arising thereon are recognized in the books of account on
principle of Prudence as prescribed in the Accounting Standard (AS)- 1
issued by the Institute of Chartered Accountants of India.
27.2.10 Government Grants
Government grants in the nature of promoters'' contribution like
investment subsidy, where no repayment is ordinarily expected in
respect thereof, are treated as capital reserve under shareholders''
fund.
Any Grant/ Subsidy received against Specific fixed assets have been
reduced from the cost of fixed assets.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
27.2.11 Investments
Long Term Investments are stated at cost. Cost of investment includes
acquisition charges such as brokerage, fees and duties.
27.2.12 Employee benefits
Provident Fund, Employee State Insurance & Gratuity
Contribution towards provident fund and employee state insurance for
employee is made to the regulatory authorities, where the Company has
no further obligations. Such benefits are classifed as Defined
Contribution Schemes as the company does not carry any further
obligations, apart from the contributions made on a monthly basis. Such
contributions are charged to the Statement of Profit and Loss for the
period of service rendered by the employee.
In case of gratuity, the company funds the benefits through annual
contributions to Life Insurance Corporation of India under its
Employees Group Gratuity Scheme, where the
company has no further obligations. Such benefits are classifed as
Defined Contribution Schemes as the company does not carry any further
obligations, apart from the contributions made on a yearly basis.
Leave Encashment (Compensated Absences)
Accumulated leaves, 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 leaves as the additional amount expected to be
paid as a result of the unused entitlement as at the year end.
Accumulated leaves, which are expected to be availed or encashed beyond
12 months from the end of the year are treated as other long term
employee benefits. The company''s liability is actuarially determined
(using the Projected Unit Credit Method) at the end of each year.
Actuarial losses/ gains are recognised in the Statement of Profit and
Loss in the year in which they arise.
27.2.13 Borrowing Costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost.
Costs in connection with the borrowing of funds to the extent not
directly related to the acquisition of qualifying assets are charged to
the Statement of Profit and Loss in the period in which they are
incurred.
Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date, asset
is ready for its intended use.
27.2.14 Leases
Leases in which a significant portion of the risk and rewards of
ownership are retained by the lessor are classifed as operating leases.
Lease rentals are expensed with reference to lease terms and other
considerations.
27.2.15 Earnings Per Share
Basic earnings per share is computed by dividing the Profit / (loss)
after tax (including the post-tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the period.
Diluted earnings per share is computed by dividing the Profit/ (loss)
after tax (including the post-tax effect of extraordinary items, if
any) for the period attributable to equity shareholders by the
weighted-average number of shares outstanding during the period.
27.2.16 Tax on Income
Current tax is determined on the basis of estimated taxable income
computed in accordance with the provisions of Income Tax Act, 1961.
Deferred tax is recognized on timing difference between the book and
taxable Profit for the year and quantifed using the tax rates and law
enacted or substantively enacted as on the Balance Sheet date.
Deferred tax assets are recognized and carried forwarded only to the
extent that there is a reasonable certainty that asset will be realized
in future.
Minimum Alternative 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. In the period/
year in which the MAT credit becomes eligible to be recognised as an
asset in accordance with the recommendations contained in Guidance Note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of credit to the Statement of Profit and Loss
and shown as MAT Credit Entitlement. The Company reviews the same at
each balance sheet date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the effect that company will pay normal Income Tax during the
specified period.
27.2.17 Impairment of Assets
Any impairment loss is recognized to the extent, the carrying amount of
assets exceed their recoverable amount. Recoverable amount is higher
of an asset''s net selling price 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.
27.2.18 Provisions & Contingent Liabilities
Provisions
Provisions are recognized when there is a present obligation as a
result of past event and 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.
These estimates are reviewed at each balance sheet date and adjusted to
refect the current best estimates.
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 the 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, is termed
as a contingent liability. Material contingent liabilities are
disclosed by way of notes.
Mar 31, 2013
1. NATURE OF OPERATION
The company is primarily engaged in the business of manufacturing and
trading of footwear and accessories through its retail, export and
wholesale network.
2. ACCOUNTING CONVENTION
The Financial Statements have been prepared under the historical cost
convention and in accordance with generally accepted accounting
principles and the provisions of the Companies Act, 1956.
3. USE OF ESTIMATES
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the period in which
the results are known / materialise.
4. INVENTORIES
Inventories are valued as under:
 Raw Material, Packing Material, Stock-in- process, Finished goods,
Stock-in-Trade, Fuel, Stores, Spares & Tools at cost or net realizable
value, whichever is lower. The cost is determined on weighted average
basis and includes freight, taxes and duties and is net of credit under
VAT and CENVAT schemes, wherever applicable.
- Manufactured Goods at cost or net realizable value, whichever is
lower. Cost includes all direct costs and applicable production
overheads to bring the goods to the present location and condition.
- Excise duty accrued on the production of manufactured goods is
included in the valuation of inventories, wherever applicable.
5. CASH AND CASH EQUIVALENTS
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances, highly liquid investments that are
readily convertible into known amounts of cash and which are subject to
insignificant risk of changes in value.
6. CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby profit/
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non- cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated.
7. PRIOR PERIOD & EXTRA ORDINARY ITEMS
Prior period as well as Extra Ordinary items having material impact on
the financial affairs of the company are disclosed separately.
8. DEPRECIATION AND AMORTISATION
Depreciation has been provided on straight-line method (SLM) at the
rates and in the manner prescribed in Schedule XIV of the Companies
Act, 1956. The value of leasehold land has been granted for long period
and is therefore, not amortized, except value of leasehold land of
Windmill, which is amortised over the period of lease. Cost of
leasehold improvements are amortised over the period of lease or their
useful lives whichever is lower. The Trade Marks are amortised over
their useful life or ten years whichever is lower. Computer softwares
are amortised over the period of five years.
9. REVENUE RECOGNITION
Sales are recognized, net of trade discounts, returns and claims, on
transfer of significant risks and rewards of ownership to the buyer,
which generally coincides with the delivery of goods to customers.
Sales include excise duty but exclude sales tax and value added tax.
Sales from services are recognised when the services are rendered and
related costs are incurred. Interest income is accounted on accrual
basis. Dividend income is accounted for when the right to receive is
established.
10. TANGIBLE FIXED ASSETS
Fixed assets are stated at historical cost of acquisition /
construction less accumulated depreciation. All cost including interest
relating to acquisition of fixed assets till the time of commissioning
of such assets are capitalized. Grants/ subsidy received have been
reduced from the cost of specific fixed assets.
Project under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
Any impairment loss is recognized, whenever carrying value of fixed
assets exceeds the market value or value in use, whichever is higher.
11. INTANGIBLE ASSETS
Intangible assets are carried at cost less accumulated amortisation and
impairment losses, if any. The cost of an intangible asset comprises
its purchase price including import duties and other taxes (other than
those subsequently recoverable from the taxing authorities), and any
directly attributable expenditure on making the asset ready for its
intended use. Subsequent expenditure on an intangible asset after its
purchase / completion is recognised as an expense when incurred unless
it is probable that such expenditure will enable the asset to generate
future economic benefits in excess of its originally assessed standards
of performance and such expenditure can be measured and attributed to
the asset reliably, in which case such expenditure is added to the cost
of the asset.
12. RESEARCH AND DEVELOPMENT EXPENSES
Revenue expenditure pertaining to research is charged to the Statement
of Profit and Loss. Development costs of products are also charged to
the Statement of Profit and Loss unless a product''s technological
feasibility has been established, in which case such expenditure is
capitalised. Fixed assets utilised for research and development are
capitalised and depreciated in accordance with the policies stated for
Tangible Fixed Assets and Intangible Assets.
13. FOREIGN CURRENCY TRANSACTION
Transactions in foreign currency are accounted for at the exchange
rates prevailing on the date of the transaction. Monetary current
assets and liabilities at the year end are translated at the rate
prevailing on last day of financial year. The difference thereon and
also the exchange difference on settlement of foreign currency
transactions during the year are recognized as income or expenses in
Statement of Profit and Loss. Non-monetary items are carried at
historical cost.
Derivative transactions are considered as off- balance sheet items and
cash flows arising thereon are recognized in the books of account on
principle of Prudence as prescribed in the Accounting Standard ( AS-1)
issued by the Institute of Chartered Accountants of India. Premium/
discount on forward exchange contracts, which are not intended for
trading or speculation purposes, are amortised over the period of the
contracts if such contracts relate to monetary items as at the Balance
Sheet date.
14. GOVERNMENT GRANTS
Government grants in the nature of promoters'' contribution like
investment subsidy, where no repayment is ordinarily expected in
respect thereof, are treated as capital reserve. Any Grants/ Subsidy
received against specific fixed assets have been reduced from the cost
of fixed assets.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
15. INVESTMENTS
Long Term Investments are stated at cost. Cost of investment include
acquisition charges such as brokerage, fees and duties.
16. EMPLOYEE BENEFITS
Retirement benefits in the form of Provident Fund & Gratuity are
defined contribution plan and the contribution are charged to Statement
of Profit and Loss of the year when the contribution to the respective
funds are due. In case of Gratuity obligations, company has taken
policy from Life Insurance Corporation of India. There are no other
obligations other than the contributions payable to the respective
authorities. Leave encashment benefit is charged to Statement of Profit
and Loss on the basis of actuarial valuation at the end of financial
year.
17. BORROWING COSTS
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
18. LEASES
Assets acquired under leases where a significant portion of the risks
and rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are expensed with reference to lease
terms and other considerations.
19. EARNINGS PER SHARE
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year.
20. TAX ON INCOME
Provision for current Tax is made as per the provision of Income Tax
Act, 1961.
Deferred tax is recognized on timing difference between the book and
taxable profit for the year and quantified using the tax rates and law
enacted or substantively enacted as on the Balance Sheet date.
Deferred tax assets are recognized and carried forwarded only to the
extent that there is a reasonable certainty that asset will be realized
in future.
Minimum Alternative 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. In the period/
year in which the MAT credit becomes eligible to be recognised as an
asset in accordance with the recommendations contained in Guidance Note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of credit to the Statement of Profit and Loss
and shown as MAT Credit Entitlement. The Company reviews the same at
each balance sheet date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the effect that company will pay normal Income Tax during the
specified period.
21. PROVISIONS & CONTINGENT LIABILITIES
Provision involving substantial degree of estimation in measurement are
recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities, if material, are disclosed by way of notes.
Mar 31, 2012
1. NATURE OF OPERATION
The company is primarily engaged in the business of manufacturing and
trading of footwear and accessories through its retail, export and
wholesale network.
2. ACCOUNTING CONVENTION
The Financial Statements have been prepared under the historical cost
convention and in accordance with generally accepted accounting
principles and the provisions of the Companies Act, 1956.
During the year ended 31st March 2012, the revised Schedule VI notified
under the Companies Act, 1956 has become applicable to the company, for
preparation and presentation of its financial statements. The adoption
of revised Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However,
it has significant impact on presentation and disclosure made in the
financial statements. The company has also reclassified previous year
figures in accordance with the requirements applicable in the current
year.
3. USE OF ESTIMATES
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the period in which
the results are known / materialise.
4. INVENTORIES
Inventories are valued as under :
- Raw Material, Packing Material, Stock-in-process, Finished goods,
Stock-in-Trade, Fuel, Store, Spare & Tools at cost or net realizable
value, whichever is lower. The cost is determined on weighted average
basis and includes freight, taxes and duties and is net of credit under
VAT and CENVAT schemes, wherever applicable.
- Manufactured Goods at cost or net realizable value, whichever is
lower. Cost include all direct costs and applicable production
overheads to bring the goods to the present location and condition.
- Excise duty accrued on the production of manufactured goods is
included in the valuation of inventories, wherever applicable.
5. CASHANDCASH EQUIVALENTS
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances, highly liquid investments that are
readily convertible into known amounts of cash and which are subject to
insignificant risk of changes in value.
6. CASH FLOW STATEMENT
Cash flows are reported using the indirect method, whereby profit/
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non- cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated.
7. PRIOR PERIOD & EXTRA ORDINARY ITEMS
Prior period as well as Extra Ordinary items having material impact on
the financial affairs of the company are disclosed separately.
8. DEPRECIATION AND AMORTISATION
Depreciation has been provided on straight-line method (SLM) at the
rates and in the manner prescribed in Schedule XIV of the Companies
Act, 1956. The value of leasehold land has been granted for long period
and is therefore, not amortized, except value of leasehold land of
Windmill, which is amortised over the period of lease. Cost of
leasehold improvements are amortised over the period of lease or their
useful lives whichever is lower. The Trade Marks are amortised over
their useful life or ten years whichever is lower. Computer softwares
are amortised over the period of five years.
9. REVENUE RECOGNITION
Sales are recognized, net of trade discounts, returns and claims, on
transfer of significant risks and rewards of ownership to the buyer,
which generally coincides with the delivery of goods to customers.
Sales include excise duty but exclude sales tax and value added tax.
Sales from services are recognised when the services are rendered and
related costs are incurred. Interest income is accounted on accrual
basis. Dividend income is accounted for when the right to receive is
established.
10. TANGIBLEFIXED ASSETS
Fixed assets are stated at historical cost of acquisition/ construction
less accumulated depreciation. All cost including interest relating to
acquisition of fixed assets till the time of commissioning of such
assets are capitalized. Grants/ subsidy received have been reduced
from the cost of specific fixed assets.
Project under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
Any impairment loss is recognized, whenever carrying value of fixed
assets exceeds the market value or value in use, whichever is higher.
11. INTANGIBLE ASSETS
Intangible assets are carried at cost less accumulated amortisation and
impairment losses, if any. The cost of an intangible asset comprises
its purchase price including import duties and other taxes (other than
those subsequently recoverable from the taxing authorities), and any
directly attributable expenditure on making the asset ready for its
intended use. Subsequent expenditure on an intangible asset after its
purchase / completion is recognised as an expense when incurred unless
it is probable that such expenditure will enable the asset to generate
future economic benefits in excess of its originally assessed standards
of performance and such expenditure can be measured and attributed to
the asset reliably, in which case such expenditure is added to the cost
of the asset.
12. RESEARCH AND DEVELOPMENT EXPENSES
Revenue expenditure pertaining to research is charged to the Statement
of Profit and Loss. Development costs of products are also charged to
the Statement of Profit and Loss unless a product's technological
feasibility has been established, in which case such expenditure is
capitalised. Fixed assets utilised for research and development are
capitalised and depreciated in accordance with the policies stated for
Tangible Fixed Assets and Intangible Assets.
13. FOREIGN CURRENCY TRANSACTION
Transaction in foreign currency are accounted for at the exchange rates
prevailing on the date of the transaction. Monetary current assets and
liabilities at the year end are translated at the rate prevailing on
last day of financial year. The difference thereon and also the
exchange difference on settlement of foreign currency transactions
during the year are recognized as income or expenses in Statement of
Profit and Loss. Non- monetary items are carried at historical cost.
Derivative transactions are considered as off-balance sheet items and
cash flows arising thereon are recognized in the books of account on
principle of Prudence as prescribed in the Accounting Standard (AS-1)
issued by the Institute of Chartered Accountants of India. Premium/
discount on forward exchange contracts, which are not intended for
trading or speculation purposes, are amortised over the period of the
contracts if such contracts relate to monetary items as at the Balance
Sheet date.
14. GOVERNMENT GRANTS
Government grants in the nature of promoters' contribution like
investment subsidy, where no repayment is ordinarily expected in
respect thereof, are treated as capital reserve. Any Grants/Subsidy
received against specific fixed assets are reduced from the cost of
fixed assets.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
15. INVESTMENTS
Long Term Investments are stated at cost. Cost of investment include
acquisition charges such as brokerage, fees and duties.
16. EMPLOYEE BENEFITS
Retirement benefits in the form of Provident Fund & Gratuity are
defined contribution plan and the contribution are charged to Statement
of Profit and Loss of the year when the contribution to the respective
funds are due. In case of Gratuity obligations, company has taken
policy from Life Insurance Corporation of India. There are no other
obligations other than the contributions payable to the respective
authorities. Leave encashment benefit is charged to Statement of Profit
and Loss on the basis of actuarial valuation at the end of financial
year.
17. BORROWING COSTS
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction/ development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
18. LEASES
Assets acquired under leases where a significant portion of the risks
and rewards of ownership are retained by the lessor are classified as
operating leases. Lease rentals are expensed with reference to lease
terms and other considerations.
19. EARNINGS PER SHARE
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year.
20. TAXON INCOME
Provision for current Tax is made as per the provision of Income Tax
Act, 1961.
Deferred tax is recognized on timing difference between the book and
taxable profit for the year and quantified using the tax rates and law
enacted or substantively enacted as on the Balance Sheet date.
Deferred tax assets are recognized and carried forwarded only to the
extent that there is a reasonable certainty that asset will be realized
in future.
Minimum Alternative 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. In the period/
year in which the MAT credit becomes eligible to be recognised as an
asset in accordance with the recommendations contained in Guidance Note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of credit to the Statement of Profit and Loss
and shown as MAT Credit Entitlement. The Company reviews the same at
each balance sheet date and writes down the carrying amount of MAT
Credit Entitlement to the extent there is no longer convincing evidence
to the effect that company will pay normal Income Tax during the
specified period.
21. PROVISIONS & CONTINGENT LIABILITIES
Provision involving substantial degree of estimation in measurement are
recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities, if material, are disclosed by way of notes.
Mar 31, 2011
1. ACCOUNTING CONVENTION
The Financial Statements have been prepared under the historical cost
convention in accordance with generally accepted accounting principles
and the provisions of the Companies Act, 1956.
2. FIXED ASSETS
Fixed assets are stated at historical cost of acquisition /
construction less accumulated depreciation. All cost including interest
relating to acquisition of fixed assets till the time of commissioning
of such assets are capitalized. Grants/ subsidy received have been
reduced from the cost of specific fixed assets.
Incidental Expenditure during construction period is included under
capital work-in-progress and the same is allocated to the respective
fixed assets on completion of construction.
Any impairment loss is recognized, whenever carrying value of fixed
assets exceeds the market value or value in use, whichever is higher.
3. DEPRECIATION
Depreciation has been provided on straight-line method (SLM) at the
rates and in the manner prescribed in Schedule XIV of the Companies
Act, 1956. The value of leasehold land has been granted for long period
and is therefore, not amortized, except value of leasehold land of
Windmill, which is amortised over the period of lease. Cost of
leasehold improvements are amortised over the period of lease or their
useful lives whichever is lower. The Trade Marks are amortised over
their useful life or ten years whichever is lower. Computer softwares
are amortised over the period of five years.
4. INVENTORIES
Inventories are valued as under :
- Raw Material, Packing Material, Fuel, Stores, Spares Consumables and
Trading Goods at cost or net realizable value, whichever is lower. The
cost is determined on weighted average basis and includes freight,
taxes and duties and is net of credit under VAT and CENVAT scheme,
wherever applicable.
- Manufactured Goods at cost or net realizable value, whichever is
lower. Cost include all direct costs and applicable production
overheads to bring the goods to the present location and condition.
- Excise duty accrued on the production of manufactured goods is
included in the valuation of inventories, wherever applicable.
5. EMPLOYEE BENEFITS
Retirement benefits in the form of Provident Fund & Gratuity are
defined contribution plan and the contribution are charged to Profit &
Loss Account of the year when the contribution to the respective funds
are due. In case of Gratuity obligations, company has taken policy from
Life Insurance Corporation of India. There are no other obligations
other than the contributions payable to the respective authorities.
Leave encashment benefit is charged to Profit & Loss Account on the
basis of actuarial valuation at the end of financial year.
6. REVENUE RECOGNITION
Sales are net of trade discounts and claims. Other items of revenue are
recognized in accordance with the Accounting Standard (AS-9) issued by
the Institute of Chartered Accountants of India.
7. RESEARCH & DEVELOPMENT
Capital expenditure on Research and Development is capitalized under
various fixed assets. Revenue expenses are charged to Profit and Loss
Account, when incurred.
8. PRIOR PERIOD & EXTRA ORDINARY ITEMS
Prior period as well as Extra Ordinary items having material impact on
the financial affairs of the company are disclosed separately.
9. TAX ON INCOME
Provision for current Tax is made as per the provision of Income Tax
Act, 1961.
Deferred tax is recognized on timing difference between the book and
taxable profit for the year and quantified using the tax rates and law
enacted or substantively enacted as on the Balance Sheet date.
Deferred tax assets are recognized and carried forwarded only to the
extent that there is a reasonable certainty that asset will be realized
in future.
Minimum Alternative 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. In the period/
year in which the MAT credit becomes eligible to be recognised as an
asset in accordance with the recommendations contained in Guidance Note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of credit to the Profit & Loss Account and
shown as MAT Credit Entitlement. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that company will pay normal Income Tax during the specified
period.
10. FOREIGN CURRENCY TRANSACTION
Transaction in foreign currency are accounted for at the exchange rates
prevailing on the date of the transaction. Monetary current assets and
liabilities at the year end are translated at the rate prevailing on
last day of financial year. The difference thereon and also the
exchange difference on settlement of foreign currency transactions
during the year are recognized as income or expenses in Profit & Loss
Account. Non-monetary items are carried at historical cost. Derivative
transactions are considered as off-balance sheet items and cash flows
arising thereon are recognized in the books of account on principle of
Prudence as prescribed in the Accounting Standard ( AS-1) issued by the
Institute of Chartered Accountants of India.
11. PROVISIONS & CONTINGENT LIABILITIES
Provision involving substantial degree of estimation in measurement are
recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities, if material, are disclosed by way of notes.
12. INVESTMENTS
Long Term Investments are stated at cost.
13. LEASES
Lease rentals in respect of assets taken on 'Operating Lease' are
charged to Profit & loss Account on a straight line basis over the
lease term.
14. GOVERNMENT GRANTS
Grants in the form of Capital/ Investment subsidy are treated as
Capital Reserve. Any Grants/ Subsidy received against specific fixed
assets have been reduced from the cost of fixed assets.
15. SEGMENT ACCOUNTING
The generally accepted accounting principles used in the preparation of
financial statements are applied to record revenue and expenditure in
individual segments.
Expenses that are directly identifiable to segments are considered for
determining the segment results. Expenses that are not allocable to
segments are included under unallocated corporate expenses.
Segments assets and liabilities include those directly identifiable
with the respective segments. Unallocated corporate assets &
liabilities represent the assets & liabilities that are not allocable
to any segment.
Mar 31, 2010
1. ACCOUNTING CONVENTION
The Financial Statements have been prepared under the historical cost
convention in accordance with generally accepted accounting principles
and the provisions of the Companies Act, 1956.
2. FIXED ASSETS
Fixed assets are stated at historical cost of acquisition /
construction less accumulated depreciation. All cost including interest
relating to acquisition of fixed assets till the time of commissioning
of such assets are capitalized. Grants/ subsidy received have been
reduced from the cost of specific fixed assets.
Incidental Expenditure during construction period is included under
capital work-in-progress and the same is allocated to the respective
fixed assets on completion of construction.
Any impairment loss is recognized, whenever carrying value of fixed
assets exceed the market value or value in use, whichever is higher.
3. DEPRECIATION
Depreciation has been provided on straight-line method (SLM) at the
rates and in the manner prescribed in Schedule XIV of the Companies
Act, 1956. The value of leasehold land has been granted for long period
and is therefore, not amortized, except value of leasehold land of
Windmill, which is amortised over the period of lease. Cost of
leasehold improvements are amortised over the period of lease or their
useful lives whichever is lower. Intangible assets are amortized over
the period of their useful lives in
accordance with the Accounting Standard on intangible assets (AS-26)
issued by the Institute of Chartered Accountants of India.
4. INVENTORIES
Inventories are valued as under :
- Stock in Trade, Raw Material, Packing Material and Fuel at cost,
determined on FIFO basis, or net realizable value, whichever is lower.
- Stock in process : Raw material cost as increased by estimated
production overheads keeping in account the stage of process.
- Stores, tools and spare parts are treated as consumed during the year
of purchase
- Excise duty accrued on the production of finished goods is included
in the valuation of inventories.
5. EMPLOYEE BENEFITS
Retirement benefits in the form of Provident Fund & Gratuity are
defined contribution plan and the contribution are charged to Profit &
Loss Account of the year when the contribution to the respective funds
are due. In case of Gratuity obligations, company has taken policy from
Life Insurance Corporation of India. There are no other obligations
other than the contributions payable to the respective authorities.
Leave encashment benefit is charged to Profit & Loss Account on the
basis of actuarial valuation at the end of financial year.
6. REVENUE RECOGNITION
Sales are net of trade discounts and claims. Other items of revenue are
recognized in accordance with the Accounting Standard (AS-9) issued by
the Institute of Chartered Accountants of India.
7. RESEARCH & DEVELOPMENT
Capital expenditure on Research and Development is capitalized under
various fixed assets. Revenue expenses are charged to Profit and Loss
Account, when incurred.
8. PRIOR PERIOD & EXTRA ORDINARY ITEMS
Prior period as well as Extra Ordinary items having material impact on
the financial affairs of the company are disclosed separately.
9. TAX ON INCOME
Provision for current Tax is made as per the provision of Income Tax
Act, 1961.
Deferred tax is recognized on timing difference between the book and
taxable profit for the year and quantified using the tax rates and law
enacted or substantively enacted as on the Balance Sheet date.
Deferred tax assets are recognized and carried forwarded only to the
extent that there is a reasonable certainty that asset will be realized
in future.
Minimum Alternative 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. In the period/
year in which the MAT credit becomes eligible to be recognised as an
asset in accordance with the recommendations contained in Guidance Note
issued by the Institute of Chartered Accountants of India, the said
asset is created by way of credit to the Profit & Loss Account and
shown as MAT Credit Entitlement. The Company reviews the same at each
balance sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that company will pay normal Income Tax during the specified
period.
10. FOREIGN CURRENCY TRANSACTION
Transaction in foreign currency are accounted for at the exchange rates
prevailing on the date of the transaction. Monetary current assets and
liabilities at the year end are translated at the rate prevailing on
last day of financial year. The difference thereon and also the
exchange difference on settlement of foreign currency transactions
during the year are recognized as income or expenses in Profit & Loss
Account. Non-monetary items are carried at historical cost. Derivative
transactions are considered as off- balance sheet items and cash flows
arising thereon are recognized in the books of account on principle of
Prudence as prescribed in the Accounting Standard ( AS-1) issued by the
Institute of Chartered Accountants of India.
11. PROVISIONS & CONTINGENT LIABILITIES
Provision involving substantial degree of estimation in measurement are
recognized when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities, if material, are disclosed by way of notes.
12. INVESTMENTS
Long Term Investments are stated at cost.
13. LEASES
Lease rentals in respect of assets taken on Operating Lease are
charged to Profit & loss Account on a straight line basis over the
lease term.
14. GOVERNMENT GRANTS
Grants in the form of Capital/ Investment subsidy are treated as
Capital Reserve. Any Grants/ Subsidy received against specific fixed
assets have been reduced from the cost of fixed assets.
15. SEGMENT ACCOUNTING
The generally accepted accounting principles used in the preparation of
financial statements are applied to record revenue and expenditure in
individual segments.
Expenses that are directly identifiable to segments are considered for
determining the segment results. Expenses that are not allocable to
segments are included under unallocated corporate expenses.
Segments assets and liabilities include those directly identifiable
with the respective segments. Unallocated corporate assets &
liabilities represent the assets & liabilities that are not allocable
to any segment.
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