Mar 31, 2018
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of Preparation
The standalone Ind AS financial statements have been prepared on a historical cost basis except for certain financial assets and financial liabilities (including financial instruments) which have been measured at fair value at the end of each reporting period as explained in the accounting policies stated below.
1.2 Functional and presentation currency and Rounding off of the amounts
The functional and presentation currency of the company is Indian rupees. These standalone financial statements are presented in Indian rupees and all values are stated in lakhs of Rupees except otherwise indicated. Due to rounding off, the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures.
1.3 Current/non-current classification
1.3.1 The company has classified all its assets and liabilities under current and non-current as required by Ind AS 1- Presentation of Financial Statements. The asset is treated as current when it is:
- 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
1.3.2 All other assets are classified as non-current.
1.3.3 A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
1.3.4 All other liabilities are classified as non-current.
1.3.5 The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. Deferred tax assets (including Minimum Alternate Tax Credit) and liabilities are always classified as non-current assets and liabilities.
1.4 Property, Plant and Equipment (PPE)
1.4.1 Freehold land are stated at historical cost.
1.4.2 All other items of PPE including capital work in progress are stated at cost of acquisition less accumulated depreciation and accumulated impairment losses, if any. PPE is recognized when the cost of an asset can be reliably measured and it is probable that the entity will obtain future economic benefits from the asset.
1.4.3 PPE is measured initially at cost. Cost includes the fair value of the consideration given to acquire the asset (net of discounts and rebates) and any directly attributable cost of bringing the asset to working condition for its intended use (inclusive of import duties and non-refundable purchase taxes).
1.4.4 The Company has elected to use the exemption available under Ind AS 101 to continue the carrying value for all of its PPE as recognised in the standalone financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition (April 1, 2016).
1.4.5 Capital work in progress (CWIP) comprises of cost of acquisition of assets, duties, levies and any cost directly attributable to bringing the asset to its working condition for the intended use. Expenditure incurred on project under implementation is treated as incidental expenditure incurred during construction and is pending allocation to the assets which will be allocated / apportioned on completion of the project.
1.5 Depreciation/Amortization
1.5.1 The depreciable amount of PPE (being the gross carrying value less the estimated residual value) is depreciated over its useful life as prescribed in Schedule II to The Companies Act, 2013 on Written down value basis.
1.5.2 The management believes that the estimated useful lives are realistic and reflects fair approximation of the period over which the assets are likely to be used. At each financial year end, management reviews the residual values, useful lives and method of depreciation of property, plant and equipment and values ofthe same are adjusted prospectively where needed.
1.6 Intangible assets
1.6.1 Intangible assets acquired separately are measured on initial recognition at cost. Cost comprises the acquisition price, development cost and any attributable / allocable incidental cost of bringing the asset to its working condition for its intended use. The useful life of intangible assets is assessed as either finite or indefinite. All finite-lived intangible assets, are accounted for using the cost model whereby intangible assets are stated at cost less accumulated amortisation and impairment losses, if any. Intangible assets are amortised over the estimated useful economic life. Residual values and useful lives are reviewed at each reporting date.
1.6.2 Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
1.6.3 When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount ofthe asset, and is recognised in the statement of profit and loss within âother incomeâ or âother expensesâ respectively.
1.7 Impairment of non-financial Assets
1.7.1 The Company assesses at each reporting date as to whether there is any indication that any property, plant and equipment and intangible assets or group of assets, called cash generating units (CGU) may be impaired. If any such indication exists the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs.
1.7.2 An impairment loss is recognized in the Statement of Profit and Loss to the extent, assetâs carrying amount exceeds its recoverable amount. The recoverable amount is higher of an assetâs fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.
1.7.3 The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
1.8 Leases
1.8.1 Leases are classified as finance leases whenever the terms of the lease, transfers substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
1.8.2 The determination of whether an arrangement is a lease is based on the substance of the arrangement at the inception ofthe lease. The arrangement is considered as a lease if fulfilment ofthe arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
1.8.3 Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term except where another systematic basis is more representative of time pattern in which economic benefits from the leased assets are consumed.
1.9 Financial instruments
The Company recognizes financial assets and financial liabilities when it becomes party to the contractual provision of the instrument.
1.9.1 Financial assets
a. Initial recognition and measurement
Financial assets are initially measured at its fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets (other than financial assets at fair value through profit or loss) are added to or deducted from the fair value of the concerned financial assets, as appropriate, on initial recognition. Transaction costs directly attributable to acquisition of financial assets at fair value through profit or loss are recognized immediately in profit or loss. However, trade receivable that do not contain a significant financing component are measured at transaction price.
b. Subsequent measurement
For subsequent measurement, the Company classifies financial assets in following broad categories:
- Financial assets carried at amortized cost.
- Financial assets carried at fair value through other comprehensive income (FVTOCI)
- Financial assets carried at fair value through profit or loss (FVTPL)
c. Financial asset carried at amortized cost (net of any write down for impairment, if any)
- Financial assets are measured at amortized cost when asset is held within a business model, whose objective is to hold assets for collecting contractual cash flows and contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest. Such financial assets are subsequently measured at amortized costs using Effective Interest Rate (EIR) method less impairment, if any. The losses arising from impairment are recognized in the statement of profit or loss. Cash and bank balances, trade receivables, loans and other financial asset of the Company are covered under this category.
Under the EIR method, the future cash receipts are exactly discounted to the initial recognition value using EIR. The cumulative amortization using the EIR method of the difference between the initial recognition amount and maturity amount is added to the initial recognition value (net of principal repayments, if any) of the financial asset over the relevant period of the financial asset to arrive at amortized cost at each reporting date. The corresponding effect of the amortization under EIR method is recognized as interest income over the relevant period of the financial asset. The same is included under âother incomeâ in the statement of profit or loss. The amortized cost of the financial asset is also adjusted for loss allowance, if any.
d. Financial asset carried at FVTOCI
Financial asset under this category are measured initially as well as at each reporting date at fair value, when asset is held with a business model whose objective is to hold asset for both collecting contractual cash flows and selling financial assets. Fair value movements are recognized in the other comprehensive income.
e. Financial asset carried at FVTPL
Financial asset under this category are measured initially as well as at each reporting date at fair value. Changes in fair value are recognized in the statement of profit or loss.
f. Financial Guarantee
Financial guarantee contracts issued by the Company are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument.
Guarantees given on behalf of subsidiaries by parent company without charging any fee is recognised at a value which represents a differential interest rate of borrowing, had there been no financial guarantee issued to the subsidiary. Such determined value is considered as an investment in group companies and the liability recognised is to be amortised to the profit and loss account over the term of the guarantee.
g Derecognition of Financial Assets
A financial asset is primarily derecognized when rights to receive cash flows from the asset have expired or the Company has transferred its contractual rights to receive cash flows of the financial asset and has substantially transferred all the risk and reward of the ownership of the financial asset.
h. Impairment of financial assets
In accordance with Ind AS 109, the Company uses âExpected Credit Lossâ (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).
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 effective interest rate.
Lifetime ECL are the expected credit losses resulting from all possible default events over the expected life of a financial asset. 12-month ECL are a portion of the lifetime ECL which result from default events that are possible within 12 months from the reporting date.
For trade receivables Company applies âsimplified approachâ which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Company uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.
For other assets, the Company uses 12 month ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.
ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in the Statement of Profit and Loss under the head âOther expensesâ.
1.9.2 Financial liabilities
a. Initial recognition and measurement
The Company recognizes a financial liability in its Balance Sheet when it becomes party to the contractual provisions ofthe instrument. The Company classifies all financial liabilities as subsequently measured at amortised cost or FVTPL.
All financial liabilities are recognized initially at fair value and in the case of loans, borrowings and payables, net of directly attributable transaction costs. Financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments.
b. Subsequent measurement
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Interest-bearing loans and borrowings are subsequently measured at amortized cost using the Effective Interest Rate (EIR) method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.
The EIR amortization is included as finance costs in the statement of profit and loss.
c. Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the Statement of Profit and Loss.
1.9.3 Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
1.9.4 Derivative financial instrument
a. Company uses derivative financial instruments such as forward contracts to mitigate its foreign currency fluctuation risks. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value at each reporting date. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
b. Any gains or losses arising from changes in the fair value of derivatives are taken directly to the Statement of Profit and Loss, except for the effective portion of cash flow hedges, which is recognized in OCI and later reclassified to profit or loss when the hedge item affects profit or loss or treated as basis adjustment if a hedged forecast transaction subsequently results in the recognition of a non-financial asset or non-financial liability.
c. For the purpose of hedge accounting, hedges are classified as:
- Fair value hedges when hedging the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment;
- Cash flow hedges when hedging the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognized firm commitment;
- Hedges of a net investment in a foreign operation.
d. At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Companyâs risk management objective and strategy for undertaking hedge, the hedging/economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how will the entity assess the effectiveness of changes in the hedging instrumentâs fair value in offsetting the exposure to changes in the hedged itemâs fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective if achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
e. Hedges that meet the strict criterial for hedge accounting are accounted for, as described below:
- Fair value hedges
The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognized in the Statement of Profit and Loss as finance costs.
For fair value hedges relating to items carried at amortized cost, any adjustment to carrying value is amortized through profit or loss over the remaining term of the hedge using the EIR method. EIR amortization may begin as soon as an adjustment exists and no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.
If the hedged item is derecognized, the unamortized fair value is recognized immediately in profit or loss. When an unrecognized form commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognized as an asset or liability with a corresponding gain or loss recognized in the Statement of profit and loss.
- Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognized in the OCI in the cash flow hedge reserve, while any ineffective portion is recognized immediately in the Statement of profit and loss. The Company uses forward contracts as hedges of its exposure to foreign currency risk in forecast transactions and firm commitments. The ineffective portion relating to foreign currency contracts is recognized in finance costs.
Amounts recognized in OCI are transferred to Statement of profit and loss when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is recognized or when a forecast sale occurs. When the hedged item is a cost of a non-financial asset or non-financial liability, the amounts recognized in OCI are transferred to the initial carrying amount of the non-financial asset or liability. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognized in OCI remains separately in equity until the forecast transaction occurs or the foreign currency firm commitment is met.
The Company does not use hedges of net investment.
f. Derecognition
On derecognition of hedged item, the unamortized fair value, of the hedging instrument adjusted to the hedged items is recognized in the Statement of Profit or Loss.
1.10 Fair value measurement
The Company measures certain financial instruments at fair value at each balance sheet date. Certain accounting policies and disclosures require the measurement of fair values, for both financial and nonfinancial assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The best estimate of the fair value of a financial instrument on initial recognition is normally the transaction price - i.e. the fair value of the consideration given or received. If the Company determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently that difference is recognised in Statement of Profit and Loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
All assets and liabilities for which fair value is measured or disclosed in the standalone financial statements are categorized within the fair value hierarchy that categorizes into three levels, described as follows, the inputs to valuation techniques used to measure value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs).
- Level 1 â quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 â inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
- Level 3 â inputs that are unobservable for the asset or liability
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.11 Investment in subsidiaries
Investment in subsidiaries are recorded at cost and reviewed for impairment at each reporting date.
1.12 Inventories
Inventories are valued as under:
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.
1.13 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, regardless of when the payment is being received. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment which flows to the company on its own account but excluding taxes or duties collected on behalf ofthe government.
1.13.1 Sale of goods
a. Revenue from sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated cost can be estimated reliably, there is no continuing effective control or managerial involvement with the goods, and the amount of revenue can be measured reliably.
b. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates.
1.13.2 Sale of services
a. Sale of services comprises of jewellery making charges.
b. Revenue from Jewellery making charges is recognized when it is probable that the economic benefit will flow to the company and the amount of income can be measured reliably.
1.13.3 Other operating revenue
a. Other operating revenue comprises of sale of dust.
b. Revenue from sale of dust is recognized when it is probable that the economic benefit will flow to the company and the amount of income can be measured reliably.
1.14 Other Income
a. Other income comprises of interest income and dividend from investment and profits on redemption of investments.
b. Interest income from financial assets is recognized when it is probable that the economic benefit will flow to the company and the amount of income can be measured reliably. Interest income is accrued on time basis by reference to the principal outstanding and at the effective rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
c. Dividend income from investment is recognized when the shareholderâs right to receive payment has been established (provided that it is probable that the economic benefit will flow to the company and the amount of income can be measured reliably).
d. Profit on redemption of investment is recognized by upon exercise of power by the company to redeem the investment held in any particular security / instrument (non-current as well as current investment).
e. Income other than mentioned above is recognized only when it is reasonably certain that the ultimate collection will be made.
1.15 Borrowing Cost
Borrowing cost includes interest, amortization of 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 directly attributable to the acquisition, construction or production of qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs.
1.16 Foreign Currency Transactions and Translations
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Foreign currency denominated monetary assets and liabilities at the Balance Sheet date are translated at the exchange rate prevailing on the date of Balance Sheet.
Exchange rate differences resulting from foreign currency transactions settled during the period including year-end translation of assets and liabilities are recognized in the Statement of Profit and Loss.
Non-monetary assets, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognized in Other Comprehensive Income (OCI) or Statement of Profit and Loss are also recognized in OCI or Statement of Profit and Loss, respectively).
1.17 Employee benefits
1.17.1 Short Term Employee Benefits
Short term employee benefits are recognized in the period during which the services have been rendered.
1.17.2 Long Term Employee Benefits
a. Provident Fund, Family Pension Fund & Employeesâ State Insurance Scheme
As per the Employees Provident Funds and Miscellaneous Provisions Act, 1952 all employees of the Company are entitled to receive benefits under the provident fund & family pension fund which is a defined contribution plan. These contributions are made to the fund administered and managed by Government of India. In addition, some employees of the Company are covered under Employeesâ State Insurance Scheme Act 1948, which are also defined contribution schemes recognized and administered by Government of India.
The Companyâs contributions to these schemes are recognized as expense in Statement of Profit and Loss account during the period in which the employee renders the related service. The Company has no further obligation under these plans beyond its monthly contributions.
b. Leave Encashment
The Company provides for the liability at year end on account of unavailed earned leave as per the actuarial valuation.
c. Gratuity
The Company provides for gratuity obligations through a Defined Benefits Retirement plan (âThe Gratuity Planâ) covering all employees. The present value of the obligation under such
Defined benefits plan is determined based on actuarial valuation using the Project Unit Credit method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement andmeasure each unit separately to build up final obligation. The obligation is measured at the present value of the estimated cash flows. The discount rate used for determining the present value of the defined obligation under defined benefit plan, is based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognized in profit and loss account as and when determined.
Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding the amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding the amounts included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Re-measurements are not reclassified to Statement of Profit or Loss in subsequent periods.
1.18 Tax
The tax expense for the period comprises current and deferred tax. Taxes are recognised in the statement of profit and loss, except to the extent that it relates to the items recognised in the comprehensive income or in Equity. In which case, the tax is also recognised in the comprehensive income or in Equity.
1.18.1 Current tax
Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income-tax Act. Current income tax relating to items recognised outside statement of profit and loss is recognised outside statement of profit and loss (either in OCI or in equity).
1.18.2 Deferred tax
a. Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the standalone financial statements and the corresponding tax bases used in the computation of taxable profit.
b. Deferred tax liabilities are generally recognized for all taxable temporary timing difference. Deferred tax assets are recognized for deductible temporary differences to the extent that they are probable that taxable profit will be available against which the deductible temporary difference can be utilized.
c. The carrying amount of deferred tax assets is reviewed at each reporting date and adjusted to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
d. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted on the reporting date.
e. Current and deferred tax for the year are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
f. In the situations where the company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in respect of timing differences which reverse during the tax holiday period, to the extent the companyâs gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the year in which the timing differences originate. However, the company restricts recognition of deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the timing differences which originate first are considered to reverse first.
1.18.3 Minimum Alternate Tax (MAT) Credit
Deferred Tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. Accordingly, MAT is recognized as deferred tax asset in the balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realized.
1.19 Segment reporting
The company is primarily engaged in the business of Diamond and Jewellery. This represents a primary segment. However, the Company has two operating/reportable segments based on geographical area, i.e., domestic sales and export sales.
1.20 Earnings per share
Basic EPS is calculated by dividing the profit or loss for the period attributable to the equity holders of the parent company by the weighted average number of ordinary shares outstanding (including adjustments for bonus and rights issues).
Diluted EPS is calculated by adjusting the profit or loss and the weighted average number of ordinary shares by taking into account the conversion of any dilutive potential ordinary shares.
Basic and diluted EPS are presented in the statement of profit and loss for each class of ordinary shares in accordance with Ind AS 33.
1.21 Provisions, Contingent Liabilities and Contingent Assets
1.21.1 Provisions
a. Provisions are recognized when the company has present obligation (legal or constructive) as a result of past event and it is probable that outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense related to a provision is presented in the statement of profit and loss net of any reimbursement/contribution towards provision made.
b. If the effect of the time value of money is material, estimate for the provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
c. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
1.21.2 Contingent liability
a. Contingent liability is disclosed in the case;
- When there is a possible obligation which could arise from past event and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or;
- A present obligation that arises from past events but is not recognized as expense because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or;
- The amount of the obligation cannot be measured with sufficient reliability.
b. Commitments
Commitments include the value of the contracts for the acquisition of the assets net of advances.
1.21.3 Contingent assets
Contingent asset is disclosed in case a possible asset arises from past events and whose existence 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.
Contingent liabilities, contingent assets and commitments are reviewed at each balance sheet date.
1.22 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments maturing within 3 months from the date of acquisition that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
1.23 Cash flow statements
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flow from operating, investing and financing activities of Company is segregated.
1.24 Measurement of EBITDA
As permitted by the Guidance Note on Division II - Ind AS Schedule III to the Companies Act, 2013, the company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the company does not include depreciation and amortization expense, finance costs and tax expense.
Mar 31, 2016
for the year ended March 31, 2016
1. CORPORATE INFORMATION
Renaissance Jewellery Limited (the company) is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The company is engaged in the manufacture of diamond studded jewellery which is majorly exported to countries like USA, Hong Kong, etc.
2. BASIS OF PREPARATION
The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the Accounting Standards notified u/s 133 of the Companies Act, 2013 (the Act) read with rule 7 of Companies (Accounts) Rules, 2014 and the relevant provisions of the Act. The financial statements have been prepared under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.
2.1 Summary of significant accounting policies
a. use of estimates
The preparation of financial statements in conformity with Indian GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities at the end of the reporting period. Although these estimates are based upon managementâs best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in the future periods.
b. Tangible fixed assets
Fixed assets are stated at cost, net of accumulated depreciation. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the 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. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are changed to the statement of profit and loss for the period during which such expenses are incurred
Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
c. Depreciation/Amortization
Depreciation on fixed assets is calculated as per the useful life specified in Schedule II to the Act applying the Written Down Value rates.
Leasehold Land is amortized on a straight line basis over the period of lease i.e. 24 years.
d. Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized on a straight line basis over the estimated useful economic life.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
e. Impairment of tangible and intangible assets
The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assetâs net selling price 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 risks specific to the asset.
f. Leases
Company is the lessee
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items, are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term.
g. Investments
Investments that are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of cost and fair value determined on category of investment. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.
On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.
h. Inventories
Cut & Polished Diamonds |
Polished diamonds are valued at lower of cost or net realizable value. Cost is ascertained on lot-wise weighted average basis. |
Finished Goods of Jewellery |
Finished goods are valued at lower of cost or net realizable value. |
Raw materials |
Lower of cost and net realizable value. 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 specific identification basis. Cost of raw materials comprises of cost of purchase and other cost in bringing the inventory to their present location and condition excluding refundable taxes and duties. |
Work-in-progress and Finished goods |
Lower of cost and net realizable value. Cost includes direct materials, labor and proportionately all other cost related to converting them into finished goods. Cost is determined on specific identification basis. |
Stores and spares |
Stores and spares are valued at lower of cost or net realizable value. The cost is computed on moving weighted average. |
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.
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. The following specific recognition criteria must also be met before revenue is recognized:
Sale of Goods
Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. The company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the company. Hence, they are excluded from revenue.
Interest
Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Interest income is included under the head "other income" in the statement of profit and loss.
Dividends
Revenue is recognized when the shareholdersâ right to receive payment is established by the reporting date. j. Borrowing Cost
Borrowing cost includes interest, amortization of 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 directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.
k. Foreign currency translation
Foreign currency transactions and balances
a. Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
b. Conversion
Foreign currency monetary items are reported using the closing rate.
c. Exchange Differences
Exchange differences arising on the settlement of monetary items or on reporting such monetary items of company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.
d. Forward Contracts
The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year.
e. Hedge Accounting
The Company designates its forward contract as hedge instrument to hedge its foreign currency risk of its firm commitment and highly probable or forecasted revenue transaction to be accounted as cash flow hedge. The unrealized exchange gains or losses on transactions related to foreign currency borrowing which qualify as effective hedge are recognized in the Hedging Reserve Account.
l. Retirement and other employee benefits
A retirement benefit in the form of Provident Fund is a defined contribution scheme and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective funds.
Gratuity liability is a defined benefit obligation. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year-end using the projected unit credit method.
Actuarial gains and losses for defined benefit plans are recognized in full in the period in which they occur in the statement of profit and loss
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date
m. Income taxes
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India.
The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date.
Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
In the situations where the company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in respect of timing differences which reverse during the tax holiday period, to the extent the companyâs gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the year in which the timing differences originate. However, the company restricts recognition of deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the timing differences which originate first are considered to reverse first.
At each reporting date, the company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
n. Segment reporting policies
The company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the company as a whole.
o. Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.
Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.
p. provisions
A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates
q. Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The company does not recognize a contingent liability but discloses its existence in the financial statements.
r. Cash and Cash equivalents
Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.
s. Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the company does not include depreciation and amortization expense, finance costs and tax expense.
Mar 31, 2015
1. CORPORATE INFORMATION
Renaissance Jewellery Limited (the Company) is a public limited company
domiciled in India and incorporated under the provisions of the
Companies Act, 1956. Its shares are listed on two stock exchanges in
India. The Company is engaged in the manufacture of diamond studded
jewellery which are majorly exported to countries like USA, Hong Kong,
etc.
2. BASIS OF PREPARATION
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The Company has prepared these financial statements to
comply in all material respects with the Accounting Standards notified
u/s 133 of the Companies Act, 2013 (the Act) read with rule 7 of
Companies (Accounts) Rules, 2014 and the relevant provisions of the
Act. The financial statements have been prepared under the historical
cost convention. The accounting policies adopted in the preparation of
financial statements are consistent with those of previous year.
2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make judgments, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities at the end of the
reporting period. Although these estimates are based upon management's
best knowledge of current events and actions, uncertainty about these
assumptions and estimates could result in the outcomes requiring a
material adjustment to the carrying amounts of assets or liabilities in
the future periods.
b) Tangible fixed assets
Fixed assets are stated at cost, net of accumulated depreciation. The
cost comprises purchase price, borrowing costs if capitalization
criteria are met and directly attributable cost of bringing the asset
to its working condition for the 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.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
changed to the statement of profit and loss for the period during which
such expenses are incurred.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
c) Depreciation/Amortization
Depreciation on fixed assets is calculated as per the useful life
specified in Schedule II to the Act applying the Written Down Value
rates.
Leasehold Land is amortized on a straight-line basis over the period of
lease i.e. 24 years.
d) Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any.
Intangible assets are amortized on a straight-line basis over the
estimated useful economic life.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
e) Impairment of tangible and intangible assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price 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 risks
specific to the asset.
f) Leases
Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased items, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight-line basis over the lease
term.
g) Investments
Investments that are readily realizable and intended to be held for not
more than one year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on category of investment. Long-term
investments are carried at cost. However, provision for diminution in
value is made to recognize a decline other than temporary in the value
of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
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.
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. The following specific recognition criteria must
also be met before revenue is recognized:
Sale of Goods
Revenue is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. The Company collects
sales taxes and value added taxes (VAT) on behalf of the government
and, therefore, these are not economic benefits flowing to the Company.
Hence, they are excluded from revenue.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. Interest income is
included under the head "other income" in the statement of profit and
loss.
Dividends
Revenue is recognized when the shareholders' right to receive payment
is established by the reporting date.
j) Borrowing Cost
Borrowing cost includes interest, amortization of 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 directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
k) Foreign currency translation
Foreign currency transactions and balances
a) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
b) Conversion
Foreign currency monetary items are reported using the closing rate.
c) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting such monetary items of Company at rates different from those
at which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
d) Forward Contracts
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year.
e) Hedge Accounting
The Company designates its forward contract as hedge instrument to
hedge its foreign currency risk of its firm commitment and highly
probable or forecasted revenue transaction to be accounted as cash flow
hedge. The unrealized exchange gains or losses on transactions related
to foreign currency borrowing which qualify as effective hedge are
recognized in the Hedging Reserve Account.
I) Retirement and other employee benefits
A retirement benefit in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to the Profit and
Loss Account of the year when the contributions to the respective funds
are due. There are no other obligations other than the contribution
payable to the respective funds.
Gratuity liability is a defined benefit obligation. The cost of
providing benefits under this plan is determined on the basis of
actuarial valuation at each year-end using the projected unit credit
method.
Actuarial gains and losses for defined benefit plans are recognized in
full in the period in which they occur in the statement of profit and
loss.
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The Company measures
the expected cost of such absences as the additional amount that it
expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
m) Income taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India.
The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
In the situations where the Company is entitled to a tax holiday under
the Income-tax Act, 1961 enacted in India or tax laws prevailing in the
respective tax jurisdictions where it operates, no deferred tax (asset
or liability) is recognized in respect of timing differences which
reverse during the tax holiday period, to the extent the Company's
gross total income is subject to the deduction during the tax holiday
period. Deferred tax in respect of timing differences which reverse
after the tax holiday period is recognized in the year in which the
timing differences originate. However, the Company restricts
recognition of deferred tax assets to the extent that it has become
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. For recognition of deferred taxes,
the timing differences which originate first are considered to reverse
first.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes- down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realized. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
n) Segment Reporting Policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
o) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
Partly paid equity shares are treated as a fraction of an equity share
to the extent that they are entitled to participate in dividends
relative to a fully paid equity share during the reporting period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
p) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
q) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
r) Cash and Cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
s) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. The Company
measures EBITDA on the basis of profit/(loss) from continuing
operations. In its measurement, the Company does not include
depreciation and amortization expense, finance costs and tax expense.
Mar 31, 2014
A) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make judgments, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities at the end of the
reporting period. Although these estimates are based upon management''s
best knowledge of current events and actions, uncertainty about these
assumptions and estimates could result in the outcomes requiring a
material adjustment to the carrying amounts of assets or liabilities in
the future periods.
b) Tangible fixed assets
Fixed assets are stated at cost, net of accumulated depreciation. The
cost comprises purchase price, borrowing costs if capitalization
criteria are met and directly attributable cost of bringing the asset
to its working condition for the 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.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
c) Depreciation/Amortization
Depreciation on fixed assets is calculated on a written down value
basis using the rates prescribed in Schedule XIV to the Companies Act,
1956. The Company has used the following rates to provide depreciation
on its fixed assets.
Nature of Assets Rates (WDV)
Factory buildings 10%
Other buildings 5%
Plant and equipments 13.91%
Furniture and fixtures 18.1%
Vehicles25.89%
Computers 40%
Office Equipment_13.91%
Leasehold ImDrovements 18.1% or the rate based on lease Deriod.
whichever is hiaher
Further in respect of assets built on leasehold land or leasehold
premises, if the life as per Schedule XIV is more than the balance
period of lease as per lease term the asset shall be written off over
the balance period of lease.
Leasehold Land is amortized on a straight line basis over the period of
lease i.e. 24 years.
Fixed assets costing Rs. 5,000 or less are depreciated fully in the year
of acquisition.
d) Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any.
Intangible assets are amortized on a straight line basis over the
estimated useful economic life.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
A summary of amortization policies applied to the Company''s intangible
assets is as below: Computer Software 20%
e) Impairment of tangible and intangible assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price 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 risks
specific to the asset.
f) Leases
Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased items, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight-line basis over the lease
term.
g) Investments
Investments that are readily realizable and intended to be held for not
more than one year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
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.
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. The following specific recognition criteria must
also be met before revenue is recognized:
Sale of Goods
Revenue is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. The Company collects
sales taxes and value added taxes (VAT) on behalf of the government
and, therefore, these are not economic benefits flowing to the Company.
Hence, they are excluded from revenue.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. Interest income is
included under the head "other income" in the statement of profit and
loss.
Dividends
Revenue is recognized when the shareholders'' right to receive payment
is established by the reporting date.
j) Borrowing Cost
Borrowing cost includes interest, amortization of 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 directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
k) Foreign currency translation
Foreign currency transactions and balances
a) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
b) Conversion
Foreign currency monetary items are reported using the closing rate.
c) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting such monetary items of Company at rates different from those
at which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
d) Forward Contracts
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or as expense for the
year.
I) Retirement and other employee benefits
A retirement benefit in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to the Profit and
Loss Account of the year when the contributions to the respective funds
are due. There are no other obligations other than the contribution
payable to the respective funds.
Gratuity liability is a defined benefit obligation. The costs of
providing benefits under this plan is determined on the basis of
actuarial valuation at each year-end using the projected unit credit
method.
Actuarial gains and losses for defined benefit plans are recognized in
full in the period in which they occur in the statement of profit and
loss.
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The Company measures
the expected cost of such absences as the additional amount that it
expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
m) Income taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India.
The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
In the situations where the Company is entitled to a tax holiday under
the Income-tax Act, 1961 enacted in India or tax laws prevailing in the
respective tax jurisdictions where it operates, no deferred tax (asset
or liability) is recognized in respect of timing differences which
reverse during the tax holiday period, to the extent the Company''s
gross total income is subject to the deduction during the tax holiday
period. Deferred tax in respect of timing differences which reverse
after the tax holiday period is recognized in the year in which the
timing differences originate. However, the Company restricts
recognition of deferred tax assets to the extent that it has become
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. For recognition of deferred taxes,
the timing differences which originate first are considered to reverse
first.
At each reporting date, the Company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes- down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
n) Segment Reporting Policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
o) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
Partly paid equity shares are treated as a fraction of an equity share
to the extent that they are entitled to participate in dividends
relative to a fully paid equity share during the reporting period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
p) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
q) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the Company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The Company does not
recognize a contingent liability but discloses its existence in the
financial statements.
r) Cash and Cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
s) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the Company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. The Company
measures EBITDA on the basis of profit/(loss) from continuing
operations. In its measurement, the Company does not include
depreciation and amortization
pynpnco finance nnctc anrl tflY eYnpncp
Of the above, 720,000 Equity Shares of Rs. 10/- each fully paid-up have
been issued during the period of five years immediately preceding the
reporting date to RJL - Employee Welfare Trust pursuant to Employee
Stock Purchase Scheme (ESPS). (Refer note 38)
b. Terms/rights attached to equity shares
The Company has only one class of equity shares having par value of Rs.
10 per share. Each holder of equity shares is entitled to one vote per
share. The Company declares and pays dividends in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval
of the shareholders in the ensuing Annual General Meeting. During the
year ended March 31, 2014, the amount of per share dividend recognized
as distributions to equity shareholders was Rs. 1.00 (March 31, 2013: Rs.
1.00).
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive remaining assets of the Company,
after distribution of all preferential amounts. The distribution will
be in proportion to the numbers of equity share held by the
shareholders.
As per records of the Company, including its register of
shareholders/members and other declarations received from shareholders
regarding beneficial interest, the above shareholding represents both
legal and beneficial ownerships of shares.
(The Working Capital Loan is secured by first charge on pari passu
basis by way of hypothecation and/or pledge of company''s current assets
both present and future, by way of joint equitable mortgage of
Company''s factory premises situated at Plot Nos. 36A and 37 (Mumbai),
at Plot No. 2302 (Bhavnagar) and office premises situated bearing no
CC9081 with car parking situated at Bharat Diamond Bourse and
hypothecation of machinery and plant, furniture and fixtures,
electrical installations, office equipments, erected and installed
therein and by personal guarantee of some of the directors/promoters.
The working capital finance is generally having tenure of 180 days. The
Foreign currency loans carries interest rate @ LIBOR plus 2% to 4.5%
and Indian currency Loans carries interest rate @ 10% to 12%.)
Mar 31, 2013
(a) Use of Estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make judgments, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities at the end of the
reporting period. Although these estimates are based upon management''s
best knowledge of current events and actions, uncertainty about these
assumptions and estimates could result in the outcomes requiring a
material adjustment to the carrying amounts of assets or liabilities in
the future periods.
(b) Tangible Fixed Assets
Fixed assets are stated at cost, net of accumulated depreciation. The
cost comprises purchase price, borrowing costs if capitalization
criteria are met and directly attributable cost of bringing the asset
to its working condition for the 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.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
(c) Depreciation/Amortization
Depreciation on fixed assets is calculated on a written down value
basis using the rates prescribed in Schedule XIV to the Companies Act,
1956. The company has used the following rates to provide depreciation
on its fixed assets.
Further in respect of assets built on leasehold land or leasehold
premises, if the life as per Schedule XIV is more than the balance
period of lease as per lease term the asset shall be written off over
the balance period of lease.
Leasehold Land is amortised on a straight line basis over the period of
lease i.e. 24 years.
Fixed assets costing Rs. 5,000 or less are depreciated fully in the year
of acquisition.
(d) Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any.
Intangible assets are amortized on a straight line basis over the
estimated useful economic life.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
A summary of amortization policies applied to the company''s intangible
assets is as below:
Computer software 20%
(e) Impairment of tangible and intangible assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset''s net selling price 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 risks
specific to the asset.
(f) Leases
Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased items, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight-line basis over the lease
term.
(g) Investments
Investments that are readily realizable and intended to be held for not
more than one year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
(h) Inventories
Cut & Polished Diamonds Polished diamonds are valued at lower of cost
or net realizable value.
Cost is ascertained on lot-wise weighted average basis.
Raw materials Lower of cost and net realizable value. 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 specific identification basis. Cost of raw materials
comprises of cost of purchase and other cost in bringing the inventory
to their present location and condition excluding refundable taxes and
duties.
Work-in-progress and Finished goods
Lower of cost and net realizable value. Cost includes direct materials,
labor and proportionately all other cost related to converting them
into finished goods. Cost is determined on specific identification
basis.
Stores and spares Stores and spares are valued at lower of cost or net
realizable value. The cost is computed on moving weighted average.
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.
(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. The following specific recognition criteria must
also be met before revenue is recognized:
Sale of Goods
Revenue is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. The company collects
sales taxes and value added taxes (VAT) on behalf of the government
and, therefore, these are not economic benefits flowing to the company.
Hence, they are excluded from revenue.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. Interest income is
included under the head "other income" in the statement of profit and
loss.
Dividends
Revenue is recognised when the shareholders'' right to receive payment
is established by the reporting date.
(j) Borrowing Cost
Borrowing cost includes interest, amortization of 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 directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
(k) Foreign Currency Translation
Foreign currency transactions and balances (i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are reported using the closing rate.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting such monetary items of company at rates different from those
at which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
(iv) Forward Contracts
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or as expense for the
year.
(I) Retirement and Other Employee Benefits
Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to the Profit and
Loss Account of the year when the contributions to the respective funds
are due. There are no other obligations other than the contribution
payable to the respective funds.
Gratuity liability is a defined benefit obligation. The costs of
providing benefits under this plan is determined on the basis of
actuarial valuation at each year-end using the projected unit credit
method.
Actuarial gains and losses for defined benefit plans are recognized in
full in the period in which they occur in the statement of profit and
loss.
Accumulated leave, which is expected to be utilized within the next 12
months, is treated as short-term employee benefit. The company measures
the expected cost of such absences as the additional amount that it
expects to pay as a result of the unused entitlement that has
accumulated at the reporting date.
(m) Income Taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India.
The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits.
In the situations where the company is entitled to a tax holiday under
the Income-tax Act, 1961 enacted in India or tax laws prevailing in the
respective tax jurisdictions where it operates, no deferred tax (asset
or liability) is recognized in respect of timing differences which
reverse during the tax holiday period, to the extent the company''s
gross total income is subject to the deduction during the tax holiday
period. Deferred tax in respect of timing differences which reverse
after the tax holiday period is recognized in the year in which the
timing differences originate. However, the company restricts
recognition of deferred tax assets to the extent that it has become
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. For recognition of deferred taxes,
the timing differences which originate first are considered to reverse
first.
At each reporting date, the company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The company writes- down the carrying amount of a deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
(n) Segment Reporting Policies
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole.
(o) Earnings per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
Partly paid equity shares are treated as a fraction of an equity share
to the extent that they are entitled to participate in dividends
relative to a fully paid equity share during the reporting period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(p) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates.
(q) Contingent Liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(r) Cash and Cash Equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
(s) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. The company
measures EBITDA on the basis of profit/(loss) from continuing
operations. In its measurement, the company does not include
depreciation and amortization expense, finance costs and tax expense.
Mar 31, 2012
(a) Change in accounting policy
Presentation and disclosure of financial statements
During the year ended March 31, 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 a significant impact on the presentation and disclosures made in
the financial statements. The company has also reclassified previous
year figures in accordance with the requirements applicable in the
current year.
(b) Use of estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make judgments, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and
liabilities and disclosure of contingent liabilities at the end of the
reporting period. Although these estimates are based upon
management's best knowledge of current events and actions,
uncertainty about these assumptions and estimates could result in the
outcomes requiring a material adjustment to the carrying amounts of
assets or liabilities in the future periods.
(c) Tangible fixed assets
Fixed assets are stated at cost, net of accumulated depreciation. The
cost comprises purchase price, borrowing costs if capitalization
criteria are met and directly attributable cost of bringing the asset
to its working condition for the 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.
All other expenses on existing fixed assets, including day-to-day
repair and maintenance expenditure and cost of replacing parts, are
charged to the statement of profit and loss for the period during which
such expenses are incurred.
Gains or losses arising from derecognition of fixed assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognized in the statement of profit and
loss when the asset is derecognized.
(d) Depreciation/Amortization
Depreciation on fixed assets is calculated on a written down value
basis using the rates prescribed in Schedule XIV to the Companies Act
1956. The company has used the following rates to provide depreciation
on its fixed assets.
Further in respect of assets built on leasehold land or leasehold
premises, if the life as per Schedule XIV is more than the balance
period of lease as per lease term the asset shall be written off over
the balance period of lease.
Leasehold Land is amortised on a straight line basis over the period of
lease.i.e. 24 years.
Fixed assets costing Rs. 5,000 or less are depreciated fully in the year
of acquisition.
(e) Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any.
Intangible assets are amortized on a straight line basis over the
estimated useful economic life.
Gains or losses arising from derecognition of an intangible asset are
measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in the statement of
profit and loss when the asset is derecognized.
A summary of amortization policies applied to the company's
intangible assets is as below:
Computer software 20%
(f) Impairment of tangible and intangible assets
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the asset's net selling price 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 risks
specific to the asset.
(g) Leases
Company is the lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss account on a straight-line basis over the lease
term.
(h) Investments
Investments that are readily realizable and intended to be held for not
more than one year from the date on which such investments are made,
are classified as current investments. All other investments are
classified as long-term investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Long-term investments are carried at cost. However, provision for
diminution in value is made to recognize a decline other than temporary
in the value of the investments.
On disposal of an investment, the difference between its carrying
amount and net disposal proceeds is charged or credited to the
statement of profit and loss.
(i) Inventories
Inventories are valued as follows:
Raw materials (Cut & Polished Cut and Polished Diamonds are valued at
replacement cost which is Diamonds) technically evaluated and certified
by management keeping in view the wide variety and grades of diamond.
Raw materials (Gold Silver Alloys Lower of cost and net realizable
value. However, materials and other & Others) 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 specific identification
basis. Cost of raw materials comprises of cost of purchase and other
cost in bringing the inventory to their present location and condition
excluding refundable taxes and duties.
Work-in-progress and Finished Lower of cost and net realizable value.
Cost includes direct materials, goods labor and proportionately all
other cost related to converting them into finished goods. Cost is
determined on specific identification basis.
Stores and spares Stores and spares are valued at lower of cost or net
realizable value. The _cost is computed on moving weighted average.
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.
(j) 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. The following specific recognition criteria must
also be met before revenue is recognized:
Sale of Goods
Revenue is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. The company collects
sales taxes and value added taxes (VAT) on behalf of the government
and, therefore, these are not economic benefits flowing to the company.
Hence, they are excluded from revenue.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. Interest income is
included under the head "other income" in the statement of profit
and loss.
Dividends
Revenue is recognised when the shareholders' right to receive payment
is established by the reporting date. (k) Borrowing Cost
Borrowing cost includes interest, amortization of 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 directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalized as
part of the cost of the respective asset. All other borrowing costs are
expensed in the period they occur.
(l) Foreign currency translation
Foreign currency transactions and balances
(i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are reported using the closing rate.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting such monetary items of company at rates different from those
at which they were initially recorded during the year, or reported in
previous financial statements, are recognized as income or as expenses
in the year in which they arise.
(iv) Forward Contracts
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
statement of profit and loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or as expense for the
year.
(m) Retirement and other employee benefits
(i) Retirement benefits in the form of Provident Fund is a defined
contribution scheme and the contributions are charged to the Profit and
Loss Account of the year when the contributions to the respective funds
are due. There are no other obligations other than the contribution
payable to the respective funds.
(ii) Gratuity liability is a defined benefit obligation. The costs of
providing benefits under this plan is determined on the basis of
actuarial valuation at each year-end using the projected unit credit
method.
(iii) Actuarial gains and losses for defined benefit plans are
recognized in full in the period in which they occur in the statement
of profit and loss.
(iv) Accumulated leave, which is expected to be utilized within the
next 12 months, is treated as short-term employee benefit. The company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date. The company treats accumulated
leave expected to be carried forward beyond twelve months, as long-term
employee benefit for measurement purposes. Such long-term compensated
absences are provided for based on the actuarial valuation using the
projected unit credit method at the year-end. Actuarial gains/losses
are immediately taken to the statement of profit and loss and are not
deferred. The company presents the entire leave as a current liability
in the balance sheet, since it does not have an unconditional right to
defer its settlement for 12 months after the reporting date.
(n) Income taxes
Tax expense comprises of current and deferred tax. Current income tax
is measured at the amount expected to be paid to the tax authorities in
accordance with the Income-tax Act, 1961 enacted in India.
The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted, at the reporting date.
Deferred income taxes reflects the impact of current year timing
differences between taxable income and accounting income for the year
and reversal of timing differences of earlier years.
Deferred tax is measured based on the tax rates and the tax laws
enacted or substantively enacted at the balance sheet date.
Deferred tax liabilities are recognized for all taxable timing
differences. Deferred tax assets are recognized for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. In situations where the company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognized only if there is virtual certainty supported
by convincing evidence that they can be realized against future taxable
profits. In the situations where the company is entitled to a tax
holiday under the Income-tax Act, 1961 enacted in India or tax laws
prevailing in the respective tax jurisdictions where it operates, no
deferred tax (asset or liability) is recognized in respect of timing
differences which reverse during the tax holiday period, to the extent
the company's gross total income is subject to the deduction during
the tax holiday period. Deferred tax in respect of timing differences
which reverse after the tax holiday period is recognized in the year in
which the timing differences originate. However, the company restricts
recognition of deferred tax assets to the extent that it has become
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available against which such
deferred tax assets can be realized. For recognition of deferred taxes,
the timing differences which originate first are considered to reverse
first.
At each reporting date, the company re-assesses unrecognized deferred
tax assets. It recognizes unrecognized deferred tax asset to the extent
that it has become reasonably certain or virtually certain, as the case
may be, that sufficient future taxable income will be available against
which such deferred tax assets can be realized. The carrying amount of
deferred tax assets are reviewed at each balance sheet date. The
company writes down the carrying amount of a deferred tax asset to the
extent that it is no longer reasonably certain or virtually certain, as
the case may be, that sufficient future taxable income will be
available against which deferred tax asset can be realised. Any such
write-down is reversed to the extent that it becomes reasonably certain
or virtually certain, as the case may be, that sufficient future
taxable income will be available.
(o) Segment Reporting Policies
The company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the company as a whole.
(p) Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
Partly paid equity shares are treated as a fraction of an equity share
to the extent that they are entitled to participate in dividends
relative to a fully paid equity share during the reporting period.
For the purpose of calculating diluted earnings per share, the net
profit or loss for the period attributable to equity shareholders and
the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
(q) Provisions
A provision is recognised when an enterprise has a present obligation
as a result of past event; it is probable that an outflow of resources
will be required to settle the obligation, in respect of which a
reliable estimate can be made. Provisions are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates
(r) Contingent liabilities
A contingent liability is a possible obligation that arises from past
events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the
control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be
required to settle the obligation. A contingent liability also arises
in extremely rare cases where there is a liability that cannot be
recognized because it cannot be measured reliably. The company does not
recognize a contingent liability but discloses its existence in the
financial statements.
(s) Cash and Cash equivalents
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
(t) Employee Stock Purchase Plan
The company records employee share purchase plan in accordance with the
Guidance Note on Accounting for Employee Share based Payment issued by
ICAI. The shares as per the scheme are issued at market price and hence
there is no employee compensation expense.
(u) Measurement of EBITDA
As permitted by the Guidance Note on the Revised Schedule VI to the
Companies Act, 1956, the company has elected to present earnings before
interest, tax, depreciation and amortization (EBITDA) as a separate
line item on the face of the statement of profit and loss. The company
measures EBITDA on the basis of profit/(loss) from continuing
operations. In its measurement, the company does not include
depreciation and amortization expense, finance costs and tax expense.
Mar 31, 2011
A) Basis of Accounting
The Financial statement are prepared on mercantile basis under the
historical cost convention in accordance with the generally accepted
accounting principles in India, Accounting Standards notified under
sub-section (3C) of section 211 of the Companies Act, 1956 and the
other relevant provisions of the Companies Act, 1956.
b) Revenue Recognition
All revenues and expenses are accounted on accrual basis. Revenue is
recognized when no significant uncertainties exist in relation to the
amount of eventual receipt.
c) Fixed Assets
Fixed assets are stated at cost of acquisition/construction, and
include other direct/indirect and incidental expenses incurred to put
them into use.
d) Depreciation
Depreciation is provided on Written down Value basis at the rates
prescribed in Schedule XIV of the Companies Act, 1956. Depreciation on
additions/deletions is calculated pro rata from/up to the month of
additions/deletions.
e) Intangibles
Intangible assets are stated at costs less accumulated amortization.
Intangible assets are amortized over a period of 5 years.
f) Investments
Investments which are Long Term in nature are stated at cost of
acquisition with provision where necessary for diminution, other than
temporary, in the value of investments.
g) Inventories
Classification:
Due to the short period of processing and/or manufacturing, difficulty
in identifying the stages of process and the insignificant impact on
valuation, goods in process is classified as raw materials for the
purpose of classification and valuation
Valuation:
i) Raw Materials:
Raw materials are valued at lower of cost or net realizable value. The
cost is computed on a specific identification basis.
ii) Finished Goods:
Jewellery is valued at lower of cost on weighted average basis or net
realized value.
iii) Silver Models:
Silver Models are valued based on technical estimates and accordingly,
50% is written off in the year of purchase and balance in the
subsequent year.
iv) Stores and Spares:
Stores and spares are valued at lower of cost or net realizable value.
The cost is computed on moving weighted average.
h) Employee Benefits
- æ Short Term Employee Benefits:
Shorf term employee benefits are recognised in the period during which
the services have been rendered. -
- Long Term Employee Benefits:
Provident Fund, Family Pension Fund & Employees' State Insurance
Scheme.
As per Provident Fund Act, 1952 all employees of the company are
entitled to receive benefits under the provident fund & family pension
fund which is a defined contribution plan. These contributions are made
to the fund administrated and managed by Government of India. In
addition, some employees of the company are covered under Employees'
State Insurance Scheme Act 1948, which are also defined contribution
schemes recognised and administrated by Government of India.
The Company's contributions to these schemes are recognised as expense
in profit and loss account during the period in which the employee
renders the related service. The company has no furthe'r obligation
under these plans beyond its monthly contributions.
- Leave Encashment:
- The Company has provided for the liability at year end on account of
unavailed earned leave as per the actuarial valuation.
- Gratuity:
The Company provide for gratuity obligations through a Defined benefits
Retirement plan (The Gratuity Plan') covering all eligible employees.
The present value of the obligation under such Defined benefits plan is
determined based on actuarial valuation using the Project Unit Credit
method, which recognizes each period of service as giving rise to
additional unit of employee benefit entitlement and measure each unit
separately to build up final obligation. The obligation is measured at
the present value of the estimated cash flows. The discount rate used
for determining the present value of the defined obligation under
defined benefit plan, is based on the market yields on Government
securities as at the balance sheet date. Actuarial gains and losses are
recognised in Profit and Loss Account as and when determined.
i) Foreign Currency Transactions
Transactions in foreign currency are accounted at the exchange rate
prevailing at the time of transaction. Gains or Losses upon settlement
of transaction during the' year is recognised in the profit and loss
account.
Assets and liabilities denominated in foreign currency are restated at
the year end rates. Gains or losses arising as a result of the above
are recognized in the profit and loss account.
In respect of foreign exchange transactions covered by forward exchange
contracts, the difference between the forward contract rate and the
exchange rate at the date of the transaction is recognised as income or
expenses over the life of contracts. Gains or losses on cancellation or
renewal of forward exchange contracts are recognised as income or
expenses.
j) Income Tax
Tax expenses comprise of current and deferred tax.
Provision for current income tax is made on the basis of relevant
provisions of Income Tax Act, 1961 as applicable to the financial year.
Deferred Tax is recognized subject to the consideration of prudence on
timing differences, being the difference between Taxable Income and
Accounting Income that originate in one period and are capable of
reversal in one or more subsequent periods.
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.
k) Borrowing Cost
Borrowing Cost directly attributable to the acquisition' of or
construction of fixed assets are capitalized as part of cost of the
assets up to the date the asset is put to use. Other borrowing costs
are charged to the profit & loss account in the year in which they are
incurred.
l) Impairment of Assets
Where there is an indication that an asset is impaired, the recoverable
amount if any, is estimated and the impairment loss is recognized to
the extent carrying amount exceeds recoverable amount.
m) Leases
Leases wherein a significant portion of the risks and reward of
ownership are retained by the lessor are classified as Operating
Leases. Lease rentals in respect of such leases are charged to the
Profit and Loss Account.
n) Provisions and Contingent Liabilities
The Company creates a provision when there is a present obligation as a
result of past event that probably requires an outflow of resources and
a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or present obligation that probably will not require an
outflow of resources or where reliable estimate of the amount of the
obligation cannot be made.
o) Employee Stock Purchase Scheme
In accordance with the Employee Stock Option Scheme and Employee Stock
Purchase Scheme Guideline, 1999 issued by the Securities and Exchange
Board of India ("SEBI"), the excess of market price on day prior to the
date of issue of the shares over the price at which they are issued is recognized as employee compensation cost.
Mar 31, 2010
A) Basis of Accounting
The Financial statement are prepared on mercantile basis under
the-historical cost convention in accordance with the generally
accepted accounting principles in India, Accounting Standards notified
under sub-section (3C) of section 211 of the Companies Act, 1956 and
the other relevant provisions of the Companies Act, 1956,
b) Revenue Recognition
All revenues and expenses are accounted on accrual basis. Revenue is
recognized when no significant uncertainties exist in relation to the
amount of eventual receipt.
c) Fixed Assets
Fixed assets are stated at cost of acquisition/construction, and
include other direct/indirect and incidental expenses incurred to put
them into use.
d) Depreciation
Depreciation is provided on Written down Value basis at the rates
prescribed in Schedule XIV of the Companies Act, 1956. Depreciation on
additions/deletions is calculated pro rata from/up to the month of
additions/deletions.
e) Intangibles
Intangible assets are stated at costs less accumulated amortization.
Intangible" assets are amortized over a period of 5 years.
f) Investments
Investments which are Long Term in nature are stated at cost of
acquisition with provision where necessary for diminution, other than
temporary, in the value of investments.
g) Inventories
Classification:
Due to the short period of processing and/or manufacturing, difficulty
in identifying the stages of process and the insignificant impact on
valuation, goods in processis classified as raw materials for the
purpose of classification and valuation.
Valuation:
i) Raw materials are valued at lower of cost or net realizable value.
The cost is computed on a specific identification
basis.
ii) Silver Models are valued based on technical estimates and
accordingly, 50% is written off in the year of purchase and balance in
the subsequent year.
iii) Stores and spares are valued at lower of cost or net realizable
value. The cost is computed on moving weighted average.
h) Employee Benefits
- Short Term Employee Benefits:
Short term employee benefits are recognised in the period during which
the services have been rendered.
- Long Term Employee Benefits:
Provident Fund, Family Pension Fund & Employees State Insurance Scheme
As per Provident Fund Act, 1952 all employees of the company are
entitled to receive benefits under the provident fund & family pension
fund which is a defined contribution plan. These contributions are made
to the fund administrated and managed by Government of India. In
addition, some employees of the company are covered under Employees
State Insurance Scheme Act 1948, which are also defined contribution
schemes recognised and administrated by Government of India.
The Companys contributions to these schemes are recognised as expense
in profit and loss account during the period in which the employee
renders the related service. The company has no further obligation
under these plans beyond its monthly contributions.
- Leave Encashment:
The Company has provided for the liability at year end on account of
unavailed earned leave as per the actuarial valuation.
- Gratuity:
The Company provide for gratuity obligations through a Defined benefits
Retirement plan (The Gratuity Plan) covering all eligible employees.
The present value of the obligation under such Defined benefits plan is
determined based on actuarial valuation using the Project Unit Credit
method, which recognizes each period of service as giving rise to
additional unit of-employee benefit entitlement and measure each unit
separately to build up final obligation. The obligation is measured at
the present value of the estimated cash flows. The discount rate used
for determining the present value of the defined obligation under
defined benefit plan, is based on the market yields on Government
securities as at the balance sheet date. Actuarial gains and losses are
recognised in Profit and Loss Account as and when determined.
i) Foreign Currency Transactions
Transactions in foreign currency are accounted at the exchange rate
prevailing at the time of transaction. Gains or Losses upon settlement
of transaction during the year is recognised in the profit and loss
account.
Assets and liabilities denominated in foreign currency are restated at
the year end rates. Gains or losses arising as a result of the above
are recognized in the profit and loss account. .
In respect of foreign exchange transactions covered by forward exchange
contracts, the difference between the forward contract rate and the
exchange rate at the date of the transaction is recognised as income or
expenses over the life of contracts. Gains or losses on cancellation or
renewal of forward exchange contracts are recognised as income or
expenses.
j) Income Tax
Tax expenses comprise of current and deferred tax.
Provision for current income tax is made on the basis of relevant
provisions of Income Tax Act, 1961 as applicable to the financial year.
Deferred Tax is recognized subject to the consideration of prudence on
timing differences, being the difference between Taxable Income and
Accounting Income that originate in one period and are capable of
reversal in one or more subsequent periods.
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.
k) Borrowing Cost
Borrowing Cost directly attributable to the acquisition of or
construction of fixed assets are capitalized as part of cost of the
assets up to the date the asset is put to use. Other borrowing costs
are charged to the profit & loss account in the year in which they are
incurred.
l) Impairment of Assets
Where there is an indication that an asset is impaired, the recoverable
amount if any, is estimated and the impairment loss is recognized to
the extent carrying amount exceeds recoverable amount.
m) Leases
Leases wherein a significant portion of the risks and reward of
ownership are retained by the lessor are classified as Operating
Leases, Lease rentals in respect of such leases are charged to the
Profit and Loss Account,
n) Provisions and Contingent Liabilities ,
The Company creates a provision when there is a present obligation as a
result of past event that probably requires an outflow of resources and
a reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or present obligation that probably will not require an
outflow of resources or where reliable estimate of the amount of the
obligation cannot be made.
o) Employee Stock Purchase Scheme
In accordance with the Employee Stock Option Scheme and Employee Stock
Purchase Scheme Guideline, 1999 issued by the Securities and Exchange
Board of India ("SEBI"), the excess of market price on day prior to the
date of issue of the shares over the price at which they are issued is
recognized as employee compensation cost.