Mar 31, 2022
a. corporate information
Superhouse Limited (âthe Companyâ) is a public limited company having its registered office situated at 150 Feet Road, Jajmau, Kanpur - 208010 (UP).
The Companyâs equity shares are listed at the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
The principal activities of the Company are manufacturing and exports of Leather, Leather Goods and Textile Goods etc.
The financial statements were approved for issue in accordance with a resolution of the directors on 30.06.2022.
b. significant accounting policies
The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Section 133 of the Companies Act, 2013 (the Act) read with the Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act. In addition, the guidance notes/ announcements issued by the Institute of Chartered Accountants of India (ICAI) are also applied except where compliance with other statutory promulgations require a different treatment.
The financial statements have been prepared on the historical cost convention on accrual basis except for following assets and liabilities which have been measured at fair value amount:
i) Certain financial assets and liabilities (including derivative instruments),
ii) Defined benefit plans - plan assets
Historical cost is generally based on the fair value of the consideration given in exchange of goods or 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.
3. Operating Cycle for current and non-current classification
The Company presents assets and liabilities in the Balance Sheet based on current/non-current classification.
An asset is classified as current when it is:
a) expected to be realised or intended to be sold or consumed in the normal operating cycle,
b) held primarily for the purpose of trading,
c) expected to be realised within twelve months after the reporting period, or
d) cash or cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current when:
a) it is expected to be settled in the normal operating cycle,
b) it is held primarily for the purpose of trading,
c) it is due to be settled within twelve months after the reporting period, or
d) there is no unconditional right to defer settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
The operating cycle of the Company, that is, the time between the acquisition of assets for processing and their realisation in cash or cash equivalent is 12 months.
Deferred tax assets and liabilities are classified as noncurrent.
4. Companyâs financial statements are presented in Indian Rupees, which is also its functional currency.
5. Critical estimate and Judgements
The preparation of financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
The areas involving critical estimates or judgements are:
⢠Employee benefits (estimation of defined benefit obligation)
Post-employment benefits represent obligations that will be settled in the future and require assumptions to project benefit obligations. Postemployment benefit accounting is intended to reflect the recognition of future benefit costs over the employeeâs approximate service period, based on the terms of the plans and the investment and funding decisions made. The accounting requires the Company to make assumptions regarding variables such as discount rate and salary growth rate. Changes in these key assumptions can have a significant impact on the defined benefit obligations.
⢠Estimation of expected useful lives of property, plant and equipment
Management reviews its estimate of the useful lives of property, plant and equipment at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of property, plant and equipment.
⢠Contingencies
Legal proceedings covering a range of matters are pending against the Company. Due to the uncertainty inherent in such matters, it is often difficult to predict the final outcome. The cases and claims against the Company often raise difficult and complex factual and legal issues that are subject to many uncertainties and complexities, including but not limited to the facts and circumstances of each particular case/claim, the jurisdiction and the differences in applicable law. In the normal course of business, the Company consults with legal counsel and other experts on matters related to litigations. The Company accrues a liability when it is determined that an adverse outcome is probable and the amount of the loss can be reasonably estimated. In the event an adverse outcome is possible or an estimate is not determinable, the matter is disclosed.
⢠Valuation of deferred tax assets
Deferred income tax expense is calculated based on the differences between the carrying value of assets and liabilities for financial reporting purposes and their respective tax bases that are considered temporary in nature. Valuation of deferred tax assets is dependent on managementâs assessment of future recoverability of the deferred benefit. Expected recoverability may result from expected taxable income in the future, planned transactions or planned optimising measures. Economic conditions may change and lead to a different conclusion regarding recoverability.
⢠Fair value measurements
When the fair values of financial assets and financial liabilities recorded in the Balance Sheet cannot be measured based on quoted prices in active markets, their fair values are measured using valuation techniques, including market multiples model (Market Approach) and Capitalisation method (Income Approach) which involve various judgements and assumptions.
⢠impairment of Property, plant and equipment, Right-of-use assets, intangible assets (other than goodwill) and Capital work-in-progress
The Company estimates the value in use of the cash generating unit (CGU) based on future cash flows after considering current economic conditions and trends, estimated future operating results and growth rates and anticipated future economic and regulatory conditions. The estimated cash flows are developed using internal forecasts. The cash flows are discounted using a suitable discount rate in order to calculate the present value.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets.
Revisions to accounting estimates are recognised prospectively in the period in which the estimate is revised if the revision affects only that period; they are recognised in the period of the revision and future periods if the revision affects both current and future periods.
6. Property, plant and equipment (PPE)
Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. For this purpose, cost includes deemed cost which represent the carrying value of property, plant and equipment recognised at 1st April 2016 measured as per the previous GAAP. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Assets are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.
Expenses incurred relating to project, including borrowing cost and net of income earned during the project development stage prior to its intended use, are considered as pre - operative expenses and disclosed under Capital Work - in - Progress.
Spare parts are capitalized when they meet the definition of PPE, i.e., when the Company intends to use these during more than a period of 12 months.
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. For this purpose, cost includes deemed cost which represent the carrying value of property, plant and equipment recognised at 1st April 2016 measured as per the previous GAAP. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets.
An item of property, plant and equipment or any significant part initially recognised of such item of property plant and equipment is derecognised upon disposal or when
no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation has been provided on such cost of assets less their residual values on straight line method on the basis of estimated useful life of assets as prescribed in Schedule II of the Act.
Estimated useful lives of the property, plant and equipment as estimated by the management is the same as prescribed in Schedule II and the same are as follows:
Factory buildings - 30 years
Other buildings - 5 to 60 years
Plant and equipments - 3 to 40 years
Furniture and fixtures - 8 to 10 years
Office equipments - 5 years
Computers - 3 years
Vehicles - 8 to 10 years
Freehold land is not depreciated/amortised.
Assets held under financial leases are depreciated over their expected useful lives on the same basis as owned assets or, wherever shorter, the term of relevant lease.
Depreciation is calculated on a pro rata basis except that, assets costing upto Rs. 5,000 each are fully depreciated in the year of purchase.
The estimated useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Intangible Assets are stated at cost of acquisition net of recoverable taxes, trade discount and rebates less accumulated amortisation/depletion and impairment loss, if any. Such cost includes purchase price, borrowing costs, and any cost directly attributable to bringing the asset to its working condition for the intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the
asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
Intangible assets being computer software is amortised on straight line method over the period of five years.
The Company has elected to continue with the carrying value of all of its intangibles assets recognised as on April 1, 2016 measured as per the previous GAAP and use that carrying value as its deemed cost as of transition date.
The amortisation period and the amortisation method for an intangible asset are reviewed at least at the end of each reporting period and adjusted prospectively, if appropriate.
The amortisation expense on intangible assets is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
10. impairment of tangible and intangible assets other than goodwill
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitâs(CGU) fair value less costs of disposal and its value in use.
Impairment loss is recognized when the carrying amount of an asset exceeds recoverable amount.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased.
If such indication exists, the Company estimates the assetâs or CGUâs recoverable amount. A previously recognised impairment loss is reversed. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of d epreciation , had no impairment loss been recog nised for the asset in prior years.
Company as a Lessee
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a define period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified assets, the Company assesses whether: (i) the contact involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
As a lessee, The Company recognises a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred
and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right of use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right of use asset or the end of the lease term. The estimated useful lives of right of use assets are determined on the same basis as those of property and equipment. In addition, the right of use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Companyâs incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole.
Lease payments included in the measurement of the lease liability comprise the fixed payments, including in-substance fixed payments and lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option;
The lease liability is measured at amortised cost using the effective interest method.
The Company has elected not to recognise right of use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with these leases as an expense on a straightline basis over the lease term. The Company applied a single discount rate to a portfolio of leases of similar assets in similar economic environment with a similar end date.
Company as a Lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Where the Company is a lessor under an operating lease, the asset is capitalised within property, plant and equipment and depreciated over its useful economic life. Payments received under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis over the term of the lease.
12. inventories
Inventories are valued at cost or net realisable value, whichever is lower. The basis of determining the cost for various categories of inventory are as follows:
(a) Raw materials, Chemicals, Components, stores & spares and Stock in Trade - Cost includes cost of purchase (Net of recoverable taxes) and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on FIFO basis.
(b) Stock in process and finished goods- Direct cost plus appropriate share of overheads.
(c) Saleable Scrap/Waste/By products - At estimated realisable value.
(d) Inter unit gods transfer - transfer price
(e) Import Entitlement / Licences - At estimated realisable/Utilisation value
Net realisable value is the estimated selling price in the ordinary course of business,less estimated costs of completion and the estimated costs necessary to make the sale.
a) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (âthe functional currencyâ). The financial statements are presented in Indian Rupee (INR/Rupees), which is the Companyâs functional and presentation currency.
b) Transaction and balances
Transactions in foreign currencies are recorded on initial recognition at the exchange rate prevailing on the date of the transaction.
Any gains or losses arising due to differences in exchange rates at the time of translation or settlement are accounted for in the Statement of Profit & Loss either under the head foreign exchange fluctuation or interest cost, as the case may be, except those relating to long-term foreign currency monetary items.
(i) Exchange differences pertaining to long term foreign currency loans obtained on or before March 31, 2017:
(a) relating to acquisition of depreciable assets - are adjusted to the carrying cost of the assets and depreciated over the balance useful life of the assets.
(b) Others - carried forward and amortise over the remaining period of such asset or liability since the company had opted to carry forward the same in accordance with the Companies (Accounting Standards) Amendment Rules, 2011.
(ii) Exchange differences pertaining to long term foreign currency loans obtained on or after April 1, 2017 is charged off or credited to profit & loss account.
(iii) Investment in overseas Wholly Owned Subsidiaries are carried in Balance Sheet at the rates prevailing on the dates of transaction.
14. investment in Subsidiaries and Associates
Investment in subsidiaries and associates are carried at cost less accumulated impairment, if any.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most advantageous market which can be accessed by the Company for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
⢠Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
⢠Level 3 Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
Subsequent measurement is determined with reference to the classification of the respective financial assets. Based on the business model for managing the financial assets and the contractual cash flow characteristics of the financial asset, the Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit and loss.
Debt instruments at amortised cost
Debt instruments such as trade and other receivables, security deposits and loans given are measured at the amortised cost if both the following conditions are met:
⢠The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
⢠Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.
Debt instruments at Fair value through Other Comprehensive income (FVOCI)
A âdebt instrumentâ is classified as at the FVTOCI if both of the following criteria are met:
⢠The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
⢠The assetâs contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI).
Debt instruments at Fair value through Profit or Loss (FVTPL)
FVTPL is a residual category for debt instruments excluding investments in subsidiary and associate companies. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
After initial measurement, any fair value changes including any interest income, foreign exchange gain and losses, impairment losses and other net gains and losses are recognised in the Statement of Profit and Loss.
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the company decides to classify the same either as at FVTOCI or FVTPL. The company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Profit or loss.
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
primarily derecognised (i.e. removed from the Companyâs Balance Sheet) when
⢠The rights to receive cash flows from the asset have expired, or
⢠The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpassthroughâ arrangement; and either:
⢠The Company has transferred substantially all the risks and rewards of the asset, or
⢠The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
On de-recognition, any gains or losses on all debt instruments (other than debt instruments measured at FVOCI) and equity instruments (measured at FVTPL) are recognised in the Statement of Profit and Loss. Gains and losses in respect of debt instruments measured at FVOCI and that are accumulated in OCI are reclassified to profit or loss on de-recognition. Gains or losses on equity instruments measured at FVOCI that are recognised and accumulated in OCI are not reclassified to profit or loss on de-recognition.
17 impairment of financial assets
The Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance.
b) Financial assets measured at fair value through other comprehensive income.
In case of other assets (listed as a) above), the company determines if there has been a significant increase in credit risk of the financial asset since initial recognition. If the credit risk of such assets has not increased significantly, an amount equal to 12-month ECL is measured and recognized as loss allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and recognized as loss allowance.
18. Financial Liabilities
initial recognition and measurement
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial Liabilities at Fair Value through Profit or Loss (FVTPL)
Financial liabilities at fair value through profit or loss include financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in Ind-AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk is recognized in OCI. These gains/ losses are not subsequently transferred to profit or loss. However, the company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit or loss.
Financial Liabilities at amortised cost
Financial liabilities classified and measured at amortised cost such as loans and borrowings are initially recognized at fair value, net of transaction cost incurred. After initial recognition, financial liabilities are subsequently measured at amortised cost using the Effective interest rate (EIR) method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
19. Derivative financial instruments
The Company uses derivative financial instruments to manage the commodity price risk and exposure on account of fluctuation in interest rate and foreign exchange rates. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently measured at fair value with changes being recognized in Statement of Profit and Loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken through profit and loss.
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any differences between the proceeds (net of transaction costs) and the
redemption amount is recognised in Profit or loss over the period of the borrowing using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facilities will be drawn down. In this case, the fee is deferred until the drawdown occurs.
The borrowings are removed from the Balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of the financial liability that has been extinguished or transferred to another party and the consideration paid including any noncash asset transferred or liabilities assumed, is recognised in profit or loss as other gains/(losses).
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability of at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the financial statement for issue, not to demand payment as a consequence of the breach.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction/development of the qualifying asset upto the date of capitalisation of such asset is added to the cost of the assets.
Interest income earned on temporary investment of specific borrowing pending expenditure on qualifying asset is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are expensed in the period in which they occur.
22. Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the net amount is reported in the standalone balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company, or the counterparty.
Claims against the Company not acknowledged as debts are disclosed after a careful evaluation of the facts and legal aspects of the matter involved.
24. Provisions, Contingent liabilities and Capital Commitments
Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Company, or present obligations where it is not probable that an outflow of resources will be required, or the amount of the obligation cannot be measured with sufficient reliability. Information on contingent liability is disclosed in the Notes to the Financial Statements.
Contingent assets are not recognised but disclosed when the inflow of economic benefits is probable. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognised as an asset.
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
A government grant that becomes receivable as compensation for expenses or losses incurred in previous period(s). Such a grant is recognised in profit or loss of the period in which it becomes receivable.
Government grants shall be recognised in profit or loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate.
Government grants related to assets are presented in the balance sheet as deferred income and is recognised in profit or loss on a systematic basis over the expected useful life of the related assets or other relevant basis.
Government grants by way of financial assistance on the basis of certain qualifying criteria are recognised as they become receivable.
In the unlikely event that a grant previously recognised is ultimately not received, it is treated as a change in
estimate and the amount cumulatively recognised is expensed in the Statement of Profit and Loss.
26. Revenue Recognition Sale of Goods and services
Revenue is recognised upon transfer of control of promised goods to customers in an amount thatreflects the consideration which the Company expects to receive in exchange for those goods.
Revenue from the sale of goods is recognised at the point in time when (a) control is transferred to the customer, which is mainly upon delivery in case of domestic sales and on issuance of Shipping Bill in case of export sales.
Revenue is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of returns, rebates and discounts to customers.
Revenue from the sale of goods excludes amounts collected on behalf of third parties, such as Goods & Services Tax (GST).
Interest income is accrued on using on a time basis by the effective interest rate with reference to the principal outstanding.
Dividend income from investments is recognised when the shareholderâs right to receive payment has been established.
Export Incentives
Export Incentives are recognised when certainty of receipt is established.
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.
Other income is accounted for on accrual basis except where the receipt of income is uncertain and, in such cases, it is accounted for on receipt basis.
The Company makes contributions to both defined benefit and defined contribution schemes which are mainly administered through/by duly constituted and approved Trusts and the Government.
In case of provident fund administered through Regional Provident Fund Commissioner, the Company has no obligation, other than the contribution payable to the provident fund.
In case of members of constituted and approved trusts, the Company recognises contribution payable to such trusts as an expense including any shortfall in interest between the amount of interest realised by the
investment and the interest payable to members at the rate declared by the Government of India.
The Companyâs contributions paid / payable during the year to provident fund administered through Approved Trust, Regional Provident Fund Commissioner, Superannuation Fund and Employeesâ State Insurance Corporation are recognised in the Statement of Profit and Loss as an expense when employees have rendered services entitling them to contributions.
Gratuity: Cost of providing the Benefit is determined on an actuarial basis at the end of the year and charged to Statement of Profit and Loss. The cost of providing these benefits is determined by independent actuary using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses and the effect of the asset ceiling, (excluding amounts included in net interest on the net defined benefit liability and return on plan assets), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. It is included in retained earnings in the statement of changes in equity and in the balance sheet.
Leave encashment: Leave balance as at the end of the calendar year is encashed and balance leaves earned thereafter to the extent not availed by the employees are provided in the accounts
28. Research and Development Expenditure
Expenditure on research of revenue nature is charged to Statement of Profit and Loss and that of capital nature is capitalized as fixed assets.
Current tax is the amount of tax payable determined in accordance with the applicable tax rates and provisions of the Income Tax Act, 1961 and other applicable tax laws.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Balance sheet and the corresponding tax bases used in the computation of taxable profit and are accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognized for all deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised. Deferred tax assets and liabilities are measured at the applicable tax rates. Deferred tax assets and deferred tax liabilities are off set, and presented as net.
Current and deferred taxes relating to items directly recognised in reserves are recognised in reserves and not in the Statement of Profit and Loss.
Dividends paid (including income tax thereon) is recognised in the period in which the interim dividends
are approved by the Board of Directors, or in respect of the final dividend when approved by shareholders.
Cash flows statement is prepared as per the Indirect Method specified in Ind AS 7 on Cash Flows. Cash and cash equivalents (including bank balances) shown in statement of cash flows exclude item which are not available for general use on the date of balance sheet.
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations.
Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.
Operating segments are reported in consistent manner with the internal reporting provided to the Chief Operating Decision Maker (CODM) of the Company. The CODM is responsible for allocating resources and assessing performance of the Company.
34. Recent Indian Accounting Standard (Ind AS)
Ministry of Corporate Affairs (âMCAâ) notifies new standard or amendments to the existing standards. MCA vide notification dated March 23, 2022 has amended certain accounting standards (Ind AS) effective from April 1, 2022. Those amendments are not expected to have any material impact on the company in current or future reporting periods.
Mar 31, 2018
A. SIGNIFICANT ACCOUNTING POLICIES
1. Statement of compliance
The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Section 133 of the Companies Act, 2013 (the Act) read with the Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act. In addition, the guidance notes/announcements issued by the Institute of Chartered Accountants of India (ICAI) are also applied except where compliance with other statutory promulgations require a different treatment.
Upto the year ended March 31, 2017, the Company has prepared the financial statements in accordance with the requirements of previous GAAP, which includes standards notified under the Companies (Accounting Standards) Rules, 2006 and other relevant provisions of the Act.
These are the Companyâs first Ind AS financial statements. The date of transition to the Ind AS is April 1, 2016. Refer Note no. 37 for details of firsttime adoption exceptions and exemptions availed by the Company.
2. Basis of preparation
The financial statements have been prepared on the historical cost convention on accrual basis except for following assets and liabilities which have been measured at fair value amount:
i) Certain financial assets and liabilities (including derivative instruments),
ii) Defined benefit plans - plan assets
Historical cost is generally based on the fair value of the consideration given in exchange of goods or 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.
3. Operating Cycle for current and non-current classification
All assets and liabilities have been classified as current or non-current according to the Companyâs operating cycle and other criteria set out in the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as twelve months.
4. Companyâs financial statements are presented in Indian Rupees, which is also its functional currency.
5. The preparation of financial statements in conformity with Ind AS requires management to make judgements, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
6. Revisions to accounting estimates are recognised prospectively in the period in which the estimate is revised if the revision affects only that period; they are recognised in the period of the revision and future periods if the revision affects both current and future periods.
7. Property, plant and equipment (PPE)
Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. For this purpose, cost includes deemed cost which represent the carrying value of property, plant and equipment recognised at 1st April 2016 measured as per the previous GAAP. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Assets are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.
Expenses incurred relating to project, including borrowing cost and net of income earned during the project development stage prior to its intended use, are considered as pre - operative expenses and disclosed under Capital Work - in - Progress.
Spare parts are capitalized when they meet the definition of PPE, i.e., when the Company intends to use these during more than a period of 12 months.
8. Investment property
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified asinvestment property. Property, plant and equipment are stated at cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. For this purpose, cost includes deemed cost which represent the carrying value of property, plant and equipment recognised at 1st April 2016 measured as per the previous GAAP. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets.
An item of property, plant and equipment or any significant part initially recognised of such item of property plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.
9. Depreciation
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation has been provided on such cost of assets less their residual values on straight line method on the basis of estimated useful life of assets as prescribed in Schedule II of the Act.
Freehold land is not depreciated/amortised.
Assets held under financial leases are depreciated over their expected useful lives on the same basis as owned assets or, wherever shorter, the term of relevant lease.
Depreciation is calculated on a pro rata basis except that, assets costing upto Rs. 5,000 each are fully depreciated in the year of purchase.
The estimated useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
10. Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable taxes, trade discount and rebates less accumulated amortisation/depletion and impairment loss, if any. Such cost includes purchase price, borrowing costs, and any cost directly attributable to bringing the asset to its working condition for the intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets.
Subsequent costs are included in the assetâs carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
Intangible assets being computer software is amortised on straight line method over the period of five years.
The Company has elected to continue with the carrying value of all of its intangibles assets recognised as on April 1, 2016 measured as per the previous GAAP and use that carrying value as its deemed cost as of transition date.
The amortisation period and the amortisation method for an intangible asset are reviewed at least at the end of each reporting period and adjusted prospectively, if appropriate.
The amortisation expense on intangible assets is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
11. Impairment of tangible and intangible assets other than goodwill
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitâs(CGU) fair value less costs of disposal and its value in use.
Impairment loss is recognized when the carrying amount of an asset exceeds recoverable amount.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased.
If such indication exists, the Company estimates the assetâs or CGUâs recoverable amount. A previously recognised impairment loss is reversed. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.
12. Leases
Leases are recognised as a finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Company as a Lessee
Assets used under finance leases are recognised as property, plant and equipment in the Balance Sheet for an amount that corresponds to the lower of fair value and the present value of minimum lease payments determined at the inception of the lease and a liability is recognised for an equivalent amount.
The minimum lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in the Statement of Profit and Loss.
Rentals payable under operating leases are charged to the Statement of Profit and Loss on a straight-line basis over the term of the relevant lease unless the payments to the lessor are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary cost increases, suchincreases are recognised in the year in which such benefits accrue.
Company as a Lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Where the Company is a lessor under an operating lease, the asset is capitalised within property, plant and equipment and depreciated over its useful economic life. Payments received under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis over the term of the lease.
13. Inventories
Inventories are valued at cost or net realisable value, whichever is lower. The basis of determining the cost for various categories of inventory are as follows:
(a) Raw materials, Chemicals, Components, stores & spares and Stock in
Trade - Cost includes cost of purchase (Net of recoverable taxes) and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on FIFO basis.
(b) Stock in process and finished goods- Direct cost plus appropriate share of overheads.
(c) Saleable Scrap/Waste/By products - At estimated realisable value.
(d) Inter unit gods transfer - transfer price
(e) Import Entitlement / Licences - At estimated realisable/Utilisation value
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
14. Foreign Currencies
a) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (âthe functional currencyâ). The financial statements are presented in Indian Rupee (INR/Rupees), which is the Companyâs functional and presentation currency.
b) Transaction and balances
Transactions in foreign currencies are recorded on initial recognition at the exchange rate prevailing on the date of the transaction.
Any gains or losses arising due to differences in exchange rates at the time of translation or settlement are accounted for in the Statement of Profit & Loss either under the head foreign exchange fluctuation or interest cost, as the case may be, except those relating to long-term foreign currency monetary items.
(i) Exchange differences pertaining to long term foreign currency loans obtained on or before March 31, 2017:
(a) relating to acquisition of depreciable assets - are adjusted to the carrying cost of the assets and depreciated over the balance useful life of the assets.
(b) Others - carried forward and amortise over the remaining period of such asset or liability since the company had opted to carry forward the same in accordance with the Companies (Accounting Standards) Amendment Rules, 2011.
(ii) Exchange differences pertaining to long term foreign currency loans obtained on or after April 1, 2017 is charged off or credited to profit & loss account.
(iii) Investment in overseas Wholly Owned Subsidiaries are carried in Balance Sheet at the rates prevailing on the dates of transaction.
15. Investment in Subsidiaries and Associates
Investment in subsidiaries and associates are carried at cost less accumulated impairment, if any.
16. Fair Value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market which can be accessed by the Company for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
17. Financial Assets
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
Subsequent measurement is determined with reference to the classification of the respective financial assets. Based on the business model for managing the financial assets and the contractual cash flow characteristics of the financial asset, the Company classifies financial assets as subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit and loss.
Debt instruments at amortised cost
Debt instruments such as trade and other receivables, security deposits and loans given are measured at the amortised cost if both the following conditions are met:
- The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
- Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.
Debt instruments at Fair Value Through Other Comprehensive Income (FVTOCI)
A âdebt instrumentâ is classified as at the FVTOCI if both of the following criteria are met:
- The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
- The assetâs contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI).
Debt instruments at Fair value through Profit or Loss (FVTPL)
FVTPL is a residual category for debt instruments excluding investments in subsidiary and associate companies. Any debt instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
After initial measurement, any fair value changes including any interest income, foreign exchange gain and losses, impairment losses and other net gains and losses are recognised in the Statement of Profit and Loss.
Equity investments
All equity investments in scope of Ind-AS 109 are measured at fair value. Equity instruments which are held for trading are classified as at FVTPL.
For all other equity instruments, the company decides to classify the same either as at FVTOCI or FVTPL. The company makes such election on an instrument-by-instrument basis. The classification is made on initial recognition and is irrevocable.
Equity instruments included within the FVTPL category are measured at fair value with all changes recognized in the Profit or loss.
De-recognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Companyâs Balance Sheet) when
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either:
- The Company has transferred substantially all the risks and rewards of the asset, or
- The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
On de-recognition, any gains or losses on all debt instruments (other than debt instruments measured at FVOCI) and equity instruments (measured at FVTPL) are recognised in the Statement of Profit and Loss. Gains and losses in respect of debt instruments measured at FVOCI and that are accumulated in OCI are reclassified to profit or loss on de-recognition. Gains or losses on equity instruments measured at FVOCI that are recognised and accumulated in OCI are not reclassified to profit or loss on de-recognition.
18. Impairment of financial assets
The Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance.
b) Financial assets measured at fair value through other comprehensive income.
In case of other assets (listed as a) above), the company determines if there has been a significant increase in credit risk of the financial asset since initial recognition. If the credit risk of such assets has not increased significantly, an amount equal to 12-month ECL is measured and recognized as loss allowance. However, if credit risk has increased significantly, an amount equal to lifetime ECL is measured and recognized as loss allowance.
19. Financial Liabilities
Initial recognition and measurement
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial Liabilities at Fair Value through Profit or Loss (FVTPL)
Financial liabilities at fair value through profit or loss include financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in Ind-AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk is recognized in OCI. These gains/ losses are not subsequently transferred to profit or loss. However, the company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the statement of profit or loss.
Financial Liabilities at amortised cost
Financial liabilities classified and measured at amortised cost such as loans and borrowings are initially recognized at fair value, net of transaction cost incurred. After initial recognition, financial liabilities are subsequently measured at amortised cost using the Effective interest rate (EIR) method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss. Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.
20. Derivative financial instruments
The Company uses derivative financial instruments to manage the commodity price risk and exposure on account of fluctuation in interest rate and foreign exchange rates. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently measured at fair value with changes being recognized in Statement of Profit and Loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken through profit and loss.
21. Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any differences between the proceeds (net of transaction costs) and the redemption amount is recognised in Profit or loss over the period of the borrowing using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facilities will be drawn down. In this case, the fee is deferred until the drawdown occurs.
The borrowings are removed from the Balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of the financial liability that has been extinguished or transferred to another party and the consideration paid including any non cash asset transferred or liabilities assumed, is recognised in profit or loss as other gains/(losses).
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability of at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the financial statement for issue, not to demand payment as a consequence of the breach.
22. Borrowing costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction/development of the qualifying asset upto the date of capitalisation of such asset is added to the cost of the assets.
Interest income earned on temporary investment of specific borrowing pending expenditure on qualifying asset is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are expensed in the period in which they occur.
23. Offsetting of financial instruments
Financial assets and financial liabilities are offset, and the net amount is reported in the standalone balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company, or the counterparty.
24. Claims
Claims against the Company not acknowledged as debts are disclosed after a careful evaluation of the facts and legal aspects of the matter involved.
25. Provisions, Contingent liabilities and Capital Commitments
Provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost. Contingent liabilities are possible obligations whose existence will only be confirmed by future events not wholly within the control of the Company, or present obligations where it is not probable that an outflow of resources will be required, or the amount of the obligation cannot be measured with sufficient reliability. Information on contingent liability is disclosed in the Notes to the Financial Statements.
Contingent assets are not recognised but disclosed when the inflow of economic benefits is probable. However, when the realisation of income is virtually certain, then the related asset is no longer a contingent asset, but it is recognised as an asset.
26. Government Grant
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
A government grant that becomes receivable as compensation for expenses or losses incurred in previous period(s). Such a grant is recognised in profit or loss of the period in which it becomes receivable. Government grants shall be recognised in profit or loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to compensate.
Government grants related to assets are presented in the balance sheet as deferred income and is recognised in profit or loss on a systematic basis over the expected useful life of the related assets or other relevant basis. Government grants by way of financial assistance on the basis of certain qualifying criteria are recognised as they become receivable.
In the unlikely event that a grant previously recognised is ultimately not received, it is treated as a change in estimate and the amount cumulatively recognised is expensed in the Statement of Profit and Loss.
27. Revenue Recognition Sale of Goods and services
Revenue is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of returns, rebates and discounts to customers.
Revenue from the sale of goods includes excise and other duties which the Company pays as a principal but excludes amounts collected on behalf of third parties, such as sales Tax/ value added tax/Goods & Services Tax. Revenue from the sale of goods is recognised when (a) significant risks and rewards of ownership have been transferred to the customer, which is mainly upon delivery in case of domestic sales and on issuance of Shipping Bill in case of export sales, (b) the amount of revenue can be measured reliably and (c) recovery of the consideration is probable. Revenue from services is recognised in the periods in which the services are rendered. Interest Income
Interest income is accrued on using on a time basis by the effective interest rate with reference to the principal outstanding.
Dividend Income
Dividend income from investments is recognised when the shareholderâs right to receive payment has been established.
Export Incentives
Export Incentives are recognised when certainty of receipt is established. Insurance Claim
Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection. Other Income
Other income is accounted for on accrual basis except where the receipt of income is uncertain ans in such cases it is accounted for on receipt basis.
28. Employee benefits
The Company makes contributions to both defined benefit and defined contribution schemes which are mainly administered through/by duly constituted and approved Trusts and the Government.
Defined Contribution Scheme
In case of provident fund administered through Regional Provident Fund Commissioner, the Company has no obligation, other than the contribution payable to the provident fund.
In case of members of constituted and approved trusts, the Company recognises contribution payable to such trusts as an expense including any shortfall in interest between the amount of interest realised by the investment and the interest payable to members at the rate declared by the Government of India.
The Companyâs contributions paid / payable during the year to provident fund administered through Approved Trust, Regional Provident Fund Commissioner, Superannuation Fund and Employeesâ State Insurance Corporation are recognised in the Statement of Profit and Loss as an expense when employees have rendered services entitling them to contributions.
Defined Benefit Scheme
Gratuity: Cost of providing the Benefit is determined on an actuarial basis at the end of the year and charged to Statement of Profit and Loss. The cost of providing these benefits is determined by independent actuary using the projected unit credit method.
Re-measurements, comprising of actuarial gains and losses and the effect of the asset ceiling,(excluding amounts included in net interest on the net defined benefit liability and return on plan assets), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. It is included in retained earnings in the statement of changes in equity and in the balance sheet.
Leave encashment: Accrued Leaves are encashed annually at the end of the calendar year and not accumulated. Provision for the same is done on the basis of leaves accrued as at the end of the reporting period.
29. Research and Development Expenditure
Expenditure on research of revenue nature is charged to Statement of Profit and Loss and that of capital nature is capitalized as fixed assets.
30. Taxes on Income
Current tax is the amount of tax payable determined in accordance with the applicable tax rates and provisions of the Income Tax Act, 1961 and other applicable tax laws.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the Balance sheet and the corresponding tax bases used in the computation of taxable profit and are accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognized for all deductible temporary differences, carry forward tax losses and allowances to the extent that it is probable that future taxable profits will be available against which those deductible temporary differences, carry forward tax losses and allowances can be utilised. Deferred tax assets and liabilities are measured at the applicable tax rates. Deferred tax assets and deferred tax liabilities are off set, and presented as net.
Current and deferred taxes relating to items directly recognised in reserves are recognised in reserves and not in the Statement of Profit and Loss.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an deferred tax asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.
31. Dividend Distribution
Dividends paid (including income tax thereon) is recognised in the period in which the interim dividends are approved by the Board of Directors, or in respect of the final dividend when approved by shareholders.
32. Cash Flow Statement
Cash flows statement is prepared as per the Indirect Method specified in Ind AS 7 on Cash Flows. Cash and cash equivalents (including bank balances) shown in statement of cash flows exclude item which are not available for general use on the date of balance sheet.
33. Earnings per share
Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post-tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.
Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.
34. Segment Reporting
Operating segments are reported in consistent manner with the internal reporting provided to the Chief Operating Decision Maker (CODM) of the Company. The CODM is responsible for allocating resources and assessing performance of the Company.
Mar 31, 2016
1.1 Basis of Preparation of Financial Statements
The financial statements are prepared under the historical cost convention, except for certain fixed assets which were revalued, on accrual basis of accounting in accordance with the applicable Accounting Standards as prescribed under the relevant provisions of the Companies Act, 2013 and Generally Accepted Accounting Principles (GAAP) in India.
1.2 Use of Estimates
The preparation of financial statements in conformity with Indian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of financial statements and the reported amount of revenues and expenses during the reported period. Difference between actual results and estimates are recognized in the period in which the results are known/ materialized.
1.3 Fixed Assets
Fixed Assets, other than those revalued, are stated at their cost of acquisition or construction as the case may be and including all related acquisition/installation expenses and borrowing cost as per Accounting Standard (AS) 16. Subsidy received on Fixed Assets is credited to the cost of respective fixed assets. Assets revalued are stated at their revalued amount. Cost/revalued amount so ascertained is adjusted for accumulated depreciation/amortization and provision for impairment. Intangible Assets are stated at cost of acquisition less accumulated amortization/impairment.
1.4 Depreciation
Depreciation on Fixed Assets is provided on âStraight Line Methodâ in accordance with the provisions of Schedule II to the Companies Act, 2013 except for leasehold land and intangible assets. Leasehold Land is amortized over the period of lease. Depreciation attributable to appreciation due to revaluation of fixed assets (other than leasehold land) is provided over the remaining useful life of the asset in accordance with Schedule II to the Companies Act, 2013 and equivalent amount is withdrawn from Revaluation Reserve and credited to Statement of Profit and Loss. In case of impaired assets, depreciation is charged on the adjusted cost net of impairment. However the assets costing below Rs. 5000 are depreciated fully in the year of addition. Intangible Assets are amortized over a period of five years under the straight line method of amortization.
1.5 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 ârecoverable amountâ of 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 âcarrying amountâ, the carrying amount is reduced to its recoverable amount. If at the Balance Sheet date there is an indication that a previously assessed / impaired loss no longer exists, the recoverable amount is reassessed and the asset is reflected at recoverable amount.
1.6 Capital work in progress
Capital work in Progress includes, cost of assets not yet commissioned, borrowing cost and incidental expenses during construction period.
1.7 Investments
Long term Investments (non current) are stated at cost of acquisition less provision for diminution in value, other than temporary. Current Investments are stated at lower of cost and market/fair value.
1.8 Inventories
Raw materials, Chemicals, Components & Spares parts and Stock-in-Trade are valued at lower of cost, arrived at on FIFO method (net of CENVAT) and net realizable value. Finished Goods (including stock at port or in transit) and Work in Process are valued at lower of cost and net realizable value. Saleable waste / scrap is valued at estimated realizable value. Inter-unit goods transfers are valued at lower of their respective transfer price and net realizable value. Import entitlements/Licenses are valued at estimated net realizable / utilization value.
1.9 Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered probable. Contingent liabilities are disclosed by way of notes on accounts in respect of obligations where, based on the evidence available, their existence at the Balance Sheet date is considered not probable. Contingent Assets are neither recognized nor disclosed in the financial statements.
1.10 Revenue Recognition
i) Sales are inclusive of excise duty but net of sales tax, returns and discounts. Domestic sales are recognized on dispatch of goods to customers. Export sales are recognized on the issuance of Bill of Lading/ Airway Bill by the carrier.
ii) Revenue is accounted for on accrual basis when its collection or receipt is reasonably certain.
iii) All expenses are accounted for on accrual basis. However the claims are recognized on settlement.
1.11 Government Grants
Grants received against specific fixed assets are adjusted to the cost of the assets and those in the nature of promoterâs contribution are credited to capital reserve. Revenue grants are recognized in the Statement of Profit and Loss in accordance with the related scheme and in the period in which those are accrued.
1.12 Foreign Currency Translations
i) The reporting currency of the company is Indian rupees.
ii) All foreign currency transactions are recorded at the rates prevailing on the date of the transaction.
iii) All foreign currency assets and liabilities other than investments are restated/reported at the closing exchange rate prevailing on the date of Balance Sheet.
iv) Gains and losses arising out of fluctuations in the exchange rates are recognized in Statement of Profit and Loss.
v) Investments in wholly owned subsidiaries are carried in Balance sheet at the rates prevailing on the dates of transactions.
1.13 Accounting for Retirement Benefits
i) Provident Fund & Family Pension (PF & FPF) and Employees State Insurance (ESI) are defined contribution obligations and companyâs contributions to PF and ESI are charged to Statement of Profit and Loss.
ii) Gratuity is a defined benefit obligation. The company has created a trust with Life Insurance Corporation of India under the Group Gratuity Scheme in which actuarial valuation is carried out annually in the month of March. The amount required to be contributed to meet the accrued liability as per the actuarial valuation is charged to Statement of Profit and Loss.
iii) Leave encashment is a defined benefit obligation and provision for the same is done on the basis of leaves accrued as at the end of the year.
1.14 Excise Duty
Excise Duty is accounted for as and when paid on clearance of goods from bonded premises. No provision is made for Excise Duty in respect of finished products lying in bonded premises since major sales comprises of Export Sales.
1.15 Borrowing Cost
Interest and other cost in connection with the borrowing of funds are capitalized up to the date when such qualifying assets are ready for its intended use and other borrowing costs are charged to Statement of Profit and Loss. Borrowing Cost include exchange fluctuation to the extent regarded as adjustment to interest cost.
1.16 Taxation
Provision for Income Tax is made after considering the various deductions/benefits admissible under the Income Tax Act, 1961. In accordance with AS 22 on âAccounting for Taxes on Incomeâ, the company has recognized Deferred Tax arising out of timing differences between taxable income and accounting income and quantified the same using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.
1.17 Prior Period Items
Prior period items, if material, are disclosed separately.
1.18 Cash Flow Statement
Cash flow statement is prepared in accordance with the "indirect method" prescribed inAS-3onCash Flow Statement.
Mar 31, 2015
1.1 Basis of Preparation of Financial Statements :
The financial statements are prepared under the historical cost
convention, except for certain fixed assets which were revalued, on
accrual basis of accounting in accordance with the applicable
Accounting Standards as prescribed under the relevant provisions of the
Companies Act, 2013 and Generally Accepted Accounting Principles (GAAP)
in India.
The financial statements are prepared under the historical cost
convention, except for certain fixed assets which were revalued, on
accrual basis of accounting in accordance with the applicable
Accounting Standards as prescribed under the relevant provisions of the
Companies Act, 2013 and Generally Accepted Accounting Principles (GAAP)
in India.
1.2 Use of Estimates :
The preparation of financial statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of financial statements and the
reported amount of revenues and expenses during the reported period.
Difference between actual results and estimates are recognized in the
period in which the results are known/ materialised.
1.3 Fixed Assets :
Fixed Assets, other than those revalued, are stated at their cost of
acquisition or construction as the case may be and including all
related acquisition/installation expenses and borrowing cost as per
Accounting Standard (AS) 16. Subsidy received on Fixed Assets is
credited to the cost of respective fixed assets. Assets revalued are
stated at their revalued amount. Cost/revalued amount so ascertained is
adjusted for accumulated depreciation/amortization and provision for
impairment. Intangible Assets are stated at cost of acquisition less
accumulated amortisation/impairment.
1.4 Depreciation
Depreciation on Fixed Assets is provided on 'Straight Line Method' in
accordance with the provisions of Schedule II to the Companies Act,
2013 except for leasehold land and intangible assets. Leasehold Land is
amortised over the period of lease. Depreciation attributable to
appreciation due to revaluation of fixed assets (other than leasehold
land) is provided over the remaining useful life of the asset in
accordance with Schedule II to the Companies Act, 2013 and equivalent
amount is withdrawn from Revaluation Reserve and credited to Statement
of Profit and Loss. In case of impaired assets, depreciation is charged
on the adjusted cost net of impairment. However the assets costing
below Rs. 5000 are depreciated fully in the year of addition.
Intangible Assets are amortised over a period of five years.
1.5 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 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. If at the Balance Sheet date there is an indication
that a previously assessed / impaired loss no longer exists, the
recoverable amount is reassessed and the asset is reflected at
recoverable amount.
1.6 Capital work in progress :
Capital work in Progress includes, cost of assets not yet commissioned,
borrowing cost and incidental expenses during construction period.
1.7 Investments :
Long term Investments (non current) are stated at cost of acquisition
less provision for diminution in value, other than temporary. Current
Investments are stated at lower of cost and market/fair value.
1.8 Inventories :
Raw materials, Chemicals, Components & Spares parts and Stock-in-Trade
are valued at lower of cost, arrived at on FIFO method (net of CENVAT)
and net realisable value. Finished Goods (including stock at port or in
transit) and Work in Process are valued at lower of cost and net
realisable value. Saleable waste / scrap is valued at estimated
realisable value. Inter-unit goods transfers are valued at lower of
their respective transfer price and net realisable value. Import
entitlements/Licenses are valued at estimated net realizable /
utilization value.
1.9 Provisions, Contingent Liabilities and Contingent Assets :
Provisions are recognised in respect of obligations where, based on the
evidence available, their existence at the Balance Sheet date is
considered probable. Contingent liabilities are disclosed by way of
notes on accounts in respect of obligations where, based on the
evidence available, their existence at the Balance Sheet date is
considered not probable. Contingent assets are not recognised in the
accounts.
1.10 Revenue Recognition
i) Sales are inclusive of excise duty but net of sales tax, returns and
discounts. Domestic sales are recognised on dispatch of goods to
customers. Export sales are recognised on the issuance of Bill of
Lading/ Airway Bill by the carrier.
ii) Revenue is accounted for on accrual basis when its collection or
receipt is reasonably certain.
iii) All expenses are accounted for on accrual basis. However the
claims are recognised on settlement.
1.11 Government Grants
Grants received against specific fixed assets are adjusted to the cost
of the assets and those in the nature of promoter's contribution are
credited to capital reserve. Revenue grants are recognized in the
Statement of Profit and Loss in accordance with the related scheme and
in the period in which those are accrued.
1.12 Foreign Currency Translations
i) All foreign currency transactions are recorded at the rates
prevailing on the date of the transaction.
ii) All foreign currency assets and liabilities other than investments
are restated/reported at the closing exchange rate prevailing on the
date of Balance Sheet.
iii) Gains and losses arising out of fluctuations in the exchange rates
are recognised in Statement of Profit and Loss.
iv) Investments in wholly owned subsidiaries are carried in Balance
sheet at the rates prevailing on the dates of transactions.
1.13 Accounting for Retirement Benefits
i) Provident Fund & Family Pension (PF & FPF) and Employees State
Insurance (ESI) are defined contribution obligations and company's
contributions to PF and ESI are charged to Statement of Profit and
Loss.
ii) Gratuity is a defined benefit obligation. The company has created a
trust with Life Insurance Corporation of India under the Group Gratuity
Scheme in which actuarial valuation is carried out annually in the
month of March. The amount required to be contributed to meet the
accrued liability as per the actuarial valuation is charged to
Statement of Profit and Loss.
iii) Leave encashment is a defined benefit obligation and provision for
the same is done on the basis of leaves accrued as at the end of the
year.
1.14 Excise Duty :
Excise Duty is accounted for as and when paid on clearance of goods
from bonded premises. No provision is made for Excise Duty in respect
of finished products lying in bonded premises since major sales
comprises of Export Sales.
1.15 Borrowing Cost :
Interest and other cost in connection with the borrowing of funds are
capitalized up to the date when such qualifying assets are ready for
its intended use and other borrowing costs are charged to Statement of
Profit and Loss. Borrowing Cost include exchange fluctuation to the
extent regarded as adjustment to interest cost.
1.16 Taxation :
Provision for Income Tax is made after considering the various
deductions/benefits admissible under the Income Tax Act, 1961. In
accordance with AS 22 on 'Accounting for Taxes on Income', the
company has recognised Deferred Tax arising out of timing differences
between taxable income and accounting income and quantified the same
using the tax rates and laws enacted or substantively enacted as on the
Balance Sheet date.
1.17 Prior Period Items :
Prior period items, if material, are disclosed separately.
1.18 Cash Flow Statement :
Cash flow statement is prepared in accordance with the "indirect
method" prescribed in AS-3 on Cash Flow Statement.
2.2 Term/rights attached to equity shares
The company has only one class of equity shares having a par value of
Rs. 10 per share. Each holder of equity shares is entitled to one vote
per share. The company declares and pays dividends in Indian rupees.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the company, the holders of equity
shares will be entitled to receive remaining assets of the company,
after distribution of all preferential amounts. The distribution will
be in proportion to the number of equity shares held by the
shareholders.
3.1 The Company (Accounting Standards) Second Amendment Rules, 2011 has
amended the provisions of AS-11 relating to "The effect of the Change
in Foreign Exchange Rates" vide notification dated December 29, 2011.
In terms of the amendments, the company has opted to carry over the
Long Term Monetary Gain/Loss and amortise the same over balance period
of such long term asset/liability.
4.1 Indian rupee & foreign currency loans from bank(s) are primarily
secured by equitable mortgage/hypothecation of specific fixed assets.
Also secured collaterally by equitable mortgage of company's specific
land and building. Further secured by personal guarantee of promoter
director(s) of the company. External Commercial Borrowing (ECB) carries
a non disposable undertaking of the Shares of the acquired Wholly Owned
Subsidiaries (WOS).
4.4 Long term borrowings repayable within twelve months from the
reporting date, as per sanctioned terms, are reduced from long term
borrowings and disclosed separately as Current Maturities of Long Term
Borrowings in Note 8, Other Current Liabilities.
4.5 Vehicle loans are secured against vehicle financed.
@ Deferred Tax Assets has been recognised and carried forward only to
the extent there is virtual certainty that sufficient future taxable
income will be available against which such Deferred Tax Assets can be
realised. Deferred Tax Assets and Deferred Tax Liabilities have been
set off in accordance with clause 29 of AS 22 .
6.1 Working Capital Loans are primarily secured by hypothecation of
present and future stock of raw materials, stock in process, finished
goods, stores and spares, book debts, outstanding monies, receivable
claims, bills and materials in transit. Also secured collaterally by
equitable mortgage of company's specific factory land and building.
Further secured by personal guarantee of promoter director(s) of the
company.
7.1 The company has requested confirmation from Suppliers regarding
their registration (filling of Memorandum) under the Micro, Small and
Medium Enterprises Development Act, 2006 (the Act). According to the
information available with the company there was no amount (principal
and/or interest) due to any micro/small enterprises (SME as defined in
the Act) as at the end of the year. There is no delay in payment to SME
during the year. No interest was paid/payable on account of delay in
payment to SME during the year in terms of Section 16 of the Act.
In respect of items which are purchased both from indigenous and
imported sources, the identity of individual items consumed cannot be
established but segregation of consumption between imported and
indigenous sources has been made on a reasonable approximation
determined from the Company's records.
Mar 31, 2014
The accompanying notes form an integral part of these financial
statements. As per our report of even date
1.1 Basis of Preparation of Financial Statements
The financial statements are prepared under the historical cost
convention, except for certain fixed assets which were revalued, on
accrual basis of accounting in accordance with the applicable
Accounting Standards as prescribed by the Companies (Accounting
Standards) Rules, 2006 (AS), Generally Accepted Accounting Principles
(GAAP) in India and the relevant provisions of the Companies Act, 1956
(the Act).
1.2 Use of Estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of financial statements and the
reported amount of revenues and expenses during the reported period.
Difference between actual results and estimates are recognized in the
period in which the results are known/ materialised.
1.3 Fixed Assets
Fixed Assets, other than those revalued, are stated at their cost of
acquisition or construction as the case may be and including all
related acquisition/installation expenses and borrowing cost as per
Accounting Standard (AS) 16. Subsidy received on Fixed Assets is
credited to the cost of respective fixed assets. Assets revalued are
stated at their revalued amount. Cost/revalued amount so ascertained is
adjusted for accumulated depreciation/amortization and provision for
impairment. Intangible Assets are stated at cost of acquisition less
accumulated amortisation/impairment.
1.4 Depreciation
Depreciation on Fixed Assets is provided on ''Straight Line Method'' in
accordance with the provisions of Schedule XIV to the Companies Act,
1956 except for leasehold land, intangible assets and Shoe moulds.
Leasehold Land is amortised over the period of lease. Shoe Moulds are
depreciated over economic life of the asset or three years whichever is
earlier. Depreciation attributable to appreciation due to revaluation
of fixed assets (other than leasehold land) is provided according to
the rates prescribed in Schedule XIV to the Companies Act, 1956 and
equivalent amount is withdrawn from Revaluation Reserve and credited to
Profit and Loss Account. In case of impaired assets, depreciation is
charged on the adjusted cost net of impairment. Intangible Assets are
amortised over a period of five years.
1.5 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 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. If at the Balance Sheet date there is an indication that a
previously assessed / impaired loss no longer exists, the recoverable
amount is reassessed and the asset is reflected at recoverable amount.
1.6 Capital work in progress
Capital work in Progress includes, cost of assets not yet commissioned,
borrowing cost and incidental expenses during construction period.
1.7 Investments
Long term Investments (non current) are stated at cost of acquisition
less provision for diminution in value, other than temporary. Current
Investments are stated as lower of cost and market/fair value.
1.8 Inventories
Raw materials, Chemicals, Components & Spares parts are valued at lower
of cost, arrived at on FIFO method (net of CENVAT) or net realisable
value. Finished Goods (including stock at port or in transit) and Work
in Process are valued at lower of cost or net realisable value.
Saleable waste / scrap is valued at estimated realisable value.
Inter-unit goods transfers are valued at lower of their respective
transfer price or net realisable value. Import entitlements/Licenses
are valued at estimated net realizable / utilization value.
1.9 Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised in respect of obligations where, based on the
evidence available, their existence at the Balance Sheet date is
considered probable. Contingent liabilities are disclosed by way of
notes on accounts in respect of obligations where, based on the
evidence available, their existence at the Balance Sheet date is
considered not probable. Contingent assets are not recognised in the
accounts.
1.10 Revenue Recognition
i) Sales are inclusive of excise duty but net of sales tax, returns and
discounts. Domestic sales are recognised on dispatch of goods to
customers. Export sales
are recognised on the issuance of Bill of Lading/ Airway Bill by the
carrier. ii) Revenue is accounted for on accrual basis when its
collection or receipt is reasonably certain. iii) All expenses are
accounted for on accrual basis.
1.11 Government Grants
Grants received against specific fixed assets are adjusted to the cost
of the assets and those in the nature of promoter''s contribution are
credited to capital reserve. Revenue grants are recognized in the
Statement of Profit and Loss in accordance with the related scheme and
in the period in which those are accrued.
1.12 Foreign Currency Translations
i) All foreign currency transactions are recorded at the rates
prevailing on the date of the transaction.
ii) All foreign currency assets and liabilities other than investments
are restated/reported at the closing exchange rate prevailing on the
date of Balance Sheet.
iii) Gains and losses arising out of fluctuations in the exchange rates
are recognised in Statement of Profit and Loss.
iv) Investments in wholly owned subsidiaries are carried in Balance
sheet at the rates prevailing on the dates of transactions.
1.13 Accounting for Retirement Benefits
i) Provident Fund & Family Pension (PF & FPF) and Employees State
Insurance (ESI) are defined contribution obligations and company''s
contributions to PF
and ESI are charged to Statement of Profit and Loss. ii) Gratuity is a
defined benefit obligation. The company has created a trust with Life
Insurance Corporation of India under the Group Gratuity Scheme in which
actuarial valuation is carried out annually in the month of March. The
amount required to be contributed to meet the accrued liability as per
the actuarial
valuation is charged to Statement of Profit and Loss. iii) Leave
encashment is a defined benefit obligation and provision for the same
is done on the basis of leaves accrued as at the end of the year.
1.14 Excise Duty
Excise Duty is accounted for as and when paid on clearance of goods
from bonded premises. No provision is made for Excise Duty in respect
of finished products lying in bonded premises since major sales
comprises of Export Sales.
1.15 Borrowing Cost
Interest and other cost in connection with the borrowing of funds are
capitalized up to the date when such qualifying assets are ready for
its intended use and other borrowing costs are charged to Statement of
Profit and Loss.
1.16 Taxation
Provision for Income Tax is made after considering the various
deductions/benefits admissible under the Income Tax Act, 1961. In
accordance with AS 22 on ''Accounting for Taxes on Income'', the company
has recognised Deferred Tax arising out of timing differences between
taxable income and accounting income and quantified the same using the
tax rates and laws enacted or substantively enacted as on the Balance
Sheet date.
1.17 Prior Period Items
Prior period items, if material, are disclosed separately.
1.18 Cash Flow Statement
Cash flow statement is prepared in accordance with the "indirect
method" prescribed in AS-3 on Cash Flow Statement.
2.2 Term/rights attached to equity shares
The company has only one class of equity shares having a par value of
Rs. 10 per share. Each holder of equity shares is entitled to one vote
per share. The company declares and pays dividends in Indian rupees.
The dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting. In
the event of liquidation of the company, the holders of equity shares
will be entitled to receive remaining assets of the company, after
distribution of all preferential amounts. The distribution will be in
proportion to the number of equity shares held by the shareholders.
2.3 Bonus Shares/Shares issued for consideration other than cash and
Buy Back of shares NIL (NIL) during preceding five years:
2.4 Shares held by holding/ultimate holding company and/or their
subsidiaries/associates: NIL (NIL)
2.5 Details of shareholders holding more than 5% shares in the company
4.1 Indian rupee & foreign currency loans from bank(s) are primarily
secured by equitable mortgage/hypothecation of specific fixed assets.
Also secured collaterally by equitable mortgage of company''s specific
land and building. Further secured by personal guarantee of promoter
director(s) of the company. External Commercial Borrowing (ECB) carries
a non dispos- able undertaking of the Shares of the acquired Wholly
Owned Subsidiaries (WOS).
4.2 These Loans are repayable over a period upto 6 years.
4.3 Continuing default in respect of principal and or interest Nil Nil
4.4 Long term borrowings repayable within twelve months from the
reporting date, as per sanctioned terms, are reduced from long term
borrowings and disclosed separately as Current Maturities of Long term
Borrowings in Note 8, Other Current Liabilities.
4.5 Secured against vehicle finanaced.
@Deferred Ta x Assets has been recognised and carried forward only to
the extent there is virtual certainty that sufficient future taxable
income will be available against which such Deferred Tax Assets can be
realised. Deferred Tax Assets and Deferred Tax Liabilities have been
set off in accordance with clause 29 of AS 22 .
6.1 Working Capital Loans are primarily secured by hypothecation of
present and future stock of raw materials, stock in process, finished
goods, stores and spares, book debts, outstanding monies, receivable
claims, bills and materials in transit. Also secured collaterally by
equitable mortgage of company''s specific factory land and building.
Further secured by personal guarantee of promoter director(s) of the
company.
7.1 The company has requested confirmation from Suppliers regarding
their registration (filling of Memorandum) under the Micro, Small and
Medium Enterprises Development Act, 2006 (the Act). According to the
information available with the company there was no amount (principal
and/or interest) due to any micro/ small enterprises (SME as defined in
the Act) as at the end of the year. There is no delay in payment to SME
during the year. No interest was paid/payable on account of delay in
payment to SME during the year in terms of Section 16 of the Act.
10.1 Building and Plant and Machinery include Gross Block Rs.
1,79,88,995 (Rs. 1,79,88,995) and Rs. 10,07,184 (Rs. 10,07,184)
respectively and Net block Rs. 1,45,45,039 (Rs. 1,48,38,260) and Rs.
6,22,345 (Rs. 6,55,985) respectively in respect of expenditure incurred
on capital assets, ownership whereof does not vest with the company.
10.2 Certain Fixed Assets of the Company were revalued by the Approved
Valuer, on the basis of fair market value as on 31.12.1994.
Accordingly value of Fixed Assets of the Company was increased by Rs.
15,59,29,935 (Leasehold Land Rs. 3,09,83,028, Factory Building Rs.
6,40,82,953 and Plant and Machinery Rs. 6,08,63,954) and the
corresponding amount was credited to the Revaluation Reserve.
10.3 Subsidy amounting to Rs. 13,39,827 (Rs. 5,50,000) received during
the year under IDLS Scheme of the Government of India has been
adjusted/credited to cost of respective machines.
11.1 The Company (Accounting Standards) Second Amendment Rules, 2011
has amended the provisions of AS-11 relating to "The effect of the
Change in Foreign Exchange Rates" vide notification dated December 29,
2011. In terms of the amendments, the company has opted to carry over
the Long Term Monetary Loss and amortise the same over balance period
of such long term asset/liability.
In respect of items which are purchased both from indigenous and
imported sources, the identity of individual items consumed cannot be
established but segregation of consumption between imported and
indigenous sources has been made on a reasonable approximation
determined from the Company''s records.
Mar 31, 2013
1.1 Basis of Preparation of Financial Statements : The financial
statements are prepared under the historical cost convention, except
for certain fixed assets which were revalued, on accrual basis of
accounting in accordance with the applicable Accounting Standards as
prescribed by the Companies (Accounting Standards) Rules, 2006 (AS),
Generally Accepted Accounting Principles (GAAP) in India and the
relevant provisions of the Companies Act, 1956 (the Act).
1.2 Use of Estimates : The preparation of financial statements in
conformity with Indian GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent liabilities on the date of financial
statements and the reported amount of revenues and expenses during the
reported period. Difference between actual results and estimates are
recognized in the period in which the results are known/ materialised.
1.3 Fixed Assets : Fixed Assets, other than those revalued, are stated
at their cost of acquisition or construction as the case may be and
including all related acquisition/installation expenses and borrowing
cost as per Accounting Standard (AS) 16. Subsidy received on Fixed
Assets is credited to the cost of respective fixed assets. Assets
revalued are stated at their revalued amount. Cost/revalued amount so
ascertained is adjusted for accumulated depreciation/amortization and
provision for impairment. Intangible Assets are stated at cost of
acquisition less accumulated amortisation/impairment.
1.4 Depreciation : Depreciation on Fixed Assets is provided on
ÂStraight Line Method in accordance with the provisions of Schedule
XIV to the Companies Act, 1956 except for leasehold land, intangible
assets and Shoe moulds. Leasehold Land is amortised over the period of
lease. Shoe Moulds are depreciated over economic life of the asset or
three years whichever is earlier. Depreciation attributable to
appreciation due to revaluation of fixed assets (other than leasehold
land) is provided according to the rates prescribed in Schedule XIV to
the Companies Act, 1956 and equivalent amount is withdrawn from
Revaluation Reserve and credited to Profit and Loss Account. In case of
impaired assets, depreciation is charged on the adjusted cost net of
impairment. Intangible Assets are amortised over a period of five
years.
1.5 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 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. If at the Balance Sheet date there
is an indication that a previously assessed / impaired loss no longer
exists, the recoverable amount is reassessed and the asset is reflected
at recoverable amount.
1.6 Capital work in progress : Capital work in Progress includes, cost
of assets not yet commissioned, borrowing cost and incidental expenses
during construction period.
1.7 Investments : Long term Investments (non current) are stated at
cost of acquisition less provision for diminution in value, other than
temporary. Current Investments are stated as lower of cost and
market/fair value.
1.8 Inventories : Raw materials, Chemicals, Components & Spares parts
are valued at lower of cost, arrived at on FIFO method (net of CENVAT)
or net realisable value. Finished Goods (including stock at port or in
transit) and Work in Process are valued at lower of cost or net
realisable value. Saleable waste / scrap is valued at estimated
realisable value. Inter-unit goods transfers are valued at lower of
their respective transfer price or net realisable value. Import
entitlements/Licenses are valued at estimated net realizable /
utilization value.
1.9 Provisions, Contingent Liabilities and Contingent Assets :
Provisions are recognised in respect of obligations where, based on the
evidence available, their existence at the Balance Sheet date is
considered probable. Contingent liabilities are disclosed by way of
notes on accounts in respect of obligations where, based on the
evidence available, their existence at the Balance Sheet date is
considered not probable. Contingent assets are not recognised in the
accounts.
1.10 Revenue Recognition
i) Sales are inclusive of excise duty but net of sales tax, returns and
discounts. Domestic sales are recognised on dispatch of goods to
customers. Export sales are recognised on the issuance of Bill of
Lading/ Airway Bill by the carrier. ii) Revenue is accounted for on
accrual basis when its collection or receipt is reasonably certain.
iii) All expenses are accounted for on accrual basis.
1.11 Government Grants : Grants received against specific fixed assets
are adjusted to the cost of the assets and those in the nature of
promoter''s contribution are credited to capital reserve. Revenue grants
are recognized in the Statement of Profit and Loss in accordance with
the related scheme and in the period in which those are accrued.
1.12 Foreign Currency Translations
i) All foreign currency transactions are recorded at the rates
prevailing on the date of the transaction.
ii) All foreign currency assets and liabilities other than investments
are restated/reported at the closing exchange rate prevailing on the
date of Balance Sheet. iii) Gains and losses arising out of
fluctuations in the exchange rates are recognised in Statement of
Profit and Loss. iv) Investments in wholly owned subsidiaries are
carried in Balance sheet at the rates prevailing on the dates of
transactions.
1.13 Accounting for Retirement Benefits
i) Provident Fund & Family Pension (PF & FPF) and Employees State
Insurance (ESI) are defined contribution obligations and company''s
contributions to PF and ESI are charged to Statement of Profit and
Loss. ii) Gratuity is a defined benefit obligation. The company has
created a trust with Life Insurance Corporation of India under the
Group Gratuity Scheme in which actuarial valuation is carried out
annually in the month of March. The amount required to be contributed o
meet the accrued liability as per the actuarial valuation is charged to
Statement of Profit and Loss. iii) Leave encashment is a defined
benefit obligation and provision for the same is done on the basis of
leaves accrued as at the end of the year.
1.14 Excise Duty : Excise Duty is accounted for as and when paid on
clearance of goods from bonded premises. No provision is made for
Excise Duty in respect of finished products lying in bonded premises
since major sales comprises of Export Sales.
1.15 Borrowing Cost : Interest and other cost in connection with the
borrowing of funds are capitalized up to the date when such qualifying
assets are ready for its intended use and other borrowing costs are
charged to Statement of Profit and Loss.
1.16 Taxation : Provision for Income Tax is made after considering the
various deductions/benefits admissible under the Income Ta x Act, 1961.
In accordance with AS 22 on "Accounting for Taxes on Income", the
company has recognised Deferred Tax arising out of timing differences
between taxable income and accounting income and quantified the same
using the tax rates and laws enacted or substantively enacted as on the
Balance Sheet date.
1.17 Prior Period Items : Prior period items, if material, are
disclosed separately.
1.18 Cash Flow Statement : Cash flow statement is prepared in
accordance with the "indirect method" prescribed in AS-3 on Cash Flow
Statement.
Mar 31, 2012
1.1 Basis of Preparation of Financial Statements
The financial statements are prepared under the historical cost
convention, except for certain fixed assets which were revalued, on
accrual basis of accounting in accordance with the applicable
Accounting Standards issued by the Institute of Chartered Accountants
of India (ICAI), generally accepted accounting principles (GAAP) in
India and the relevant provisions of the Companies Act, 1956.
1.2 Use of Estimates
The preparation of financial statements inconformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of financial statements and the
reported amount of revenues and expenses during the reported period.
Difference between actual results and estimates are recognized in the
period in which the results are known/ materialized.
1.3 Fixed Assets
Fixed Assets, other than those revalued, are stated at their cost of
acquisition or construction as the case may be and including all
related acquisition/installation expenses and borrowing cost as per
Accounting Standard (AS) 16. Subsidy received on Fixed Assets is
credited to the cost of respective fixed assets. Assets revalued are
stated at their revalued amount. Cost/revalued amount so ascertained is
adjusted for accumulated depreciation/amortization and provision for
impairment. Intangible Assets are stated at cost of acquisition less
accumulated amortization/impairment.
1.4 Depreciation
Depreciation on Fixed Assets is provided on 'Straight Line Method'
in accordance with the provisions of Schedule XIV to the Companies Act,
1956. Leasehold Land is amortized over the period of lease.
Depreciation attributable to appreciate ion due to revaluation of fixed
assets (other than leasehold land) is provided according to the rates
prescribed in Schedule XIV to the Companies Act, 1956 and equivalent
amount is withdrawn from Revaluation Reserve and credited to Profit and
Loss Account. In case of impaired assets, depreciation is charged on
the adjusted cost net of impairment. Intangible Assets are amortised
over a period of five years.
1.5 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 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. If at the Balance Sheet date there is an indication
that a previously assessed / impaired loss no longer exists, the
recoverable amount is reassessed and the asset is reflected at
recoverable amount.
1.6 Capital work in progress
Capital work in Progress includes, cost of assets not yet commissioned,
borrowing cost and incidental expenses during construction period.
1.7 Investments
Investments are stated at cost of acquisition less provision for
diminution in value, other than temporary, of long term Investments.
1.8 Inventories
Raw materials, Chemicals, Components & Spares parts are valued at lower
of cost, arrived at on FIFO method (net of CENVAT) or net realizable
value. Finished Goods (including stock at port or in transit) and Work
in Process are valued at lower of cost or net realizable value.
Saleable waste / scrap is valued at estimated realizable value.
Inter-unit goods transfers are valued at lower of their respective
transfer price or net realizable value. Import entitlements/Licenses
are valued at estimated net realizable / utilization value.
1.9 Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized in respect of obligations where, based on the
evidence available, their existence at the Balance Sheet date is
considered probable. Contingent liabilities are disclosed by way of
notes on accounts in respect of obligations where, based on the
evidence available, their existence at the Balance Sheet date is
considered not probable. Contingent assets are not recognized in the
accounts.
1.10 Revenue Recognition
i) Sales are inclusive of excise duty but net of sales tax, returns and
discounts. Domestic sales are recognized on dispatch of goods to
customers. Export sales are recognized on the issuance of Bill of
Lading/ Airway Bill by the carrier.
ii) All other expenses and income are accounted for on accrual basis.
1.11 Government Grants
Grants received against specific fixed assets are adjusted to the cost
of the assets and those in the nature of promoter's contribution are
credited to capital reserve. Revenue grants are recognized in the
Profit and Loss Account in accordance with the related scheme and in
the period in which there are accrued.
1.12 Foreign Currency Translations
i) All foreign currency transactions are recorded at the rates
prevailing on the date of the transaction.
ii) All foreign currency assets and liabilities other than investments
are restated / reported at the closing exchange rate prevailing on the
date of Balance Sheet.
iii) The premium or discount on Forward Exchange Contract is amortized
on a straight line method over the period of contract.
iv) Gains and losses arising out of fluctuations in the exchange rates
are recognized in Profit and Loss Account.
v) Investments in wholly owned subsidiaries are carried in Balance
sheet at the rates prevailing on the dates of transactions.
1.13 Overseas Office
i) Revenue items except opening & closing inventory and depreciation:
at average exchange rate.
ii) Fixed Assets and Depreciation: at exchange rate prevalent at the
time of acquisition of the assets.
iii) Current Assets and Current Liabilities: at the closing exchange
rate prevalent on the date of Balance Sheet.
iv) The exchange difference resulting from the translations of items in
the financial statements of foreign branch are recognized as income or
expense as the case may be.
1.14 Accounting for Retirement Benefits
i) Company's contributions to Provident Fund are charged to Profit
and Loss Account.
ii) The company has created a trust with Life Insurance Corporation of
India under the Group Gratuity Scheme in which actuarial valuation is
carried out annually in the month of March. The amount required to be
contributed to meet the accrued liability as per the actuarial
valuation is charged to Profit and Loss Account.
iii) Provision for leave encashment is done on the basis of leaves
accrued as at the end of the year.
1.15 Excise Duty
Excise Duty is accounted for as and when paid on clearance of goods
from bonded premises. No provision is made for excise Duty in respect
of finished products lying in bonded premises since major sales
comprises of Export Sales.
1.16 Borrowing Cost
Interest and other cost in connection with the borrowing of funds are
capitalized up to the date when such qualifying assets are ready for
its intended use and other borrowing costs are charged to Profit and
Loss Account.
1.17 Taxation
Provision for Income Tax is made after considering the various
deductions/benefits admissible under the Income Tax Act, 1961. In
accordance with AS 22 'Accounting for Taxes on Income' issued by
ICAI, the company has recognized Deferred Tax arising out of timing
differences between taxable income and accounting income and quantified
the same using the tax rates and laws enacted or substantively enacted
as on the Balance Sheet date.
1.18 Prior Period Items
Prior period items, if material, are disclosed separately.
Mar 31, 2011
1. Basis of Preparation of Financial Statements
The financial statements are prepared under the historical cost
convention on accrual basis of accounting in accordance with the
applicable Accounting Standards issued by the Institute of Chartered
Accountants of India (ICAI), generally accepted accounting principles
(GAAP) and the relevant provisions of the Companies Act, 1956.
2. Use of Estimates
The preparation of financial statements inconformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of financial statements and the
reported amount of revenues and expenses during the reported period.
Difference between actual results and estimates are recognized in the
period in which the results are known/ materialised.
3. Fixed Assets
Fixed Assets, other than those revalued, are stated at their cost of
acquisition or construction as the case may be, and including all
related acquisition/installation expenses and borrowing cost as per
Accounting Standard (AS) 16. Subsidy received on Fixed Assets is
credited to the cost of respective fixed assets. Assets revalued are
stated at their revalued amount. Cost/revalued amount so ascertained is
adjusted for accumulated depreciation/amortization and provision for
impair- ment.
4. Depreciation
Depreciation on Fixed Assets is provided on 'Straight Line Method' in
accordance with the provi- sions of Schedule XIV to the Companies Act,
1956. Leasehold Land is amortised over the period of lease.
Depreciation attributable to appreciation due to revaluation of fixed
assets (other than leasehold land) is provided according to the rates
prescribed in Schedule XIV to the Companies Act, 1956 and equivalent
amount is withdrawn from Revaluation Reserve and credited to Profit and
Loss Account. In case of impaired assets, depreciation is charged on
the adjusted cost net of impairment.
5. 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 asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generat- ing unit to which the asset belongs is less than the
"carrying amount", the carrying amount is reduced to its recoverable
amount. If at the Balance Sheet date there is an indication that a
previously assessed / impaired loss no longer exists, the recoverable
amount is reassessed and the asset is reflected at recoverable amount.
6. Capital work in progress
Capital work in Progress includes, cost of assets not yet commissioned,
borrowing cost and inci- dental expenses during construction period.
7. Investments
Investments are stated at cost of acquisition less provision for
diminution in value of quoted In- vestments.
8. Inventories
Raw materials, Chemicals, Components & Spares parts are valued at lower
of cost, arrived at on FIFO method (net of CENVAT) or net realisable
value. Finished Goods (including stock at port or in transit) and Work
in Process are valued at lower of cost or net realisable value.
Saleable waste/ scrap is valued at estimated realisable value. Inter
unit goods transfers are valued at lower of their respective transfer
price or net realisable value. Import entitlements/ Licenses are valued
at estimated net realizable/utilization value.
9. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised in respect of obligations where, based on the
evidence available, their existence at the Balance Sheet date is
considered probable. Contingent liabilities are disclosed by way of
notes on accounts in respect of obligations where, based on the
evidence available, their existence at the Balance Sheet date is
considered not probable. Contingent assets are not recognised in the
accounts.
10. Revenue Recognition
a) Sales are inclusive of excise duty but net of sales tax, returns and
discounts. Domestic sales are recognised on dispatch of goods to
customers. Export sales are recognised on the issu- ance of Bill of
Lading/ Airway Bill by the carrier.
b) Export incentives such as Duty Drawback and benefits under the Duty
Exemption Pass Book Scheme etc. are recognised on accrual basis.
11. Government Grants
Grants received against specific fixed assets are adjusted to the cost
of the assets and those in vhe nature of promoter's contribution are
credited to capital reserve. Revenue grants are recog- nized in the
Profit and Loss Account in accordance with the related scheme and in
the period in which there are accrued.
12. Foreign Currency Translations
a) All foreign currency transactions are recorded at the rates
prevailing on the date of the trans- action.
b) All foreign currency assets and liabilities other than investments
are restated / reported at the closing exchange rate prevailing on the
date of Balance Sheet.
c) The premium or discount on Forward Exchange Contract is amortised on
a straight line method over the period of contract.
d) Gains and losses arising out of fluctuations in the exchange rates
are recognised in Profit and Loss Account.
e) Investments in wholly owned subsidiaries are carried in Balance
Sheet at the rates prevailing on the dates of transactions.
f) Overseas Office
i) Revenue items except opening & closing inventory and depreciation:
at average ex- change rate.
ii) Fixed Assets and Depreciation : at exchange rate prevalent at the
time of acquisition of the assets.
iii) Current Assets and Current Liabilities: at the closing exchange
rate prevalent on the date of Balance Sheet.
iv) The exchange difference resulting from the translations of items in
the financial state- ments of foreign branch are recognised as income
or expense as the case may be.
13. Accounting for Retirement Benefits
a) Company's contributions to Provident Fund are charged to Profit and
Loss Account.
b) The company has created a trust with Life Insurance Corporation of
India under the Group Gratuity Scheme in which actuarial valuation is
carried out annually in the month of March. The amount required to be
contributed to meet the accrued liability as per the actuarial valu-
ation is charged to Profit and Loss Account.
c) Provision for leave encashment is done on the basis of leaves
accrued as at the end of the year.
d) Termination benefits are recognised as an expense as and when
incurred.
14. Excise Duty
Excise Duty is accounted for as and when paid on clearance of goods
from bonded premises. No provision is made for excise Duty in respect
of finished products lying in bonded premises since major sales
comprises of Export Sales.
15. Borrowing Cost
Interest and other cost in connection with the borrowing of funds are
capitalized up to the date when such qualifying assets are ready for
its intended use and other borrowing costs are charged to Profit and
Loss Account.
16. Taxation
Provision for Income Tax is made after considering the various
deductions/benefits admissible under the Income Tax Act, 1961. In
accordance with AS 22 'Accounting for Taxes on Income' issued by ICAI,
the company has recognised Deferred Tax arising out of timing
differences be- tween taxable income and accounting income and
quantified the same using the tax rates and laws enacted or
substantively enacted as on the Balance Sheet date.
17. Prior Period Items: -
Prior period items, if material, are disclosed separately.
Mar 31, 2010
1. Basis of Preparation of Financial Statements
The financial statements are prepared under the historical cost
convention on accrual basis of accounting in accordance with the
applicable Accounting Standards issued by the Institute of Chartered
Accountants of India (ICAI), Generally Accepted Accounting Principles
(GAAP) and the relevant provisions of the Companies Act, 1956.
2. Use of Estimates
The preparation of financial statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent liabilities on the date of financial statements and the
reported amount of revenues and expenses during the reported period.
Difference between actual results and estimates are recognized in the
period in which the results are known/ materialised.
3. Fixed Assets
Fixed Assets, other than those revalued, are stated at their cost of
acquisition or construction as the case may be, and including all
related acquisition/installation expenses and borrowing cost as per
Accounting Standard (AS) 16. Subsidy received on Fixed Assets is
credited to the cost of respective fixed assets. Assets revalued are
stated at their revalued amount. Cost/revalued amount so ascertained is
adjusted for accumulated depreciation/amortization and provision for
impair- ment.
4. Depreciation
Depreciation on Fixed Assets is provided on Straight Line Method in
accordance with the provi- sions of Schedule XIV to the Companies Act,
1956. Leasehold Land is amortised over the period of lease.
Depreciation attributable to appreciation due to revaluation of fixed
assets (other than leasehold land) is provided according to the rates
prescribed in Schedule XIV to the Companies Act, 1956 and equivalent
amount is withdrawn from Revaluation Reserve and credited to Profit and
Loss Account. In case of impaired assets, depreciation is charged on
the adjusted cost net of impairment.
5. 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 asset. If
such recoverable amount of the asset or the recoverable amount of the
cash generat- ing unit to which the asset belongs is less than the
"carrying amount", the carrying amount is reduced to its recoverable
amount. If at the Balance Sheet date there is an indication that a
previously assessed / impaired loss no longer exists, the recoverable
amount is reassessed and the asset is reflected at recoverable amount.
6. Capital work in progress
Capital work in Progress includes, cost of assets not yet commissioned,
borrowing cost and inci- dental expenses during construction period.
7. Investments
Investments are stated at cost of acquisition less provision for
diminution in value of quoted In- vestments.
8. Inventories
Raw materials, Chemicals, Components & Spares parts are valued at lower
of cost, arrived at on FIFO method (net of CENVAT) or net realisable
value. Finished Goods (including stock at port or in transit) and Work
in Process are valued at lower of cost or net realisable value.
Saleable waste/ scrap is valued at estimated realisable value. Inter
unit goods transfers are valued at lower of their respective transfer
price or net realisable value. Import entitlements/ Licenses are valued
at estimated net realizable/utilization value.
9. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised in respect of obligations where, based on the
evidence available, their existence at the Balance Sheet date is
considered probable. Contingent liabilities are disclosed by way of
notes on accounts in respect of obligations where, based on the
evidence available, their existence at the Balance Sheet date is
considered not probable. Contingent assets are not recognised in the
accounts.
10. Revenue Recognition
a) Sales are inclusive of excise duty but net of sales tax, returns and
discounts. Domestic sales are recognised on dispatch of goods to
customers. Export sales are recognised on the issu- ance of Bill of
Lading/Airway Bill by the carrier.
b) Export incentives such as Duty Drawback and benefits under the Duty
Exemption Pass Book Scheme etc. are recognised on accrual basis.
c) Insurance Claims are accounted for on settlement of claims.
11. Government Grants
Grants received against specific fixed assets are adjusted to the cost
of the assets and those in the nature of promoters contribution are
credited to capital reserve. Revenue grants are recog- nized in the
Profit and Loss Account in accordance with the related scheme and in
the period in which there are accrued.
12. Foreign Currency Translations
a) All foreign currency transactions are recorded at the rates
prevailing on the date of the trans- action.
b) All foreign currency assets and liabilities other than investments
are restated / reported at the closing exchange rate prevailing on the
date of Balance Sheet.
c) The premium or discount on Forward Exchange Contract is amortised on
a straight line method over the period of contract.
d) Gains and losses arising out of fluctuations in the exchange rates
are recognised in Profit and Loss Account.
e) Investments in wholly owned subsidiaries are carried in Balance
sheet at the rates prevailing on the dates of transactions.
f) Overseas Office
i) Revenue items except opening & closing inventory and depreciation:
at average ex- change rate.
ii) Fixed Assets and Depreciation: at exchange rate prevalent at the
time of acquisition of the assets.
iii) Current Assets and Current Liabilities: at the closing exchange
rate prevalent on the date of Balance Sheet.
iv) The exchange difference resulting from the translations of items in
the financial state- ments of foreign branch are recognised as income
or expense as the case may be.
13. Accounting for Retirement Benefits
a) Companys contributions to Provident Fund are charged to Profit and
Loss Account.
b) The company has created a trust with Life Insurance Corporation of
India under the Group Gratuity Scheme in which actuarial valuation is
carried out annually in the month of March. The amount required to be
contributed to meet the accrued liability as per the actuarial valu-
ation is charged to Profit and Loss Account.
c) Provision for leave encashment is done on the basis of leaves
accrued as at the end of the year.
d) Termination benefits are recognised as an expense as and when
incurred.
14. Excise Duty
Excise Duty is accounted for as and when paid on clearance of goods
from bonded premises. No provision is made for Excise Duty in respect
of finished products lying in bonded premises since major sales
comprises of Export Sales.
15. Borrowing Cost
Interest and other cost in connection with the borrowing of funds are
capitalized up to the date when such qualifying assets are ready for
its intended use and other borrowing costs are charged to Profit and
Loss Account.
16. Taxation
Provision for Income Tax is made after considering the various
deductions/benefits admissible under the Income Tax Act, 1961. In
accordance with AS 22 Accounting for Taxes on Income issued by ICAI,
the company has recognised Deferred Tax arising out of timing
differences be- tween taxable income and accounting income and
quantified the same using the tax rates and laws enacted or
substantively enacted as on the Balance Sheet date.
17. Prior Period Items
Prior period items, if material, are disclosed separately.