Accounting Policies of Sunshield Chemicals Ltd. Company
Mar 31, 2018
1. SIGNIFICANT ACCOUNTING POLICIES:
Statement of compliance
The financial statements have been prepared in accordance with Ind ASs notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.
Upto the year ended 31 March, 2017, the Company prepared its financial statements in accordance with the requirements of previous GAAP which includes Standards notified under the Companies (Accounting Standards) Rules, 2006. These are the Company''s first Ind AS financial statements. The date of transition to Ind AS is 1 April, 2016. Refer Note 3 for the details of first-time adoption exemptions availed by the Company.
The Company has not early applied the following IND AS that has been issued but is not yet effective:
IND AS 115 - Revenue from Contracts with Customers
Effective for annual periods beginning on or after 1 April 2018.
IND AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IND AS 115 will supersede the current revenue recognition guidance including IND AS 18 Revenue, IND AS 11 Construction Contracts and the related Interpretations when it becomes effective.
Under IND AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ''control'' of the goods or services underlying the particular performance obligation is transferred to the customer.
The amendments apply prospectively for annual periods beginning on or after April 1, 2018. The Company is currently assessing the impact of the same on the financial statements.
2.1 Basis of preparation of Financial Statements
The financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given at the date of the transaction, in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2, or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
2.2 Revenue recognition
Revenue is recognised when it is earned and no significant uncertainty exists as to its realisation or collection.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment.
Sale of goods
Revenue from sale of goods is recognised upon transfer of significant risks and rewards of ownership of the goods to the customer. It is measured at fair value of consideration received or receivable, net of returns, rebates, trade discounts and indirect taxes.
Income from services
Service income is recognised as per the terms of the contract when the related services are rendered.
2.3 Other income
Interest income is accounted on accrual basis.
2.4 Foreign currency transactions and translations
Transactions in foreign currencies are recognised at the exchange rates prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are restated at the rates prevailing at that date. Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.
2.5 Taxation:
Income- tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with income tax laws) and deferred tax charge or credit (reflecting the tax effect of timing differences between accounting income and taxable income for the year).
Current Tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the Statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company''s current tax is calculated using applicable tax rates that have been enacted by the end of the reporting period and the provisions of the Income Tax Act, 1961 and other tax laws, as applicable.
Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Deferred tax asset arising from unused tax losses or tax credits is recognised only to the extent that the Company has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilised by the Company. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably certain to be realised.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and Deferred Tax for the year
Current and deferred tax are recognised in the Statement of Profit and Loss, except when they relate to items that are recognised in Other Comprehensive Income or directly in equity, in which case, the current and deferred tax are also recognised in Other Comprehensive Income or directly in equity respectively.
2.6 Property, Plant and Equipment:
Property, plant and equipment are carried at cost less accumulated depreciation and impairment losses, if any. The cost of property, plant and equipment comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use and interest on borrowings attributable to acquisition of qualifying property, plant and equipment up to the date the asset is ready for its intended use. Machinery spares which can be used only in connection with an item of property, plant and equipment and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure on property, plant and equipment after its purchase / completion is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Freehold land is not depreciated. Depreciation on property, plant and equipment has been provided on the straight-line method.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an itemof property, plant and equipment is determined as the difference between the sales proceeds and the carrying amountof the asset and is recognised in profit or loss.
For transition to Ind AS, the Company has elected to continue with the carrying value of all of its property, plant and equipment recognised as at 1 April 2016 (transition date) measured as per the previous GAAP and use that carrying value as the deemed cost (see note 5).
Capital work-in-progree:
Projects under which tangible property, plant and equipment are not yet ready for their intended use are carried at cost, comprising direct cost and attributable interest, if applicable.
2.7 Impairment of assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, trade receivables and other contractual rights to receive cash or other financial asset.
For trade receivables and any contractual right to receive cash or another financial asset that result from transactions that are within the scope of IND AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses. Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under IND AS 109.
2.8 Inventories
Inventories are measured at the lower of cost (weighted average basis) and net realisable value after providing for obsolescence and other losses, where considered necessary. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges.
2.9 Provisions and contingencies
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
A contingent asset is neither recognised nor disclosed in the financial statements.
2.10 Financial Instruments
Initial Recognition and Measurement
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments. At initial recognition, financial assets and financial liabilities are measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss FVTPL)) are added to or deducted from the value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at Fair Value through Profit or Loss are recognised in the Statement of Profit and Loss.
Financial assets
Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition of financial assets are added to the fair value of the financial assets on initial recognition. After initial recognition all financial assets (other than derivative instruments) are subsequently measured at amortised cost using the effective interest method. The Company has not designated any financial asset as FVTPL or Fair Value through Other Comprehensive Income (FVTOCI).
Classification of Financial Assets
Debt instruments that meet conditions based on purpose of holding assets and contractual terms of instrument are subsequently measured at amortised cost using effective interest method. All other financial assets are measured at fair value. Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as Fair Value Through Profit or Loss. Interest income is recognised in the statement of profit or loss and is included in the "Other income" line item.
Impairment of Financial Assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, trade receivables and other contractual rights to receive cash or other financial asset.
For trade receivables and any contractual right to receive cash or another financial asset that result from transactions that are within the scope of IND AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses. Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under IND AS 109.
Financial Liabilities and equity instruments Classification of debt or equity
Debt or equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of financial liability and equity instrument.
Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
Financial Liabilities
All financial liabilities (other than derivative financial instruments) are measured at amortised cost using effective interest method at the end of reporting periods.
Derecognition of Financial Assets and Liabilities
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or when the Company transfers the contractual rights to receive the cash flows of the financial asset in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset and does not retain control of the financial asset. The Company derecognises a financial liability (or a part of financial liability) when the contractual obligation is discharged, cancelled or expires.
Derivative Financial Instruments
The Company holds derivative financial instruments such as foreign exchange forward contracts and principal swap to manage its exposure to foreign currency exchange rate risks. Derivatives are initially recognised at fair value at the date the contracts are entered into. Subsequent to initial recognition, these contracts are measured at fair value at the end of each reporting period and changes are recognised in the Statement of Profit and Loss.
2.11 Cash flow statement
The Cash Flow Statement is prepared by the indirect method set out in IND AS 7 on Cash Flow Statements and presents the cash flows by operating, investing and financing activities of the Company. Cash and cash equivalents for the purposes of Cash Flow Statement comprises cash on hand and demand deposits with banks (with an original maturity of three months or less from the date of acquisitions).
2.12 Segment reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities are identified to segments on the basis of their relationship to the operating activities of the segment.
2.13 Employee benefits
Compensation to employees for services rendered is measured and accounted for in accordance with Indian Accounting Standard 19 on Employee Benefits.
Employee Benefits such as salaries, allowances, non-monetary benefits and employee benefits under defined contribution plans such as provident and other funds, which fall due for payment within a period of twelve months after rendering service, are charged as expense to profit or loss in the period in which the service is rendered.
Employee Benefits under defined benefit plans such as gratuity which fall due for payment after completion of employment are measured by the projected unit credit method, on the basis of actuarial valuations carried out by third party actuaries at each balance sheet date. The Company''s obligation recognised in the balance sheet represents the present value of obligations as reduced by the fair value of plan assets.
Actuarial Gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest) are recognised immediately in other comprehensive income. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset.
2.14 Borrowing costs
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 profit or loss in the period in which they are incurred.
2.15 Earnings per share
The Company reports basic and diluted Earnings per Share (EPS) in accordance with IND AS 33 on Earnings Per Share. Basic EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
Diluted EPS is computed by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive.
Mar 31, 2016
1 Corporate information
Sunshield Chemicals Limited (''the Company'') was incorporated in India on 19th November 1986. The Company is engaged in manufacture and sale of Specialty Chemicals in domestic and international markets.
2 Significant accounting policies
2.1 Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act"), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
2.2 Use of estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known/materialize.
2.3 Inventories
Inventories are valued at the lower of cost (weighted average basis) and net realizable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to the point of sale, including octroi and other levies, transit insurance and receiving charges. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty.
2.4 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
2.5 Cash flow statement
Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of pastor future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
2.6 Depreciation
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes and maintenance support, etc.:
General plant and machinery -18years
2.7 Revenue recognition Sale of goods
Sales are recognized, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude sales tax and value added tax.
Income from services
Service income is recognized as per the terms of the contract when the related services are rendered.
2.8 Other income
Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.
2.9 Fixed Assets (Tangible/Intangible)
Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets comprises its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenditure on making the asset ready for its intended use, other incidental expenses and interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalized and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure on fixed assets after its purchase/completion is capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.
Fixed assets acquired and put to use for project purpose are capitalized and depreciation thereon is included in the project cost till the project is ready for its intended use.
Capital work-in-progress:
Projects under which tangible fixed assets are not yet ready for their intended use are carried at cost, comprising direct cost, related incidental expenses and attributable interest.
2.10 Foreign currency transactions and translations Initial recognition
Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.
Measurement at the balance sheet date
Foreign currency monetary items (other than derivative contracts) of the Company, outstanding at the balance sheet date are restated at the year-end rates. Non-monetary items of the Company are carried at historical cost.
Treatment of exchange differences
Exchange differences arising on settlement / restatement of foreign currency monetary assets and liabilities of the Company are recognized as income or expense in the Statement of Profit and Loss.
Accounting for forward contracts
Premium / discount on forward exchange contracts, which are not intended for trading or speculation purposes, are amortized over the period of the contracts if such contracts relate to monetary items as at the balance sheet date. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense in the period in which such cancellation or renewal is made.
2.11 Investments
Long-term investments are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Cost of investments include acquisition charges such as brokerage, fees and duties.
2.12 Employee benefits
(i) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. These benefits include compensated absences such as paid annual leave and sickness leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period as an expense as the related service is rendered by employees.
(ii) Post Employment Benefits:
(a) Defined Contribution Plans
Contributions to the recognized statutory Provident Fund, which is a defined contribution scheme, are charged to the Statement of Profit and Loss in the period in which the liability is incurred.
(b) Defined Benefit Plans
Provision for gratuity, which is a defined benefit plan, is made on the basis of an actuarial valuation carried out by an independent actuary at the balance sheet date and is funded through a scheme administered by the LIC. The actuarial valuation is done using the ''Project Unit Credit Method''. The discount rates used for determining the present value of the defined benefit obligation, are based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.
(iii) Other Long- term employment benefits:
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation at the balance sheet date. The discount rates used for determining the present value of the defined benefit obligation are based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.
2.13 Borrowing costs
Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction/development of the qualifying asset up to the date of capitalization of such asset are added to the cost of the assets. Capitalization of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
2.14 Segment reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.
2.15 Leases
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as operating leases. Lease rentals under operating leases are recognized in the Statement of Profit and Loss on a straight-line basis over the lease term.
2.16 Earnings per share
Basic and diluted earnings per share are computed by dividing the net profit/ (loss) attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the period.
2.17 Taxes on income
Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with income tax laws) and deferred tax charge or credit (reflecting the tax effect of timing differences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that the assets can be realized in future; however when there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realized.
Minimum Alternate Tax
In accordance with the Guidance Note issued by the Institute of Chartered Accountants of India (''lCAl'') on accounting for credit available in respect of Minimum Alternate Tax (MAT) under the Income Tax Act, 1961, the Company recognizes MAT credit as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set off against the normal tax liability. MAT credit recognized as an asset is reviewed at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists.
2.18 Impairment of assets
The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor. 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 Statement of Profit and Loss. If at the balance sheet date there isan indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.
2.19 Provisions and contingencies
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognized in the financial statements.
2.20 Derivative contracts
The Company enters into derivative contracts in the nature of foreign currency swaps with an intention to hedge its existing liabilities in foreign currency. Derivative contracts which are closely linked to the existing liabilities are accounted as per the policy stated for Foreign currency transactions and translations. All derivative contracts are marked-to-market and losses are recognized in the Statement of Profit and Loss. Gains arising on the same are not recognized, until realized, on grounds of prudence.
2.21 Operating Cycle
Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Mar 31, 2015
1.1 Basis of accounting and preparation of financial statements
The financial statements of the Company have been prepared in
accordance with Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards specified under
Section 133 of the Companies Act, 2013, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of the
Companies Act, 2013 ("the 2013 Act")/Companies Act, 1956 ("the 1956
Act"), as applicable. The financial statements have been prepared on
accrual basis under the historical cost convention. The accounting
policies adopted in the preparation of the financial statements are
consistent with those followed in the previous year.
2.2 Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Managementto make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known/materialise.
2.3 Inventories
Inventories are valued at the lower of cost (weighted average basis)
and net realisable value after providing for obsolescence and other
losses, where considered necessary. Cost includes all charges in
bringing the goods to the point of sale, including octroi and other
levies, transit insurance and receiving charges. Work-in-progress and
finished goods include appropriate proportion of overheads and, where
applicable, excise duty.
2.4 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
2.5 Cash flow statement
Cash flows are reported using the indirect method, whereby
profit/(loss) before extraordinary items and tax is adjusted for the
effects of transactions of non-cash nature and any deferrals or
accruals of pastor future cash receipts or payments. The cash flows
from operating, investing and financing activities of the Company are
segregated based on the available information.
2.6 Depreciation
"Depreciable amount for assets is the cost of an asset, or other amount
substituted for cost, less its estimated residual value. Depreciation
on tangible fixed assets has been provided on the straight-line method
as per the useful life prescribed in Schedule II to the Companies Act,
2013 except in respect of the following categories of assets, in whose
case the life of the assets has been assessed as under based on
technical advice, taking into account the nature of the asset, the
estimated usage of the asset, the operating conditions of the asset,
past history of replacement, anticipated technological changes and
maintenance support, etc.:"
General plantand machinery -18years
2.7 Revenue recognition Sale of goods
Sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers. Sales
include excise duty but exclude sales tax and value added tax.
Income from services
Service income is recognised as per the terms of the contract when the
related services are rendered.
2.8 Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
2.9 Fixed Assets (Tangible/Intangible)
Fixed assets are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets comprises its
purchase price net of any trade discounts and rebates, any import
duties and other taxes (other than those subsequently recoverable from
the tax authorities), any directly attributable expenditure on making
the asset ready for its intended use, other incidental expenses and
interest on borrowings attributable to acquisition of qualifying fixed
assets up to the date the asset is ready for its intended use.
Machinery spares which can be used only in connection with an item of
fixed asset and whose use is expected to be irregular are capitalised
and depreciated over the useful life of the principal item ofthe
relevant assets. Subsequentexpenditure on fixed assets after its
purchase/completion iscapitalised only if such expenditure results in
an increase in the future benefits from such asset beyond its
previously assessed standard of performance.Fixed assets acquired and
put to use for project purpose are capitalised and depreciation thereon
is included in the project cost till the project is ready for its
intended use.
Capital work-in-progress:
Projects under which tangible fixed assets are not yet ready for their
intended use are carried at cost, comprising direct cost, related
incidental expenses and attributable interest.
2.10 Foreign currency transactions and translations Initial recognition
Transactions in foreign currencies entered into by the Company are
accounted at the exchange rates prevailing on the date ofthe
transaction or at rates that closely approximate the rate at the date
ofthe transaction.
Measurement at the balance sheet date
Foreign currency monetary items (other than derivative contracts) ofthe
Company, outstanding at the balance sheet date are restated at the
year-end rates. Non-monetary items ofthe Company are carried at
historical cost.
Treatment of exchange differences
Exchange differences arising on settlement / restatement of foreign
currency monetary assets and liabilities of the Company are recognised
as income or expense in the Statement of Profit and Loss.
2.11 Investments
Long-term investments are carried individually at cost less provision
for diminution, other than temporary, in the value of such investments.
Cost of investments include acquisition charges such as brokerage, fees
and duties.
2.12 Employee benefits
(i) Short Term Employee Benefits:
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. These
benefits include compensated absences such as paid annual leave and
sickness leave. The undiscounted amount of short-term employee benefits
expected to be paid in exchange for the services rendered by employees
is recognised during the period as an expense as the related service is
rendered by employees.
(ii) Post Employment Benefits:
(a) Defined Contribution Plans
Contributions to the recognized statutory Provident Fund, which is a
defined contribution scheme, are charged to the Statement of Profit and
Loss in the period in which the liability is incurred.
(b) Defined Benefit Plans
Provision for gratuity, which is a defined benefit plan, is made on the
basis of an actuarial valuation carried out by an independent actuary
at the balance sheet date and is funded through a scheme administered
by the LIC. The actuarial valuation is done using the 'Project Unit
Credit Method'. The discount rates used for determining the
presentvalue of the defined benefit obligation, are based on the
marketyieldson Government securities as at the balance date. Actuarial
gains and losses are recognized immediately in the Statement of Profit
and Loss.
(iii) Other Long- term employment benefits:
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related services are recognized as a liability at the presentvalue of
the defined benefit obligation at the balance sheet date. The discount
rates used for determining the presentvalue of the defined benefit
obligation are based on the marketyields on Government securities as at
the balance sheet date. Actuarial gains and losses are recognized
immediately in the Statement of Profitand Loss.
2.13 Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss. Borrowing costs, allocated
to and utilised for qualifying assets, pertaining to the period from
commencement of activities relating to construction/development of the
qualifying asset upto the date of capitalisation of such asset are
added to the cost of the assets. Capitalisation of borrowing costs is
suspended and charged to the Statement of Profit and Loss during
extended periods when active development activity on the qualifying
assets is interrupted.
2.14 Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit / loss amounts are evaluated regularly by the executive
Management in deciding howto allocate resources and in assessing
performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment.
2.15 Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profitand Loss on a straight-line basis over the
lease term.
2.16 Earnings per share
Basic and diluted earnings per share are computed by dividing the net
profit/ (loss) attributable to equity shareholders for theyear by the
weighted average number of equity shares outstanding during the period.
2.17 Taxes on income
Income-tax expense comprises current tax (i.e. amount of tax for the
period determined in accordance with income tax laws) and deferred tax
charge or credit (reflecting the tax effect of timing differences
between accounting income and taxable income for the year). The
deferred tax charge or credit and the corresponding deferred tax
liabilities or assets are recognised using the tax rates that have been
enacted or substantively enacted at the balance sheet date. Deferred
tax assets are recognized only to the extent that there is reasonable
certainty that the assets can be realized in future; however when there
is unabsorbed depreciation or carry forward loss under taxation laws,
deferred tax assets are recognised only if there is virtual certainty
of realisation of such assets. Deferred tax assets are reviewed as at
each balance sheet date and written down or written up to
reflecttheamountthatis reasonably/virtually certain (as the case maybe)
to be realised.
Minimum Alternate Tax
In accordance with the Guidance Note issued by the Institute of
Chartered Accountants of India ('ICAI') on accounting for credit
available in respect of Minimum Alternate Tax (MAT) under the Income
Tax Act, 1961, the Company recognises MAT credit as an asset only when
and to the extent there is convincing evidence that the Company will
pay normal income taxduring the period for which the MAT credit can be
carried forward for set off against the normal tax liability. MAT
credit recognized as an asset is reviewed at each balance sheet date
and written down to the extent the aforesaid convincing evidence no
longer exists.
2.18 Impairment of assets
The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the Company estimates the recoverable amount of the asset. The
recoverable amount is the greater of the net selling price and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value based on an appropriate discount
factor. 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 Statement of Profit and Loss. 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 subject to a maximum of
depreciable historical cost.
2.19 Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed inthe Notes. Contingent assets are not recognised in the
financial statements.
2.20 Operating Cycle
Based on the nature of products/activities of the Company and the
normal time between acquisition of assets and their realisation in cash
or cash equivalents, the Company has determined its operating cycle as
12 months for the purpose of classification of its assets and
liabilities as currentand non-current.
(d) Terms/Rights attached to equity shares
The Company has only one class of shares referred to as equity shares
having a par value ofRs. 10 per share. Accordingly, all equity shares
rank equally with regard to dividend and share in the Company's
residual assets. The equity shareholders are entitled to receive
dividend as declared from time to time. Each holder of equity share is
entitled to one vote per share. In the event of liquidation of the
Company the holder of equity shares will be entitled to receive
remaining assets of the Company after distribution of all the
preferential amounts. The distribution will be in proportion to the
number of equity shares held by the shareholders.
Mar 31, 2014
(a) Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared in accordance
with the Generally Accepted Accounting Principles in India (Indian
GAAP), to comply with the applicable mandatory Accounting Standards
notifed under the Companies (Accounting Standards) Rules, 2006 (as
amended), Revised Schedule VI and the relevant provisions of the
Companies Act, 1956 (which continue to be applicable in respect of
Section 133 of the Companies Act, 2013 in terms of General Circular
15/2013 dated 13th September 2013 of the Ministry of Corporate
Affairs). The financial statements have been prepared on accrual basis
under the historical cost convention.
The financial statement are prepared and presented in the form set out
in Part I and Part II of Revised Schedule VI of the Act, so far as they
are applicable thereto.
These financial statements are presented in Indian rupees and rounded
off to nearest Lacs unless otherwise stated.
(b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in India (Indian GAAP) requires
management to make estimates and assumptions that affect the reported
amount of assets, liabilities, revenues and expenses and disclosure of
contingent liabilities on the date of the financial statements. The
estimates and assumptions used in the accompanying financial statements
are based upon management''s evaluation of the relevant facts and
circumstances as of the date of financial statements which in
management''s opinion are prudent and reasonable. Actual results may
differ from the estimates used in preparing the accompanying financial
statements. Any revision to accounting estimates is recognised
prospectively in current and future periods.
(c) Fixed Assets / Intangible Assets
Fixed Assets are stated on cost less accumulated depreciation. The
total cost of assets comprises its purchase price, freight, net of
recoverable duties & taxes and any other incidental expenses directly
attributable to bringing the asset to the working condition for its
intended use. The adjustments arising from exchange rate variations
attributable to the fixed assets are capitalized.
Intangible assets are recognized if it is probable that the future
economic benefits that are attributable to the assets will fow to the
Company and cost of the assets can be measured reliably.
(d) Depreciation
- Leasehold Improvements are amortized over the period of lease or
estimated period of useful life of such improvement, whichever is
lower.
- Depreciation on other fixed assets is provided at the rates prescribed
under Schedule XIV of the Act.
- Assets costing less than or equal to Rs. 5,000 are depreciated fully in
the year of purchase.
(e) Impairment of Assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset or a group of assets (cash generating unit)
may be impaired. If any such indication exists, the Company estimates
the recoverable amount of the asset or a group of assets. The
recoverable amount of the asset (or where applicable, that of the cash
generating unit to which the asset belongs) is estimated as the higher
of its net selling price and its value in use. 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 Statement of
profit and Loss. After impairment, depreciation is provided on the
revised carrying amount of the asset over its remaining useful life.
Value in use is the present value of estimated future cash fow expected
to arise from the continuing use of the assets and from its disposal at
the end of its useful life.
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 refected at the recoverable amount subject
to a maximum of depreciable historical cost.
(f) Inventories
Inventories are valued at lower of cost or net realizable value. Basis
of determination of cost remain as follows:
Raw materials, components, stores and spares, Trading goods, and
Packing Materials
Cost is determined on a FIFO method. Materials and other items held for
use in the production of inventories are not written down below cost if
the fnished products in which they will be incorporated are expected to
be sold at or above cost.
Work-in-progress and fnished goods
Cost includes direct materials and labour and a proportion of
manufacturing overheads based on normal operating capacity. Cost of
fnished goods includes provision for excise duty.
Goods in Transits are valued inclusive of custom duty, wherever
applicable
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(g) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will fow to the Company and the revenue can be
reliably measured.
- Sales of goods
Revenue from sale of goods is recognised on transfer of all significant
risks and rewards of ownership to the buyer. Sales are stated net of
trade discount, duties and sales tax.
- Service Income
Service income is recognised as per the terms of the contract when the
related services are rendered. It is stated net of service tax.
- Interest income
Interest income is recognized on time proportion basis.
- Other Income
Export incentive, income from investment and other service income are
accounted on accrual basis.
(h) Investments
Investments are classifed under Non-current and current categories.
''Non-current Investments'' are carried at acquisition / amortized cost.
A provision is made for diminution other than temporary on an
individual basis.
''Current Investments'' are carried at the lower of cost or fair value on
an individual basis.
(i) Foreign Currency Transactions
- Initial recognition
Foreign currency transactions are recorded in the reporting currency
which is Indian Rupee, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of the transaction.
- Conversion
Monetary assets and liabilities in foreign currency, which are
outstanding as at the year-end, are translated at the year-end at the
closing exchange rate and the resultant exchange differences are
recognized in the Statement of profit and Loss except in case of long
term liabilities, where they relate to acquisition of fixed assets, in
which case they are adjusted to the carrying cost of such assets.
Non-monetary foreign currency items are carried at cost.
- Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting monetary items of the Company at rates different from those
at which they were initially recorded during the year, or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise.
The financial statements of an integral foreign operation are translated
as if the transactions of the foreign operation have been those of the
Company itself.
In translating the financial statements of a non-integral foreign
operation for incorporation in financial statements, the assets and
liabilities, both monetary and non-monetary, of the non-integral
foreign operation are translated at the closing rate; income and
expense items of the non-integral foreign operation are translated at
exchange rates at the dates of the transactions; and all resulting
exchange differences are accumulated in a foreign currency translation
reserve until the disposal of the net investment.
On the disposal of a non-integral foreign operation, the cumulative
amount of the exchange differences which have been deferred and which
relate to that operation are recognised as income or as expenses in the
same period in which the gain or loss on disposal is recognised.
When there is a change in the classifcation of a foreign operation, the
translation procedures applicable to the revised classifcation are
applied from the date of the change in the classifcation.
(j) Retirement and Other Employee benefits
- Short term employee benefit
All employee benefits payable wholly within twelve months of rendering
the service are classifed as short-term employee benefits. These benefits
include short term compensated absences such as paid annual leave. The
undiscounted amount of short-term employee benefits expected to be paid
in exchange for the services rendered by employees is recognized as an
expense during the period. benefits such as salaries and wages, etc. and
the expected cost of the bonus / ex-gratia are recognised in the period
in which the employee renders the related service.
- Post employment employee benefits
Defined Contribution schemes
Company''s contributions to the Provident Fund and Employee''s State
Insurance Fund are charged to the Statement of profit and Loss of the
year when the contributions to the respective funds are due.
Defined benefits plans
The Company''s gratuity benefit scheme is a Defined benefit plan. The
Company''s net obligation in respect of the gratuity benefit scheme is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such Defined benefit plan is
determined based on actuarial valuation, carried out by an independent
actuary at each Balance Sheet date, using the Projected Unit Credit
Method, which recognizes each period of service as giving rise to an
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation.
The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value of
the obligation under Defined benefit plan are based on the market yields
on Government Securities as at the Balance Sheet date.
Actuarial gains and losses are recognized immediately in the Statement
of profit and Loss.
Other long term employee benefits
Company''s liabilities towards compensated absences to employees are
accrued on the basis of valuations, as at the Balance Sheet date,
carried out by an independent actuary using Projected Unit Credit
Method. Actuarial gains and losses comprise experience adjustments and
the effects of changes in actuarial assumptions and are recognised
immediately in the Statement of profit and Loss.
(k) Leases
Assets taken under leases, where the company assumes substantially all
the risks and rewards of Ownership are classifed as Finance Leases.
Such assets are capitalized at the inception of the lease at the lower
of fair value or the present value of minimum lease payments and a
liability is created for an equivalent amount. Each lease rental paid
is allocated between the liability and the interest cost, so as to
obtain a constant periodic rate of interest on outstanding liability
for each period.
Assets taken under leases, where the lessor effectively retains
substantially all the risks and benefits of ownership of the leased
term, are classifed as operating leases. Operating lease payments are
recognized as an expense in the Statement of profit and Loss on a
straight-line basis over the lease term.
(l) Taxation
Income-tax expense comprises current tax, deferred tax charge or
credit, minimum alternative tax (MAT).
Current tax
Provision for current tax is made for the tax liability payable on
taxable income after considering tax allowances, deductions and
exemptions determined in accordance with the prevailing tax laws.
Deferred tax
Deferred tax liability or asset is recognized for timing differences
between the profits / losses offered for income tax and profits / losses
as per the financial statements. Deferred tax assets and liabilities are
measured using the tax rates and tax laws that have been enacted or
substantively enacted at the Balance Sheet date.
Deferred tax asset is recognized only to the extent there is reasonable
certainty that the assets can be realized in future; however, where
there is unabsorbed depreciation or carried forward loss under taxation
laws, deferred tax asset is recognized only if there is a virtual
certainty of realization of such asset. Deferred tax asset is reviewed
as at each Balance Sheet date and written down or written up to refect
the amount that is reasonably / virtually certain to be realized.
Minimum alternative tax
Minimum alternative tax (MAT) obligation in accordance with the tax
laws, which give rise to future economic benefits in the form of
adjustment of future income tax liability, is considered as an asset if
there is convincing evidence that the Company will pay normal tax
during the specified period. Accordingly, it is recognized as an asset
in the Balance Sheet when it is probable that the future economic
benefit associated with it will fow to the Company and the asset can be
measured reliably.
(m) Borrowing Cost
Borrowing costs to the extent related / attributable to the acquisition
/ construction of assets that takes substantial period of time to get
ready for their intended use are capitalized along with the respective
fixed asset up to the date such asset is ready for use. Other borrowing
costs are charged to the Statement of profit and Loss.
(n) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
Diluted earnings per share are calculated after adjusting effects of
potential equity shares (PES).PES are those shares which will convert
into equity shares at a later stage. profit / loss is adjusted by the
expenses incurred on such PES. Adjusted profit / loss is divided by the
weighted average number of ordinary plus potential equity shares.
(o) Provisions and Contingencies
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted
to their present values and are determined based on management estimate
required to settle the obligation at the Balance Sheet date. These are
reviewed at each Balance Sheet date and adjusted to refect the current
management estimates.
Contingent liabilities are disclosed in respect of possible obligations
that have arisen from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of future events not
wholly within the control of the Company.
When there is an obligation in respect of which the likelihood of
outflow of resources is remote, no provision or disclosure is made.
Mar 31, 2013
(a) Basis of Preparation of Financial Statements
The fnancial statements are prepared and presented under the historical
cost convention, on the accrual basis of accounting and in accordance
with the provisions of the Companies Act, 1956 (Âthe Act''), and the
accounting principles generally accepted in India and comply with the
accounting standards prescribed in the Companies (Accounting Standards)
Rules, 2006 issued by the Central Government, in consultation with the
National Advisory Committee on Accounting Standards, to the extent
applicable.
The fnancial statement are prepared and presented in the form set out
in Part I and Part II of Revised Schedule VI of the Act, so far as they
are applicable thereto.
These fnancial statements are presented in Indian rupees and rounded
off to nearest Thousands unless otherwise stated.
(b) Use of estimates
The preparation of fnancial statements in conformity with generally
accepted accounting principles in India (Indian GAAP) requires
management to make estimates and assumptions that affect the reported
amount of assets, liabilities, revenues and expenses and disclosure of
contingent liabilities on the date of the fnancial statements. The
estimates and assumptions used in the accompanying fnancial statements
are based upon management''s evaluation of the relevant facts and
circumstances as of the date of fnancial statements which in
management''s opinion are prudent and reasonable. Actual results may
differ from the estimates used in preparing the accompanying fnancial
statements. Any revision to accounting estimates is recognised
prospectively in current and future periods.
(c) Fixed Assets / Intangible Assets
Fixed Assets are stated on cost less accumulated depreciation. The
total cost of assets comprises its purchase price, freight, net of
recoverable duties & taxes and any other incidental expenses directly
attributable to bringing the asset to the working condition for its
intended use. The adjustments arising from exchange rate variations
attributable to the fxed assets are capitalized.
Intangible assets are recognized if it is probable that the future
economic benefts that are attributable to the assets will fow to the
Company and cost of the assets can be measured reliably.
(d) Depreciation
- Leasehold Improvements are amortized over the period of lease or
estimated period of useful life of such improvement, whichever is
lower.
- Depreciation on other fxed assets is provided at the rates prescribed
under Schedule XIV of the Act.
- Assets costing less than or equal to Rs. 5,000 are depreciated fully in
the year of purchase.
(e) Impairment of Assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset or a group of assets (cash generating unit)
may be impaired. If any such indication exists, the Company estimates
the recoverable amount of the asset or a group of assets. The
recoverable amount of the asset (or where applicable, that of the cash
generating unit to which the asset belongs) is estimated as the higher
of its net selling price and its value in use. 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 Statement of
Proft and Loss. After impairment, depreciation is provided on the
revised carrying amount of the asset over its remaining useful life.
Value in use is the present value of estimated future cash fow expected
to arise from the continuing use of the assets and from its disposal at
the end of its useful life.
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 refected at the recoverable amount subject
to a maximum of depreciable historical cost.
(f) Inventories
Inventories are valued at lower of cost or net realizable value. Basis
of determination of cost remain as follows:
(g) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefts will fow to the Company and the revenue can be
reliably measured.
- Sales of goods
Revenue from sale of goods is recognised on transfer of all signifcant
risks and rewards of ownership to the buyer. Sales are stated net of
trade discount, duties and sales tax.
- Service Income
Service income is recognised as per the terms of the contract when the
related services are rendered. It is stated net of service tax.
- Interest income
Interest income is recognized on time proportion basis.
- Other Income
Export incentive, income from investment and other service income are
accounted on accrual basis.
(h) Investments
Investments are classifed under Non-current and current categories.
ÂNon-current Investments'' are carried at acquisition /amortized cost. A
provision is made for diminution other than temporary on an individual
basis.
ÂCurrent Investments'' are carried at the lower of cost or fair value on
an individual basis.
(i) Foreign Currency Transactions
- Initial recognition
Foreign currency transactions are recorded in the reporting currency
which is Indian Rupee, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
at the date of the transaction.
- Conversion
Monetary assets and liabilities in foreign currency, which are
outstanding as at the year-end, are translated at the year-end at the
closing exchange rate and the resultant exchange differences are
recognized in the Statement of Proft and Loss except in case of long
term liabilities, where they relate to acquisition of fxed assets, in
which case they are adjusted to the carrying cost of such assets..
Non-monetary foreign currency items are carried at cost.
- Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting monetary items of the Company at rates different from those
at which they were initially recorded during the year, or reported in
previous fnancial statements, are recognised as income or as expenses
in the year in which they arise.
The fnancial statements of an integral foreign operation are translated
as if the transactions of the foreign operation have been those of the
Company itself.
In translating the fnancial statements of a non-integral foreign
operation for incorporation in fnancial statements, the assets and
liabilities, both monetary and non-monetary, of the non-integral
foreign operation are translated at the closing rate; income and
expense items of the non-integral foreign operation are translated at
exchange rates at the dates of the transactions; and all resulting
exchange differences are accumulated in a foreign currency translation
reserve until the disposal of the net investment.
On the disposal of a non-integral foreign operation, the cumulative
amount of the exchange differences which have been deferred and which
relate to that operation are recognised as income or as expenses in the
same period in which the gain or loss on disposal is recognised.
When there is a change in the classifcation of a foreign operation, the
translation procedures applicable to the revised classifcation are
applied from the date of the change in the classifcation
(j) Retirement and Other Employee Benefts
- Short term employee beneft
All employee benefts payable wholly within twelve months of rendering
the service are classifed as short-term employee benefts. These benefts
include short term compensated absences such as paid annual leave. The
undiscounted amount of short-term employee benefts expected to be paid
in exchange for the services rendered by employees is recognized as an
expense during the period. Benefts such as salaries and wages, etc. and
the expected cost of the bonus / ex-gratia are recognised in the period
in which the employee renders the related service.
- Post employment employee benefts
Defned Contribution schemes
Company''s contributions to the Provident Fund and Employee''s State
Insurance Fund are charged to the Statement of Proft and Loss of the
year when the contributions to the respective funds are due.
Defned benefts plans
The Company''s gratuity beneft scheme is a defned beneft plan. The
Company''s net obligation in respect of the gratuity beneft scheme is
calculated by estimating the amount of future beneft that employees
have earned in return for their service in the current and prior
periods; that beneft is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such defned beneft plan is
determined based on actuarial valuation, carried out by an independent
actuary at each Balance Sheet date, using the Projected Unit Credit
Method, which recognizes each period of service as giving rise to an
additional unit of employee beneft entitlement and measures each unit
separately to build up the fnal obligation.
The obligation is measured at the present value of the estimated future
cash fows. The discount rates used for determining the present value of
the obligation under defned beneft plan are based on the market yields
on Government Securities as at the Balance Sheet date.
Actuarial gains and losses are recognized immediately in the Statement
of Proft and Loss.
Other long term employee benefts
Company''s liabilities towards compensated absences to employees are
accrued on the basis of valuations, as at the Balance Sheet date,
carried out by an independent actuary using Projected Unit Credit
Method. Actuarial gains and losses comprise experience adjustments and
the effects of changes in actuarial assumptions and are recognised
immediately in the Statement of Proft and Loss.
(k) Leases
Assets taken under leases, where the company assumes substantially all
the risks and rewards of Ownership are classifed as Finance Leases.
Such assets are capitalized at the inception of the lease at the lower
of fair value or the present value of minimum lease payments and a
liability is created for an equivalent amount. Each lease rental paid
is allocated between the liability and the interest cost, so as to
obtain a constant periodic rate of interest on outstanding liability
for each period.
Assets taken under leases, where the lessor effectively retains
substantially all the risks and benefts of ownership of the leased
term, are classifed as operating leases. Operating lease payments are
recognized as an expense in the Statement of Proft and Loss on a
straight-line basis over the lease term.
(l) Taxation
Income-tax expense comprises current tax, deferred tax charge or
credit, minimum alternative tax (MAT). Current tax
Provision for current tax is made for the tax liability payable on
taxable income after considering tax allowances, deductions and
exemptions determined in accordance with the prevailing tax laws.
Deferred tax
Deferred tax liability or asset is recognized for timing differences
between the profts/losses offered for income tax and profts/losses as
per the fnancial statements. Deferred tax assets and liabilities are
measured using the tax rates and tax laws that have been enacted or
substantively enacted at the Balance Sheet date.
Deferred tax asset is recognized only to the extent there is reasonable
certainty that the assets can be realized in future; however, where
there is unabsorbed depreciation or carried forward loss under taxation
laws, deferred tax asset is recognized only if there is a virtual
certainty of realization of such asset. Deferred tax asset is reviewed
as at each Balance Sheet date and written down or written up to refect
the amount that is reasonably/virtually certain to be realized.
Minimum alternative tax
Minimum alternative tax (MAT) obligation in accordance with the tax
laws, which give rise to future economic benefts in the form of
adjustment of future income tax liability, is considered as an asset if
there is convincing evidence that the Company will pay normal tax
during the specifed period. Accordingly, it is recognized as an asset
in the Balance Sheet when it is probable that the future economic
beneft associated with it will fow to the Company and the asset can be
measured reliably.
(m) Borrowing Cost
Borrowing costs to the extent related/attributable to the
acquisition/construction of assets that takes substantial period of
time to get ready for their intended use are capitalized along with the
respective fxed asset up to the date such asset is ready for use. Other
borrowing costs are charged to the Statement of Proft and Loss.
(n) Earnings Per Share
Basic earnings per share are calculated by dividing the net proft or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
Diluted earnings per share are calculated after adjusting effects of
potential equity shares (PES).PES are those shares which will convert
into equity shares at a later stage. Proft / loss is adjusted by the
expenses incurred on such PES. Adjusted proft/loss is divided by the
weighted average number of ordinary plus potential equity shares.
(o) Provisions and Contingencies
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outfow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted
to their present values and are determined based on management estimate
required to settle the obligation at the Balance Sheet date. These are
reviewed at each Balance Sheet date and adjusted to refect the current
management estimates.
Contingent liabilities are disclosed in respect of possible obligations
that have arisen from past events and the existence of which will be
confrmed only by the occurrence or non-occurrence of future events not
wholly within the control of the Company.
When there is an obligation in respect of which the likelihood of
outfow of resources is remote, no provision or disclosure is made.
Mar 31, 2012
A) Basis of Preparation of Financial Statements
The financial statements are prepared and presented under the
historical cost convention, on the accrual basis of accounting and in
accordance with the provisions of the Companies Act, 1956 ('the Act"),
and the accounting principles generally accepted in India and comply
with the accounting standards prescribed in the Companies (Accounting
Standards) Rules, 2006 issued by the Central Government, in
consultation with the National Advisory Committee on Accounting
Standards, to the extent applicable.
The financial statement are prepared and presented in the form set out
in Part I and Part II of Revised Schedule VI of the Act, so far as they
are applicable thereto.
These financial statements are presented in Indian rupees and rounded
off to nearest Lacs unless otherwise stated.
b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in India (Indian GAAP) requires
management to make estimates and assumptions that affect the reported
amount of assets, liabilities, revenues and expenses and disclosure of
contingent liabilities on the date of the financial statements. The
estimates and assumptions used in the accompanying financial statements
are based upon management's evaluation of the relevant facts and
circumstances as of the date of financial statements which in
managements opinion are prudent and reasonable. Actual results may
differ from the estimates used in preparing the accompanying financial
statements. Any revision to accounting estimates is recognised
prospectively in current and future periods.
c) Fixed Assets / Intangible Assets
Fixed Assets are stated on cost less accumulated depreciation. The
total cost of assets comprises its purchase price, freight, net of
recoverable duties & taxes and any other incidental expenses directly
attributable to bringing the asset to the working condition for its
intended use. The adjustments arising from exchange rate variations
attributable to the fixed assets are capitalized.
Intangible assets are recognized if it is probable that the future
economic benefits that are attributable to the assets will flow to the
Company and cost of the assets can be measured reliably.
d) Depreciation
- Leasehold Improvements are amortized over the period of lease or
estimated period of useful life of such improvement, whichever is
lower.
- Depreciation on other fixed assets is provided at the rates
prescribed under Schedule XIV of the Act.
- Assets costing less than or equal to' 5,000 are depreciated fully in
the year of purchase.
e) Impairment of Assets
The Company assesses at each Balance Sheet date whether there is any
indication that an asset or a group of assets (cash generating unit)
may be impaired. If any such indication exists, the Company estimates
the recoverable amount of the asset or a group of assets. The
recoverable amount of the asset (or where applicable, that of the cash
generating unit to which the asset belongs) is estimated as the higher
of its net selling price and its value in use. 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 Statement of
Profit and Loss. After impairment, depreciation is provided on the
revised carrying amount of the asset over its remaining useful life.
Value in use is the present value of estimated future cash flow
expected to arise from the continuing use of the assets and from its
disposal at the end of its useful life.
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 subject
to a maximum of depreciable historical cost.
g) Revenue Recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
- Sales of goods
Revenue from sale of goods is recognised on transfer of all significant
risks and rewards of ownership to the buyer. Sales are stated net of
trade discount, duties and sales tax.
- Service Income
Service income is recognised as per the terms of the contract when the
related services are rendered. It is stated net of service tax.
- Interest income
Interest income is recognized on time proportion basis.
- Other Income
Export incentive, income from investment and other service income are
accounted on accrual basis.
h) Investments
Investments are classified under Non-current and current categories.
Non-current Investments' are carried at acquisition /amortized cost. A
provision is made for diminution other than temporary on an individual
basis.
Current Investments' are carried at the lower of cost or fair value on
an individual basis.
i) Foreign Currency Transactions
- Initial recognition
Foreign currency transaction is recorded in the reporting currency
which is Indian Rupee, by applying to the foreign currency amount the
exchange rate between the reporting currency and the foreign currency
as announced by the Customs authority for the period in which the
transaction taken place.
- Conversion
Monetary assets and liabilities in foreign currency, which are
outstanding as at the year-end, are translated at the year-end at the
closing exchange rate and the resultant exchange differences are
recognized in the Statement of Profit and Loss except in case of long
term liabilities, where they relate to acquisition of fixed assets, in
which case they are adjusted to the carrying cost of such assets.
Non-monetary foreign currency items are carried at cost.
- Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting monetary items of the Company at rates different from those
at which they were initially recorded during the year, or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise.
- Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting monetary items of the Company at rates different from those
at which they were initially recorded during the year, or reported in
previous financial statements, are recognised as income or as expenses
in the year in which they arise. The financial statements of an
integral foreign operation are translated as if the transactions of the
foreign operation have been those of the Company itself.
In translating the financial statements of a non-integral foreign
operation for incorporation in financial statements, the assets and
liabilities, both monetary and non-monetary, of the non-integral
foreign operation are translated at the closing rate; income and
expense items of the non-integral foreign operation are translated at
exchange rates at the dates of the transactions; and all resulting
exchange differences are accumulated in a foreign currency translation
reserve until the disposal of the net investment. On the disposal of a
non-integral foreign operation, the cumulative amount of the exchange
differences which have been deferred and which relate to that operation
are recognised as income or as expenses in the same period in which the
gain or loss on disposal is recognised.
When there is a change in the classification of a foreign operation,
the translation procedures applicable to the revised classification are
applied from the date of the change in the classification
j) Retirement and Other Employee Benefits
- Short term employee benefit
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. These
benefits include short term compensated absences such as paid annual
leave. The undiscounted amount of short-term employee benefits expected
to be paid in exchange for the services rendered by employees is
recognized as an expense during the period. Benefits such as salaries
and wages, etc. and the expected cost of the bonus / ex-gratia are
recognised in the period in which the employee renders the related
service.
- Post employment employee benefits Defined Contribution schemes
Company's contributions to the Provident Fund and Employee's State
Insurance Fund are charged to the Statement of Profit and Loss of the
year when the contributions to the respective funds are due. Defined
benefits plans
The Company's gratuity benefit scheme is a defined benefit plan. The
Company's net obligation in respect of the gratuity benefit scheme is
calculated by estimating the amount of future benefit that employees
have earned in return for their service in the current and prior
periods; that benefit is discounted to determine its present value, and
the fair value of any plan assets is deducted.
The present value of the obligation under such defined benefit plan is
determined based on actuarial valuation, carried out by an independent
actuary at each Balance Sheet date, using the Projected Unit Credit
Method, which recognizes each period of service as giving rise to an
additional unit of employee benefit entitlement and measures each unit
separately to build up the final obligation.
The obligation is measured at the present value of the estimated future
cash flows. The discount rates used for determining the present value
of the obligation under defined benefit plan are based on the market
yields on Government Securities as at the Balance Sheet date.
Actuarial gains and losses are recognized immediately in the Statement
of Profit and Loss. Other long term employee benefits
Company's liabilities towards compensated absences to employees are
accrued on the basis of valuations, as at the Balance Sheet date,
carried out by an independent actuary using Projected Unit Credit
Method. Actuarial gains and losses comprise experience adjustments and
the effects of changes in actuarial assumptions and are recognised
immediately in the Statement of Profit and Loss.
k) Leases
Assets taken under leases, where the company assumes substantially all
the risks and rewards of Ownership are classified as Finance Leases.
Such assets are capitalized at the inception of the lease at the lower
of fair value or the present value of minimum lease payments and a
liability is created for an equivalent amount. Each lease rental paid
is allocated between the liability and the interest cost, so as to
obtain a constant periodic rate of interest on outstanding liability
for each period.
Assets taken under leases, where the lessor effectively retains
substantially all the risks and benefits of ownership of the leased
term, are classified as operating leases. Operating lease payments are
recognized as an expense in the Statement of Profit and Loss on a
straight-line basis over the lease term.
I) Taxation
Income-tax expense comprises current tax, deferred tax charge or
credit, minimum alternative tax (MAT).
Current tax
Provision for current tax is made for the tax liability payable on
taxable income after considering tax allowances, deductions and
exemptions determined in accordance with the prevailing tax laws.
Deferred tax
Deferred tax liability or asset is recognized for timing differences
between the profits/losses offered for income tax and profits/losses as
per the financial statements. Deferred tax assets and liabilities are
measured using the tax rates and tax laws that have been enacted or
substantively enacted at the Balance Sheet date. Deferred tax asset is
recognized only to the extent there is reasonable certainty that the
assets can be realized in future; however, where there is unabsorbed
depreciation or carried forward loss under taxation laws, deferred tax
asset is recognized only if there is a virtual certainty of realization
of such asset. Deferred tax asset is reviewed as at each Balance Sheet
date and written down or written up to reflect the amount that is
reasonably/ virtually certain to be realized.
Minimum alternative tax
Minimum alternative tax (MAT) obligation in accordance with the tax
laws, which give rise to future economic benefits in the form of
adjustment of future income tax liability, is considered as an asset if
there is convincing evidence that the Company will pay normal tax
during the specified period. Accordingly, it is recognized as an asset
in the Balance Sheet when it is probable that the future economic
benefit associated with it will flow to the Company and the asset can
be measured reliably.
m) Borrowing Cost
Borrowing costs to the extent related/attributable to the
acquisition/construction of assets that takes substantial period of
time to get ready for their intended use are capitalized along with the
respective fixed asset up to the date such asset is ready for use.
Other borrowing costs are charged to the Statement of Profit and Loss.
n) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the period attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period. Diluted
earnings per share are calculated after adjusting effects of potential
equity shares (PES). PES are those shares which will convert into
equity shares at a later stage. Profit / loss is adjusted by the
expenses incurred on such PES. Adjusted profit/loss is divided by the
weighted average number of ordinary plus potential equity shares.
o) Provisions and Contingencies
A provision is recognised when an enterprise has a present obligation
as a result of past event and it is probable that an outflow of
resources will be required to settle the obligation, in respect of
which a reliable estimate can be made. Provisions are not discounted to
their present values and are determined based on management estimate
required to settle the obligation at the Balance Sheet date. These are
reviewed at each Balance Sheet date and adjusted to reflect the current
management estimates.
Contingent liabilities are disclosed in respect of possible obligations
that have arisen from past events and the existence of which will be
confirmed only by the occurrence or non-occurrence of future events not
wholly within the control of the Company.
When there is an obligation in respect of which the likelihood of
outflow of resources is remote, no provision or disclosure is made.
Mar 31, 2011
A) Basis of preparation:
The Accounts of Sunshield Chemicals Limited ("the Company") have been
prepared to comply with the Accounting Standards referred to in the
Companies (Accounting Standards) Rule 2006 issued by the Central
Government in exercise of the power conferred under sub-section (1) (a)
of Section 642 and the relevant provisions of the Companies Act, 1956
(the Act). The Accounts have been prepared under historical cost
convention on accrual basis. The accounting policies have been
consistently applied by the Company unless otherwise stated.
b) Fixed Assets:
(i) Fixed assets are stated at cost less accumulated depreciation and
impairment losses. Cost comprises the purchases price and any
attributable costs net of credit / set off of bringing the assets to
their working condition for their intended use.
(ii) Depreciation on fixed assets is provided on straight-line method
at the rates and the manner prescribed in Schedule XIV to the Act, at
rates laid down in circular no.G.S.R.756 (E) dt.16.12.1993.
c) Intangibles:
Patents, Trademarks, Designs and Licenses
Costs relating to patents, trademarks, designs and licenses, which are
acquired, are capitalized and amortized on a straight-line basis over a
period of five years.
d) Investment:
Investments are stated at cost.
e ) Inventories:
Raw materials, work-in-progress and finished goods are valued at lower
of cost and net realizable value. Cost for the purpose is worked out on
FIFO basis. In respect of finished goods and work in process,
appropriate overheads are loaded on absorption costing basis. Stock of
Finished product is stated inclusive of Excise Duty.
f) Research & Development:
Revenue expenditure incurred on research and development is charged to
the Profit & Loss Account in the year it is incurred.
Capital expenditure is included in the respective heads under fixed
assets and depreciation / amortization thereon is charged to
depreciation in the profit and loss account.
g) Sales Turnover:
Sales turnover for a year includes sale value of the goods (excluding
Sales Tax), excise duty and other receivables like insurance,
transport, packing charges, etc. Job Processing Income includes such
income earned at Companys plant or at plants of others operated under
specific agreement/s.
h) Contingent Liability:
Contingent liabilities are disclosed by way of note to the Accounts.
i) 1) Retirement Benefits :
Gratuity liabilities of the Company.
The Company has taken a policy with Life Insurance Corporation of India
under Group Gratuity Insurance Scheme of the Corporation. LIC computes
and intimates the actuarial valuation of the Gratuity Liabilities of
the Company at the end of every balance sheet date. Shortfall if any
between the amount as computed and the balance in funds is additionally
provided in the accounts. Difference between the valuations as at the
end of the accounting year and that at the end of previous accounting
year is provided in the Accounts.
2) Leave Encashment: -
Present value of Leave Encashment is provided in the Accounts on the
basis of actuarial valuation certificate.
j) Borrowing costs:-
Borrowing costs directly attributable to acquisition or construction of
fixed assets, which necessarily takes a substantial period of time to
get ready for their intended use, are capitalized.
k) Impairment of Assets
The Company assesses at each balance sheet date whether there is any
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 the
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 is a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount subject to a maximum of depreciated
historical cost.
l) Others
1. The Company makes a provision for doubtful debts as required from
time to time.
2. The Company accounts for Sales Tax Deferral as follows:
(i) Upto 31st March, 2004
The present value of Sales Tax Deferral benefit (in the form of
deferral / unsecured loan) is charged to the profit & loss account and
correspondingly converted into interest free Unsecured Sales Tax loan
at the end of accounting year. The present value of the said Sales Tax
benefit is computed on the basis of the notification (referred in
Schedule 18 note 8 (B). Based on the said computation and movements
consequent to repayments and current years increments, any variation
thereof is reflected in the profit & loss appropriation account.
(ii) From 1st April, 2004 Ã (AS 29)
Sales Tax Deferred under the backward area scheme is provided for fully
in Profit & Loss Account.
Mar 31, 2010
A) Basis of preparation:
The Accounts of Sunshield Chemicals Limited ("the Company") have been
prepared to comply with the Accounting Standards referred to in the
Companies (Accounting Standards) Rule 2006 issued by the Central
Government in exercise of the power conferred under sub-section (1) (a)
of Section 642 and the relevant provisions of the Companies Act, 1956
(the Act). The Accounts have been prepared under historical cost
convention on accrual basis. The accounting policies have been
consistently applied by the Company unless otherwise stated.
b) Fixed Assets:
(i) Fixed assets are stated at cost less accumulated depreciation and
impairment losses. Cost comprises the purchases price and any
attributable costs net of credit / set off of bringing the assets to
their working condition for their intended use.
(ii) Depreciation on fixed assets is provided on straight-line method
at the rates and the manner prescribed in Schedule XIV to the Act, at
rates laid down in circular no.G.S.R.756 (E) dt.16.12.1993.
c) Intangibles:
Patents, Trademarks, Designs and Licenses
Costs relating to patents, trademarks, designs and licenses, which are
acquired, are capitalized and amortized on a straight-line basis over a
period of five years.
Computer software
Software which is not an integral part of the related hardware is
classified as an intangible asset and is being amortized over a period
of 6 years, being its estimated useful life.
Non-compete fee
Non compete fee is capitalized and amortized on a straight-line basis
over the term of the non-compete agreement.
Product Development
Costs incurred for acquiring rights for product under development are
recognized as intangible assets and amortized on straight-line basis
over a period of five years from the date of the regulatory approval.
Subsequent expenditure on development of such products is also added to
the cost of such intangibles.
d) Investment:
Investments are stated at cost or market value whichever is lower. Any
diminution of temporary nature is not recognized.
e) Inventories:
Raw materials, work-in-progress and finished goods and bought out goods
are valued at lower of cost and net realizable value. Cost for the
purpose is worked out on FIFO basis. In respect of finished goods and
work in process, appropriate overheads are loaded on absorption costing
basis. Stock of Finished product is stated inclusive of Excise Duty.
f) Research & Development:
Revenue expenditure incurred on research and development is charged to
the Profit & Loss Account in the year it is incurred.
Capital expenditure is included in the respective heads under fixed
assets and depreciation / amortization thereon is charged to
depreciation in the profit and loss account.
g) Sales Turnover:
Sales turnover for a year includes sale value of the goods (excluding
Sales Tax), excise duty and other receivables like insurance,
transport, packing charges, etc. Job Processing Income includes such
income earned at Companys plant or at plants of others operated under
specific agreement/s.
h) Contingent Liability:
Contingent liabilities are disclosed by way of note to the Accounts.
i) 1) Retirement Benefits :
Gratuity liabilities of the Company.
The Company has taken a policy with Life Insurance Corporation of India
under Group Gratuity Insurance Scheme of the Corporation. LIC computes
and intimates the actuarial valuation of the Gratuity Liabilities of
the Company at the end of every balance sheet date. Shortfall if any
between the amount as computed and the balance in funds is additionally
provided in the accounts. Difference between the valuations as at the
end of the accounting year and that at the end of previous accounting
year is provided in the Accounts.
2) Leave Encashment: -
Present value of Leave Encashment is provided in the Accounts on the
basis of actuarial valuation certificate.
j) Borrowing costs:-
Borrowing costs directly attributable to acquisition or construction of
fixed assets, which necessarily takes a substantial period of time to
get ready for their intended use, are capitalized.
k) Impairment of Assets
The Company assesses at each balance sheet date whether there is any
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 the
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 is a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount subject to a maximum of depreciated
historical cost.
I) Others
1. The Company amortizes Voluntary Retirement benefits over a period
of five years.
2. The Company makes a provision for doubtful debts as required from
time to time.
3. The Company accounts for Sales Tax Deferral as follows:
(i) Upto 31st March, 2004
The present value of Sales Tax Deferral benefit (in the form of
deferral / unsecured loan) is charged to the profit & loss account and
correspondingly converted into interest free Unsecured Sales Tax loan
at the end of accounting year. The present value of the said Sales Tax
benefit is computed on the basis of the notification (referred in
Schedule 18 note 8 (C). Based on the said computation and movements
consequent to repayments and current years increments, any variation
thereof is reflected in the profit & loss appropriation account.
(ii) From 1st April, 2004 - (AS 29)
Sales Tax Deferred under the backward area scheme is provided for fuliy
in Profit & Loss Account.
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