Accounting Policies of Saint-Gobain Sekurit India Ltd. Company
Mar 31, 2018
NOTE 1:CORPORATE INFORMATION
Saint-Gobain Sekurit India Limited ("the Companyâ) having CIN No. L26101MH1973PLC018367 is engaged primarily in business of manufacture and sale of automotive glass. The Company has its manufacturing facility in Pune and sells primarily in India. The Company is a public limited company and listed on the Bombay Stock Exchange Limited (BSE).
NOTE 1A: BASIS FOR PREPARATION AND MEASUREMENT A) Basis of Preparation
The financial statements comply with all material aspects with the Indian Accounting Standards ("Ind ASâ) as notified by Ministry of Corporate Affairs in pursuant to Section 133 of the Companies Act, 2013 (the Act). It also comply with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) Rules, 2016, the Companies (Indian Accounting Standards) Rules, 2017 and other relevant provisions of the Act.
The financial statements have been prepared in accordance with generally accepted accounting principles in India under the historical cost convention on accrual basis at the end of each reporting period, except for the following:
- certain financial assets and liabilities (including derivative instruments) that are measured at fair value;
- assets held for sale - measured at lower of cost or fair value less cost to sell; and
- defined benefit plan assets measured at fair value.
B) Measurement of Fair Value
The Companyâs accounting policies and disclosures require the measurement of fair values for financial instruments. The Company has an established control framework with respect to the measurement of fair values. The Management regularly reviews significant inputs and valuation adjustments. If third party information, such as Government approved valuer, broker quotes or pricing services, is used to measure fair values, then the Management assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of Ind AS, including the level in the fair value hierarchy, in which such valuations should be classified.
While measuring the fair value of a financial asset or a financial liability, the Company uses observable market data as far as possible. Fair values are categorized into different levels, in a fair value hierarchy, based on the inputs used in the valuation techniques as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2 inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3 inputs for the assets or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
C) Rounding of Amounts
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
D) Recent Accounting Pronouncements
All the Indian Accounting Standards ("Ind ASâ) issued and notified by the Ministry of Corporate Affairs are effective and considered for the significant accounting policies to the extent relevant and applicable for the Company except for:
Ind AS 115 - Revenue from Contracts with Customers: In February 2015, the Ministry of Corporate Affairs had notified Ind AS 115, Revenue from Contracts with Customers. The Ind AS is applicable with effect from 1st April 2018. The Company is in the process of making an assessment of the impact of Ind AS 115 upon initial application.
Ind AS 116 - Leases: This Standard is effective for annual period beginning on or after 1st April, 2019 with early adoption allowed only if Ind AS 115 - Revenue from Contracts with Customers is also adopted.
E) Critical Estimates and Judgments
The preparation of financial statements requires Management to make judgments, estimates and assumptions in the application of accounting policies that affect the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Continuous evaluation is done on the estimation and judgments based on historical experience and other factors, including expectations of future events that are believed to be reasonable.
Information about critical judgments in applying accounting policies, as well as estimates and assumptions that have the most significant effect to the carrying amounts of assets and liabilities within the next financial year, are as follows:
a) Taxation
The Companyâs tax charge on ordinary activities is the sum of the total current and deferred tax charges. The calculation of the Companyâs total tax charge necessarily involves a degree of estimation and judgment in respect of certain items whose tax treatment cannot be finally determined until resolution has been reached with the relevant tax authority or, as appropriate, through a formal legal process. The final resolution of some of these items may give rise to material profits / losses and / or cash flows.
b) Recognition of Deferred Tax Assets
The recognition of deferred tax assets is based upon whether it is more likely than not that sufficient and suitable taxable profits will be available in the future against which the reversal of temporary differences can be deducted. To determine the future taxable profits, reference is made to the latest available profit forecasts. Where the temporary differences are related to losses, relevant tax law is considered to determine the availability of the losses to offset against the future taxable profits.
Historical differences between forecast and actual taxable profits have not resulted in material adjustments to the recognition of deferred tax assets.
c) Useful Lives of Property, Plant and Equipment and Intangible Assets
The charge in respect of periodic depreciation is derived after determining an estimate of an assetâs expected useful life and the expected residual value at the end of its life. Increasing an assetâs expected life or its residual value would result in a reduced depreciation charge in the statement of profit and loss.
The useful lives and residual values of assets are determined by management at the time the asset is acquired and reviewed annually for appropriateness. The lives are based on historical experience with similar assets as well as anticipation of future events which may impact their life such as changes in technology.
d) Provision and Contingent Liabilities
The Company exercises judgment in measuring and recognizing provisions and the exposures to contingent liabilities related to pending litigation or other outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation, as well as other contingent liabilities (refer Note 16 and 37). Judgment is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise, and to quantify the possible range of the financial settlement. Because of the inherent uncertainty in this evaluation process, actual losses may be different from the originally estimated provision.
Management estimates and judgments are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.
e) Estimation of Defined Benefit Obligation
In determining the valuation of defined benefit schemesâ assets and liabilities, a number of key assumptions have been made. The key assumptions, which are given below, are largely dependent on factors outside the control of the Company:
- inflation rate;
- life expectancy;
- discount rate; and
- salary and pension growth rates.
The Company is exposed to risks through its defined benefit schemes if actual experience differs to the assumptions used and through volatility in the plan assets. Details of the assumptions used, and associated sensitivities, are included in Note 17.
f) Impairment of Trade Receivables
The impairment provisions for financial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company past history, existing market conditions as well as forward looking estimates at the end of each reporting period.
g) Discontinued Operations
The disposal of assets at Bhosari plant does not qualify as a discontinued operation as defined under Ind AS 105 "Non-current assets held for sale and discontinued operationsâ as these do not represent a separate major line of business or geographical area of operations. The operating results for the Bhosari plant are not reviewed separately by the management of the Company and the revenue generated from goods produced from these assets is not considered to be a significant portion of total revenue.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
This note provides a list of significant accounting policies adopted in the preparation of the financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.
a) Property Plant and Equipment
Freehold land is carried at historical cost. Property, Plant and Equipment (PPE) are stated at cost of acquisition, including any attributable cost for bringing the asset to its working condition for its intended use less accumulated depreciation and less accumulated impairment, if any. Cost includes expenses related to acquisition and installation of the concerned assets, borrowing cost during the construction period and excludes any duties / taxes recoverable.
Advances paid towards the acquisition of PPE outstanding at each reporting date is classified as Capital Advances under Other Non-Current Assets and assets which are not ready for intended use as on the date of Balance Sheet are disclosed as "Capital Work in Progressâ.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes all costs incurred to bring the assets to their present location and condition. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
An item of PPE is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising from de-recognition 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.
Subsequent costs are included in the assetâs carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. When significant identifiable parts of PPE are required to be replaced, the Company de-recognizes the replaced parts and recognizes the new part with its own associated useful life and it is depreciated accordingly. In other cases, expenses are charged off to Statement of Profit and Loss.
* Useful life for General plant and machinery followed by the Company is normally 15 years. Certain items of General plant and machinery have a useful life that ranges from 2-15 years based on Management estimates of useful life of the asset.
The assetsâ residual values and useful lives are reviewed, at the end of each reporting period with the effect of any changes in estimate being accounted on a prospective basis.
An assetâs carrying amount is written down immediately to its recoverable amount if the assetâs carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount on the date of disposal. These are included in the Statement of Profit and Loss.
b) Intangible Assets
Computer Software
Computer software having finite life is amortized using the straight-line method over a period of four to five years.
c) Impairment of Non-Financial Assets
At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets to determine whether there is any indication of an impairment loss. If any such indication exists, the recoverable amounts are estimated in order to determine the extent of the impairment loss (if any). An impairment loss is recognized whenever the carrying amount of an asset or a cash-generating unit exceeds its recoverable amount. The impairment loss, if any, is recognized in the Statement of Profit and Loss in the period in which impairment takes place.
Recoverable amount is higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an assets and from its disposal at the end of its useful life. Where an impairment loss subsequently reverses, the carrying amount of the assets is increased to the revised estimate of its recoverable amount, however subject to the increased carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the asset in prior accounting periods.
d) Investments and Other Financial Assets
i) Classification
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
- those measured at amortized cost.
The classification depends on the entityâs business model for managing the financial assets and the contractual terms of the cash flows.
For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in mutual fund, the Company has opted to account for the fair value through profit or loss.
The Company reclassifies debt investments when and only when its business model for managing those assets changes.
ii) Measurement
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Subsequent measurement depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its instruments:
- Amortized cost:
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. A gain or loss on a debt investment that is subsequently measured at amortized cost and is not part of a hedging relationship is recognized in profit or loss when the asset is derecognized or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
- Fair value through other comprehensive income (FVOCI):
Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetâs cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognized in profit and loss. When the financial asset is derecognized, the cumulative gain or loss previously recognized in OCI is reclassified from equity to profit or loss and recognized in other gains/(losses). Interest income from these financial assets is included in other income using the effective interest rate method.
- Fair value through profit or loss:
Assets that do not meet the criteria for amortized cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognized in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
iii) Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Notes 33 details how the Company determines whether there has been a significant increase in credit risk.
iv) Derecognition of financial assets
A financial asset is derecognized only when
- The Company has transferred the rights to receive cash flows from the financial asset or
- retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. Where the entity has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognized to the extent of continuing involvement in the financial asset.
v) Income recognition
Interest income
Interest income from debt instruments is recognized using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
Dividend income
Dividend is recognized in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
e) Derivatives and Hedging Activities
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently premeasured to their fair value at the end of each reporting period. The Company does not designate any of its derivatives as hedging instruments. Accordingly, such contracts are accounted for at fair value through profit or loss. The gain / (losses) are included in other income and other expenses respectively.
f) Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
g) Cash and Cash Equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, bank balances, other short-term deposits, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
h) Trade Receivables
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment.
i) Inventories
Raw materials and stores, work in progress, traded and finished goods are stated at the lower of cost and net realizable value. Cost of raw materials, traded goods and spares comprises cost of purchases. Cost of work-in-progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Cost of inventories also includes all other costs incurred in bringing the inventories to their present location and condition. Cost of raw materials and spares is determined using the standard cost adjusted for variance from actual costs on moving average basis. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Provision is made for cost of obsolescence and other anticipated losses, whenever considered necessary by Management based on their best judgment.
j) Non-Current Assets Held for Sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.
An impairment loss is recognized for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognized for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non-current asset is recognized at the date of de-recognition.
Non-current assets are not depreciated or amortized while they are classified as held for sale.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet.
k) Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 to 60 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.
l) Borrowings
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss as other income and other gains/(losses).
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach.
m) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Company is engaged in the business of "Automotive Glassâ and constitutes a single reportable business segment. The Companyâs sales are predominantly in India and accordingly there is no other geographical reportable segment. Refer Note 35 for segment information presented.
n) Foreign Currency Transaction
Functional and presentation currency
The financial statements are presented in Indian Rupee (''), which is the Companyâs functional and presentation currency. Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognized in the Statement of profit and loss.
o) Government Grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and The Company will comply with all of the attached conditions.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets and presented within other income.
Government grants relating to income are deferred and recognized in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.
p) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of Excise Duty / Goods and Service tax and net of returns, trade allowances, rebates, value added taxes and amounts collected on behalf of third parties.
The Company recognizes revenue from sale of goods when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and the products have been delivered to the customer. The Company bases its estimates of discount and rebates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Timing of revenue recognition -
The Company manufactures and sells a range of glasses to the original equipment manufacturers (OEMâs) and free market. Sales are recognized when the products are delivered to OEMâs and free market.
q) Income tax
The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in India. Management periodically establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
r) Leases
As a lessee
Leases of property, plant and equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the leaseâs inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases.
As a lessor
Lease income from operating leases where the Company is a lessor is recognized in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
s) Borrowing Costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are expensed in the period in which they are incurred.
t) Provisions
Provisions are recognized when the Company has a present obligation as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date. The expenses relating to a provision is presented in the Statement of Profit and Loss net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows specific to the liability. The unwinding of the discount is recognized as finance cost.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
A Contingent asset is not recognized but disclosed in the financial statements where an inflow of economic benefit is probable.
Provisions, contingent assets, contingent liabilities and commitments are reviewed at each balance sheet date. u) Employee Benefits
i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employeesâ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
ii) Post-employment obligations
The Company operates the following post-employment schemes:
- defined benefit plans such as gratuity; and
- defined contribution plans such as provident fund, superannuation fund.
Defined benefit plans - Gratuity obligations
The liability or asset recognized in the balance sheet in respect of defined benefit pension and gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.
Defined Contribution plans - Provident fund
The Company pays provident fund contributions to publicly administered provident funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
Hi) Other long-term employee benefit obligations
The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognized in profit or loss.
The obligations are presented as current liabilities in the balance sheet based on when the actual settlement is expected to occur.
iv) Termination benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination benefits as and when incurred. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.
v) Contributed equity
Equity shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
w) Earning per share
i) Basic earnings per share
Basic earnings per share is calculated by dividing:
- the profit attributable to owners of the Company
- by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year.
ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
- the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
- the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
e) There are no shares reserved for issue under options and contracts or commitments for the sale of shares or disinvestment, including the terms and amounts.
f) During the period of five years immediately preceding the date as at which the Balance Sheet is prepared:
i) The Company has not allotted any shares as fully paid up pursuant to contracts without payment being received in cash.
ii) The Company has not allotted the fully paid up bonus shares.
iii) The Company has not bought back any of his equity shares.
g) There are no securities convertible into equity/ preference shares.
h) There are no calls unpaid on any of the equity shares.
i) There are no forfeited shares.
Securities premium
The securities premium is used to record the premium on issue of shares. The premium is to be utilized in accordance with the provisions of the Companies Act, 2013.
Capital redemption reserve
The reserve is to be utilized in accordance with the provisions of the Companies Act, 2013.
Mar 31, 2015
I. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. Pursuant to Section 133 of the
Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules,
2014, till the standards of accounting or any addendum thereto are
prescribed by Central Government in consultation and recommendation of
the National Financial Reporting Authority, the existing Accounting
Standards notified under the Companies Act, 1956 shall continue to
apply. Consequently, these financial statements have been prepared to
comply in all material aspects with the accounting standards notified
under Section 211(3C) of the Companies Act, 1956 [Companies (Accounting
Standards) Rules, 2006, as amended] and other relevant provisions of
the Companies Act, 2013.
All assets and liabilities have been classified as current or
non-current as per the Company's operating cycle and other criteria set
out in the Schedule III to the Companies Act, 2013. Based on the nature
of products and the time between the acquisition of assets for
processing and their realisation in cash and cash equivalents, the
Company has ascertained its operating cycle as 12 months for the
purpose of current - non-current classification of assets and
liabilities.
iii. TANGIBLE ASSETS AND DEPRECIATION
Fixed assets are stated at cost of acquisition or construction less
accumulated depreciation and accumulated amortization losses, if any.
All costs relating to the acquisition and installation of fixed assets
are capitalized and include borrowing costs directly attributable to
construction or acquisition of fixed assets, upto the date the asset is
put to use. Subsequent expenditures related to an item of fixed asset
are added to its book value only if they increase the future benefits
from the existing asset beyond its previously assessed standard of
performance.
Losses arising from the retirement of, and gains or losses arising from
disposal of fixed assets which are carried at cost are recognised in
the Statement of Profit and Loss.
Depreciation is provided on pro-rata basis on the straight-line method
over the estimated useful lives of the assets which in certain cases
may be different than lives prescribed under Schedule II to the
Companies Act, 2013, in order to reflect the actual usage of the
assets. The estimates of the useful lives of the assets based on a
technical evaluation, have undergone a change on account of transition
to the Companies Act, 2013. Refer Note 34 for the assets where useful
lives followed are different than Schedule II of the Companies Act,
2013.
iv. INTANGIBLE ASSETS AND AMORTIZATION
Intangible assets are stated at acquisition cost, net of accumulated
amortization and accumulated impairment losses, if any. Intangible
assets are amortised on a straight line basis over their estimated
useful lives. A rebuttable presumption that the useful life of an
intangible asset will not exceed ten years from the date when the asset
is available for use is considered by the management. The amortisation
period and the amortisation method are reviewed at least at each
financial year end. If the expected useful life of the asset is
significantly different from previous estimates, the amortisation
period is changed accordingly.
Gains or losses arising from the retirement or disposal of an
intangible asset are determined as the difference between the net
disposal proceeds and the carrying amount of the asset and recognised
as income or expense in the Statement of Profit and Loss. The
amortisation rates used are:
(a) Computer software is amortized over a period of five years
v. BORROWING COSTS
General and specific borrowing costs directly attributable to the
acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready
for their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale. All other borrowing costs are recognised in
Statement of Profit and Loss in the period in which they are incurred.
vi. IMPAIRMENT
Assessment is done at each Balance Sheet date as to whether there is
any indication that an asset (tangible and intangible) may be impaired.
For the purpose of assessing impairment, the smallest identifiable
group of assets that generates cash inflows from continuing use that
are largely independent of the cash inflows from other assets or groups
of assets, is considered as a cash generating unit. If any such
indication exists, an estimate of the recoverable amount of the
asset/cash generating unit is made. Assets whose carrying value exceeds
their recoverable amount are written down to the recoverable amount.
Recoverable amount is higher of an asset's or cash generating unit's
net selling price and its value in use. Value in use is the present
value of estimated future cash flows expected to arise from the
continuing use of an asset and from its disposal at the end of its
useful life. Assessment is also done at each Balance Sheet date as to
whether there is any indication that an impairment loss recognised for
an asset in prior accounting periods may no longer exist or may have
decreased.
vii. INVESTMENTS
Investments that are readily realisable and are 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. Current investments are carried
at cost or fair value, whichever is lower. Long-term investments are
carried at cost. However, provision for diminution is made to recognise
a decline, other than temporary, in the value of the investments, such
reduction being determined and made for each investment individually.
viii. INVENTORIES
(a) Raw materials, components, stores and spares are valued at cost or
net realizable value, whichever is lower. Cost is determined using the
standard cost adjusted for variance from actual costs on weighted
average basis.
(b) Finished goods and work-in-process are valued at cost or net
realizable value, whichever is lower. Finished goods and
work-in-process includes cost of conversion incurred in bringing the
inventories to its present location and condition.
ix. REVENUE RECOGNITION
Sale of goods: Sales are recognised when the significant risks and
rewards of ownership in the goods are transferred to the buyer as per
the terms of the contract and are recognised net of trade discounts,
rebates, sales taxes and excise duties.
x. OTHER INCOME
Dividend: Dividend income is recognised when the right to receive
dividend is established.
Interest - Interest Income is recognised on a time proportion basis
taking into account the amount outstanding and the rate applicable.
xi. FOREIGN CURRENCY TRANSACTIONS
Initial Recognition
On initial recognition, all foreign currency transactions are recorded
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Subsequent Recognition
As at the reporting date, non-monetary items which are carried in terms
of historical cost denominated in a foreign currency are reported using
the exchange rate at the date of the transaction. All non-monetary
items which are carried at fair value or other similar valuation
denominated in a foreign currency are reported using the exchange rates
that existed when the values were determined.
All monetary assets and liabilities in foreign currency are restated at
the end of accounting period.
Exchange differences on restatement of all other monetary items are
recognised in the Statement of Profit and Loss.
Forward Exchange Contracts
The premium or discount arising at the inception of forward exchange
contracts entered into to hedge an existing asset/liability, is
amortised as expense or income over the life of the contract. Exchange
differences on such a contract are recognised in the Statement of
Profit and Loss in the reporting period in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of such a
forward exchange contract are recognised as income or as expense for
the period.
Forward exchange contracts outstanding as at the year end on account of
firm commitment/highly probable forecast transactions are marked to
market and the losses, if any are recognized in the Statement of Profit
and Loss and gains are ignored in accordance with the Announcement of
Institute of Chartered Accountants of India on "Accounting for
Derivatives" issued in March 2008.
xii. EMPLOYEE BENEFITS
Provident Fund: Contribution towards provident fund for certain
employees is made to the regulatory authorities, where the Company has
no further obligations. Such benefits are classified as Defined
Contribution Schemes as the Company does not carry any further
obligations, apart from the contributions made on a monthly basis.
Gratuity: The Company provides for gratuity, a defined benefit plan
(the "Gratuity Plan") covering eligible employees in accordance
with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a
lump sum payment to vested employees at retirement, death,
incapacitation or termination of employment, of an amount based on the
respective employee's salary and the tenure of employment. The
Company's liability is actuarially determined (using the Projected Unit
Credit method) at the end of each year. Actuarial losses/ gains are
recognised in the Statement of Profit and Loss in the year in which
they arise.
Compensated Absences: Accumulated compensated absences, which are
expected to be availed or encashed within 12 months from the end of the
year end are treated as short term employee benefits. The obligation
towards the same is measured at the expected cost of accumulating
compensated absences as the additional amount expected to be paid as a
result of the unused entitlement as at the year end.
Accumulated compensated absences, which are expected to be availed or
encashed beyond 12 months from the end of the year end are treated as
other long term employee benefits. The Company's liability is
actuarially determined (using the Projected Unit Credit method) at the
end of each year. Actuarial losses/ gains are recognised in the
Statement of Profit and Loss in the year in which they arise.
Termination Benefits: Termination benefits in the nature of voluntary
retirement benefits are recognised in the Statement of Profit and Loss
as and when incurred.
xiii. TAXATION
(a) Provision for current tax is made in accordance with and at the
rates specified under the Income-tax Act, 1961, as amended.
(b) In accordance with Accounting Standard 22 - 'Accounting for
taxes on Income', issued by the Institute of Chartered Accountants of
India, the deferred tax for timing differences between the book and tax
profits for the year is accounted for using the tax rates and laws that
have been enacted or substantively enacted as of the Balance Sheet
date.
Deferred tax assets arising from the timing differences are recognized
to the extent there is reasonable certainty that the assets can be
realized in future.
In cases where there is tax loss and unabsorbed depreciation, deferred
tax assets are recognized to the extent that the realization of the
related tax benefit through the future taxable profits is virtually
certain.
Minimum Alternative Tax credit is recognised as an asset only when and
to the extent there is reasonable certainty supported by convincing
evidence that the Company will pay normal income tax during the
specified period. Such asset is reviewed at each Balance Sheet date and
the carrying amount of the MAT credit asset is written down to the
extent there is no longer a convincing evidence to the effect that the
Company will pay normal income tax during the specified period.
xiv. PROVISIONS AND CONTINGENCIES
Provisions: Provisions are recognised when there is a present
obligation as a result of a past event, it is probable that an outflow
of resources embodying economic benefits will be required to settle the
obligation and there is a reliable estimate of the amount of the
obligation. Provisions are measured at the best estimate of the
expenditure required to settle the present obligation at the Balance
sheet date and are not discounted to its present value.
Contingent Liabilities: Contingent liabilities are disclosed when there
is a possible obligation arising from past events, the existence of
which will be confirmed only by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the
Company or a present obligation that arises from past events where it
is either not probable that an outflow of resources will be required to
settle or a reliable estimate of the amount cannot be made, is termed
as a contingent liability.
xv. CASH AND CASH EQUIVALENTS
In the cash flow statement, cash and cash equivalents includes cash in
hand, demand deposits with banks, other short-term highly liquid
investments with original maturities of three months or less.
xvi. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
Mar 31, 2014
I. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. Pursuant to circular 15/2013 dated
13.09.2013 read with circular 08/2014 dated 04.04.2014, till the
Standards of Accounting and any addendum thereto are prescribed by
Central Government in consultation and recommendation of the National
Financial Reporting Authority, the existing Accounting Standards
notifed under the Companies Act,1956 shall continue to apply.
Consequently, these financial statements have been prepared to comply in
all material aspects with the accounting standards notifed under
Section 211(3C) [Companies (Accounting Standards) Rules, 2006, as
amended] and the other relevant provisions of the Companies Act,1956.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule VI to the Companies Act, 1956. Based
on the nature of products and the time between the acqusition of assets
for processing and their realisation in cash and cash equivalents, the
Company has ascertained its operating cycle as 12 months for the
purpose of current and non-current classification of assets and
liabilities.
III. TANGIBLE ASSETS AND DEPRECIATION
Fixed assets are stated at cost of acquisition or construction less
accumulated depreciation and accumulated amortization losses, if any.
All costs relating to the acquisition and installation of fixed assets
are capitalized and include borrowing costs directly attributable to
construction or acquisition of fixed assets, upto the date the asset is
put to use. Subsequent expenditures related to an item of fixed asset
are added to its book value only if they increase the future benefits
from the existing asset beyond its previously assessed standard of
performance.
Losses arising from the retirement of, and gains or losses arising from
disposal of fixed assets which are carried at cost are recognised in the
Statement of profit and Loss.
Depreciation on fixed assets has been provided as under:
Depreciation is provided on a pro-rata basis on the straight-line
method over the estimated useful lives of the assets or the rates
prescribed under Schedule XIV of the Companies Act, 1956, whichever is
higher, as follows:
(a) Moulds, pallets and trolleys are depreciated over a period of four
years
(b) Computers and vehicles are depreciated over a period of four years
Fixed Assets costing less than Rs. 5,000 are fully depreciated in the
year of purchase. Leasehold land is amortized over the period of
lease.
IV. INTANGIBLE ASSETS AND AMORTIZATION
Intangible assets are stated at acquisition cost, net of accumulated
amortization and accumulated impairment losses, if any. Intangible
assets are amortised on a straight line basis over their estimated
useful lives. A rebuttable presumption that the useful life of an
intangible asset will not exceed ten years from the date when the asset
is available for use is considered by the management. The amortisation
period and the amortisation method are reviewed at least at each
financial year end. If the expected useful life of the asset is
significantly different from previous estimates, the amortisation period
is changed accordingly.
Gains or losses arising from the retirement or disposal of an
intangible asset are determined as the difference between the net
disposal proceeds and the carrying amount of the asset and recognised
as income or expense in the Statement of profit and Loss. The
amortisation rates used are:
(a) Computer software is amortized over a period of five years
V. BORROWING COSTS
General and Specific borrowing costs directly attributable to the
acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready
for their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale. All other borrowing costs are recognised in
Statement of profit and Loss in the period in which they are incurred.
VI. IMPAIRMENT
Assessment is done at each Balance Sheet date as to whether there is
any indication that an asset (tangible and intangible) may be impaired.
For the purpose of assessing impairment, the smallest identifable group
of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows from other assets or groups of
assets, is considered as a cash generating unit. If any such indication
exists, an estimate of the recoverable amount of the asset/cash
generating unit is made. Assets whose carrying value exceeds their
recoverable amount are written down to the recoverable amount.
Recoverable amount is higher of an asset''s or cash generating unit''s
net selling price and its value in use. Value in use is the present
value of estimated future cash flows expected to arise from the
continuing use of an asset and from its disposal at the end of its
useful life. Assessment is also done at each Balance Sheet date as to
whether there is any indication that an impairment loss recognised for
an asset in prior accounting periods may no longer exist or may have
decreased.
VII. INVESTMENTS
Investments that are readily realisable and are 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. Current investments are carried at
cost or fair value, whichever is lower. Long-term investments are
carried at cost. However, provision for diminution is made to recognise
a decline, other than temporary, in the value of the investments, such
reduction being determined and made for each investment individually.
VIII. INVENTORIES
(a) Raw materials, components, stores and spares are valued at cost or
net realizable value, whichever is lower. Cost is determined using the
standard cost adjusted for variance from actual costs on weighted
average basis.
(b) Finished goods and work-in-process are valued at cost or net
realizable value, whichever is lower. Finished goods and
work-in-process includes cost of conversion incurred in bringing the
inventories to its present location and condition.
IX. REVENUE RECOGNITION
Sale of goods: Sales are recognised when the significant risks and
rewards of ownership in the goods are transferred to the buyer as per
the terms of the contract and are recognised net of trade discounts,
rebates, sales taxes and excise duties.
X. OTHER INCOME
Dividend: Dividend income is recognised when the right to receive
dividend is established.
Interest  Interest Income is recognised on a time proportion basis
taking into account the amount outstanding and the rate applicable.
XI. FOREIGN CURRENCY TRANSACTIONS
Initial Recognition
On initial recognition, all foreign currency transactions are recorded
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Subsequent Recognition
As at the reporting date, non-monetary items which are carried in terms
of historical cost denominated in a foreign currency are reported using
the exchange rate at the date of the transaction. All non-monetary
items which are carried at fair value or other similar valuation
denominated in a foreign currency are reported using the exchange rates
that existed when the values were determined.
All monetary assets and liabilities in foreign currency are restated at
the end of accounting period.
Exchange differences on restatement of all other monetary items are
recognised in the Statement of profit and Loss.
Forward Exchange Contracts
The premium or discount arising at the inception of forward exchange
contracts entered into to hedge an existing asset/liability, is
amortised as expense or income over the life of the contract. Exchange
differences on such a contract are recognised in the Statement of profit
and Loss in the reporting period in which the exchange rates change.
Any profit or loss arising on cancellation or renewal of such a forward
exchange contract are recognised as income or as expense for the
period.
Forward exchange contracts outstanding as at the year end on account of
firm commitment/highly probable forecast transactions are marked to
market and the losses, if any are recognized in the Statement of profit
and Loss and gains are ignored in accordance with the Announcement of
Institute of Chartered Accountants of India on "Accounting for
Derivatives" issued in March 2008.
XII. EMPLOYEE BENEFITS
Provident Fund: Contribution towards provident fund for certain
employees is made to the regulatory authorities, where the Company has
no further obligations. Such benefits are classified as Defined
Contribution Schemes as the Company does not carry any further
obligations, apart from the contributions made on a monthly basis.
Gratuity: The Company provides for gratuity, a Defined benefit plan (the
"Gratuity Plan") covering eligible employees in accordance with the
Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum
payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective
employee''s salary and the tenure of employment. The Company''s liability
is actuarially determined (using the Projected Unit Credit method) at
the end of each year. Actuarial losses/gains are recognised in the
Statement of profit and Loss in the year in which they arise.
Compensated Absences: Accumulated compensated absences, which are
expected to be availed or encashed within 12 months from the end of the
year end are treated as short term employee benefits. The obligation
towards the same is measured at the expected cost of accumulating
compensated absences as the additional amount expected to be paid as a
result of the unused entitlement as at the year end.
Accumulated compensated absences, which are expected to be availed or
encashed beyond 12 months from the end of the year end are treated as
other long term employee benefits. The Company''s liability is
actuarially determined (using the Projected Unit Credit method) at the
end of each year. Actuarial losses/gains are recognised in the
Statement of profit and Loss in the year in which they arise.
Termination benefits: Termination benefits in the nature of voluntary
retirement benefits are recognised in the Statement of profit and Loss as
and when incurred.
XIII. TAXATION
(a) Provision for current tax is made in accordance with and at the
rates specified under the Income-tax Act, 1961, as amended.
(b) In accordance with Accounting Standard 22 Â ''Accounting for taxes
on Income'', issued by the Institute of Chartered Accountants of India,
the deferred tax for timing differences between the book and tax profits
for the year is accounted for using the tax rates and laws that have
been enacted or substantively enacted as of the Balance Sheet date.
Deferred tax assets arising from the timing differences are recognized
to the extent there is reasonable certainty that the assets can be
realized in future.
In cases where there is tax loss and unabsorbed depreciation, deferred
tax assets are recognized to the extent that the realization of the
related tax benefit through the future taxable profits is virtually
certain.
Minimum Alternative Tax credit is recognised as an asset only when and
to the extent there is convincing evidence that the company will pay
normal income tax during the specified period. Such asset is reviewed at
each Balance Sheet date and the carrying amount of the MAT credit asset
is written down to the extent there is no longer a convincing evidence
to the effect that the Company will pay normal income tax during the
specified period.
XIV. PROVISIONS AND CONTINGENCIES
Provisions: Provisions are recognised when there is a present
obligation as a result of a past event, it is probable that an outflow
of resources embodying economic benefits will be required to settle the
obligation and there is a reliable estimate of the amount of the
obligation. Provisions are measured at the best estimate of the
expenditure required to settle the present obligation at the Balance
sheet date and are not discounted to its present value.
Contingent Liabilities: Contingent liabilities are disclosed when there
is a possible obligation arising from past events, the existence of
which will be confirmed only by the occurrence or non occurrence of one
or more uncertain future events not wholly within the control of the
company or a present obligation that arises from past events where it
is either not probable that an outflow of resources will be required to
settle or a reliable estimate of the amount cannot be made, is termed
as a contingent liability.
X V. CASH AND CASH EQUIVALENTS
In the cash fow statement, cash and cash equivalents includes cash in
hand, demand deposits with banks, other short-term highly liquid
investments with original maturities of three months or less.
XVI. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
1. Rights, preferences and restrictions attached to the shares
Equity Shares:
The Company has one class of equity shares having a par value of Rs.10
per share. Each shareholder is eligible for one vote per share held.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting,
except in case of interim dividend. In the event of liquidation, the
equity shareholders are eligible to receive the remaining assets of the
Company after distribution of all preferential amounts, in proportion
to their shareholding.
Mar 31, 2013
I. GENERAL INFORMATION:
Saint-Gobain Sekurit India Limited (the ''Company'') is engaged primarily
in business of automotive glass. The Company has two manufacturing
plants in Pune at Bhosari and Chakan and sells primarily in India. The
Company is a public limited company and is listed on the Stock
Exchange, Mumbai (BSE).
II. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under Section 211(3C) [Companies (Accounting
Standards) Rules, 2006, as amended] and the other relevant provisions
of the Companies Act, 1956.
All assets and liabilities have been classified as current or
non-current as per the Company''s normal operating cycle and other
criteria set out in the Schedule VI to the Companies Act, 1956.
III. TANGIBLE ASSETS AND DEPRECIATION
Fixed assets are stated at cost of acquisition or construction less
accumulated depreciation and accumulated amortization losses, if any.
All costs relating to the acquisition and installation of fixed assets
are capitalized and include borrowing costs directly attributable to
construction or acquisition of fixed assets, upto the date the asset is
put to use. Subsequent expenditures related to an item of fixed asset
are added to its book value only if they increase the future benefits
from the existing asset beyond its previously assessed standard of
performance.
Losses arising from the retirement of, and gains or losses arising from
disposal of fixed assets which are carried at cost are recognised in
the Statement of Profit and Loss.
Depreciation on fixed assets has been provided as under:
Depreciation is provided on a pro-rata basis on the straight-line
method over the estimated useful lives of the assets or the rates
prescribed under Schedule XIV of the Companies Act, 1956, whichever is
higher, as follows:
a) Moulds, pallets and trolleys are depreciated over a period of four
years
b) Computers and vehicles are depreciated over a period of four years
Fixed Assets costing less than Rs. 5,000 are fully depreciated in the
year of purchase. Leasehold land is amortized over the period of
lease.
IV. INTANGIBLE ASSETS AND AMORTIZATION
Intangible assets are stated at acquisition cost, net of accumulated
amortization and accumulated impairment losses, if any. Intangible
assets are amortised on a straight line basis over their estimated
useful lives. A rebuttable presumption that the useful life of an
intangible asset will not exceed ten years from the date when the
asset, is available for use is considered by the management. The
amortisation period and the amortisation method are reviewed at least
at each financial year end. If the expected useful life of the asset is
significantly different from previous estimates, the amortisation
period is changed accordingly.
Gains or losses arising from the retirement or disposal of an
intangible asset are determined as the difference between the net
disposal proceeds and the carrying amount of the asset and recognised
as income or expense in the Statement of Profit and Loss. The
amortisation rates used are:
a) Computer software is amortized over a period of five years
V. BORROWING COSTS
General and specific borrowing costs directly attributable to the
acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready
for their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale. All other borrowing costs are recognised in
Statement of Profit and Loss in the period in which they are incurred.
VI. IMPAIRMENT
Assessment is done at each Balance Sheet date as to whether there is
any indication that an asset (tangible and intangible) may be impaired.
For the purpose of assessing impairment, the smallest identifiable
group of assets that generates cash inflows from continuing use that
are largely independent of the cash inflows from other assets or groups
of assets, is considered as a cash generating unit. If any such
indication exists, an estimate of the recoverable amount of the
asset/cash generating unit is made. Assets whose carrying value exceeds
their recoverable amount are written down to the recoverable amount.
Recoverable amount is higher of an asset''s or cash generating unit''s
net selling price and its value in use. Value in use is the present
value of estimated future cash flows expected to arise from the
continuing use of an asset and from its disposal at the end of its
useful life. Assessment is also done at each Balance Sheet date as to
whether there is any indication that an impairment loss recognised for
an asset in prior accounting periods may no longer exist or may have
decreased.
VII. INVESTMENTS
Investments that are readily realisable and are 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. Current investments are carried
at cost or fair value, whichever is lower. Long-term investments are
carried at cost. However, provision for diminution is made to recognise
a decline, other than temporary, in the value of the investments, such
reduction being determined and made for each investment individually.
VIII. INVENTORIES
a) Raw materials, components, stores and spares are valued at cost or
net realizable value, whichever is lower. Cost is determined using the
standard cost adjusted for variance from actual costs on weighted
average basis.
b) Finished goods and work-in-process are valued at cost or net
realizable value, whichever is lower. Finished goods and
work-in-process includes cost of conversion incurred in bringing the
inventories to its present location and condition.
IX. REVENUE RECOGNITION
Sale of goods: Sales are recognised when the substantial risks and
rewards of ownership in the goods are transferred to the buyer as per
the terms of the contract and are recognised net of trade discounts,
rebates, sales taxes and excise duties.
X. OTHER INCOME
Dividend: Dividend income is recognised when the right to receive
dividend is established.
XI. FOREIGN CURRENCY TRANSACTIONS
Initial Recognition
On initial recognition, all foreign currency transactions are recorded
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Subsequent Recognition
As at the reporting date, non-monetary items which are carried in terms
of historical cost denominated in a foreign currency are reported using
the exchange rate at the date of the transaction. All non-monetary
items which are carried at fair value or other similar valuation
denominated in a foreign currency are reported using the exchange rates
that existed when the values were determined.
All monetary assets and liabilities in foreign currency are restated at
the end of accounting period.
Exchange differences on restatement of all other monetary items are
recognised in the Statement of Profit and Loss.
Forward Exchange Contracts
The premium or discount arising at the inception of forward exchange
contracts entered into to hedge an existing asset/liability, is
amortised as expense or income over the life of the contract. Exchange
differences on such a contract are recognised in the Statement of
Profit and Loss in the reporting period in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of such a
forward exchange contract are recognised as income or as expense for
the period.
XII. EMPLOYEE BENEFITS
Provident Fund: Contribution towards provident fund for certain
employees is made to the regulatory authorities, where the Company has
no further obligations. Such benefits are classified as Defined
Contribution Schemes as the Company does not carry any further
obligations, apart from the contributions made on a monthly basis.
Gratuity: The Company provides for gratuity, a defined benefit plan
(the "Gratuity Plan") covering eligible employees in accordance with
the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump
sum payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective
employee''s salary and the tenure of employment. The Company''s liability
is actuarially determined (using the Projected Unit Credit method) at
the end of each year. Actuarial losses/gains are recognised in the
Statement of Profit and Loss in the year in which they arise.
Compensated Absences: Accumulated compensated absences, which are
expected to be availed or encashed within 12 months from the end of the
year end are treated as short term employee benefits. The obligation
towards the same is measured at the expected cost of accumulating
compensated absences as the additional amount expected to be paid as a
result of the unused entitlement as at the year end.
Accumulated compensated absences, which are expected to be availed or
encashed beyond 12 months from the end of the year end are treated as
other long term employee benefits. The Company''s liability is
actuarially determined (using the Projected Unit Credit method) at the
end of each year. Actuarial losses/gains are recognised in the
Statement of Profit and Loss in the year in which they arise.
Termination Benefits: Termination benefits in the nature of voluntary
retirement benefits are recognised in the Statement of Profit and Loss
as and when incurred.
XIII. TAXATION
(a) Provision for current tax is made in accordance with and at the
rates specified under the Income-tax Act, 1961, as amended.
(b) In accordance with Accounting Standard 22 - ''Accounting for taxes
on Income'', issued by the Institute of Chartered Accountants of India,
the deferred tax for timing differences between the book and tax
profits for the year is accounted for using the tax rates and laws that
have been enacted or substantively enacted as of the Balance Sheet
date.
Deferred tax assets arising from the timing differences are recognized
to the extent there is reasonable certainty that the assets can be
realized in future.
In cases where there is tax loss and unabsorbed depreciation, deferred
tax assets are recognized to the extent that the realization of the
related tax benefit through the future taxable profits is virtually
certain.
Minimum Alternative Tax credit is recognised as an asset only when and
to the extent there is convincing evidence that the company will pay
normal income tax during the specified period. Such asset is reviewed
at each Balance Sheet date and the carrying amount of the MAT credit
asset is written down to the extent there is no longer a convincing
evidence to the effect that the Company will pay normal income tax
during the specified period.
XIV. PROVISIONS AND CONTINGENCIES
Provisions: Provisions are recognised when there is a present
obligation as a result of a past event, it is probable that an outflow
of resources embodying economic benefits will be required to settle the
obligation and there is a reliable estimate of the amount of the
obligation. Provisions are measured at the best estimate of the
expenditure required to settle the present obligation at the Balance
Sheet date and are not discounted to its present value.
Contingent Liabilities: Contingent liabilities are disclosed when there
is a possible obligation arising from past events, the existence of
which will be confirmed only by the occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the
Company or a present obligation that arises from past events where it
is either not probable that an outflow of resources will be required to
settle or a reliable estimate of the amount cannot be made, is termed
as a contingent liability.
XV. CASH AND CASH EQUIVALENTS
In the cash flow statement, cash and cash equivalents includes cash in
hand, demand deposits with banks, other short-term highly liquid
investments with original maturities of three months or less.
XVI. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
Mar 31, 2012
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These financial statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis. These financial statements have been
prepared to comply in all material aspects with the accounting
standards notified under Section 211(3C) [Companies (Accounting
Standards) Rules, 2006, as amended] and the other relevant provisions
of the Companies Act, 1956.
All assets and liabilities have been classified as current or
non-current as per the Company's normal operating cycle and other
criteria set out in the Schedule VI to the Companies Act, 1956.
2. TANGIBLE ASSETS AND DEPRECIATION
Fixed assets are stated at cost of acquisition or construction less
accumulated depreciation and accumulated amortization losses, if any.
All costs relating to the acquisition and installation of fixed assets
are capitalized and include borrowing costs directly attributable to
construction or acquisition of fixed assets, upto the date the asset is
put to use. Subsequent expenditures related to an item of fixed asset
are added to its book value only if they increase the future benefits
from the existing asset beyond its previously assessed standard of
performance.
Losses arising from the retirement of, and gains or losses arising from
disposal of fixed assets which are carried at cost are recognised in
the Statement of Profit and Loss.
Depreciation on fixed assets has been provided as under:
Depreciation is provided on a pro-rata basis on the straight-line
method over the estimated useful lives of the assets or the rates
prescribed under Schedule XIV of the Companies Act, 1956, whichever is
higher, as follows:
a) Moulds, pallets and trolleys are depreciated over a period of four
years
b) Computers and vehicles are depreciated over a period of four years
Fixed Assets costing less than Rs. 5,000 are fully depreciated in the
year of purchase. Leasehold land is amortized over the period of
lease.
3. INTANGIBLE ASSETS AND AMORTIZATION
Intangible Assets are stated at acquisition cost, net of accumulated
amortization and accumulated impairment losses, if any. Intangible
assets are amortised on a straight line basis over their estimated
useful lives. A rebuttable presumption that the useful life of an
intangible asset will not exceed ten years from the date when the asset
is available for use is considered by the management. The amortisation
period and the amortisation method are reviewed at least at each
financial year end. If the expected useful life of the asset is
significantly different from previous estimates, the amortisation
period is changed accordingly.
Gains or losses arising from the retirement or disposal of an
intangible asset are determined as the difference between the net
disposal proceeds and the carrying amount of the asset and recognised
as income or expense in the Statement of Profit and Loss. The
amortisation rates used are:
a) Computer software is amortized over a period of five years
4. BORROWING COSTS
General and specific borrowing costs directly attributable to the
acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready
for their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale. All other borrowing costs are recognised in
Statement of Profit and Loss in the period in which they are incurred.
5. IMPAIRMENT
Assessment is done at each Balance Sheet date as to whether there is
any indication that an asset (tangible and intangible) may be impaired.
For the purpose of assessing impairment, the smallest identifiable
group of assets that generates cash inflows from continuing use that
are largely independent of the cash inflows from other assets or groups
of assets, is considered as a cash generating unit. If any such
indication exists, an estimate of the recoverable amount of the
asset/cash generating unit is made. Assets whose carrying value exceeds
their recoverable amount are written down to the recoverable amount.
Recoverable amount is higher of an asset's or cash generating unit's
net selling price and its value in use. Value in use is the present
value of estimated future cash flows expected to arise from the
continuing use of an asset and from its disposal at the end of its
useful life. Assessment is also done at each Balance Sheet date as to
whether there is any indication that an impairment loss recognised for
an asset in prior accounting periods may no longer exist or may have
decreased.
6. INVESTMENTS
Investments that are readily realisable and are 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. Current investments are carried at
cost or fair value, whichever is lower. Long-term investments are
carried at cost. However, provision for diminution is made to recognise
a decline, other than temporary, in the value of the investments, such
reduction being determined and made for each investment individually.
7. INVENTORIES
a) Raw materials, components, stores and spares are valued at cost or
net realizable value, whichever is lower. Cost is determined using the
standard cost adjusted for variance from actual costs on weighted
average basis.
b) Finished goods and work-in-process are valued at cost or net
realizable value, whichever is lower. Finished goods and
work-in-process includes cost of conversion incurred in bringing the
inventories to its present location and condition.
8. REVENUE RECOGNITION
Sale of goods: Sales are recognised when the substantial risks and
rewards of ownership in the goods are transferred to the buyer as per
the terms of the contract and are recognised net of trade discounts,
rebates, sales taxes and excise duties.
9. OTHER INCOME
Dividend: Dividend income is recognised when the right to receive
dividend is established.
10. FOREIGN CURRENCY TRANSACTIONS
Initial Recognition
On initial recognition, all foreign currency transactions are recorded
by applying to the foreign currency amount the exchange rate between
the reporting currency and the foreign currency at the date of the
transaction.
Subsequent Recognition
As at the reporting date, non-monetary items which are carried in terms
of historical cost denominated in a foreign currency are reported using
the exchange rate at the date of the transaction. All non-monetary
items which are carried at fair value or other similar valuation
denominated in a foreign currency are reported using the exchange rates
that existed when the values were determined.
All monetary assets and liabilities in foreign currency are restated at
the end of accounting period.
Exchange differences on restatement of all other monetary items are
recognised in the Statement of Profit and Loss.
Forward Exchange Contracts
The premium or discount arising at the inception of Forward exchange
contracts entered into to hedge an existing asset/ liability, is
amortised as expense or income over the life of the contract. Exchange
differences on such a contract are recognised in the Statement of
Profit and Loss in the reporting period in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of such a
forward exchange contract are recognised as income or as expense for
the period.
11. EMPLOYEE BENEFITS
Provident Fund: Contribution towards provident fund for certain
employees is made to the regulatory authorities, where the Company has
no further obligations. Such benefits are classified as Defined
Contribution Schemes as the Company does not carry any further
obligations, apart from the contributions made on a monthly basis.
Gratuity: The Company provides for gratuity, a defined benefit plan
(the "Gratuity Plan") covering eligible employees in accordance with
the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump
sum payment to vested employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective
employee's salary and the tenure of employment. The Company's liability
is actuarially determined (using the Projected Unit Credit method) at
the end of each year. Actuarial losses/ gains are recognised in the
Statement of Profit and Loss in the year in which they arise.
Compensated Absences: Accumulated compensated absences, which are
expected to be availed or encashed within 12 months from the end of the
year end are treated as short term employee benefits. The obligation
towards the same is measured at the expected cost of accumulating
compensated absences as the additional amount expected to be paid as a
result of the unused entitlement as at the year end.
Accumulated compensated absences, which are expected to be availed or
encashed beyond 12 months from the end of the year end are treated as
other long term employee benefits. The Company's liability is
actuarially determined (using the Projected Unit Credit method) at the
end of each year. Actuarial losses/ gains are recognised in the
Statement of Profit and Loss in the year in which they arise.
Termination Benefits: Termination benefits in the nature of voluntary
retirement benefits are recognised in the Statement of Profit and Loss
as and when incurred.
12. TAXATION
(i) Provision for current tax is made in accordance with and at the
rates specified under the Income-tax Act, 1961, as amended.
(ii) In accordance with Accounting Standard 22 - 'Accounting for taxes
on Income', issued by the Institute of Chartered Accountants of India,
the deferred tax for timing differences between the book and tax
profits for the year is accounted for using the tax rates and laws that
have been enacted or substantively enacted as of the Balance Sheet
date.
Deferred tax assets arising from the timing differences are recognized
to the extent there is reasonable certainty that the assets can be
realized in future.
Deferred tax assets are recognized for tax loss and depreciation
carried forward to the extent that the realization of the related tax
benefit through the future taxable profits is virtually certain.
Minimum Alternative Tax credit is recognised as an asset only when and
to the extent there is convincing evidence that the company will pay
normal income tax during the specified period. Such asset is reviewed
at each Balance Sheet date and the carrying amount of the MAT credit
asset is written down to the extent there is no longer a convincing
evidence to the effect that the Company will pay normal income tax
during the specified period.
13. PROVISIONS AND CONTINGENCIES
Provisions: Provisions are recognised when there is a present
obligation as a result of a past event, it is probable that an outflow
of resources embodying economic benefits will be required to settle the
obligation and there is a reliable estimate of the amount of the
obligation. Provisions are measured at the best estimate of the
expenditure required to settle the present obligation at the Balance
sheet date and are not discounted to its present value.
Contingent Liabilities: Contingent liabilities are disclosed when there
is a possible obligation arising from past events, the existence of
which will be confirmed only by the occurrence or non occurrence of one
or more uncertain future events not wholly within the control of the
company or a present obligation that arises from past events where it
is either not probable that an outflow of resources will be required to
settle or a reliable estimate of the amount cannot be made, is termed
as a contingent liability.
14. CASH AND CASH EQUIVALENTS
In the cash flow statement, cash and cash equivalents includes cash in
hand, demand deposits with banks, other short- term highly liquid
investments with original maturities of three months or less.
15. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
Mar 31, 2011
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared to comply in all material
aspects with all the applicable accounting principles in India, the
applicable accounting standards notified under Section 211 (3C) of the
Companies Act, 1956 and the relevant provisions of the Companies Act,
1956.
2. FIXED ASSETS
a) Fixed assets are stated at cost of acquisition or construction less
accumulated depreciation.
b) Cost is inclusive of duties, taxes, erection/ commissioning expenses
and incidental expenses of bringing the asset to its working condition
for intended use and is net of Cenvat benefit/Sales Tax set off, where
applicable.
c) Borrowing costs, if any, for assets which necessarily take a
substantial period of time to get ready for its intended use are
capitalized to the cost of assets.
d) Computer software is recognised as an asset when control over the
future economic benefits is achieved through legal rights granted.
3. DEPRECIATION ON FIXED ASSETS
a) Depreciation is provided using the straight-line method in the
manner specified in Schedule XIV to the Companies Act, 1956 and at
rates prescribed therein or based on the useful life of assets,
whichever is higher.
b) Moulds, Pallets & Trolleys are depreciated over a period of four
years.
c) Computers and vehicles are depreciated over a period of four years.
d) Computer Software is depreciated over a period of five years.
e) Fixed Assets costing less than Rs.5,000 are fully depreciated in the
year of purchase.
f) Leasehold Land is amortised over the period of lease.
4. INVENTORY VALUATION
a) Inventories are valued at the lower of cost, computed on weighted
average basis and net realisable value.
b) Finished goods and work in progress include costs of conversion and
other costs incurred in bringing the inventories to their present
location and condition.
c) Traded goods include the purchase price, duties and taxes (Net of
duties & taxes recoverable).
d) Excise duty on Finished goods is included in the value of finished
goods.
5. INVESTMENTS
a) Long-term investments are stated at cost. A provision for diminution
is made to recognise a decline, other than temporary, in the value of
long-term investments.
b) Current Investments are stated at lower of cost and fair value.
6. FOREIGN CURRENCY TRANSACTIONS
(i) Foreign currency transactions are recorded at the exchange rates
prevailing at the date of the transaction. Gains and losses resulting
from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currencies are
recognised in the Profit and Loss Account.
(ii) The premium or discount arising at the inception of forward
exchange contract is amortised as expense or income over the life of
the contract. Exchange differences on such contracts are recognised in
the Profit and Loss Account in the reporting period in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of such a forward exchange contract is recognised as income or
as expense for the period.
7. RESEARCH AND DEVELOPMENT
Revenue Expenditure on Research and Development is charged under the
respective heads of account. Capital Expenditure on Research and
Development is included as part of Fixed Assets and depreciated
appropriately..
8. REVENUE RECOGNITION
Revenue from sale of goods is recognised on transfer of significant
risks and rewards of ownership of the goods to the buyer. Sales of
products are stated net of sales tax, returns, discounts and allowances
Interest income is recognised on the time proportion method.
Dividend income on investments is accounted for when the right to
receive the payment is established.
9. EMPLOYEE BENEFITS
1) Post Employment Benefits
a) Defined Contribution Plans:
The Company contributes on a defined contribution basis to the
Employee's Provident Fund and Superannuation Fund (for few eligible
employees) towards post employment benefits, all of which are
administered by the respective Government authorities, and has no
further obligation beyond making its contribution. The contribution is
expensed in the year to which it pertains.
b) Defined Benefit Plans:
Funded Plan: The Company has a Defined Benefit Plan namely Gratuity for
all its employees. The liability for the defined benefit plan of
Gratuity is determined on the basis of an actuarial valuation by an
independent actuary at the year end, which is calculated using
projected unit credit method, which is administered through Life
Insurance Corporation (LIC).
Actuarial gains and losses which comprise experience adjustment and the
effect of changes in actuarial assumptions are recognised in the Profit
and Loss Account.
2) Other Long Term Employee Benefits
The employees of the Company are entitled to leave as per the leave
policy of the Company. The liability in respect of unutilised leave
balances is provided based on an actuarial valuation carried out by an
independent actuary as at the year end and charged to the Profit and
Loss Account..
10. LEASES
Lease Income from Operating Leases are recognised as rent income on a
straight line basis over the lease term.
11. TAXATION
a) Current Taxation:
Provision for current taxation is based on the taxable profits of the
current accounting year. Adjustments for taxation relating to previous
years, if any, are based on the returns filed for the fiscal year ended
March 31 and cognizance is taken of assessment/ appeal orders received
by the Company.
b) Deferred Taxation:
Deferred tax resulting from timing differences between book and tax
profits is accounted for under the Liability method at the current rate
of tax to the extent that the timing differences are expected to
crystallise/capable of reversal as a deferred tax charge/credit in the
Profit and Loss Account and as deferred tax liability/asset in the
Balance Sheet.
In cases where there is unabsorbed tax depreciation and unabsorbed
losses, deferred tax asset are recongnised only to the extent that
there is virtual certainty of their realisation supported by convincing
evidence.
12. IMPAIRMENT OF ASSETS
The Company assesses at each balance sheet date whether there is an
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the Profit and Loss Account. If at the Balance Sheet date
there is an indication that a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount.
13. PROVISIONS & CONTINGENCIES
The Company recognizes a provision when there is a present obligation
as a result of a 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 a present obligation that may, but probably
will not, require an outflow of resources. Where there is a possible
obligation or a present obligation but the likelihood of outflow of
resources is remote, no provision or disclosure is made, as required by
Accounting Standard 29 on Provisions, Contingent Liabilities and
Contingent Assets issued by the Institute of Chartered Accountants of
India.
14. ACCOUNTING ESTIMATES
The preparation of financial statements requires estimates and
assumptions to be made that affect the reported amounts of assets and
liabilities on the date of financial statements and the reported
amounts of revenue and expenses during the reporting period. Difference
between the actual results and the estimates are recognized in the
period in which the results are known/ materialised.
Mar 31, 2010
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared to comply in all material
aspects with all the applicable accounting principles in India, the
applicable accounting standards notified under Section 211 (3C) of the
Companies Act, 1956 and the relevant provisions of the Companies Act,
1956.
2. FIXED ASSETS
a) Fixed assets are stated at cost of acquisition or construction less
accumulated depreciation.
b) Cost is inclusive of duties, taxes, erection/ commissioning expenses
and incidental expenses of bringing the asset to its working condition
for intended use and is net of Cenvat benefit/Sales Tax set off, where
applicable.
c) Borrowing costs, if any, for assets which necessarily take a
substantial period of time to get ready for its intended use are
capitalized to the cost of assets.
d) Computer software is recognised as an asset when control over the
future economic benefits is achieved through legal rights granted.
3. DEPRECIATION ON FIXED ASSETS
a) Depreciation is provided using the straight-line method in the
manner specified in Schedule XIV to the Companies Act, 1956 and at
rates prescribed therein or based on the useful life of assets,
whichever is higher.
b) Moulds, Pallets & Trolleys are depreciated over a period of four
years.
c) Computers and vehicles are depreciated over a period of four years.
d) Computer Software is depreciated over a period of five years.
e) Fixed Assets costing less than Rs.5,000 are fully depreciated in the
year of purchase.
f) Leasehold Land is amortised over the period of Lease.
4. INVENTORY VALUATION
a) Inventories are valued at the lower of cost, computed on weighted
average basis and net realisable value.
b) Finished goods and work in progress include costs of conversion and
other costs incurred in bringing the inventories to their present
location and condition.
c) Traded goods include the purchase price, duties and taxes (Net of
duties & taxes recoverable).
d) Excise duty on Finished goods is included in the value of finished
goods.
5. INVESTMENTS
a) Long-term investments are stated at cost. A provision for diminution
is made to recognise a decline, other than temporary, in the value of
long-terrri investments.
b) Current Investments are stated at lower of cost and fair value.
6. FOREIGN CURRENCY TRANSACTIONS
(i) Foreign currency transactions are recorded at the exchange rates
prevailing at the date of the transaction. Gains and losses resulting
from the settlement of such transactions and from the translation of
monetary assets and liabilities denominated in foreign currencies are
recognised in the Profit and Loss Account.
(ii) The premium or discount arising at the inception of forward
exchange contract is amortised as expense or income over the life of
the contract. Exchange differences on such contracts are recognised in
the Profit and Loss Account in the reporting period in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of such forward exchange contract is recognised as income or as
expense for the period
7. RESEARCH AND DEVELOPMENT
Revenue Expenditure on Research and Development is charged under the
respective heads of account. Capital Expenditure on Research and
Development is included as part of Fixed Assets and depreciated
appropriately.
8. REVENUE RECOGNITION
Revenue from sale of goods is recognised on transfer of significant
risks and rewards of ownership of the goods to the buyer. Sales of
products are stated net of sales tax, returns, discounts and
allowances. Interest income is recognised on the time proportion
method.
Dividend income on investments is accounted for when the right to
receive the payment is established.
Job-work income is recognised on completion of the job- work as per the
terms of the specific contract/ work order.
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