Accounting Policies of Supreme Industries Ltd. Company
Mar 31, 2023
1. BASIS OF PREPARATION, MEASUREMENT AND SIGNIFICANT ACCOUNTING POLICIES1.1 COMPANY OVERVIEW:
The Supreme Industries Limited ("the Company") is public limited company incorporated and domiciled in India and has registered office at 612, Raheja Chambers, Nariman Point, Mumbai 400021. It is incorporated under the Indian Companies Act, 1913 and its shares are listed on the Bombay Stock Exchange Limited and National Stock Exchange in India.
The Company is one of the leading plastic products manufacturing company in India having 28 manufacturing facilities spread across the country, offering a wide and comprehensive range of plastic products in India. The company operates in various product categories viz. Plastic Piping System, Cross Laminated Films & Products, Protective Packaging Products, Industrial Moulded Components, Moulded Furniture, Storage & Material Handling Products, Performance Packaging Films and Composite LPG Cylinders.
The standalone financial statements are approved for issue by the Company''s Board of Directors on 28th April, 2023.
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ''Ind AS'') as prescribed under section 133 of the Companies Act, 2013 ("the Act") read with Companies (Indian Accounting standards) Rules, 2015 as amended and other relevant provisions of the Act.
The financial statements are prepared and presented on accrual basis and under the historical cost convention, except for the following material items that have been measured at fair value as required by the relevant Ind AS:
a) Certain financial assets and liabilities are measured at Fair value and derivative financial instruments (Refer accounting policy on financial instruments - Refer Note 1.10 below)
b) Defined Benefit and other Long-term Employee Benefits - Refer Note 1.12 below
All amounts disclosed in the financial statements and notes have been rounded off to the nearest crores.
1.3 USE OF ESTIMATES AND JUDGEMENTS
The preparation of the financial statements requires that the Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The recognition, measurement, classification or disclosure of an item or information in the financial statements is made relying on these estimates.
The estimates and judgements used in the preparation of the financial statements are continuously evaluated and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.
Current and non-current classification
All the assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle (not exceeding twelve months) and other criteria set out in Schedule III to the Companies Act, 2013.
Areas involving critical estimates and Judgements are:
- Estimation of employee defined benefit obligations (Refer Note 1.12 below)
- Estimation of current tax expenses (Refer Note 1.15 below)
- Estimation of provisions and contingent liabilities (Refer Note 1.17 below)
1.4 PROPERTY, PLANT AND EQUIPMENT & INTANGIBLE ASSETS Property, Plant and Equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Costs include freight, import duties, non-refundable purchase taxes and other expenses directly attributable to the acquisition of the asset.
Subsequent costs are included in the asset''s 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 Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss during the reporting period in which they are incurred.
Intangible assets are held on the balance sheet at cost less accumulated amortisation and impairment losses. Intangible assets developed or acquired with finite useful life are amortized on straight line basis over the useful life as specified below:
|
Category |
Useful Life |
|
Computer Software and Licenses |
3 to 5 years |
|
Right to Use |
5 years |
Capital Work-in-progress and Pre-operative Expenses during Construction Period
Capital Work-in-Progress includes expenditure during construction period incurred on projects under implementation treated as pre-operative expenses pending allocation to the assets. These expenses are apportioned to the respective fixed assets on their completion / commencement of commercial production.
Depreciation/amortisation:
Depreciation is provided on the straight-line method applying the useful lives as prescribed in part C of Schedule II to the Companies Act, 2013. The range of estimated useful lives of Property, Plant & Equipment''s are as under:
|
Category |
Useful Life |
|
Buildings (including roads) |
3- 60 Years |
|
Plant & Equipment* |
7- 18 Years |
|
Moulds & Dies* |
2- 6 Years |
|
Furniture & Fixture |
10 Years |
|
Office Equipment |
3 - 5 Years |
|
Vehicles |
2 - 10 Years |
* Useful life of Plant & Equipment of Plastic Piping System Division, Protective Packaging Division and Cross Laminated Film Division and Moulds and Dies are determined based on the internal assessment supported by independent technical evaluation carried out by external valuers.
The management believes that the useful life as given above the best represent the period over which the management expects to use these assets. The Company reviews the useful lives and residual value at each reporting date.
Depreciation on assets added/sold or discarded during the year is being provided on pro-rata basis up to the date on which such assets are added/sold or discarded. Leasehold Land is amortized over the period of lease.
Assets costing up to R 10,000 each are depreciated fully in the year of purchase.
Gains/Losses on disposals/de-recognition of property, plant and equipment are determined by comparing proceeds with carrying amount and these are recognized in statement of profit & Loss.
Assets held for sale
Non-current assets or disposal groups comprising of assets and liabilities are classified as ''held for sale'' when all of the following criteria''s are met:
(i) decision has been made to sell.
(ii) the assets are available for immediate sale in its present condition.
(iii) the assets are being actively marketed and
(iv) sale has been agreed or is expected to be concluded within 12 months of the Balance Sheet date.
Subsequently, such non-current assets and disposal groups classified as ''held for sale'' are measured at the lower of its carrying value and fair value less costs to sell. Non-current assets held for sale are not depreciated or amortised.
1.5 impairment of non-financial assets
The Company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group of non-financial assets are impaired. If any such indication exists, the Company estimates the amount of impairment loss. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the individual asset/cash generating unit is made.
An impairment loss is calculated as the difference between an asset''s carrying amount and recoverable amount. Losses are recognised in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.
1.6 revenue from contracts with customers
The Company recognizes revenue, when or as control over distinct goods or services is transferred to the customer; i.e. when the customer is able to direct the use of the transferred goods or services and obtains substantially all of the remaining benefits, provided a contract with enforceable rights and obligations exists and amongst others collectability of consideration is probable taking into account customer''s creditworthiness.
Revenue is the transaction price the Company expects to be entitled to. In determining the transaction price, the Company considers effects of variable consideration, the existence of significant financing contracts, noncash consideration and consideration payable to the customer, if any.
Variable Consideration
If the consideration in a contract includes a variable amount, the company estimates the amount of consideration to which it will be entitled to in exchange for transferring goods to the customer. Some contracts with the customers provide them with a right to return and volume rebates. The right to return and volume rebates gives rise to variable consideration. The amount of variable consideration is calculated by either using the expected value or the most likely amount depending on which is expected to better predict the amount of variable consideration.
Sale of goods: Revenues are recognized at a point in time when control of the goods passes to the buyer, usually upon either at the time of dispatch or delivery. In case of export sale, it is usually recognised based on the shipped-on board date as per bill of lading. Revenue from sale of goods is net of taxes.
Sale of services: Revenues are recognized over time on a straight-line basis or, if the performance pattern is other than straightline, as services are provided/rendered.
Other operating income: - Export Incentive under various schemes are accounted in the year of export.
Other Income
Dividend income on investments is recognised when the right to receive dividend is established.
Interest income is recognized on a time proportionate basis taking into account the amounts invested and the rate of interest. For all financial instruments measured at amortised cost, interest income is recorded using the Effective interest rate method to the net carrying amount of the financial assets.
1.7 CONTRACT BALANCES Trade Receivables:
A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e. only a passage of time is required to before payment of the consideration is due).
Contract liabilities:
A contract liability is the obligation to transfer goods or services to a customer for which the company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the company transfer goods and services to the customer, a contract liability is recognised when the payment is made or the payment is due, whichever is earlier. Contract liabilities are recognised as revenue when the company performs under the contract.
1.8 government grants
Government grants are recognised where there is reasonable assurance that the grant will be received, and all attached conditions will be complied with. Government grants related to revenue are recognised on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate. Such grants are deducted in reporting the related expense. When the grant relates to an asset, it is recognized as income over the expected useful life of the asset.
In case a non-monetary asset is given free of cost it is recognised at a fair value. When loan or similar assistance are provided by government or related institutions, with an interest rate below the current applicable market rate, the effect of this favorable interest is recognized as government grant. The loan or assistance is initially recognized and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received.
1.9 INVENTORIES
Inventories includes raw material, semi finished goods, stock -in -trade, finished goods, stores & spares, consumables, packing materials, goods for resale and material in transit are valued at lower of cost and net realizable value.
Raw Material and Components - Cost include cost of purchases and other costs incurred in bringing the inventories to their present location and condition. Cost is determined using weighted average basis.
Finished/Semi-Finished Goods - Cost includes cost of direct material, labor, other direct cost (Including variable costs) and a proportion of fixed manufacturing overheads allocated based on the normal operating capacity but excluding borrowing costs. Cost is determined on weighted average basis.
Stock-in-trade - Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and conditions.
Stores, Spare Parts, Consumables, Packing Materials etc. - cost is determined on weighted average basis.
Goods for Resale - cost is determined on weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale.
Adequate allowance is made for obsolete and slow-moving items.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets - Initial recognition
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial assets other than trade receivables are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the Statement of Profit and Loss.
Subsequent measurement
Financial assets, other than equity instruments, are subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss on the basis of both:
(i) the entity''s business model for managing the financial assets and
(ii) the contractual cash flow characteristics of the financial asset.
(a) Measured at amortised cost:
A financial asset is measured at amortised cost, if it is held under the hold to collect business model i.e. held with an objective of holding the assets to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest on the principal outstanding. Amortised cost is calculated using the effective interest rate ("EIR") method 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 interest income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss. On derecognition, gain or loss, if any, is recognised to Statement of Profit and Loss.
(b) Measured at fair value through other comprehensive income (FvOCI):
A financial asset is measured at FVOCI, if it is held under the hold to collect and sell business model i.e. held with an objective to collect contractual cash flows and selling such financial asset and the contractual cash flows are solely payments of principal and interest on the principal outstanding. It is subsequently measured at fair value with fair value movements recognised in the OCI, except for interest income which is recognised using EIR method. The losses arising from impairment are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in the OCI is reclassified from the equity to Statement of Profit and Loss.
(c) Measured at fair value through profit or loss (FvTPL):
Investment in financial asset other than equity instrument, not measured at either amortised cost or FVOCI is measured at FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised in the Statement of Profit and Loss.
equity Instruments:
All investments in equity instruments classified under financial assets are subsequently measured at fair value. Equity instruments which are held for trading are measured at FVTPL.
For all other equity instruments, the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument shall be recognised in Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognised in the OCI. Amounts recognised in Other Comprehensive Income (OCI) are not subsequently transferred to Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised in Statement of Profit and Loss.
Impairment
The Company recognises a loss allowance for Expected Credit Losses (ECL) on financial assets that are measured at amortised cost and at FVOCI. The credit loss is difference between all contractual cash flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate. This is assessed on an individual or collective basis after considering all reasonable and supportable including that which is forward-looking.
The Company''s trade receivables or contract revenue receivables do not contain significant financing Branch and loss allowance on trade receivables is measured at an amount equal to life time expected losses i.e. expected cash shortfall, being simplified approach for recognition of impairment loss allowance.
Under simplified approach, the Company does not track changes in credit risk. Rather it recognizes impairment loss allowance based on the lifetime ECL at each reporting date right from its initial recognition. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables.
The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
For financial assets other than trade receivables, the Company recognises 12-month expected credit losses for all originated or acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial recognition. The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset increases significantly since its initial recognition. If, in a subsequent period, credit quality of the instrument improves such that there is no longer significant increase in credit risks since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12 months ECL.
Impairment loss allowance including ECL or reversal recognized during the period is recognized as income/ expense in the Statement of Profit and Loss. This amount is reflected under the head ''other expenses'' in the Statement of Profit and Loss. The impairment loss is presented as an allowance in the balance sheet as a reduction from the net carrying amount of the trade-receivable, loan, deposits and lease receivable respectively.
De-recognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers rights to receive cash flows from an asset, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Financial Liabilities
Initial Recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial liabilities are initially recognised at fair value net of transaction costs for all financial liabilities not carried at fair value through profit or loss.
The Company''s financial liabilities includes trade and other payables, loans and borrowings including bank overdrafts and derivative instruments.
Subsequent measurement
Financial liabilities measured at amortised cost are subsequently measured at using EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.
Loans & Borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using EIR method. Gains and losses are recognized in profit & loss when the liabilities are derecognized as well as through EIR amortization 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 or loss.
Financial Guarantee Contracts
Financial guarantee contracts issued by the Company are those contracts that requires a payment to be made or to reimburse the holder for a loss it incurs because the specified debtors fails to make payment when due in accordance with the term of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative adjustments.
De-recognition
A financial liability is de-recognised 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.
Derivative financial instruments & hedge accounting
The Company uses derivative financial instruments, such as forward foreign exchange contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value, with changes in fair value recognised 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.
The Company designates their derivatives as hedges of foreign currency risk associated with the cash flows of highly probable forecast transactions and variable interest rate risks associated with the borrowings.
The Company documents at the inception of hedging transaction the economic relationship between hedging instruments and hedged items including whether the hedging instrument is expected to offset cash flow of hedged items. The Company documents its risk management objective and strategy for undertaking various hedge transaction at the inception of each hedge relationship.
Cash flows hedge that qualify for the hedge accounting
Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit & loss, except for the effective portion of cash flow hedge which is recognized in other comprehensive income and presented as separate Branch of equity which is later reclassified to statement of profit & loss when the hedge item affects profit & loss.
Offsetting of financial instruments
Financial assets and financial liabilities are off-set, and the net amount is reported in the Balance Sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
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 for the asset or liability The principal or the most advantageous market must be accessible by the Company.
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.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to 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. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.12 employee benefits
The Company has provides following post-employment plans such as:
(a) Defined benefit plans such a gratuity and
(b) Defined contribution plans such as Provident fund & Superannuation fund
a) Defined-benefit plan:
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plan is the present value of defined benefit obligations at the end of the reporting period less fair value of plan assets. The defined benefit obligations is calculated annually by actuaries through actuarial valuation using the projected unit credit method.
The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
(a) Service costs comprising current service costs, past-service costs, gains and losses on curtailment and non-routine settlements; and
(b) Net interest expense or income
Re-measurement comprising of actuarial gains and losses arising from:
(a) Re-measurement of Actuarial(gains)/losses
(b) Return on plan assets, excluding amount recognized in effect of asset ceiling
(c) Re-measurement arising because of change in effect of asset ceiling
are recognised in the period in which they occur directly in Other comprehensive income. Re-measurement are not reclassified to profit or loss in subsequent periods.
Ind AS 19 requires the exercise of judgment in relation to various assumptions including future pay rises, inflation and discount rates and employee and pensioner demographics. The Company determines the assumptions in conjunction with its actuaries, and believes these assumptions to be in line with best practice, but the application of different assumptions could have a significant effect on the amounts reflected in the income statement, other comprehensive income and balance sheet. There may be also interdependency between some of the assumptions.
b) Defined-contribution plan:
Under defined contribution plans, provident fund, the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. Defined Contribution plan comprise of contributions to the employees'' provident fund with the government, superannuation fund and certain state plans like Employees'' State Insurance and Employees'' Pension Scheme. The Company''s payments to the defined contribution plans are recognised as expenses during the period in which the employees perform the services that the payment covers.
c) Other employee benefits:
(i) Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the obligation as at the Balance sheet date determined based on an actuarial valuation.
(ii) Undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the period when the employee renders the related services.
d) Expenses incurred towards voluntary retirement scheme are charged to the statement of profit and loss as and when incurred.
e) Other benefits comprising of discretionary long service awards are recognized as and when determined.
As a Lessee:
The Company''s lease asset classes primarily consist of leases for land, buildings and vehicles. 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 period of time in exchange for consideration.
To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract 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.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
As a Lessor:
Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
1.14 FOREIGN CURRENCY TRANSACTIONS
a) Functional and Presentation currency
The Financial statements are presented in Indian Rupees (INR), which is Company''s functional and presentation currency.
b) Initial Recognition
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss of the year.
c) Measurement of Foreign Currency Items at the Balance Sheet Date
Foreign currency monetary items of the Company are restated at the closing exchange rates. Non monetary items are recorded at the exchange rate prevailing on the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The gain or loss arising on translation of non- monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in the fair value of the item. Exchange differences arising out of these transactions are charged to the Statement of Profit and Loss.
1.15 taxes on income
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses, if any.
Income tax comprises current and deferred tax. Income tax expense is recognized in the statement of profit and loss except to the extent it relates to items directly recognized in equity or in other comprehensive income. In this case, the tax expense is also recognized in other comprehensive income or directly in equity, as the case may be.
Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences between accounting and tax treatments, and due to items, that are never taxable or tax deductible. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws prevailing and applicable for the relevant assessment year.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
The Company offsets, the tax assets and liabilities (on a year on year basis) where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis or to realise the assets and liabilities on net basis.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
1.16 RESEARCH AND DEvELOPMENT ExPENDITuRE
Research costs are expensed as incurred. Product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, further economic benefits are probable, the Company has an intention and ability to complete and use or sell the product and the costs can be measured reliably.
1.17 provisions and contingencies
A provision is recognised when there is a present legal or constructive obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, and in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
A disclosure for a contingent liability is made where there is a possible obligation arising out of past event, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation arising out of past event where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract.
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 recognised as a finance cost.
1.18 CASH AND CASH EQUIVALENTS
Cash and Cash equivalents include cash and Cheque in hand, bank balances, demand deposits with banks and other shortterm highly liquid investments that are readily convertible to known amounts of cash & which are subject to an insignificant risk of changes in value where original maturity is three months or less.
Cash flows are reported using the indirect method where by the profit before tax is adjusted for the effect of the transactions of a non-cash nature, any deferrals or accruals of past and future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of Cost of that assets, during the period till all the activities necessary to prepare the Qualifying assets for its intended use or sale are complete during the period of time that is required to complete and prepare the assets for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are recognized as an expense in the period in which they are incurred.
1.21 earnings per share
Basic EPS is arrived at based on net profit after tax available to equity shareholders to the weighted average number of equity shares outstanding during the year. The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless impact is anti-dilutive.
Operating segments are reported in a manner consistent with the internal reporting provided to Chief Operating Decision Maker (CODM).
The Company has identified its Managing Director as CODM who is responsible for allocating resources and assessing performance of the operating segments and makes strategic decisions.
When an item of income or expense within profit or loss from ordinary activity is of such size, nature or incidence that their disclosure is relevant to explain the performance of the Company for the year, the nature and amount of such items is disclosed as exceptional items.
The Company recognizes a liability to pay dividend when the distribution is authorised and the distribution is no longer at the discretion of the Company i.e. when the dividend distribution is being approved by the shareholders. A corresponding amount is recognized directly in equity.
1.25 RECENT INDIAN ACCOuNTING STANDARDS (IND AS)
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31,2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1, 2023, as below:
(a) Ind AS 1 - Presentation of Financial Statements - The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements.
(b) Ind AS 12 - Income Taxes - The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the Initial recognition exemption of Ind AS 12 so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. Accordingly, companies will need to recognise a deferred tax asset and a deferred tax liability for temporary differences arising on transactions such as initial recognition of a lease and a decommissioning provision.
(c) Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - The definition of a "change in accounting estimates" has been replaced with a definition of "accounting estimates". Accounting estimates are defined as "monetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty.
The Company is evaluating the impact, if any, in its financial statements and does not expect to have these amendments to have any significant impacts in its financial statements.
Mar 31, 2022
1. BASIS OF PREPARATION, MEASUREMENT AND SIGNIFICANT ACCOUNTING POLICIES
1.1 COMPANY OVERVIEW:
The Supreme Industries Limited ("the Company") is public limited company incorporated and domiciled in India and has registered office at 612, Raheja Chambers, Nariman Point, Mumbai 400021. It is incorporated under the Indian Companies Act, 1913 and its shares are listed on the Bombay Stock Exchange Limited and National Stock Exchange in India.
The Company is one of the leading plastic products manufacturing company in India having 25 manufacturing facilities spread across the country, offering a wide and comprehensive range of plastic products in India. The company operates in various product categories viz. Plastic Piping System, Cross Laminated Films & Products, Protective Packaging Products, Industrial Moulded Components, Moulded Furniture, Storage & Material Handling Products, Performance Packaging Films and Composite LPG Cylinders.
The standalone financial statements are approved for issue by the Company''s Board of Directors on 29th April, 2022.
1.2 BASIS OF ACCOuNTING
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ''Ind AS'') as prescribed under section 133 of the Companies Act, 2013 ("the Act") read with Companies (Indian Accounting standards) Rules, 2015 as amended and other relevant provisions of the Act.
The financial statements are prepared and presented on accrual basis and under the historical cost convention, except for the following material items that have been measured at fair value as required by the relevant Ind AS:
a) Certain financial assets and liabilities are measured at Fair value and derivative financial instruments (Refer accounting policy on financial instruments - Refer Note 1.10 below)
b) Defined Benefit and other Long-term Employee Benefits - Refer Note 1.12 below Rounding off
All amounts disclosed in the financial statements and notes have been rounded off to the nearest crores.
1.3 USE OF ESTIMATES AND JUDGEMENTS
The preparation of the financial statements requires that the Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The recognition, measurement, classification or disclosure of an item or information in the financial statements is made relying on these estimates.
The estimates and judgements used in the preparation of the financial statements are continuously evaluated and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.
Current and non-current classification
All the assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle (not exceeding twelve months) and other criteria set out in Schedule III to the Companies Act, 2013.
Areas involving critical estimates and Judgements are:
- Estimation of employee defined benefit obligations (Refer note no. 1.12 below)
- Estimation of current tax expenses (Refer note no. 1.15 below)
- Estimation of provisions and contingent liabilities (Refer note no. 1.17 below)
1.4 PROPERTY, PLANT AND EQUIPMENT & INTANGIBLE ASSETS Property, Plant and Equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Costs include freight, import duties, non-refundable purchase taxes and other expenses directly attributable to the acquisition of the asset.
Subsequent costs are included in the asset''s 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 Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss during the reporting period in which they are incurred.
Leasehold land is stated at historical cost less amounts written off proportionate to expired lease period.
Intangible Assets
Intangible assets are held on the balance sheet at cost less accumulated amortisation and impairment losses. Intangible assets developed or acquired with finite useful life are amortized on straight line basis over the useful life as specified below:
|
Category |
Useful Life |
||
|
Computer Software and Licenses |
3 to 5 years |
||
|
Right to Use |
5 years |
||
Capital Work-in-progress and Pre-operative Expenses during Construction Period
Capital Work-in-Progress includes expenditure during construction period incurred on projects under implementation treated as pre-operative expenses pending allocation to the assets. These expenses are apportioned to the respective fixed assets on their completion / commencement of commercial production.
Depreciation/amortisation:
Depreciation is provided on the straight-line method applying the useful lives as prescribed in part C of Schedule II to the Companies Act, 2013. The range of estimated useful lives of Property, Plant & Equipment''s are as under:
|
Category |
Useful Life |
|
Buildings (including roads) |
3- 60 Years |
|
Plant & Equipment* |
7- 25 Years |
|
Moulds & Dies* |
2- 6 Years |
|
Furniture & Fixture |
10 Years |
|
Office Equipment |
3 - 5 Years |
|
Vehicles |
6 - 10 Years |
* Useful life of Plant & Equipment of Plastic Piping System Division, Protective Packaging Division and Cross Laminated Film Division and Moulds and Dies are determined based on the internal assessment supported by independent technical evaluation carried out by external valuers.
The management believes that the useful life as given above the best represent the period over which the management expects to use these assets. The Company reviews the useful lives and residual value at each reporting date.
Depreciation on assets added/sold or discarded during the year is being provided on pro-rata basis up to the date on which such assets are added/sold or discarded. Leasehold Land is amortized over the period of lease.
Assets costing up to R 10,000 each are depreciated fully in the year of purchase.
Gains/Losses on disposals/de-recognition of property, plant and equipment are determined by comparing proceeds with carrying amount and these are recognized in statement of profit & Loss.
Assets held for sale
Non-current assets or disposal groups comprising of assets and liabilities are classified as ''held for sale'' when all of the following criteria''s are met:
(i) decision has been made to sell.
(ii) the assets are available for immediate sale in its present condition.
(iii) the assets are being actively marketed and
(iv) sale has been agreed or is expected to be concluded within 12 months of the Balance Sheet date.
Subsequently, such non-current assets and disposal groups classified as ''held for sale'' are measured at the lower of its carrying value and fair value less costs to sell. Non-current assets held for sale are not depreciated or amortised.
1.5 impairment of non-financial assets
The Company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group of non-financial assets are impaired. If any such indication exists, the Company estimates the amount of impairment loss. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the individual asset/cash generating unit is made.
An impairment loss is calculated as the difference between an asset''s carrying amount and recoverable amount. Losses are recognised in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.
1.6 revenue from contracts with customers
The Company recognizes revenue, when or as control over distinct goods or services is transferred to the customer; i.e. when the customer is able to direct the use of the transferred goods or services and obtains substantially all of the remaining benefits, provided a contract with enforceable rights and obligations exists and amongst others collectability of consideration is probable taking into account customer ''s creditworthiness.
Revenue is the transaction price the Company expects to be entitled to. In determining the transaction price, the Company considers effects of variable consideration, the existence of significant financing contracts, noncash consideration and consideration payable to the customer, if any.
Variable Consideration
If the consideration in a contract includes a variable amount, the company estimates the amount of consideration to which it will be entitled to in exchange for transferring goods to the customer. Some contracts with the customers provide them with a right to return and volume rebates. The right to return and volume rebates gives rise to variable consideration. The amount of variable consideration is calculated by either using the expected value or the most likely amount depending on which is expected to better predict the amount of variable consideration.
Sale of goods: Revenues are recognized at a point in time when control of the goods passes to the buyer, usually upon either at the time of dispatch or delivery. In case of export sale, it is usually recognised based on the shipped-on board date as per bill of lading. Revenue from sale of goods is net of taxes and recovery of charges collected from customers like transport, packing etc.
Sale of services: Revenues are recognized over time on a straight-line basis or, if the performance pattern is other than straightline, as services are provided/rendered.
Other operating income: - Export Incentive under various schemes are accounted in the year of export.
Other Income
Dividend income on investments is recognised when the right to receive dividend is established.
Interest income is recognized on a time proportionate basis taking into account the amounts invested and the rate of interest. For all financial instruments measured at amortised cost, interest income is recorded using the Effective interest rate method to the net carrying amount of the financial assets.
1.7 CONTRACT BALANCES Trade Receivables:
A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e. only a passage of time is required to before payment of the consideration is due).
Contract liabilities:
A contract liability is the obligation to transfer goods or services to a customer for which the company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the company transfer goods and services to the customer, a contract liability is recognised when the payment is made or the payment is due, whichever is earlier. Contract liabilities are recognised as revenue when the company performs under the contract.
1.8 government grants
Government grants are recognised where there is reasonable assurance that the grant will be received, and all attached conditions will be complied with. Government grants related to revenue are recognised on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate. Such grants are deducted in reporting the related expense. When the grant relates to an asset, it is recognized as income over the expected useful life of the asset.
In case a non-monetary asset is given free of cost it is recognised at a fair value. When loan or similar assistance are provided by government or related institutions, with an interest rate below the current applicable market rate, the effect of this favorable interest is recognized as government grant. The loan or assistance is initially recognized and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received.
1.9 INVENTORIES
Inventories includes raw material, semi finished goods, stock -in -trade, finished goods, stores & spares, consumables, packing materials, goods for resale and material in transit are valued at lower of cost and net realizable value.
Raw Material and Components - Cost include cost of purchases and other costs incurred in bringing the inventories to their present location and condition. Cost is determined using weighted average basis.
Finished/Semi-Finished Goods - Cost includes cost of direct material, labor, other direct cost (Including variable costs) and a proportion of fixed manufacturing overheads allocated based on the normal operating capacity but excluding borrowing costs. Cost is determined on weighted average basis.
Stock-in-trade - Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and conditions.
Stores, Spare Parts, Consumables, Packing Materials etc. - Cost is determined on weighted average basis.
Goods for Resale - Cost is determined on weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale.
Adequate allowance is made for obsolete and slow-moving items.
1.10 FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets - Initial recognition
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial assets other than trade receivables are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the Statement of Profit and Loss.
Subsequent measurement
Financial assets, other than equity instruments, are subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss on the basis of both:
(i) the entity''s business model for managing the financial assets and
(ii) the contractual cash flow characteristics of the financial asset.
(a) Measured at amortised cost:
A financial asset is measured at amortised cost, if it is held under the hold to collect business model i.e. held with an objective of holding the assets to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest on the principal outstanding. Amortised cost is calculated using the effective interest rate ("EIR") method 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 interest income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss. On derecognition, gain or loss, if any, is recognised to Statement of Profit and Loss.
(b) Measured at fair value through other comprehensive income (FvOCI):
A financial asset is measured at FVOCI, if it is held under the hold to collect and sell business model i.e. held with an objective to collect contractual cash flows and selling such financial asset and the contractual cash flows are solely payments of principal and interest on the principal outstanding. It is subsequently measured at fair value with fair value movements recognised in the OCI, except for interest income which recognised using EIR method. The losses arising from impairment are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in the OCI is reclassified from the equity to Statement of Profit and Loss.
(c) Measured at fair value through profit or loss (FvTPL):
Investment in financial asset other than equity instrument, not measured at either amortised cost or FVOCI is measured at FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised in the Statement of Profit and Loss.
equity Instruments:
All investments in equity instruments classified under financial assets are subsequently measured at fair value. Equity instruments which are held for trading are measured at FVTPL.
For all other equity instruments, the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument shall be recognised in Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognised in the OCI. Amounts recognised in Other Comprehensive Income (OCI) are not subsequently transferred to Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised in Statement of Profit and Loss.
Impairment
The Company recognises a loss allowance for Expected Credit Losses (ECL) on financial assets that are measured at amortised cost and at FVOCI. The credit loss is difference between all contractual cash flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate. This is assessed on an individual or collective basis after considering all reasonable and supportable including that which is forward-looking.
The Company''s trade receivables or contract revenue receivables do not contain significant financing Branch and loss allowance on trade receivables is measured at an amount equal to life time expected losses i.e. expected cash shortfall, being simplified approach for recognition of impairment loss allowance.
Under simplified approach, the Company does not track changes in credit risk. Rather it recognizes impairment loss allowance based on the lifetime ECL at each reporting date right from its initial recognition. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables.
The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
For financial assets other than trade receivables, the Company recognises 12-month expected credit losses for all originated or acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial recognition. The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset increases significantly since its initial recognition. If, in a subsequent period, credit quality of the instrument improves such that there is no longer significant increase in credit risks since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12 months ECL.
Impairment loss allowance including ECL or reversal recognized during the period is recognized as income/ expense in the Statement of Profit and Loss. This amount is reflected under the head ''other expenses'' in the Statement of Profit and Loss. The impairment loss is presented as an allowance in the balance sheet as a reduction from the net carrying amount of the trade-receivable, loan, deposits and lease receivable respectively.
De-recognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers rights to receive cash flows from an asset, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Financial Liabilities
Initial Recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial liabilities are initially recognised at fair value net of transaction costs for all financial liabilities not carried at fair value through profit or loss.
The Company''s financial liabilities includes trade and other payables, loans and borrowings including bank overdrafts and derivative instruments.
Subsequent measurement
Financial liabilities measured at amortised cost are subsequently measured at using EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.
Loans & Borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using EIR method. Gains and losses are recognized in profit & loss when the liabilities are derecognized as well as through EIR amortization 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 or loss.
Financial Guarantee Contracts
Financial guarantee contracts issued by the Company are those contracts that requires a payment to be made or to reimburse the holder for a loss it incurs because the specified debtors fails to make payment when due in accordance with the term of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative adjustments.
De-recognition
A financial liability is de-recognised 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.
Derivative financial instruments & hedge accounting
The Company uses derivative financial instruments, such as forward foreign exchange contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value, with changes in fair value recognised 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.
The Company designates their derivatives as hedges of foreign currency risk associated with the cash flows of highly probable forecast transactions and variable interest rate risks associated with the borrowings.
The Company documents at the inception of hedging transaction the economic relationship between hedging instruments and hedged items including whether the hedging instrument is expected to offset cash flow of hedged items. The Company documents its risk management objective and strategy for undertaking various hedge transaction at the inception of each hedge relationship.
*
Cash flows hedge that qualify for the hedge accounting
Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit & loss, except for the effective portion of cash flow hedge which is recognized in other comprehensive income and presented as separate Branch of equity which is later reclassified to statement of profit & loss when the hedge item affects profit & loss.
Offsetting of financial instruments
Financial assets and financial liabilities are off-set, and the net amount is reported in the Balance Sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.11 FAIR vALuE MEASuREMENT
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
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 for the asset or liability The principal or the most advantageous market must be accessible by the Company.
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.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to 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. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.12 employee benefits
The Company has provides following post-employment plans such as:
(a) Defined benefit plans such a gratuity and
(b) Defined contribution plans such as Provident fund & Superannuation fund
a) Defined-benefit plan:
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plan is the present value of defined benefit obligations at the end of the reporting period less fair value of plan assets. The defined benefit obligations is calculated annually by actuaries through actuarial valuation using the projected unit credit method.
The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
(a) Service costs comprising current service costs, past-service costs, gains and losses on curtailment and non-routine settlements; and
(b) Net interest expense or income
Re-measurement comprising of actuarial gains and losses arising from:
(a) Re-measurement of Actuarial(gains)/losses
(b) Return on plan assets, excluding amount recognized in effect of asset ceiling
(c) Re-measurement arising because of change in effect of asset ceiling
^ A
are recognised in the period in which they occur directly in Other comprehensive income. Re-measurement are not reclassified to profit or loss in subsequent periods.
Ind AS 19 requires the exercise of judgment in relation to various assumptions including future pay rises, inflation and discount rates and employee and pensioner demographics. The Company determines the assumptions in conjunction with its actuaries, and believes these assumptions to be in line with best practice, but the application of different assumptions could have a significant effect on the amounts reflected in the income statement, other comprehensive income and balance sheet. There may be also interdependency between some of the assumptions.
b) Defined-contribution plan:
Under defined contribution plans, provident fund, the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. Defined Contribution plan comprise of contributions to the employees'' provident fund with the government, superannuation fund and certain state plans like Employees'' State Insurance and Employees'' Pension Scheme. The Company''s payments to the defined contribution plans are recognised as expenses during the period in which the employees perform the services that the payment covers.
c) Other employee benefits:
(i) Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the obligation as at the Balance sheet date determined based on an actuarial valuation.
(ii) Undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the period when the employee renders the related services.
d) Expenses incurred towards voluntary retirement scheme are charged to the statement of profit and loss as and when incurred.
e) Other benefits comprising of discretionary long service awards are recognized as and when determined.
1.13 LEASES
As a Lessee:
The Company''s lease asset classes primarily consist of leases for land, buildings and vehicles. 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 period of time in exchange for consideration.
To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract 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.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
As a Lessor:
Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
1.14 FOREIGN CURRENCY TRANSACTIONS
a) Functional and Presentation currency
The Financial statements are presented in Indian Rupees (INR), which is Company''s functional and presentation currency.
b) Initial Recognition
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss of the year.
c) Measurement of Foreign Currency Items at the Balance Sheet Date
Foreign currency monetary items of the Company are restated at the closing exchange rates. Non monetary items are recorded at the exchange rate prevailing on the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The gain or loss arising on translation of non- monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in the fair value of the item. Exchange differences arising out of these transactions are charged to the Statement of Profit and Loss.
1.15 taxes on income
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses, if any.
Income tax comprises current and deferred tax. Income tax expense is recognized in the statement of profit and loss except to the extent it relates to items directly recognized in equity or in other comprehensive income. In this case, the tax expense is also recognized in other comprehensive income or directly in equity, as the case may be.
Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences between accounting and tax treatments, and due to items, that are never taxable or tax deductible. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws prevailing and applicable for the relevant assessment year.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
The Company offsets, the tax assets and liabilities (on a year on year basis) where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis or to realise the assets and liabilities on net basis.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
1.16 RESEARCH AND DEvELOPMENT ExPENDITuRE
Research costs are expensed as incurred. Product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, further economic benefits are probable, the Company has an intention and ability to complete and use or sell the product and the costs can be measured reliably.
1.17 provisions and contingencies
A provision is recognised when there is a present legal or constructive obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, and in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
A disclosure for a contingent liability is made where there is a possible obligation arising out of past event, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation arising out of past event where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract.
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 recognised as a finance cost.
1.18 CASH AND CASH EQuivALENTS
Cash and Cash equivalents include cash and Cheque in hand, bank balances, demand deposits with banks and other shortterm highly liquid investments that are readily convertible to known amounts of cash & which are subject to an insignificant risk of changes in value where original maturity is three months or less.
1.19 CASH FLOW STATEMENT
Cash flows are reported using the indirect method where by the profit before tax is adjusted for the effect of the transactions of a non-cash nature, any deferrals or accruals of past and future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.
1.20 BORROWING COST
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of Cost of that assets, during the period till all the activities necessary to prepare the Qualifying assets for its intended use or sale are complete during the period of time that is required to complete and prepare the assets for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are recognized as an expense in the period in which they are incurred.
1.21 earnings per share
Basic EPS is arrived at based on net profit after tax available to equity shareholders to the weighted average number of equity shares outstanding during the year. The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless impact is anti-dilutive.
1.22 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to Chief Operating Decision Maker (CODM).
The Company has identified its Managing Director as CODM who is responsible for allocating resources and assessing performance of the operating segments and makes strategic decisions.
1.23 ExCEPTIONAL ITEMS
When an item of income or expense within profit or loss from ordinary activity is of such size, nature or incidence that their disclosure is relevant to explain the performance of the Company for the year, the nature and amount of such items is disclosed as exceptional items.
1.24 CASH DiviDEND
The Company recognizes a liability to pay dividend when the distribution is authorised and the distribution is no longer at the discretion of the Company i.e. when the dividend distribution is being approved by the shareholders. A corresponding amount is recognized directly in equity.
1.25 RECENT INDIAN ACCOuNTING STANDARDS (IND AS)
The Ministry of Corporate Affairs ("MCA") notifies new standards / amendments under Companies (Indian Accounting Standards) Rules as issued from time to time. On 23rd March, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, as below :
(a) Ind AS 16 - Property, plant and equipment - The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment. The effective date for adoption of this amendment is annual periods beginning on or after 1st April, 2022.
(b) Ind AS 37 - Provisions, contingent liabilities and contingent assets - The amendment specifies that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The effective date for adoption of this amendment is annual periods beginning on or after 1st April, 2022, although early adoption is permitted.
(c) Ind AS 103 - Business combinations - The amendment adds a new exception in Ind AS 103 for liabilities and contingent liabilities.
(d) Ind AS 109 - Financial instruments - The amendment clarifies which fees an entity includes when it applies the ''10%'' test in assessing whether to derecognise a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other''s behalf.
The Company is in the process of evaluating the impact of these amendments.
Mar 31, 2021
1. BASIS OF PREPARATION, MEASUREMENT AND SIGNIFICANT ACCOUNTING POLICIES1.1 COMPANY OVERVIEW:
The Supreme Industries Limited ("the Company") is public limited company incorporated and domiciled in India and has registered office at 612, Raheja Chambers, Nariman Point, Mumbai 400021. It is incorporated under the Indian Companies Act, 1913 and its shares are listed on the Bombay Stock Exchange Limited and National Stock Exchange in India.
The Company is one of the leading plastic products manufacturing company in India having 25 manufacturing facilities spread across the country, offering a wide and comprehensive range of plastic products in India. The company operates in various product categories viz. Plastic Piping System, Cross Laminated Films & Products, Protective Packaging Products, Industrial Moulded Components, Moulded Furniture, Storage & Material Handling Products, Performance Packaging Films and Composite LPG Cylinders.
The standalone financial statements are approved for issue by the Company''s Board of Directors on 3rd May, 2021.
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ''Ind AS'') as prescribed under section 133 of the Companies Act, 2013 ("the Act") read with Companies (Indian Accounting standards) Rules, 2015 as amended and other relevant provisions of the Act.
The financial statements are prepared and presented on accrual basis and under the historical cost convention, except for the following material items that have been measured at fair value as required by the relevant Ind AS:
a) Certain financial assets and liabilities are measured at Fair value and derivative financial instruments (Refer accounting policy on financial instruments - Refer note 1.10 below)
b) Defined Benefit and other Long-term Employee Benefits - Refer note 1.12 below
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirement of Schedule III, unless otherwise stated.
1.3 USE OF ESTIMATES AND JUDGEMENTS
The preparation of the financial statements requires that the Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The recognition, measurement, classification or disclosure of an item or information in the financial statements is made relying on these estimates.
The estimates and judgements used in the preparation of the financial statements are continuously evaluated and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.
Current and non-current classification
All the assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle (not exceeding twelve months) and other criteria set out in Schedule III to the Companies Act, 2013.
Areas involving critical estimates and Judgements are:
- Estimation of employee defined benefit obligations (Refer note no. 1.12 below)
- Estimation of current tax expenses (Refer note no. 1.15 below)
- Estimation of provisions and contingent liabilities (Refer note no. 1.17 below)
1.4 PROPERTY, PLANT AND EQUIPMENT & INTANGIBLE ASSETS Property, Plant and Equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Costs include freight, import duties, non-refundable purchase taxes and other expenses directly attributable to the acquisition of the asset.
Subsequent costs are included in the asset''s 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 Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to the Statement of Profit and Loss during the reporting period in which they are incurred.
Leasehold land is stated at historical cost less amounts written off proportionate to expired lease period.
Intangible assets are held on the balance sheet at cost less accumulated amortisation and impairment losses. Intangible assets developed or acquired with finite useful life are amortized on straight line basis over the useful life as specified below:
|
Category |
Useful Life |
|
Computer Software and Licenses |
3 to 5 years |
|
Right to Use |
5 years |
Capital Work-in-progress and Pre-operative Expenses during Construction Period
Capital Work-in-Progress includes expenditure during construction period incurred on projects under implementation treated as pre-operative expenses pending allocation to the assets. These expenses are apportioned to the respective fixed assets on their completion / commencement of commercial production.
Depreciation/amortisation:
Depreciation is provided on the straight-line method applying the useful lives as prescribed in part C of Schedule II to the Companies Act, 2013. The range of estimated useful lives of Property, Plant & Equipment''s are as under:
|
Category |
Useful Life |
|
Buildings (including roads) |
3- 60 Years |
|
Plant & Equipment* |
7- 25 Years |
|
Moulds & Dies* |
2- 6 Years |
|
Furniture & Fixture |
10 Years |
|
Office Equipment |
3 - 5 Years |
|
Vehicles |
8 - 10 Years |
* Useful life of Plant & Equipment of Plastic Piping System Division, Protective Packaging Division and Cross Laminated Film Division and Moulds and Dies are determined based on the internal assessment supported by independent technical evaluation carried out by external valuers.
The management believes that the useful life as given above the best represent the period over which the management expects to use these assets. The Company reviews the useful lives and residual value at each reporting date.
Depreciation on assets added/sold or discarded during the year is being provided on pro-rata basis up to the date on which such assets are added/sold or discarded. Leasehold Land is amortized over the period of lease.
Assets costing up to R 10,000 each are depreciated fully in the year of purchase.
Gains/Losses on disposals/de-recognition of property, plant and equipment are determined by comparing proceeds with carrying amount and these are recognized in statement of profit & Loss.
Assets held for sale
Non-current assets or disposal groups comprising of assets and liabilities are classified as ''held for sale'' when all of the following criteria''s are met:
(i) decision has been made to sell.
(ii) the assets are available for immediate sale in its present condition.
(iii) the assets are being actively marketed and
(iv) sale has been agreed or is expected to be concluded within 12 months of the Balance Sheet date.
Subsequently, such non-current assets and disposal groups classified as ''held for sale'' are measured at the lower of its carrying value and fair value less costs to sell. Non-current assets held for sale are not depreciated or amortised.
1.5 impairment of non-financial assets
The Company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group of nonfinancial assets are impaired. If any such indication exists, the Company estimates the amount of impairment loss. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the individual asset/cash generating unit is made.
An impairment loss is calculated as the difference between an asset''s carrying amount and recoverable amount. Losses are recognised in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.
1.6 revenue from contracts with customers
The Company recognizes revenue, when or as control over distinct goods or services is transferred to the customer; i.e. when the customer is able to direct the use of the transferred goods or services and obtains substantially all of the remaining benefits, provided a contract with enforceable rights and obligations exists and amongst others collectability of consideration is probable taking into account customer''s creditworthiness.
Revenue is the transaction price the Company expects to be entitled to. In determining the transaction price, the Company considers effects of variable consideration, the existence of significant financing contracts, non cash consideration and consideration payable to the customer, if any.
Variable Consideration
If the consideration in a contract includes a variable amount, the company estimates the amount of consideration to which it will be entitled to in exchange for transferring goods to the customer. Some contracts with the customers provide them with a right to return and volume rebates. The right to return and volume rebates gives rise to variable consideration. The amount of variable consideration is calculated by either using the expected value or the most likely amount depending on which is expected to better predict the amount of variable consideration.
Sale of goods: Revenues are recognized at a point in time when control of the goods passes to the buyer, usually upon either at the time of dispatch or delivery. In case of export sale, it is usually recognised based on the shipped-on board date as per bill of lading. Revenue from sale of goods is net of taxes and recovery of charges collected from customers like transport, packing etc.
Sale of services: Revenues are recognized over time on a straight-line basis or, if the performance pattern is other than straight-line, as services are provided/rendered.
Other operating income: - Export Incentive under various schemes are accounted in the year of export.
Other Income
Dividend income on investments is recognised when the right to receive dividend is established.
Interest income is recognized on a time proportionate basis taking into account the amounts invested and the rate of interest. For all financial instruments measured at amortised cost, interest income is recorded using the Effective interest rate method to the net carrying amount of the financial assets.
1.7 CONTRACT BALANCES Trade Receivables:
A receivable represents the Company''s right to an amount of consideration that is unconditional (i.e. only a passage of time is required to before payment of the consideration is due).
Contract liabilities:
A contract liability is the obligation to transfer goods or services to a customer for which the company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the company transfer goods and services to the customer, a contract liability is recognised when the payment is made or the payment is due, whichever is earlier. Contract liabilities are recognised as revenue when the company performs under the contract.
1.8 government grants
Government grants are recognised where there is reasonable assurance that the grant will be received, and all attached conditions will be complied with. Government grants related to revenue are recognised on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate. Such grants are deducted in reporting the related expense. When the grant relates to an asset, it is recognized as income over the expected useful life of the asset.
In case a non-monetary asset is given free of cost it is recognised at a fair value. When loan or similar assistance are provided by government or related institutions, with an interest rate below the current applicable market rate, the effect of this favorable interest is recognized as government grant. The loan or assistance is initially recognized and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received.
1.9 INVENTORIES
Inventories includes raw material, semi finished goods, stock-in-trade, finished goods, stores & spares, consumables, packing materials, goods for resale and commercial premises are valued at lower of cost and net realizable value. Materials in transit is valued at cost incurred till date.
Raw Material and Components - Cost include cost of purchases and other costs incurred in bringing the inventories to their present location and condition. Cost is determined using moving average.
Finished/Semi-Finished Goods - cost includes cost of direct material, labor, other direct cost (Including variable costs) and a proportion of fixed manufacturing overheads allocated based on the normal operating capacity but excluding borrowing costs. Cost is determined on weighted average cost basis.
Stock-in-trade - cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and conditions.
Stores, Spare Parts, Consumables, Packing Materials etc. - cost is determined on FIFO basis.
Goods for Resale - cost is determined on FIFO basis.
Commercial Premises - Cost includes cost of land, premium for development rights, construction cost, materials, services and allocated interest and expenses incidental to the construction business.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale.
Adequate allowance is made for obsolete and slow-moving items.
1.10FINANCIAL INSTRUMENTS
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets - Initial recognition
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial assets other than trade receivables are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the Statement of Profit and Loss.
Subsequent measurement
Financial assets, other than equity instruments, are subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss on the basis of both:
(i) the entity''s business model for managing the financial assets and
(ii) the contractual cash flow characteristics of the financial asset.
(a) Measured at amortised cost:
A financial asset is measured at amortised cost, if it is held under the hold to collect business model i.e. held with an objective of holding the assets to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest on the principal outstanding. Amortised cost is calculated using the effective interest rate ("EIR") method 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 interest income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss. On derecognition, gain or loss, if any, is recognised to Statement of Profit and Loss.
(b) Measured at fair value through other comprehensive income (FvOCI):
A financial asset is measured at FVOCI, if it is held under the hold to collect and sell business model i.e. held with an objective to collect contractual cash flows and selling such financial asset and the contractual cash flows are solely payments of principal and interest on the principal outstanding. It is subsequently measured at fair value with fair value movements recognised in the OCI, except for interest income which recognised using EIR method. The losses arising from impairment are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in the OCI is reclassified from the equity to Statement of Profit and Loss.
(c) Measured at fair value through profit or loss (FvTPL):
Investment in financial asset other than equity instrument, not measured at either amortised cost or FVOCI is measured at FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised in the Statement of Profit and Loss.
equity Instruments:
All investments in equity instruments classified under financial assets are subsequently measured at fair value. Equity instruments which are held for trading are measured at FVTPL.
For all other equity instruments, the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument shall be recognised in Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognised in the OCI. Amounts recognised in Other Comprehensive Income (OCI) are not subsequently transferred to Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised in Statement of Profit and Loss.
Impairment
The Company recognises a loss allowance for Expected Credit Losses (ECL) on financial assets that are measured at amortised cost and at FVOCI. The credit loss is difference between all contractual cash flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate. This is assessed on an individual or collective basis after considering all reasonable and supportable including that which is forward-looking.
The Company''s trade receivables or contract revenue receivables do not contain significant financing Branch and loss allowance on trade receivables is measured at an amount equal to life time expected losses i.e. expected cash shortfall, being simplified approach for recognition of impairment loss allowance.
Under simplified approach, the Company does not track changes in credit risk. Rather it recognizes impairment loss allowance based on the lifetime ECL at each reporting date right from its initial recognition. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables.
The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forwardlooking estimates are analysed.
For financial assets other than trade receivables, the Company recognises 12-month expected credit losses for all originated or acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial recognition. The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset increases significantly since its initial recognition. If, in a subsequent period, credit quality of the instrument improves such that there is no longer significant increase in credit risks since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12 months ECL.
Impairment loss allowance including ECL or reversal recognized during the period is recognized as income/ expense in the Statement of Profit and Loss. This amount is reflected under the head ''other expenses'' in the Statement of Profit and Loss. The impairment loss is presented as an allowance in the balance sheet as a reduction from the net carrying amount of the trade- receivable, loan, deposits and lease receivable respectively.
De-recognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers rights to receive cash flows from an asset, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Financial Liabilities
Initial Recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial liabilities are initially recognised at fair value net of transaction costs for all financial liabilities not carried at fair value through profit or loss.
The Company''s financial liabilities includes trade and other payables, loans and borrowings including bank overdrafts and derivative instruments.
Subsequent measurement
Financial liabilities measured at amortised cost are subsequently measured at using EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.
Loans & Borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using EIR method. Gains and losses are recognized in profit & loss when the liabilities are derecognized as well as through EIR amortization 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 or loss.
Financial Guarantee Contracts
Financial guarantee contracts issued by the Company are those contracts that requires a payment to be made or to reimburse the holder for a loss it incurs because the specified debtors fails to make payment when due in accordance with the term of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative adjustments.
De-recognition
A financial liability is de-recognised 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.
Derivative financial instruments & hedge accounting
The Company uses derivative financial instruments, such as forward foreign exchange contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value, with changes in fair value recognised 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.
The Company designates their derivatives as hedges of foreign currency risk associated with the cash flows of highly probable forecast transactions and variable interest rate risks associated with the borrowings.
The Company documents at the inception of hedging transaction the economic relationship between hedging instruments and hedged items including whether the hedging instrument is expected to offset cash flow of hedged items. The Company documents its risk management objective and strategy for undertaking various hedge transaction at the inception of each hedge relationship.
Cash flows hedge that qualify for the hedge accounting
Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit & loss, except for the effective portion of cash flow hedge which is recognized in other comprehensive income and presented as separate Branch of equity which is later reclassified to statement of profit & loss when the hedge item affects profit & loss.
Offsetting of financial instruments
Financial assets and financial liabilities are off-set, and the net amount is reported in the Balance Sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.11 FAIR vALuE MEASuREMENT
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
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 for the asset or liability The principal or the most advantageous market must be accessible by the Company.
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.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to 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. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.12 employee benefits
The Company has provides following post-employment plans such as:
(a) Defined benefit plans such a gratuity and
(b) Defined contribution plans such as Provident fund & Superannuation fund
a) Defined-benefit plan:
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plan is the present value of defined benefit obligations at the end of the reporting period less fair value of plan assets. The defined benefit obligations is calculated annually by actuaries through actuarial valuation using the projected unit credit method.
The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
(a) Service costs comprising current service costs, past-service costs, gains and losses on curtailment and non-routine settlements; and
(b) Net interest expense or income
Re-measurement comprising of actuarial gains and losses arising from:
(a) Re-measurement of Actuarial(gains)/losses
(b) Return on plan assets, excluding amount recognized in effect of asset ceiling
(c) Re-measurement arising because of change in effect of asset ceiling
are recognised in the period in which they occur directly in Other comprehensive income. Re-measurement are not reclassified to profit or loss in subsequent periods.
Ind AS 19 requires the exercise of judgment in relation to various assumptions including future pay rises, inflation and discount rates and employee and pensioner demographics. The Company determines the assumptions in conjunction with its actuaries, and believes these assumptions to be in line with best practice, but the application of different assumptions could have a significant effect on the amounts reflected in the income statement, other comprehensive income and balance sheet. There may be also interdependency between some of the assumptions.
b) Defined-contribution plan:
Under defined contribution plans, provident fund, the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. Defined Contribution plan comprise of contributions to the employees'' provident fund with the government, superannuation fund and certain state plans like Employees'' State Insurance and Employees'' Pension Scheme. The Company''s payments to the defined contribution plans are recognised as expenses during the period in which the employees perform the services that the payment covers.
c) Other employee benefits:
(i) Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the obligation as at the Balance sheet date determined based on an actuarial valuation.
(ii) Undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the period when the employee renders the related services.
d) Expenses incurred towards voluntary retirement scheme are charged to the statement of profit and loss as and when incurred.
e) Other benefits comprising of discretionary long service awards are recognized as and when determined.
1.13 LEASES
As a Lessee:
The Company''s lease asset classes primarily consist of leases for land, buildings and vehicles. 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 period of time in exchange for consideration.
To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract 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.
At the date of commencement of the lease, the Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
As a Lessor:
Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.
1.14 FOREIGN CURRENCY TRANSACTIONS
a) Functional and Presentation currency
The Financial statements are presented in Indian Rupees (INR), which is Company''s functional and presentation currency.
b) Initial Recognition
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss of the year.
c) Measurement of Foreign Currency Items at the Balance Sheet Date
Foreign currency monetary items of the Company are restated at the closing exchange rates. Non monetary items are recorded at the exchange rate prevailing on the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The gain or loss arising on translation of non- monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in the fair value of the item. Exchange differences arising out of these transactions are charged to the Statement of Profit and Loss.
1.15 taxes on income
The income tax expense or credit for the period is the tax payable on the current period''s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses, if any.
Income tax comprises current and deferred tax. Income tax expense is recognized in the statement of profit and loss except to the extent it relates to items directly recognized in equity or in other comprehensive income. In this case, the tax expense is also recognized in other comprehensive income or directly in equity, as the case may be.
Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences between accounting and tax treatments, and due to items, that are never taxable or tax deductible. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws prevailing and applicable for the relevant assessment year.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
The Company offsets, the tax assets and liabilities (on a year on year basis) where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis or to realise the assets and liabilities on net basis.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
1.16 RESEARCH AND DEvELOPMENT ExPENDITuRE
Research costs are expensed as incurred. Product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, further economic benefits are probable, the Company has an intention and ability to complete and use or sell the product and the costs can be measured reliably.
1.17 provisions and contingencies
A provision is recognised when there is a present legal or constructive obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, and in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
A disclosure for a contingent liability is made where there is a possible obligation arising out of past event, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation arising out of past event where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract.
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 recognised as a finance cost.
1.18 CASH AND CASH EQuivALENTS
Cash and Cash equivalents include cash and Cheque in hand, bank balances, demand deposits with banks and other short-term highly liquid investments that are readily convertible to known amounts of cash & which are subject to an insignificant risk of changes in value where original maturity is three months or less.
1.19 CASH FLOW STATEMENT
Cash flows are reported using the indirect method where by the profit before tax is adjusted for the effect of the transactions of a non-cash nature, any deferrals or accruals of past and future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.
1.20 BORROWING COST
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of Cost of that assets, during the period till all the activities necessary to prepare the Qualifying assets for its intended use or sale are complete during the period of time that is required to complete and prepare the assets for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are recognized as an expense in the period in which they are incurred.
1.21 earnings per share
Basic EPS is arrived at based on net profit after tax available to equity shareholders to the weighted average number of equity shares outstanding during the year. The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless impact is anti-dilutive.
1.22 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to Chief Operating Decision Maker (CODM).
The Company has identified its Managing Director as CODM who is responsible for allocating resources and assessing performance of the operating segments and makes strategic decisions.
1.23 ExCEPTIONAL ITEMS
When an item of income or expense within profit or loss from ordinary activity is of such size, nature or incidence that their disclosure is relevant to explain the performance of the Company for the year, the nature and amount of such items is disclosed as exceptional items.
1.24 CASH DiviDEND
The Company recognizes a liability to pay dividend when the distribution is authorised and the distribution is no longer at the discretion of the Company i.e. when the dividend distribution is being approved by the shareholders. A corresponding amount is recognized directly in equity.
1.25 RECENT INDIAN ACCOuNTING STANDARDS (IND AS)
Ministry of Corporate affairs (MCA) notifies new standards or amendment to the existing standards. There is no such notification which would have been applicable from 1st April, 2021.
Mar 31, 2019
1. BASIS OF PREPARATION, MEASUREMENT AND SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of Preparation and Measurement
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ) as notified under the Companies (Indian Accounting standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendments Rules 2016 prescribed under section 133 of the Companies Act, 2013.
The financial statements are prepared and presented on accrual basis and under the historical cost convention, except for the following material items that have been measured at fair value as required by the relevant Ind AS:
- Certain financial assets and liabilities are measured at Fair value (refer accounting policy on financial instruments - Refer note 1.9 below
- Defined Benefit and other Long-term Employee Benefits - Refer note 1.11 below
- Derivative Financial instruments - Refer note 1.9 below
These standalone financial statements are approved for issue by the Companyâs Board of Directors on May 07, 2019.
1.2 Use of Estimates and Judgements
The preparation of the financial statements requires that the Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The recognition, measurement, classification or disclosure of an item or information in the financial statements is made relying on these estimates.
The estimates and judgements used in the preparation of the financial statements are continuously evaluated and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.
All the assets and liabilities have been classified as current or non-current as per the companyâs normal operating cycle of twelve months and other criteria set out in Schedule III to the Companies Act, 2013.
Areas involving critical estimates and Judgements are:
- Estimation of Defined benefit obligations
- Estimation of Current tax expenses
1.3 Property, Plant and Equipment & Intangible Assets Property, Plant and Equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Costs include freight, import duties, non-refundable purchase taxes and other expenses directly attributable to the acquisition of the asset.
Leasehold land is stated at historical cost less amounts written off proportionate to expired lease period.
Intangible Assets
Intangible assets are held on the balance sheet at cost less accumulated amortisation and impairment losses. Intangible assets developed or acquired with finite useful life are amortized on straight line basis over the useful life as specified below:
- Computer Software and Licenses - 3 to 5 years
- Right to Use, Patents- 5 years
Capital Work-in-progress and Pre-operative Expenses during Construction Period
Capital Work-in-Progress includes project expenditure incurred during construction period on projects under implementation treated as pre-operative expenses pending allocation to the assets. These expenses are apportioned to the respective fixed assets on their completion / commencement of commercial production.
Depreciation/amortisation:
Depreciation is provided on the straight-line method applying the useful lives as prescribed in part C of Schedule II to the Companies Act, 2013. The range of estimated useful lives of Property, Plant & Equipment are as under:
* Useful life of Plant & Equipment of Plastic Piping System Division, Protective Packaging Division and Cross Laminated Film Division and Moulds and Dies are determined based on the internal assessment supported by independent technical evaluation carried out by external valuers.
The management believes that the useful life as given above the best represent the period over which the management expects to use these assets. The company reviews the useful lives and residual value at each reporting date.
Depreciation on assets added/sold or discarded during the year is being provided on pro-rata basis up to the date on which such assets are added/sold or discarded. Leasehold Land is amortized over the period of lease.
Assets costing up to RS. 10,000 each are depreciated fully in the year of purchase.
Gains/Losses on disposals/de-recognition of property, plant and equipment are determined by comparing proceeds with carrying amount and these are recognized in statement of profit & Loss.
Assets held for sale
Non-current assets or disposal groups comprising of assets and liabilities are classified as âheld for saleâ when all of the following criteriaâs are met:
(i) Decision has been made to sell.
(ii) The assets are available for immediate sale in its present condition.
(iii) The assets are being actively marketed and
(iv) Sale has been agreed or is expected to be concluded within 12 months of the Balance Sheet date.
Subsequently, such non-current assets and disposal groups classified as âheld for saleâ are measured at the lower of its carrying value and fair value less costs to sell. Non-current assets held for sale are not depreciated or amortised.
1.4 Impairment of Non-Financial Assets
The Company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group of non-financial assets are impaired. If any such indication exists, the Company estimates the amount of impairment loss. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the individual asset/cash generating unit is made.
An impairment loss is calculated as the difference between an assetâs carrying amount and recoverable amount. Losses are recognised in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.
1.5 Revenue from Contracts with Customers
The Company recognizes revenue, whenever control over distinct goods or services is transferred to the customer; i.e. when the customer is able to direct the use of the transferred goods or services and obtains substantially all of the remaining benefits, provided a contract with enforceable rights and obligations exists and amongst others collectability of consideration is probable taking into account customerâs creditworthiness.
Revenue is the transaction price the Company expects to be entitled to. In determining the transaction price, the Company considers effects of variable consideration, the existence of significant financing contracts, noncash consideration and consideration payable to the customer, if any. The Company considers whether there are other promises in the contract that are separate performance obligations to which the transaction price needs to be allocated (e.g. warranties etc.).
Variable Consideration
If the consideration in a contract includes a variable amount, the company estimates the amount of consideration to which it will be entitled to in exchange for transferring goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant reversal of revenue will not occur once associated uncertainties are resolved. Some contracts with the customers provide them with a right to return and volume rebates. The right to return and volume rebates gives rise to variable consideration.
The amount of variable consideration is calculated by either using the expected value or the most likely amount depending on which is expected to better predict the amount of variable consideration. Consideration is also adjusted for the time value of money if the period between the transfer of goods or services and the receipt of payment exceeds twelve months and there is a significant financing benefit either to the customer or the Company. If a contract contains more than one distinct good or service, the transaction price is allocated to each performance obligation based on relative stand-alone selling prices. If stand-alone selling prices are not observable, the Company reasonably estimates those.
Revenue is recognized for each performance obligation either at a point in time or over time.
Sale of goods: Revenues are recognized at a point in time when control of the goods passes to the buyer, usually upon either at the time of dispatch or delivery. In case of export sale, it is usually recognised based on the shipped-on board date as per bill of lading. Revenue from sale of goods is net of taxes and recovery of charges collected from customers like transport, packing etc.
Revenues from services: Revenues are recognized over time on a straight-line basis or, if the performance pattern is other than straight-line, as services are provided/rendered.
Other Income
Dividend income on investments is recognised when the right to receive dividend is established.
Interest income is recognized on a time proportionate basis taking into account the amounts invested and the rate of interest. For all financial instruments measured at amortised cost, interest income is recorded using the Effective interest rate method to the net carrying amount of the financial assets.
1.6 Contract balances: Trade Receivables:
A receivable represents the Companyâs right to an amount of consideration that is unconditional (i.e. only a passage of time is required before payment of the consideration is due).
Contract liabilities:
A contract liability is the obligation to transfer goods or services to a customer for which the company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the company transfer goods and services to the customer, a contract liability is recognised when the payment is made or the payment is due, whichever is earlier. Contract liabilities are recognised as revenue when the company performs under the contract.
1.7 Government Grants
Government grants are recognised where there is reasonable assurance that the grant will be received, and all attached conditions will be complied with. Government grants related to revenue are recognised on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate. Such grants are deducted in reporting the related expense. When the grant relates to an asset, it is recognized as income over the expected useful life of the asset.
In case a non-monetary asset is given free of cost it is recognised at a fair value. When loan or similar assistance are provided by government or related institutions, with an interest rate below the current applicable market rate, the effect of this favorable interest is recognized as government grant. The loan or assistance is initially recognized and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received.
1.8 Inventories
Inventories includes Raw Material, Work-in-Rrogress, finished goods, Stores & spares, Consumables, Racking Materials, Goods for resale and commercial premises are valued at lower of cost and net realizable value. Materials in transit is valued at cost incurred till date.
Raw Material and Components - Cost include cost of purchases and other costs incurred in bringing the inventories to their present location and condition. Cost is determined using moving average and, in some cases, identified lot basis / First in first out (FIFO) basis.
Finished/Semi-Finished Goods - cost includes cost of direct material, labor, other direct cost and a proportion of fixed manufacturing overheads allocated based on the normal operating capacity but excluding borrowing costs. Cost is determined on weighted average cost basis/moving average cost Stores, Spare Parts, Consumables, Packing Materials etc. - cost is determined on FIFO basis.
Goods for Resale - cost is determined on FIFO basis.
Commercial Premises - Cost includes cost of land, premium for development rights, construction cost, materials, services and allocated interest and expenses incidental to the construction business.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale.
Adequate allowance is made for obsolete and slow moving items.
1.9 Financial Instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets - Initial recognition
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial assets other than trade receivables are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the Statement of Profit and Loss.
Subsequent measurement
Financial assets, other than equity instruments, are subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss on the basis of both:
(a) the entityâs business model for managing the financial assets and
(b) the contractual cash flow characteristics of the financial asset.
(a) Measured at amortised cost:
A financial asset is measured at amortised cost, if it is held under the hold to collect business model i.e. held with an objective of holding the assets to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest on the principal outstanding. Amortised cost is calculated using the effective interest rate (âEIRâ) method 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 interest income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss. On derecognition, gain or loss, if any, is recognised to Statement of Profit and Loss.
(b) Measured at fair value through other comprehensive income (FVOCI):
A financial asset is measured at FVOCI, if it is held under the hold to collect and sell business model i.e. held with an objective to collect contractual cash flows and selling such financial asset and the contractual cash flows are solely payments of principal and interest on the principal outstanding. It is subsequently measured at fair value with fair value movements recognised in the OCI, except for interest income which recognised using EIR method. The losses arising from impairment are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in the OCI is reclassified from the equity to Statement of Profit and Loss.
(c) Measured at fair value through profit or loss (FVTPL):
Investment in financial asset other than equity instrument, not measured at either amortised cost or FVOCI is measured at FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised in the Statement of Profit and Loss.
Equity Instruments:
All investments in equity instruments classified under financial assets are subsequently measured at fair value. Equity instruments which are held for trading are measured at FVTPL.
For all other equity instruments, the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument shall be recognised in Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognised in the OCI. Amounts recognised in Other Comprehensive Income (OCI) are not subsequently transferred to Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised in Statement of Profit and Loss.
Impairment
The Company recognises a loss allowance for Expected Credit Losses (ECL) on financial assets that are measured at amortised cost and at FVOCI. The credit loss is difference between all contractual cash flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate. This is assessed on an individual or collective basis after considering all reasonable and supportable including that which is forward-looking.
The Companyâs trade receivables or contract revenue receivables do not contain significant financing Branch and loss allowance on trade receivables is measured at an amount equal to life time expected losses i.e. expected cash shortfall, being simplified approach for recognition of impairment loss allowance. It recognizes impairment loss allowance based on the lifetime ECL at each reporting date right from its initial recognition.
For financial assets other than trade receivables, the Company recognises 12-month expected credit losses for all originated or acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial recognition. The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset increases significantly since its initial recognition. If, in a subsequent period, credit quality of the instrument improves such that there is no longer significant increase in credit risks since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12 months ECL.
Impairment loss allowance including ECL or reversal recognized during the period is recognized as income/ expense in the Statement of Profit and Loss. This amount is reflected under the head âother expensesâ in the Statement of Profit and Loss. The impairment loss is presented as an allowance in the balance sheet as a reduction from the net carrying amount of the trade- receivable, loan, deposits and lease receivable respectively.
De-recognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers rights to receive cash flows from an asset, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Financial Liabilities Initial Recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial liabilities are initially recognised at fair value net of transaction costs for all financial liabilities not carried at fair value through profit or loss.
The Companyâs financial liabilities includes trade and other payables, loans and borrowings including bank overdrafts and derivative instruments.
Subsequent measurement
Financial liabilities measured at amortised cost are subsequently measured at using EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.
Loans & Borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using EIR method. Gains and losses are recognized in profit & loss when the liabilities are derecognized as well as through EIR amortization 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 or loss.
Financial Guarantee Contracts
Financial guarantee contracts issued by the Company are those contracts that requires a payment to be made or to reimburse the holder for a loss it incurs because the specified debtors fails to make payment when due in accordance with the term of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative adjustments.
De-recognition
A financial liability is de-recognised 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.
Derivative financial instruments & hedge accounting
The Company uses derivative financial instruments, such as forward foreign exchange contracts to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value, with changes in fair value recognised 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.
The Company designates their derivatives as hedges of foreign currency risk associated with the cash flows of highly probable forecast transactions and variable interest rate risks associated with the borrowings.
The Company documents at the inception of hedging transaction the economic relationship between hedging instruments and hedged items including whether the hedging instrument is expected to offset cash flow of hedged items. The Company documents its risk management objective and strategy for undertaking various hedge transaction at the inception of each hedge relationship.
Cash flows hedge that qualify for the hedge accounting
Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit & loss, except for the effective portion of cash flow hedge which is recognized in other comprehensive income and presented as separate Branch of equity which is later reclassified to statement of profit & loss when the hedge item affects profit & loss.
Offsetting of financial instruments
Financial assets and financial liabilities are off-set, and the net amount is reported in the Balance Sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.10 Fair Value Measurement:
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
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 for the asset or liability The principal or the most advantageous market must be accessible by the Company.
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.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to 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 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â 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. For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.11 Employee Benefits
The Company has provides following post-employment plans such as:
(a) Defined benefit plans such a gratuity and
(b) Defined contribution plans such as Rrovident fund & Superannuation fund
a) Defined-benefit plan:
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plan is the present value of defined benefit obligations at the end of the reporting period less fair value of plan assets. The defined benefit obligations is calculated annually by actuaries through actuarial valuation using the projected unit credit method.
The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
(a) Service costs comprising current service costs, past-service costs, gains and losses on curtailment and non-routine settlements; and
(b) Net interest expense or income
Re-measurement comprising of actuarial gains and losses arising from:
(a) Re-measurement of Actuarial(gains)/losses
(b) Return on plan assets, excluding amount recognized in effect of asset ceiling
(c) Re-measurement arising because of change in effect of asset ceiling are recognised in the period in which they occur directly in Other comprehensive income. Re-measurement are not reclassified to profit or loss in subsequent periods.
Ind AS 19 requires the exercise of judgment in relation to various assumptions including future pay rises, inflation and discount rates and employee and pensioner demographics. The Company determines the assumptions in conjunction with its actuaries, and believes these assumptions to be in line with best practice, but the application of different assumptions could have a significant effect on the amounts reflected in the income statement, other comprehensive income and balance sheet. There may be also interdependency between some of the assumptions.
b) Defined-contribution plan:
Under defined contribution plans, provident fund, the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. Defined Contribution plan comprise of contributions to the employeesâ provident fund with the government, superannuation fund and certain state plans like Employeesâ State Insurance and Employeesâ Pension Scheme. The Companyâs payments to the defined contribution plans are recognised as expenses during the period in which the employees perform the services that the payment covers.
c) Other employee benefits:
(a) Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the obligation as at the Balance sheet date determined based on an actuarial valuation.
(b) Undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the period when the employee renders the related services.
d) Expenses incurred towards voluntary retirement scheme are charged to the statement of profit and loss as and when incurred.
e) Other benefits comprising of discretionary long service awards are recognized as and when determined.
1.12 Leases
A lease is classified at the inception date as a finance lease or an operating lease. Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalized at fair value or present value of the minimum lease payments at the inception of the lease, whichever is lower. 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 finance costs in the statement of profit and loss
Other leases are treated as operating leases, with payments are recognised as expense in the statement of profit & loss on a straight-line basis over the lease term.
The determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
1.13 Foreign Currency Transactions
a) Initial Recognition
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss of the year.
b) Measurement of Foreign Currency Items at the Balance Sheet Date
Foreign currency monetary items of the Company are restated at the closing exchange rates. Non monetary items are recorded at the exchange rate prevailing on the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The gain or loss arising on translation of non- monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in the fair value of the item. Exchange differences arising out of these transactions are charged to the Statement of Profit and Loss.
1.14 Taxes on Income
Income tax comprises current and deferred tax. Income tax expense is recognized in the statement of profit and loss except to the extent it relates to items directly recognized in equity or in other comprehensive income. In this case, the tax expense is also recognized in other comprehensive income or directly in equity, as the case may be.
Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences between accounting and tax treatments, and due to items, that are never taxable or tax deductible. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws prevailing and applicable for the relevant assessment year. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
The Company offsets, the current tax assets and liabilities (on a year on year basis) where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis or to realise the assets and liabilities on net basis.
Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in financial statements. Deferred income tax asset are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized. Deferred tax assets are not recognised where it is more likely than not that the assets will not be realised in the future.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Minimum Alternative Tax (âMATâ) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income-tax during the specified period. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income-tax during the specified period.
1.15 Research and Development Expenditure
Research costs are expensed as incurred. Product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, further economic benefits are probable, the Company has an intention and ability to complete and use or sell the product and the costs can be measured reliably.
1.16 Provisions and Contingencies
A provision is recognised when there is a present legal or constructive obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, and in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
A disclosure for a contingent liability is made where there is a possible obligation arising out of past event, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation arising out of past event where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract.
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 recognised as a finance cost.
1.17 Cash and Cash Equivalents
Cash and Cash equivalents include cash and Cheque in hand, bank balances, demand deposits with banks and other short-term highly liquid investments that are readily convertible to known amounts of cash & which are subject to an insignificant risk of changes in value where original maturity is three months or less.
1.18 Cash Flow Statement
Cash flows are reported using the indirect method where by the profit before tax is adjusted for the effect of the transactions of a non-cash nature, any deferrals or accruals of past and future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.
1.19 Borrowing Cost
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of Cost of that assets, during the period till all the activities necessary to prepare the Qualifying assets for its intended use or sale are complete during the period of time that is required to complete and prepare the assets for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are recognized as an expense in the period in which they are incurred.
1.20 Earnings Per Share
Basic ERS is arrived at based on net profit after tax available to equity shareholders to the weighted average number of equity shares outstanding during the year. The diluted ERS is calculated on the same basis as basic ERS, after adjusting for the effects of potential dilutive equity shares unless impact is anti-dilutive.
1.21 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to Chief Operating Decision Maker (CODM).
The Company has identified its Managing Director as CODM who is responsible for allocating resources and assessing performance of the operating segments and makes strategic decisions.
1.22 Exceptional Items
When an item of income or expense within profit or loss from ordinary activity is of such size, nature or incidence that their disclosure is relevant to explain the performance of the Company for the year, the nature and amount of such items is disclosed as exceptional items.
1.23 Cash Dividend
The Company recognizes a liability to pay dividend when the distribution is authorised and the distribution is no longer at the discretion of the Company i.e. when the dividend distribution is being approved by the shareholders. A corresponding amount is recognized directly in equity.
Mar 31, 2018
1.1 Company Overview
The Supreme Industries Limited (âthe Companyâ) is public limited company incorporated and domiciled in India and has registered office at 612, Raheja Chambers, Nariman Point, Mumbai 400 021. It is incorporated under the Indian Companies Act, 1913 and its equity shares are listed on the Bombay Stock Exchange Limited and National Stock Exchange in India.
The Supreme Industries Limited is one of the leading plastic products manufacturing company in India having 25 manufacturing facilities spread across the country. Company is engaged in manufacturing various plastic products like Plastic Piping System, Industrial and Engineering Molded products, Storage and Material Handling Products, Plastic Molded Furniture, Protective Packaging Products, Cross Laminated Film and products thereof, Performance packaging Film and Composite LPG Cylinders etc.
1.2 Basis of Accounting
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the âInd ASâ) as notified under the Companies (Indian Accounting standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendments Rules 2016 prescribed under section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014.
The financial statements of the Company are prepared and presented on accrual basis and under the historical cost convention, except for the following material items that have been measured at fair value as required by the relevant Ind AS:
- Certain financial assets and liabilities are measured at Fair value (refer accounting policy on financial instruments - Refer note 1.9 below
- Defined Benefit and other Long term Employee Benefits - Refer note 1.11 below
- Derivative Financial instruments - Refer note 1.9 below
1.3 Use of Estimates and Judgements
The preparation of the financial statements requires that the Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The recognition, measurement, classification or disclosure of an item or information in the financial statements is made relying on these estimates.
The estimates and judgements used in the preparation of the financial statements are continuously evaluated by the Company and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.
All the assets and liabilities have been classified as current or non-current as per the companyâs normal operating cycle of twelve months and other criteria set out in Schedule III to the Companies Act, 2013.
1.4 Property, Plant And Equipment & Intangible Assets Property, Plant and Equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Costs include freight, import duties, non-refundable purchase taxes and other expenses directly attributable to the acquisition of the asset.
Leasehold land is stated at historical cost less amounts written off proportionate to expired lease period.
Intangible Assets
Intangible assets are held on the balance sheet at cost less accumulated amortisation and impairment losses. Intangible assets developed or acquired with finite useful life are amortized on straight line basis over the useful life as specified below:
- Computer Software and Licenses - 3 to 4 year
- Right to Use- 5 year
Capital Work-in-progress and Pre-operative Expenses during Construction Period
Capital Work-in-Progress includes expenditure during construction period incurred on projects under implementation treated as pre-operative expenses pending allocation to the assets. These expenses are apportioned to the respective fixed assets on their completion / commencement of commercial production.
Depreciation/amortisation:
Depreciation is provided on the straight line method applying the useful lives as prescribed in part C of Schedule II to the Companies Act, 2013.
The range of estimated useful lives of Property, Plant & Equipmentâs are as under:
* Useful life of Plant & Equipment of Plastic Piping System Division, Protective Packaging Division and Cross Laminated Film Division and Moulds and Dies are determined based on the internal assessment supported by independent technical evaluation carried out by external valuers.
The management believes that the useful life as given above the best represent the period over which the management expects to use these assets. The Company reviews the useful lives and residual value at each reporting date.
Depreciation on assets added/sold or discarded during the year is being provided on pro-rata basis up to the date on which such assets are added/sold or discarded.
Leasehold Land is amortized over the period of lease.
Assets costing up to RS.10,000 each are depreciated fully in the year of purchase.
Gains/Losses on disposals/de-recognition of property, plant and equipment are determined by comparing proceeds with carrying amount and these are recognized in statement of profit & Loss.
1.5 Impairment of Non Financial Assets
The Company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group of non-financial assets are impaired. If any such indication exists, the Company estimates the amount of impairment loss. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the individual asset/cash generating unit is made.
An impairment loss is calculated as the difference between an assetâs carrying amount and recoverable amount. Losses are recognised in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.
1.6 Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefit will flow to the Company and the revenue can be measured reliably.
Sale of goods:
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have been transferred to the buyer either at the time of dispatch or delivery or when the risk of loss transfers. Export sales are recognized based on the shipped on board date as per bill of lading, which is when substantial risks and rewards of ownership are passed to the customers.
Revenue from sale of goods is net of taxes and recovery of charges collected from customers like transport, packing etc. Provision is made for returns when appropriate. Revenue is measured at the fair value of consideration received or receivable and is net of price discounts, allowance for volume rebates and similar items.
Claims / Refunds not ascertainable with reasonable certainty are accounted for, on final settlement and are recognized as revenue on certainty of receipt on prudent basis.
Rendering of services:
Revenue from sale of services are recognized when the services are rendered.
Other Income
Dividend income on investments is recognised when the right to receive dividend is established.
Interest income is recognized on a time proportionate basis taking into account the amounts invested and the rate of interest. For all financial instruments measured at amortised cost, interest income is recorded using the Effective interest rate method to the net carrying amount of the financial assets.
1.7 Government Grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
Government grants related to revenue are recognised on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate. Such grants are deducted in reporting the related expense. When the grant relates to an asset, it is recognized as income over the expected useful life of the asset.
In case a non-monetary asset is given free of cost it is recognised at a fair value. When loan or similar assistance are provided by government or related institutions, with an interest rate below the current applicable market rate, the effect of this favorable interest is recognized as government grant. The loan or assistance is initially recognized and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received.
1.8 Inventories
Inventories includes Raw Material, Work-in-Progress, Finished goods, Stores & spares , Consumables, Packing Materials, Goods for resale and commercial premises are valued at lower of cost and net realizable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
Raw Material and Components - Cost include cost of purchases and other costs incurred in bringing the inventories to their present location and condition. Cost is determined using identified lot basis / First in first out (FIFO) basis.
Finished/Semi-Finished Goods - cost includes cost of direct material, labor, other direct cost and a proportion of fixed manufacturing overheads allocated based on the normal operating capacity but excluding borrowing costs. Cost is determined on weighted average cost basis.
Stores, Spare Parts, Consumables, Packing Materials etc. - cost is determined on FIFO basis.
Goods for Resale - cost is determined on FIFO basis
Commercial Premises - Cost includes cost of land, premium for development rights, construction cost, materials, services and allocated interest and expenses incidental to the construction business.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale.
Adequate allowance is made for obsolete and slow moving items.
1.9 Financial Instruments Financial assets - Initial recognition
Financial assets are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial assets other than trade receivables are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the Statement of Profit and Loss.
Subsequent measurement
Financial assets, other than equity instruments, are subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss on the basis of both:
(a) the entityâs business model for managing the financial assets and
(b) the contractual cash flow characteristics of the financial asset.
(a) Measured at amortised cost:
A financial asset is measured at amortised cost, if it is held under the hold to collect business model i.e. held with an objective of holding the assets to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest on the principal outstanding. Amortised cost is calculated using the effective interest rate (âEIRâ) method 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 interest income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss. On derecognition, gain or loss, if any, is recognised to Statement of Profit and Loss.
(b) Measured at fair value through other comprehensive income (FVOCI):
A financial asset is measured at FVOCI, if it is held under the hold to collect and sell business model i.e. held with an objective to collect contractual cash flows and selling such financial asset and the contractual cash flows are solely payments of principal and interest on the principal outstanding. It is subsequently measured at fair value with fair value movements recognised in the OCI, except for interest income which recognised using EIR method. The losses arising from impairment are recognised in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognised in the OCI is reclassified from the equity to Statement of Profit and Loss.
(c) Measured at fair value through profit or loss (FVTPL):
Investment in financial asset other than equity instrument, not measured at either amortised cost or FVOCI is measured at FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognised in the Statement of Profit and Loss.
Equity Instruments:
All investments in equity instruments classified under financial assets are subsequently measured at fair value. Equity instruments which are held for trading are measured at FVTPL.
For all other equity instruments, the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument shall be recognised in Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognised in the OCI. Amounts recognised in Other Comprehensive Income (OCI) are not subsequently transferred to Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognised in Statement of Profit and Loss.
Impairment
The Company recognises a loss allowance for Expected Credit Losses (ECL) on financial assets that are measured at amortised cost and at FVOCI. The credit loss is difference between all contractual cash flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate. This is assessed on an individual or collective basis after considering all reasonable and supportable including that which is forward-looking.
The Companyâs trade receivables or contract revenue receivables do not contain significant financing component and loss allowance on trade receivables is measured at an amount equal to life time expected losses i.e. expected cash shortfall, being simplified approach for recognition of impairment loss allowance.
Under simplified approach, the Company does not track changes in credit risk. Rather it recognizes impairment loss allowance based on the lifetime ECL at each reporting date right from its initial recognition. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables.
The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.
For financial assets other than trade receivables, the Company recognises 12-month expected credit losses for all originated or acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial recognition. The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset increases significantly since its initial recognition. If, in a subsequent period, credit quality of the instrument improves such that there is no longer significant increase in credit risks since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12 months ECL.
The impairment losses and reversals are recognised in Statement of Profit and Loss. For equity instruments and financial assets measured at FVTPL, there is no requirement for impairment testing.
De-recognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers rights to receive cash flows from an asset, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Financial Liabilities
Initial Recognition and measurement
Financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial liabilities are initially recognised at fair value net of transaction costs for all financial liabilities not carried at fair value through profit or loss.
The Companyâs financial liabilities includes trade and other payables, loans and borrowings including bank overdrafts and derivative instruments.
Subsequent measurement
Financial liabilities measured at amortised cost are subsequently measured at using EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognised in the Statement of Profit and Loss.
Loans & Borrowings:
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using EIR method. Gains and losses are recognized in profit & loss when the liabilities are derecognized as well as through EIR amortization process.
Financial Guarantee Contracts
Financial guarantee contracts issued by the Company are those contracts that requires a payment to be made or to reimburse the holder for a loss it incurs because the specified debtors fails to make payment when due in accordance with the term of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee.
Subsequently the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative adjustments.
De-recognition
A financial liability is de-recognised 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.
Derivative financial instruments & hedge accounting
The Company uses derivative financial instruments, such as forward foreign exchange contracts, interest rate swaps, cross currency interest risk swap to hedge its foreign currency risks. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value, with changes in fair value recognised 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.
The Company designates their derivatives as hedges of foreign currency risk associated with the cash flows of highly probable forecast transactions and variable interest rate risks associated with the borrowings.
The Company documents at the inception of hedging transaction the economic relationship between hedging instruments and hedged items including whether the hedging instrument is expected to offset cash flow of hedged items. The Company documents its risk management objective and strategy for undertaking various hedge transaction at the inception of each hedge relationship.
Cash flows hedge that qualify for the hedge accounting
Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit & loss, except for the effective portion of cash flow hedge which is recognized in other comprehensive income and presented as separate component of equity which is later reclassified to statement of profit & loss when the hedge item affects profit & loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
1.10 Fair Value Measurement:
The Group measures financial instruments, such as, derivatives at fair value at each balance sheet date.
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 for the asset or liability
The principal or the most advantageous market must be accessible by the Group.
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.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group 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 Group 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.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.11 Employee Benefits
The Company has provides following post-employment plans:
(a) Defined benefit plans such a gratuity and
(b) Defined contribution plans such as Provident fund & Superannuation fund
a) Defined-benefit plan:
The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plan is the present value of defined benefit obligations at the end of the reporting period less fair value of plan assets. The defined benefit obligations is calculated annually by actuaries through actuarial valuation using the projected unit credit method.
The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
(a) Service costs comprising current service costs, past-service costs, gains and losses on curtailment and non-routine settlements; and
(b) Net interest expense or income
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and fair value of plan assets. This cost is included in employee benefit expenses in the statement of the profit & loss.
Re-measurement comprising of actuarial gains and losses arising from
(a) Re-measurement of Actuarial(gains)/losses
(b) Return on plan assets, excluding amount recognized in effect of asset ceiling
(c) Re-measurement arising because of change in effect of asset ceiling
are recognised in the period in which they occur directly in Other comprehensive income. Re-measurement are not reclassified to profit or loss in subsequent periods.
Ind AS 19 requires the exercise of judgment in relation to various assumptions including future pay rises, inflation and discount rates and employee and pensioner demographics. The Company determines the assumptions in conjunction with its actuaries, and believes these assumptions to be in line with best practice, but the application of different assumptions could have a significant effect on the amounts reflected in the income statement, other comprehensive income and balance sheet. There may be also interdependency between some of the assumptions.
b) Defined-contribution plan:
Under defined contribution plans, provident fund, the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. Defined Contribution plan comprise of contributions to the employeesâ provident fund with the government, superannuation fund and certain state plans like Employeesâ State Insurance and Employeesâ Pension Scheme. The Companyâs payments to the defined contribution plans are recognised as expenses during the period in which the employees perform the services that the payment covers.
c) Other employee benefits:
(a) Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the present value of the obligation as at the Balance sheet date determined based on an actuarial valuation.
(b) Undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the period when the employee renders the related services.
d) Expenses incurred towards voluntary retirement scheme are charged to the statement of profit and loss as and when incurred.
e) Other benefits comprising of discretionary long service awards are recognized as and when determined.
1.12 Leases
A lease is classified at the inception date as a finance lease or an operating lease. Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalized at fair value or present value of the minimum lease payments at the inception of the lease, whichever is lower. 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 finance costs in the statement of profit and loss
Other leases are treated as operating leases, with payments are recognised as expense in the statement of profit & loss on a straight-line basis over the lease term.
1.13 Foreign Currency Transactions
a) Initial Recognition
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss of the year.
b) Measurement of Foreign Currency Items at the Balance Sheet Date
Foreign currency monetary items of the Company are restated at the closing exchange rates. Non monetary items are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising out of these transactions are charged to the Statement of Profit and Loss.
1.14 Taxes on Income
Income tax comprises current and deferred tax. Income tax expense is recognized in the statement of profit and loss except to the extent it relates to items directly recognized in equity or in other comprehensive income.
Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences between accounting and tax treatments, and due to items that are never taxable or tax deductible. Tax provisions are included in current liabilities. Interest and penalties on tax liabilities are provided for in the tax charge. The Company offsets, the current tax assets and liabilities (on a year on year basis) where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis or to realise the assets and liabilities on net basis.
Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in financial statements. Deferred income tax asset are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized. Deferred tax assets are not recognised where it is more likely than not that the assets will not be realised in the future.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Minimum Alternative Tax (âMATâ) credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income-tax during the specified period. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income-tax during the specified period.
1.15 Research and Development Expenditure
Research costs are expensed as incurred. Product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, further economic benefits are probable, the Company has an intention and ability to complete and use or sell the product and the costs can be measured reliably.
1.16 Provisions and Contingencies
A provision is recognised if, as a result of a past event, the group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract.
A disclosure for contingent liabilities is made where there is a possible obligation or a present obligation that may probably not require an outflow of resources or an obligation for which the future outcome cannot be ascertained with reasonable certainty. When there is a possible or a present obligation where the likelihood of outflow of resources is remote, no provision or disclosure is made.
1.17 Cash and Cash Equivalents
Cash and Cash equivalents include cash and Cheque in hand, bank balances, demand deposits with banks and other short-term highly liquid investments that are readily convertible to known amounts of cash & which are subject to an insignificant risk of changes in value where original maturity is three months or less.
1.18 Cash Flow Statement
Cash flows are reported using the indirect method where by the profit before tax is adjusted for the effect of the transactions of a non-cash nature, any deferrals or accruals of past and future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.
1.19 Borrowing Cost
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of Cost of that assets, during the period till all the activities necessary to prepare the Qualifying assets for its intended use or sale are complete during the period of time that is required to complete and prepare the assets for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are recognized as an expense in the period in which they are incurred.
1.20 Earnings per Share
Basic EPS is arrived at based on net profit after tax available to equity shareholders to the weighted average number of equity shares outstanding during the year.
The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless impact is anti-dilutive.
1.21 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to Chief Operating Decision Maker (CODM).
The Company has identified its Managing Director as CODM which assesses the operational performance and position of the Company and makes strategic decisions.
1.22 Exceptional Items
When an item of income or expense within profit or loss from ordinary activity is of such size, nature or incidence that their disclosure is relevant to explain the performance of the Company for the year, the nature and amount of such items is disclosed as exceptional items.
1.23 Recent Accounting Pronouncements Ind AS 115, Revenue from Contract with Customers
On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Ind AS 115, Revenue from Contract with Customers effective from April 1, 2018. The core principle of the new standard is that an entity should recognize revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service (ie an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entityâs contracts with customers.
Control of an asset refers to the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset. Control includes the ability to prevent other entities from directing the use of, and obtaining the benefits from, an asset.
Ind AS 21, Foreign currency transactions
On March 28, 2018, Ministry of Corporate Affairs (âMCAâ) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 effective from April 1, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency.
Mar 31, 2017
1. SIGNIFICANT ACCOUNTING POLICIES 1.1 Company Overview
The Supreme Industries Limited ("the Company") is public limited Company incorporated and domiciled in India and has registered office at 612, Raheja Chambers, Nariman Point, Mumbai 400 021. It is incorporated under the Indian Companies Act, 1913 and its shares are listed on the Bombay Stock Exchange Limited and National Stock Exchange in India.
The Supreme Industries Limited is one of the leading plastic products manufacturing company in India having 25 manufacturing facilities spread across the country. Company is engaged in manufacturing various plastic products like Plastic Piping System, Industrial and Engineering Molded products, Storage and Material Handling Products, Plastic Molded Furniture, Protective Packaging Products, Cross Laminated Film and products thereof, Performance packaging Film and Composite LPG Cylinders etc.
1.2 Basis of Accounting
These financial statements have been prepared in accordance with the Indian Accounting Standards (hereinafter referred to as the ''Ind AS'') as notified under the Companies (Indian Accounting standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendments Rules 2016 prescribed under section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014.
The financial statements of the Company are prepared and presented on accrual basis and under the historical cost convention, except for the following material items that have been measured at fair value as required by the relevant Ind AS:
- Certain financial assets and liabilities are measured at Fair value (refer accounting policy on financial instruments - note 1.9 below.
- Defined Benefit and other Long term Employee Benefits - Refer note 1.11 below.
- Derivative Financial instruments - Refer note 1.9 below.
1.3 Use of Estimates and Judgments
The preparation of the financial statements requires that the Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The recognition, measurement, classification or disclosure of an item or information in the financial statements is made relying on these estimates.
The estimates and judgments used in the preparation of the financial statements are continuously evaluated by the Company and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.
All the assets and liabilities have been classified as current or non-current as per the company''s normal operating cycle of twelve months and other criteria set out in Schedule III to the Companies Act, 2013.
1.4 Property, Plant And Equipment & Intangible Assets Property, Plant and Equipment
Freehold land is carried at historical cost. All other items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Costs include freight, import duties, non-refundable purchase taxes and other expenses directly attributable to the acquisition of the asset.
Leasehold land is stated at historical cost less amounts written off proportionate to expired lease period.
Intangible Assets
Intangible assets are held on the balance sheet at cost less accumulated amortization and impairment losses. Intangible assets developed or acquired with finite useful life are amortized on straight line basis over the useful life as specified below:
- Computer Software and Licenses - 3 to 4 years
- Right to Use- 5 years
Capital Work-in-progress and Pre-operative Expenses during Construction Period
Capital Work-in-Progress includes expenditure during construction period incurred on projects under implementation treated as pre-operative expenses pending allocation to the assets. These expenses are apportioned to the respective fixed assets on their completion / commencement of commercial production.
* Useful life of Plant & Equipment of Plastic Piping System Division, Protective Packaging Division and Cross Laminated Film Division and Moulds and Dies are determined based on the internal assessment supported by independent technical evaluation carried out by external values.
The management believes that the useful life as given above the best represent the period over which the management expects to use these assets. The Company reviews the useful lives and residual value at each reporting date.
Depreciation on assets added/sold or discarded during the year is being provided on pro-rata basis up to the date on which such assets are added/sold or discarded.
Leasehold Land is amortized over the period of lease.
Assets costing up to V 10,000 each are depreciated fully in the year of purchase.
Gains/Losses on disposals/de-recognition of property, plant and equipment are determined by comparing proceeds with carrying amount and these are recognized in statement of profit & Loss.
1.5 Impairment of Non Financial Assets
The Company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group of non-financial assets are impaired. If any such indication exists, the Company estimates the amount of impairment loss. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the individual asset/cash generating unit is made.
An impairment loss is calculated as the difference between an asset''s carrying amount and recoverable amount. Losses are recognized in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, then the previously recognized impairment loss is reversed through profit or loss.
1.6 Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefit will flow to the Company and the revenue can be measured reliably.
Sale of goods:
Revenue from the sale of goods is recognized when the significant risks and rewards of ownership of the goods have been transferred to the buyer either at the time of dispatch or delivery or when the risk of loss transfers. Export sales are recognized based on the shipped on board date as per bill of lading, which is when substantial risks and rewards of ownership are passed to the customers.
Revenue from sale of goods is net of taxes and recovery of charges collected from customers like transport, packing etc. Provision is made for returns when appropriate. Revenue is measured at the fair value of consideration received or receivable and is net of price discounts, allowance for volume rebates and similar items.
Claims / Refunds not ascertainable with reasonable certainty are accounted for, on final settlement and are recognized as revenue on certainty of receipt on prudent basis.
Rendering of services:
Revenue from sale of services are recognized when the services are rendered.
Other Income
Dividend income on investments is recognized when the right to receive dividend is established.
Interest income is recognized on a time proportionate basis taking into account the amounts invested and the rate of interest. For all financial instruments measured at amortized cost, interest income is recorded using the Effective interest rate method to the net carrying amount of the financial assets.
1.7 Government Grants
Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.
Government grants related to revenue are recognized on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs which they are intended to compensate. Such grants are deducted in reporting the related expense. When the grant relates to an asset, it is recognized as income over the expected useful life of the asset.
In case a non-monetary asset is given free of cost it is recognized at a fair value. When loan or similar assistance are provided by government or related institutions, with an interest rate below the current applicable market rate, the effect of this favorable interest is recognized as government grant. The loan or assistance is initially recognized and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received.
1.8 Inventories
Inventories includes Raw Material, Work-in-Progress, Finished goods, Stores & spares , Consumables, Packing Materials, Goods for resale and commercial premises are valued at lower of cost and net realizable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
Raw Material and Components - Cost include cost of purchases and other costs incurred in bringing the inventories to their present location and condition. Cost is determined using identified lot basis / First in first out (FIFO) basis.
Finished/Semi-Finished Goods - cost includes cost of direct material, labor, other direct cost and a proportion of fixed manufacturing overheads allocated based on the normal operating capacity but excluding borrowing costs. Cost is determined on weighted average cost basis
Stores, Spare Parts, Consumables, Packing Materials etc. - cost is determined on FIFO basis.
Goods for Resale - cost is determined on FIFO basis
Commercial Premises - Cost includes cost of land, premium for development rights, construction cost, materials, services and allocated interest and expenses incidental to the construction business.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale.
Adequate allowance is made for obsolete and slow moving items.
1.9 FINANCIAL INSTRUMENTS Financial assets - Initial recognition
Financial assets are recognized when the Company becomes a party to the contractual provisions of the instruments. Financial assets other than trade receivables are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the Statement of Profit and Loss.
Subsequent measurement
Financial assets, other than equity instruments, are subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss on the basis of both:
(a) the entity''s business model for managing the financial assets and
(b) the contractual cash flow characteristics of the financial asset.
(a) Measured at amortized cost:
A financial asset is measured at amortized cost, if it is held under the hold to collect business model i.e. held with an objective of holding the assets to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest on the principal outstanding. Amortized cost is calculated using the effective interest rate ("EIR") method by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in interest income in the Statement of Profit and Loss. The losses arising from impairment are recognized in the Statement of Profit and Loss. On derecognition, gain or loss, if any, is recognized to Statement of Profit and Loss.
(b) Measured at fair value through other comprehensive income (FVOCI):
A financial asset is measured at FVOCI, if it is held under the hold to collect and sell business model i.e. held with an objective to collect contractual cash flows and selling such financial asset and the contractual cash flows are solely payments of principal and interest on the principal outstanding. It is subsequently measured at fair value with fair value movements recognized in the OCI, except for interest income which recognized using EIR method. The losses arising from impairment are recognized in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously recognized in the OCI is reclassified from the equity to Statement of Profit and Loss.
(c) Measured at fair value through profit or loss (FVTPL):
Investment in financial asset other than equity instrument, not measured at either amortized cost or FVOCI is measured at FVTPL. Such financial assets are measured at fair value with all changes in fair value, including interest income and dividend income if any, recognized in the Statement of Profit and Loss.
Equity Instruments:
All investments in equity instruments classified under financial assets are subsequently measured at fair value. Equity instruments which are held for trading are measured at FVTPL.
For all other equity instruments, the Company may, on initial recognition, irrevocably elect to measure the same either at FVOCI or FVTPL. The Company makes such election on an instrument-by-instrument basis. Fair value changes on an equity instrument shall be recognized in Statement of Profit and Loss unless the Company has elected to measure such instrument at FVOCI. Fair value changes excluding dividends, on an equity instrument measured at FVOCI are recognized in the OCI. Amounts recognized in Other Comprehensive Income (OCI) are not subsequently transferred to Statement of Profit and Loss. Dividend income on the investments in equity instruments are recognized in Statement of Profit and Loss.
Impairment
The Company recognizes a loss allowance for Expected Credit Losses (ECL) on financial assets that are measured at amortized cost and at FVOCI. The credit loss is difference between all contractual cash flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate. This is assessed on an individual or collective basis after considering all reasonable and supportable including that which is forward-looking.
The Company''s trade receivables or contract revenue receivables do not contain significant financing component and loss allowance on trade receivables is measured at an amount equal to life time expected losses i.e. expected cash shortfall, being simplified approach for recognition of impairment loss allowance.
Under simplified approach, the Company does not track changes in credit risk. Rather it recognizes impairment loss allowance based on the lifetime ECL at each reporting date right from its initial recognition. The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables.
The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.
For financial assets other than trade receivables, the Company recognizes 12-month expected credit losses for all originated or acquired financial assets if at the reporting date the credit risk of the financial asset has not increased significantly since its initial recognition. The expected credit losses are measured as lifetime expected credit losses if the credit risk on financial asset increases significantly since its initial recognition. If, in a subsequent period, credit quality of the instrument improves such that there is no longer significant increase in credit risks since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12 months ECL.
The impairment losses and reversals are recognized in Statement of Profit and Loss. For equity instruments and financial assets measured at FVTPL, there is no requirement for impairment testing.
De-recognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers rights to receive cash flows from an asset, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Financial Liabilities
Initial Recognition and measurement
Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments. Financial liabilities are initially recognized at fair value net of transaction costs for all financial liabilities not carried at fair value through profit or loss.
The Company''s financial liabilities includes trade and other payables, loans and borrowings including bank overdrafts and derivative instruments.
Subsequent measurement
Financial liabilities measured at mortised cost are subsequently measured at using EIR method. Financial liabilities carried at fair value through profit or loss are measured at fair value with all changes in fair value recognized in the Statement of Profit and Loss.
Loans & Borrowings:
After initial recognition, interest bearing loans and borrowings are subsequently measured at mortised cost using EIR method. Gains and losses are recognized in profit & loss when the liabilities are derecognized as well as through EIR amortization process.
Financial Guarantee Contracts
Financial guarantee contracts issued by the Company are those contracts that requires a payment to be made or to reimburse the holder for a loss it incurs because the specified debtors fails to make payment when due in accordance with the term of a debt instrument. Financial guarantee contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee.
Subsequently the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognized less cumulative adjustments.
De-recognition
A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
Derivative financial instruments & hedge accounting
The Company uses derivative financial instruments, such as forward foreign exchange contracts, interest rate swaps, cross currency interest risk swap to hedge its foreign currency risks. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently premeasured at fair value, with changes in fair value 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.
The Company designates their derivatives as hedges of foreign currency risk associated with the cash flows of highly probable forecast transactions and variable interest rate risks associated with the borrowings.
The Company documents at the inception of hedging transaction the economic relationship between hedging instruments and hedged items including whether the hedging instrument is expected to offset cash flow of hedged items. The Company documents its risk management objective and strategy for undertaking various hedge transaction at the inception of each hedge relationship.
Cash flows hedge that qualify for the hedge accounting
Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit & loss, except for the effective portion of cash flow hedge which is recognized in other comprehensive income and presented as separate component of equity which is later reclassified to statement of profit & loss when the hedge item affects profit & loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
1.10 FAIR VALUE MEASUREMENT:
The Company measures financial instruments, such as, derivatives at fair value at each balance sheet date.
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 for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
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.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
1.11 EMPLOYEE BENEFITS
The Company has following post-employment plans:
(a) Defined benefit plans such a gratuity and
(b) Defined contribution plans such as Provident fund & Superannuation fund
a) Defined-benefit plan:
The liability or asset recognized in the balance sheet in respect of defined benefit gratuity plan is the present value of defined benefit obligations at the end of the reporting period less fair value of plan assets. The defined benefit obligations is calculated annually by actuaries through actuarial valuation using the projected unit credit method.
The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
(a) Service costs comprising current service costs, past-service costs, gains and losses on curtailment and non-routine settlements; and
(b) Net interest expense or income
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and fair value of plan assets. This cost is included in employee benefit expenses in the statement of the profit & loss.
Re-measurement comprising
(a) Re-measurement of Actuarial (gains)/losses
(b) Return on plan assets, excluding amount recognized in effect of asset ceiling
(c) Re-measurement arising because of change in effect of asset ceiling are recognized in the period in which they occur directly in Other comprehensive income. Re-measurement are not reclassified to profit or loss in subsequent periods.
Ind AS 19 requires the exercise of judgment in relation to various assumptions including future pay rises, inflation and discount rates and employee and pensioner demographics. The Company determines the assumptions in conjunction with its actuaries, and believes these assumptions to be in line with best practice, but the application of different assumptions could have a significant effect on the amounts reflected in the income statement, other comprehensive income and balance sheet. There may be also interdependency between some of the assumptions.
b) Defined-contribution plan:
Under defined contribution plans, provident fund, the Company pays pre-defined amounts to separate funds and does not have any legal or informal obligation to pay additional sums. Defined Contribution plan comprise of contributions to the employees'' provident fund with the government, superannuation fund and certain state plans like Employees'' State Insurance and Employees'' Pension Scheme. The Company''s payments to the defined contribution plans are recognized as expenses during the period in which the employees perform the services that the payment covers.
c) Other employee benefits:
(a) Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the obligation as at the Balance sheet date determined based on an actuarial valuation.
(b) Undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the period when the employee renders the related services.
d) Expenses incurred towards voluntary retirement scheme are charged to the statement of profit and loss as and when incurred.
e) Other benefits comprising of discretionary long service awards are recognized as and when determined.
1.12 LEASES
A lease is classified at the inception date as a finance lease or an operating lease. Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalized at fair value or present value of the minimum lease payments at the inception of the lease, whichever is lower. 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 recognized in finance costs in the statement of profit and loss
Other leases are treated as operating leases, with payments are recognized as expense in the statement of profit & loss on a straight-line basis over the lease term.
1.13 FOREIGN CURRENCY TRANSACTIONS
a) Initial Recognition
Transactions in foreign currency are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss of the year.
b) Measurement of Foreign Currency Items at the Balance Sheet Date
Foreign currency monetary items of the Company are restated at the closing exchange rates. Non monetary items are recorded at the exchange rate prevailing on the date of the transaction. Exchange differences arising out of these transactions are charged to the Statement of Profit and Loss.
1.14 TAXES ON INCOME
Income tax comprises current and deferred tax. Income tax expense is recognized in the statement of profit and loss except to the extent it relates to items directly recognized in equity or in other comprehensive income.
Current tax is based on taxable profit for the year. Taxable profit is different from accounting profit due to temporary differences between accounting and tax treatments, and due to items that are never taxable or tax deductible. Tax provisions are included in current liabilities. Interest and penalties on tax liabilities are provided for in the tax charge. The Company offsets, the current tax assets and liabilities (on a year on year basis) where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis or to realize the assets and liabilities on net basis.
Deferred income tax is recognized using the balance sheet approach. Deferred income tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in financial statements. Deferred income tax asset are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized. Deferred tax assets are not recognized where it is more likely than not that the assets will not be realized in the future.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.
Minimum Alternative Tax (''MAT'') credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income-tax during the specified period. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income-tax during the specified period.
1.15 RESEARCH AND DEVELOPMENT EXPENDITURE
Research costs are expensed as incurred. Product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, further economic benefits are probable, the Company has an intention and ability to complete and use or sell the product and the costs can be measured reliably.
1.16 PROVISIONS AND CONTINGENCIES
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract.
A disclosure for contingent liabilities is made where there is a possible obligation or a present obligation that may probably not require an outflow of resources or an obligation for which the future outcome cannot be ascertained with reasonable certainty. When there is a possible or a present obligation where the likelihood of outflow of resources is remote, no provision or disclosure is made.
1.17 CASH AND CASH EQUIVALENTS
Cash and Cash equivalents include cash and Cheque in hand, bank balances, demand deposits with banks and other short-term highly liquid investments that are readily convertible to known amounts of cash & which are subject to an insignificant risk of changes in value where original maturity is three months or less.
1.18 CASH FLOW STATEMENT
Cash flows are reported using the indirect method where by the profit before tax is adjusted for the effect of the transactions of a non-cash nature, any deferrals or accruals of past and future operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the company are segregated.
1.19 BORROWING COST
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of Cost of that assets, during the period till all the activities necessary to prepare the Qualifying assets for its intended use or sale are complete during the period of time that is required to complete and prepare the assets for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Other borrowing costs are recognized as an expense in the period in which they are incurred.
1.20 EARNINGS PER SHARE
Basic EPS is arrived at based on net profit after tax available to equity shareholders to the weighted average number of equity shares outstanding during the year.
The diluted EPS is calculated on the same basis as basic EPS, after adjusting for the effects of potential dilutive equity shares unless impact is anti-dilutive.
1.21 OPERATING SEGMENT
Operating segments are reported in a manner consistent with the internal reporting provided to Chief Operating Decision Maker (CODM).
The Company has identified its Managing Director as CODM which assesses the operational performance and position of the Company and makes strategic decisions.
1.22 EXCEPTIONAL ITEMS
When an item of income or expense within profit or loss from ordinary activity is of such size, nature or incidence that their disclosure is relevant to explain the performance of the Company for the year, the nature and amount of such items is disclosed as exceptional items.
Terms/rights attached to Equity shares :
The Company has only one class of issued Equity Shares having a par value of V 2 per share. Each Shareholder is eligible for one vote per share held.
In the event of liquidation, the equity shareholders are eligible to receive the residual assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
The details of Shareholders holding more than 5% shares:
In the Period of five years immediately preceding March, 2017:
The Company has not alloted any equity shares as fully paid up without payment being received in cash or as Bonus Shares or Bought back any equity shares.
Proposed Dividend:
The Board of directors have recommended the payment of a final dividend of V 12 per fully paid up equity share (March 31, 2016 : V NIL ), The proposed dividend is subject to the approval of shareholders in the ensuing annual general meeting.
Jun 30, 2015
A. Basis of Accounting
a) The financial statements are prepared in accordance with generally
accepted accounting principles in India under the historical cost
convention on an accrual basis Pursuant to section 133 of the Companies
Act, 2013 ('The Act') read with Rule 7 of the Companies (Accounts)
Rules, 2014, till the standards of accounting or any addendum thereto
are prescribed by the Central Government in consultation and
recommendation of the National Financial Reporting Authority, the
existing Accounting Standards notified under the Companies Act, 1956
shall continue to apply. Consequently, these financial statements have
been prepared to comply in all material aspects with the accounting
standards notified under Section 211(3C) of the Companies Act, 1956
[Companies (Accounting Standards) Rules, 2006, as amended] and other
relevant provisions of the Companies Act, 2013.
b) The preparation of financial statements requires estimates and
assumptions to be made that affects the reported amount of assets and
liabilities on the date of financial statements and the reported
amounts of revenue and expenses during the reported year. Differences
between the actual results and estimates are recognized in the year in
which the results are known/ materialized.
c) All the assets and liabilities have been classified as current or
non-current as per the company's normal operating cycle of twelve
months and other criteria set out in Schedule III to the Companies Act,
2013.
B. Revenue Recognition
a) Sales are recognized at the time of transfer of ownership and
significant risk of goods to the customer. Service income is recognized
when the service is rendered. Sales & Services are accounted for net of
Excise Duty, VAT, Service tax, returns, claims & discounts etc.
b) Sales exclude recovery of charges separately collected from
customers like transport, packing etc.
c) The Company adopts the Mercantile method in the preparation of the
accounts. Claims / Refunds not ascertainable with reasonable certainty
are accounted for, on final settlement.
d) Government Benefits on account of export sales is estimated and
accounted for in the year of export and when there is no significant
uncertainty regarding the ultimate collections of export proceeds as
applicable.
e) Industrial promotion subsidy / government grants are recognized on
accrual basis on compliance of stipulated conditions as notified under
the respective scheme.
f) Other Income -
Dividend income on investments is recognised when the right to receive
dividend is established.
Interest is recognized on a time proportionate basis taking into
account the amounts invested and the rates of interest.
C. Fixed Assets
a) Fixed assets are stated at cost of acquisition or construction (net
of CENVAT Credit/ Value Added Tax, subsidy or grants on account of
assets) less accumulated depreciation and amortization.
b) Leasehold land is stated at historical cost less amounts written off
proportionate to expired lease period.
c) The company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash-generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the statement of profit and loss. If at the balance sheet
date there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount.
d) Self constructed assets are recognized at direct cost incurred and
proportionate allocation of overheads incurred to develop the said
asset.
e) Gains or Losses arising from disposal of discarded assets which are
carried at its book value are recognized in the statement of Profit &
Loss.
D. Capital Work-in-Progress and Preoperative Expenses during
Construction Period
Capital Work-in-Progress includes expenditure during construction period
incurred on projects under implementation treated as pre-operative
expenses pending allocation to the assets. These expenses are
apportioned to the respective fixed assets on their completion /
commencement of commercial production.
E. Depreciation & Amortisation
Tangible Assets
a) Depreciation on assets acquired up to 30th June, 2014 for Building,
Plant & Machinery and Moulds & Dies is provided on Straight Line Method
and on other assets on Written Down Value Method.
Depreciation on all Assets acquired on or after 1st July, 2014 is
provided on the straight line method.
b) Depreciation on Tangible Fixed Assets is provided over the useful
lives of the assets as prescribed by Schedule II of the Companies Act,
2013 with the exception of the following;
Plant & Machinery of Plastic Piping System Division, Protective
Packaging Division and Cross Laminated Film Division is depreciated on
triple shift basis over 12 to 18 years based on internal assessment and
independent technical evaluation carried out by external valuers.
The management believes that the useful life as given above best
represent the period over which the management expects to use these
assets.
c) Depreciation on assets sold or discarded during the year is being
provided on pro-rata basis up to the date on which such assets are sold
or discarded.
d) Leasehold Land is amortized over the period of lease.
e) Assets costing up to Rs. 10,000/- each are depreciated fully in the
year of purchase.
Intangible Assets
Intangible assets developed or acquired are amortised on straight line
basis over the useful life as specified below:
a) Computer Software and Licenses - 3 to 4 years
b) Technical License / Know-how Fee - 5 years
Government Grants
Grants received against specific fixed assets are adjusted to the cost
of the assets in the year of receipt. Revenue grants are recognized in
the Statement of Profit & Loss in accordance with the related scheme
and accounted for in the period in which these are accrued.
F. Investments
a) All long term investments are stated at cost. Provision for
diminution, if any, in the value of investments is made to recognize a
decline, other than temporary, in the opinion of the management.
b) Current investments are carried at the lower of cost and fair value,
determined on a category-wise basis.
G. Inventories
a) Raw Material & Components - at cost using identified lot basis /
First in first out (FIFO) or net realizable value whichever is lower.
b) Finished Goods/Semi-Finished Goods - at cost using weighted average
cost basis or net realisable value whichever is lower. Cost comprises
all cost of purchase, cost of conversion and other costs incurred in
bringing the inventory to their respective present location and
condition.
c) Stores, Spare Parts, Packing Materials etc. - at cost using FIFO or
at net realisable value whichever is lower.
d) Goods for Resale - at cost using FIFO basis or net realisable value
whichever is lower.
e) Inter divisional transfers are valued at works/factory costs of the
transferor unit/division, plus transport and other charges.
H. Assets Taken on Lease
In respect of operating leases, lease rentals are recognized as an
expense in the Statement of Profit & Loss on an accrual basis over the
leased term.
In respect of assets obtained on finance leases, assets are recognized
at their fair value at the date of acquisition or if lower, at the
present value of minimum lease payments. The corresponding liability to
the lessor is included in the Balance Sheet as a Finance Lease
obligation. The excess of lease payments over the recorded lease
obligations are treated as Finance charges which are allocated to each
lease term so as to produce a constant rate of charge on the remaining
balance of the obligations. The assets are depreciated as owned
depreciable assets.
I. Foreign Currency Transactions
a) Initial Recognition
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. Exchange differences arising
on foreign exchange transactions settled during the year are recognized
in the Statement of Profit & Loss of the year.
b) Measurement of Foreign Currency Items at the Balance Sheet Date
Foreign currency monetary items of the Company are restated at the
closing exchange rates. Non monetary items are recorded at the exchange
rate prevailing on the date of the transaction. Exchange differences
arising out of these transactions are charged to the Statement of
Profit & Loss.
c) Forward Exchange Contracts.
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/ income over the
life of the contract. Exchange differences on such contracts are
recognized in the Statement of Profit & Loss in the period in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of such forward exchange contract is also recognized as income
or expense for the period.
The Company uses foreign currency forward contracts to hedge its actual
underlying exposures and not for trading or speculation purpose. The
use of these forward contracts reduces the risk and/or cost to the
company.
J. Employee Benefits
a) Short Term Benefits are recognized as an expense at the undiscounted
amount in the statement of profit and loss of the year in which related
service is rendered.
b) Post Employment Benefits:-
* Defined Contribution Plan
Company's contribution to the superannuation scheme and State Governed
Provident Fund Scheme is recognized during the year in which related
service is rendered.
* Defined Benefit Plan :- Gratuity
The present value of obligation is determined based on an actuarial
valuation, using the Projected Unit Credit Method. Actuarial gains and
losses arising on such valuation are recognized immediately in the
statement of profit and loss. The Gratuity Funds for the employees are
administered by Life Insurance Companies.
c) Compensated Absences: -
The company has a policy of providing compensated absences to its
employees. The expense is recognized at the present value of the amount
payable determined based on independent actuarial valuation, using
projected unit credit method. The company doesn't maintain any plan
funds to fund its obligation towards compensated absences.
d) Other benefits comprising of discretionary long service awards are
recognized as and when determined.
K. Research & Development Expenditure
Revenue expenditure on research and development is charged to the
statement of profit and loss. Expenditure, which results in creation of
capital asset, is capitalized in the year in which it is incurred and
depreciation is provided on such assets as applicable.
L. Share / Debenture Issue Expenses And Debenture Redemption Reserve
Issue expenses are adjusted against the Securities Premium Account.
Debenture Redemption Reserve is created pursuant to SEBI (Disclosure
and Investor Protection) Guidelines, 2000.
Premium paid / payable on redemption is adjusted against the Securities
Premium Account
M. Taxes on Income
Current tax is determined based on the amount of tax payable in respect
of taxable income for the financial year ending on 30th June.
Deferred tax is recognized, subject to consideration of prudence, on
timing differences, being the difference between taxable income and
accounting income that originate in one period are capable of reversal
in one or more subsequent periods. Deferred tax assets, are recognized
only to the extent there is virtual certainty supported by convincing
evidence of its realization.
Wealth tax is provided in accordance with the provisions of Wealth Tax
Act, 1957.
N. Provisions and Contingencies
Provisions involving substantial degree of estimation in measurement
are recognized when there is a permanent obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognized but are disclosed in the
notes. Contingent Assets are not recognized.
O. Cash and Cash Equivalents
Cash & Cash equivalents include cash & Cheque in hand, bank balances,
demand deposits with banks and other short-term highly liquid
investments where original maturity is three months or less.
P. Borrowing Cost
Borrowing Cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as adjustment to the interest cost. Interest and other
borrowing costs attributable to acquisition, construction or production
of qualifying assets that takes a substantial period of time to get
ready for its intended use or sale are capitalized. All other borrowing
costs are expensed out in the period they occur.
Q. Earnings per Share
Basic and diluted earnings per share are computed by dividing the net
profit attributable to equity shareholders for the year, with the
weighted average number of shares outstanding during the year.
R. Construction Business
The company had ventured into real estate development business and thus
the accounting policies relevant specifically in relation to
construction business are as under:-
Revenue recognition
Income from real estate sales is recognized on the transfer of all
significant risk and rewards of ownership to the buyers and is not
unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration.
Cost recognition
Proportionate cost including estimated cost of completion of real
estate sold is recognized in statement of profit and loss and shown
separately under the head "Cost of materials consumed".
Valuation of inventory
Finished / under construction inventory of real estate is stated at
cost or net realizable value whichever is lower. Construction
work-in-progress includes cost of land, premium for development rights,
construction cost, materials, services and allocated interest and
expenses incidental to the construction business.
Other accounting policies, wherever applicable, are same as followed in
normal course of business.
Jun 30, 2014
A. Basis of Accounting
a) The financial statements are prepared under the historical cost
convention, in accordance with generally accepted accounting principles
in India, the Companies Accounting Standards Rules, 2006 and relevant
provisions of Companies Act, 1956 which continues to be applicable in
respect of section 133 of the Companies Act, 2013 in terms of General
Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate
Affairs & the relevant provisions of the Companies Act 1956 & Companies
Act 2013,as applicable,as adopted consistently by the company. .The
accounting is on the basis of a going concern concept.
b) The preparation of financial statements requires estimates and
assumptions to be made that affects the reported amount of assets and
liabilities on the date of financial statements and the reported
amounts of revenue and expenses during the reported year. Differences
between the actual results and estimates are recognized in the year in
which the results are known/ materialized.
c) All the assets and liabilities have been classified as current or
non-current as per the company''s normal operating cycle of twelve
months and other criteria set out in Revised Schedule VI to the
Companies Act, 1956.
B. Revenue Recognition
a) Sales are recognized at the point of dispatch of goods to the
customer. Service income is recognized when the service is rendered.
Sales & Services are accounted for net of excise duty, service tax,
returns & claims etc.
b) The Company adopts the accrual concept in the preparation of the
accounts. Claims / Refunds not ascertainable with reasonable certainty
are accounted for, on final settlement.
c) Benefit on account of entitlement to import duty-free raw materials
under any Scheme as announced by the government, is estimated and
accounted for in the year of export and when there is no significant
uncertainty regarding the ultimate collections of export proceeds as
applicable.
d) Industrial promotion subsidy / government grants are recognized on
accrual basis on compliance of stipulated conditions as notified under
the respective scheme.
C. Fixed Assets
a) Certain Land, Buildings, Plant & Machinery and Moulds & Dies are
stated at revalued amounts as a result of their revaluation less
depreciation.
b) Other fixed assets are stated at cost less accumulated depreciation
and amortization.
c) Leasehold land is stated at historical cost less amounts written off
proportionate to expired lease period.
d) The company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash-generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the statement of profit and loss. If at the balance sheet
date there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount.
D. Capital Work-in-Progress and Preoperative Expenses during
Construction Period
Capital Work-in-Progress includes expenditure during construction
period incurred on projects under implementation treated as
pre-operative expenses pending allocation to the assets. These expenses
are apportioned to the respective fixed assets on their completion /
commencement of commercial production.
E. Depreciation & Amortisation Tangible Assets
a) Depreciation on Building, Plant & Machinery and Moulds & Dies is
provided on Straight Line Method and on other assets on Written Down
Value Method at the rates and in the manner specified in Schedule XIV
of the Companies Act, 1956, except certain specific assets on which
depreciation is provided at higher rates based on useful life of the
assets estimated by the management.
b) Certain class of assets acquired after 1-7-2009 / 1-7-2010 have been
depreciated at rates higher than as specified in Schedule XIV of the
Companies Act, 1956, the details thereof are as under :-
- Injection moulding machines- 8.33% p.a. on SLM basis.
- Ancillary Equipments & utilities -14.28% p.a. on SLM basis
- Electronic equipments: - 60% on WDV basis
- Computers:- 60% on WDV basis
- Depreciation on additions to the assets during the year is being
provided on pro-rata basis from the date of acquisition/ installation.
c) Depreciation on assets sold or discarded during the year is being
provided on pro-rata basis up to the date on which such assets are sold
or discarded.
d) Leasehold Land is amortised over the period of lease.
e) Assets costing up to Rs. 5,000/- each are depreciated fully in the
year of purchase.
Intangible Assets
Intangible assets developed or acquired are amortised on straight line
basis at the rates specified below:
a) Computer Software and Licenses - 25%.
b) Technical License / Know-how Fee - 20%
c) Right To Use - 20%
F. Investments
a) All long term investments are stated at cost. Provision for
diminution, if any, in the value of investments is made to recognize a
decline, other than temporary, in the opinion of the management.
b) Current investments are carried at the lower of cost and fair value,
determined on a category-wise basis.
G. Inventories
Inventories of plastic goods are valued as under:-
a) Raw Material & Components - at cost using identified lot basis /
First in first out (FIFO) or net realizable value whichever is lower.
b) Finished Goods/Semi-Finished Goods - at cost using weighted average
cost basis or net realisable value whichever is lower. Cost comprises
all cost of purchase, cost of conversion and other costs incurred in
bringing the inventory to their respective present location and
condition
c) Stores, Spare Parts, Packing Materials etc. - at cost using FIFO
basis except obsolete and non-moving items stated at net realisable
value.
d) Goods for Resale - at cost using FIFO basis or net realisable value
whichever is lower.
e) Inter divisional transfers are valued at works/factory costs of the
transferor unit/division, plus transport and other charges.
H. Assets Taken on Lease
In respect of operating leases, lease rentals are recognized as an
expense in the Statement of Profit & Loss on an accrual basis over the
leased term.
In respect of assets obtained on finance leases, assets are recognized
at their fair value at the date of acquisition or if lower, at the
present value of minimum lease payments. The corresponding liability to
the lessor is included in the Balance Sheet as a Finance Lease
obligation. The excess of lease payments over the recorded lease
obligations are treated as Finance charges which are allocated to each
lease term so as to produce a constant rate of charge on the remaining
balance of the obligations. The assets are depreciated as owned
depreciable assets.
I. Foreign Currency Transactions
a) Initial Recognition
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. Exchange differences arising
on foreign exchange transactions settled during the year are recognised
in the Statement of Profit & Loss of the year.
b) Measurement of Foreign Currency Items at the Balance Sheet Date
Foreign currency monetary items of the Company are restated at the
closing exchange rates. Non monetary items are recorded at the exchange
rate prevailing on the date of the transaction. Exchange differences
arising out of these transactions are charged to the Statement of
Profit & Loss.
c) Forward Exchange Contracts.
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/ income over the
life of the contract. Exchange differences on such contracts are
recognized in the Statement of Profit & Loss in the period in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of such forward exchange contract is also recognized as income
or expense for the period.
The Company uses foreign currency forward contracts to hedge its actual
underlying exposures and not for trading or speculation purpose. The
use of these forward contracts reduces the risk and/or cost to the
company.
J. Employee Benefits
a) Short Term Benefits are recognised as an expense at the undiscounted
amount in the statement of profit and loss of the year in which related
service is rendered.
b) Post Employment Benefits:-
- Defined Contribution Plan
Company''s contribution to the superannuation scheme and State Governed
Provident Fund Scheme is recognised during the year in which related
service is rendered.
- Defined Benefit Plan :- Gratuity
The present value of obligation is determined based on an actuarial
valuation, using the Projected Unit Credit Method. Actuarial gains and
losses arising on such valuation are recognized immediately in the
statement of profit and loss. The Gratuity Funds for the employees are
administered by Life Insurance Corporation of India under Group
Gratuity Scheme.
c) Compensated Absences: -
The company has a policy of providing compensated absences to its
employees. The expense is recognized at the present value of the amount
payable determined based on independent actuarial valuation, using
projected unit credit method. The company doesn''t maintain any plan
funds to fund its obligation towards compensated absences.
d) Other benefits comprising of discretionary long service awards are
recognized as and when determined.
K. Research & Development Expenditure
Revenue expenditure on research and development is charged to the
statement of profit and loss. Expenditure, which results in creation of
capital asset, is capitalised in the year in which it is incurred and
depreciation is provided on such assets as applicable.
L. Share / Debenture Issue Expenses And Debenture Redemption Reserve
Issue expenses are adjusted against the Securities Premium Account.
Debenture Redemption Reserve is created pursuant to SEBI (Disclosure
and Investor Protection) Guidelines, 2000.
Premium paid / payable on redemption is adjusted against the Securities
Premium Account.
M. Taxes On Income
Current tax is determined based on the amount of tax payable in respect
of taxable income for the financial year ending 30th June.
Deferred tax is recognised, subject to consideration of prudence, on
timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets, are
recognized only to the extent there is virtual certainty supported by
convincing evidence of its realization.
Wealth tax is provided in accordance with the provisions of Wealth Tax
Act, 1957.
N. Provisions and Contingencies
Provisions involving substantial degree of estimation in measurement
are recognized when there is a permanent obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised but are disclosed in the
notes. Contingent Assets are not recognised.
O. Cash and Cash Equivalents
Cash & Cash equivalents include cash & cheques in hand, bank balances,
demand deposits with banks and other short-term highly liquid
investments where original maturity is three months or less.
P. Borrowing Cost
Borrowing Cost includes interest, amortization of ancillary costs
incurred in connection with the arrangement of borrowings and exchange
differences arising from foreign currency borrowings to the extent they
are regarded as adjustment to the interest cost. Interest and other
borrowing costs attributable to acquisition, construction or production
of qualifying assets that takes a substantial period of time to get
ready for its intended use or sale are capitalised. All other borrowing
costs are expensed out in the period they occur.
Q. Earnings per Share
Basic and diluted earnings per share are computed by dividing the net
profit attributable to equity shareholders for the year, with the
weighted average number of shares outstanding during the year.
R. Construction Business
The company had ventured into real estate development business and thus
the accounting policies relevant specifically in relation to
construction business are as under:-
(a) Revenue recognition
Income from real estate sales is recognized on the transfer of all
significant risk and rewards of ownership to the buyers and is not
unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration.
(b) Cost recognition
Proportionate cost including estimated cost of completion of real
estate sold is recognized in statement of profit and loss and shown
separately under the head "Cost of materials".
(c) Valuation of inventory
Finished / under construction inventory of real estate is stated at
cost or net realizable value whichever is lower.
Construction work-in-progress includes cost of land, premium for
development rights, construction cost, materials, services and
allocated interest and expenses incidental to the construction
business.
Other accounting policies, wherever applicable, are same as followed in
normal course of business.
Terms/rights attached to Equity shares :
The company has only one class of issued Equity Shares having a par
value of Rs. 2 per share. Each Shareholder is eligible for one vote per
share held.
The Dividend proposed by the Board of Directors is subject to the
approval of the shareholders in the ensuing Annual General Meeting,
except in case of Interim Dividend. In the event of liquidation, the
equity shareholders are eligible to receive the remaining assets of the
company after distribution of all preferential amounts, in proportion
to their shareholding.
36 DISCLOSURE PURSUANT TO ACCOUNTING STANDARD - 15 "EMPLOYEE BENEFITS"
i) Gratuity:
In accordance with the applicable laws, the Company provides for
gratuity, a defined benefit retirement plan ("The Gratuity Plan")
covering eligible employees. The Gratuity Plan provides for a lump sum
payment to vested employees on retirement (subject to completion of
five years of continuous employment), death, incapacitation or
termination of employment that are based on last drawn salary and
tenure of employment. Liabilities with regard to the Gratuity Plan are
determined by actuarial valuation on the reporting date and the Company
makes annual contribution to the gratuity fund administered by Life
Insurance Corporation of India under Group Gratuity Scheme.
The following table set out the funded status and amount recognised in
the Company''s financial statements as at 31st March, 2014 for the
Gratuity Plan:
ii) Compensated Absences:
The Company permits encashment of compensated absence accumulated by
their employees on retirement, separation and during the course of
service. The liability in respect of the Company, for outstanding
balance of leave at the balance sheet date is determined and provided
on the basis of actuarial valuation as on 31st March 2014 performed by
an independent actuary. The Company doesn''t maintain any plan assets to
fund its obligation towards compensated absences.
Jun 30, 2013
A. BASIS OF ACCOUNTING
a) The financial statements are prepared under the historical cost
convention, in accordance with generally accepted accounting
principles, the Companies Accounting Standards Rules, 2006 and relevant
provisions of Companies Act, 1956. The accounting is on the basis of a
going concern concept.
b) The preparation of financial statements requires estimates and
assumptions to be made that affects the reported amount of assets and
liabilities on the date of financial statements and the reported
amounts of revenue and expenses during the reported year. Differences
between the actual results and estimates are recognized in the year in
which the results are known / materialized.
c) All the assets and liabilities have been classified as current or
non-current as per the companyÂs normal operating cycle of twelve
months and other criteria set out in Revised Schedule VI to the
Companies Act, 1956.
B. REVENUE RECOGNITION
a) Sales & Services are accounted for net of excise duty, service tax,
returns & claims etc.
b) The Company adopts the accrual concept in the preparation of the
accounts. Claims / Refunds not ascertainable with reasonable certainty
are accounted for, on final settlement.
c) Benefit on account of entitlement to import duty-free raw materials
under any Scheme as announced by the government, is estimated and
accounted for in the year of export.
d) Industrial promotion subsidy / government grants are recognized on
accrual basis on compliance of stipulated conditions as notified under
the respective scheme.
C. FIXED ASSETS
a) Certain Land, Buildings, Plant & Machinery and Moulds & Dies are
stated at revalued amounts as a result of their revaluation less
depreciation.
b) Other fixed assets are stated at cost less accumulated depreciation
and amortization.
c) Interest on borrowings and incidental expenses incurred during the
period of construction / installation and till the acquired assets are
ready to use are added to the cost of fixed assets.
d) Leasehold land is stated at historical cost less amounts written off
proportionate to expired lease period.
e) The company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash-generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the statement of profit and loss. If at the balance sheet
date there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount.
D. CAPITAL WORK-IN-PROGRESS AND PREOPERATIVE EXPENSES DURING
CONSTRUCTION PERIOD
Capital Work-in-Progress includes expenditure during construction
period incurred on projects under implementation treated as
pre-operative expenses pending allocation to the assets. These expenses
are apportioned to the respective fixed assets on their completion /
commencement of commercial production.
E. DEPRECIATION & AMORTISATION Tangible Assets
a) Depreciation on Building, Plant & Machinery and Moulds & Dies is
provided on Straight Line Method and on other assets on Written Down
Value Method at the rates and in the manner specified in Schedule XIV
of the Companies Act, 1956, except certain specific assets on which
depreciation is provided at higher rates based on useful life of the
assets estimated by the management.
b) Certain class of assets acquired after 1-7-2009 / 1-7-2010 have been
depreciated at rates higher than as specified in Schedule XIV of the
Companies Act, 1956, the details thereof are as under :- - Injection
moulding machines- 8.33% on SLM basis.
- Ancillary Equipments & utilities -14.28% on SLM basis
- Electronic equipments: - 60% on WDV basis
- Computers:- 60% on WDV basis
- Depreciation on additions to the assets during the year is being
provided on pro-rata basis from the date of acquisition / installation.
c) Depreciation on assets sold or discarded during the year is being
provided on pro-rata basis up to the date on which such assets are sold
or discarded.
d) Leasehold Land is amortised over the period of lease.
e) Assets costing up to R 5,000/- each are depreciated fully in the
year of purchase.
Intangible Assets
Intangible assets developed or acquired are amortised on straight line
basis at the rates specified below:
a) Computer Software and Licenses - 25%.
b) Technical License / Know-how Fee - 20%
c) Right To Use - 20%
F. INVESTMENTS
a) All long term investments are stated at cost. Provision for
diminution, if any, in the value of investments is made to recognize a
decline, other than temporary, in the opinion of the management.
b) Current investments are carried at the lower of cost and fair value,
determined on a category-wise basis.
G. INVENTORIES
Inventories of plastic goods are valued as under:- a) Raw Material &
Components - at cost using identified lot basis / First in first out
(FIFO) or net realizable value whichever is lower.
b) Finished Goods - at cost using weighted average cost basis or net
realisable value whichever is lower.
c) Stores, Spare Parts, Packing Materials etc. - at cost using FIFO
basis except obsolete and non-moving items stated at net realisable
value.
d) Goods for Resale - at cost using FIFO basis or net realisable value
whichever is lower.
e) Inter divisional transfers are valued at works / factory costs of
the transferor unit / division, plus transport and other charges.
Cost comprises all cost of purchase, cost of conversion and other costs
incurred in bringing the inventory to their respective present location
and condition.
H. ASSETS TAKEN ON LEASE
In respect of operating leases, lease rentals are recognized as an
expense in the Statement of Profit & Loss on an accrual basis over the
leased term.
In respect of assets obtained on finance leases, assets are recognized
at their fair value at the date of acquisition or if lower, at the
present value of minimum lease payments. The corresponding liability to
the lessor is included in the Balance Sheet as a Finance Lease
obligation. The excess of lease payments over the recorded lease
obligations are treated as Finance charges which are allocated to each
lease term so as to produce a constant rate of charge on the remaining
balance of the obligations. The assets are depreciated as owned
depreciable assets.
I. FOREIGN CURRENCY TRANSACTIONS
a) Initial Recognition
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. Exchange differences arising
on foreign exchange transactions settled during the year are recognised
in the Statement of Profit & Loss of the year.
b) Measurement of Foreign Currency Items at the Balance Sheet Date
Foreign currency monetary items of the Company are restated at the
closing exchange rates. Non monetary items are recorded at the exchange
rate prevailing on the date of the transaction. Exchange differences
arising out of these transactions are charged to the Statement of
Profit & Loss.
c) Forward Exchange Contracts
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense / income over the
life of the contract. Exchange differences on such contracts are
recognized in the Statement of Profit & Loss in the period in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of such forward exchange contract is also recognized as income
or expense for the period.
The Company uses foreign currency forward contracts to hedge its actual
underlying exposures and not for trading or speculation purpose. The
use of these forward contracts reduces the risk and / or cost to the
company.
J. EMPLOYEE BENEFITS
a) Short Term Benefits are recognised as an expense at the undiscounted
amount in the statement of profit and loss of the year in which related
service is rendered.
b) Post Employment Benefits:- - Defined Contribution Plan
CompanyÂs contribution to the superannuation scheme and State Governed
Provident Fund Scheme is recognised during the year in which related
service is rendered.
- Defined Benefit Plan :- Gratuity
The present value of obligation is determined based on an actuarial
valuation, using the Projected Unit Credit Method. Actuarial gains and
losses arising on such valuation are recognized immediately in the
statement of profit and loss. The Gratuity Funds for the employees are
administered by Life Insurance Corporation of India under Group
Gratuity Scheme.
Provident Fund
For selected employees, monthly contributions are made to a trust
administered by the company. The interest rate payable to the
beneficiaries shall not be lower than the statutory rate of interest
notified by the government. The company has obligation to make good
shortfall, if any, between return on investment of the Trust and rates
notified by the Government.
For those employees not covered by above, monthly contributions are
deposited with Government.
c) Leave Liability:- The liability on account of leave encashment is
accounted for on accrual basis.
d) Other benefits comprising of discretionary long service awards are
recognized as and when determined.
K. RESEARCH & DEVELOPMENT EXPENDITURE
Revenue expenditure on research and development is charged to the
statement of profit and loss. Expenditure, which results in creation of
capital asset, is capitalised in the year in which it is incurred and
depreciation is provided on such assets as applicable.
L. SHARE / DEBENTURE ISSUE EXPENSES AND DEBENTURE REDEMPTION RESERVE
Issue expenses are adjusted against the Securities Premium Account.
Debenture Redemption Reserve is created pursuant to SEBI (Disclosure
and Investor Protection) Guidelines, 2000.
Premium paid / payable on redemption is adjusted against the Securities
Premium Account.
M. TAXES ON INCOME
Current tax is determined based on the amount of tax payable in respect
of taxable income for the financial year ending 30th June.
Deferred tax is recognised, subject to consideration of prudence, on
timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets, are
recognized only to the extent there is virtual certainty supported by
convincing evidence of its realization.
Wealth tax is provided in accordance with the provisions of Wealth Tax
Act, 1957.
N. PROVISIONS AND CONTINGENT LIABILITIES
Provisions involving substantial degree of estimation in measurement
are recognized when there is a permanent obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised but are disclosed in the
notes.
O. CONSTRUCTION BUSINESS
The company had ventured into real estate development business and thus
the accounting policies relevant specifically in relation to
construction business areas under:- a) Revenue recognition
Income from real estate sales is recognized on the transfer of all
significant risk and rewards of ownership to the buyers and is not
unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration.
b) Cost recognition
Proportionate cost including estimated cost of completion of real
estate sold is recognized in statement of profit and loss and shown
separately under the head "Cost of materialsÂ.
c) Valuation of inventory
Finished / under construction inventory of real estate is stated at
cost or net realizable value whichever is lower.
Construction work-in-progress includes cost of land, premium for
development rights, construction cost, materials, services and
allocated interest and expenses incidental to the construction
business.
Other accounting policies, wherever applicable, are same as followed in
normal course of business.
Jun 30, 2012
A. BASIS OF ACCOUNTING.
a) The financial statements are prepared under the historical cost
convention, in accordance with generally accepted accounting
principles, the Companies Accounting Standards Rules, 2006 and relevant
provisions of Companies Act; 1956.The accounting is on the basis of a
going concern concept.
b) The preparation of financial statements requires estimates and
assumptions to be made that affects the reported amount of assets and
liabilities on the date of financial statements and the reported
amounts of revenue and expenses during the reported year. Differences
between the actual results and estimates are recognized in the year in
which the results are known/ materialized.
B. REVENUE RECOGNITION.
a) Sales & Services are accounted for net of excise duty, service tax,
returns & claims etc.
b) The Company adopts the accrual concept in the preparation of the
accounts. Claims/ Refunds not ascertainable with reasonable certainty
are accounted for, on final settlement.
c) Benefit on account of entitlement to import duty-free raw materials
under any Scheme as announced by the government, is estimated and
accounted for in the year of export.
d) Industrial promotion subsidy/ government grants are recognized on
accrual basis on compliance of stipulated conditions as notified under
the respective scheme.
C. FIXED ASSETS.
a) Certain Land, Buildings, Plant & Machinery and Moulds & Dies are
stated at revalued amounts as a result of their revaluation less
depreciation.
b) Other fixed assets are stated at cost less accumulated depreciation
and amortization.
c) Interest on borrowings and incidental expenses incurred during the
period of construction/installation and till the acquired assets are
ready to use are added to the cost of fixed assets.
d) Leasehold land is stated at historical cost less amounts written off
proportionate to expired lease period.
e) The company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash-generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognized in the statement of profit and loss. If at the balance sheet
date there is an indication that if a previously assessed impairment
loss no longer exists, the recoverable amount is reassessed and the
asset is reflected at the recoverable amount.
D. CAPITAL WORK - IN - PROGRESS AND PREOPERATIVE EXPENSES DURING
CONSTRUCTION PERIOD.
Capital Work In Progress includes expenditure during construction
period incurred on projects under implementation treated as
pre-operative expenses pending allocation to the assets. These expenses
are apportioned to the respective fixed assets on their completion /
commencement of commercial production.
E. DEPRECIATION & AMORTISATION.
TANGIBLE ASSETS
a) Depreciation on Building, Plant & Machinery and Moulds & Dies is
provided on Straight Line Method and on other assets on Written Down
Value Method at the rates and in the manner specified in Schedule XIV
of the Companies Act, 1956, except certain specific assets on which
depreciation is provided at higher rates based on useful life of the
assets estimated by the management.
b) Certain class of assets acquired after 1-7-2009 / 1-7-2010 have been
depreciated at rates higher than as specified in Schedule XIV of the
Companies Act, 1956 , the details thereof are as under :-
- Injection moulding machines- 8.33% on SLM basis.
- Ancillary Equipments & utilities -14.28% on SLM basis
- Electronic equipments: - 60% on WDV basis
- Computers:-60 % on WDV basis
- Depreciation on additions to the assets during the year is being
provided on pro-rata basis from the date of acquisition / installation.
c) Depreciation on assets sold or discarded during the year is being
provided on pro- rata basis upto the date on which such assets are sold
or discarded.
d) Leasehold Land is amortised over the period of lease.
e) Assets costing upto Rs 5,000/- each are depreciated fully in the
year of purchase. INTANGIBLE ASSETS
Cost of software and ERP package and other intangible assets are
amortised over a period of four years.
F. INVESTMENTS.
All long term investments are stated at cost. Provision for diminution,
if any, in the value of investments is made to recognize a decline,
other than temporary, in the opinion of the management.
G. INVENTORIES.
Inventories of plastic goods are valued as under :-
a) Raw Material & Components - at cost using identified lot basis /
First in first out (FIFO) or net realizable value whichever is lower.
b) Finished Goods - at cost using weighted average cost basis or net
realisable value whichever is lower.
c) Stores, Spare Parts, Packing Materials etc. - at cost using FIFO
basis except obsolete and non-moving items stated at net realisable
value.
d) Goods for Resale - at cost using FIFO basis or net realisable value
whichever is lower.
e) Inter divisional transfers are valued at works/factory costs of the
transferor unit/division, plus transport and other charges.
Cost comprises all cost of purchase, cost of conversion and other costs
incurred in bringing the inventory to their respective present location
and condition.
H. ASSETS TAKEN ON LEASE
In respect of operating leases, lease rentals are recognized as an
expense in the Statement of Profit & Loss on an accrual basis over the
leased term.
In respect of assets obtained on finance leases, assets are recognized
at their fair value at the date of acquisition or if lower, at the
present value of minimum lease payments. The corresponding liability to
the lessor is included in the Balance Sheet as a Finance Lease
obligation. The excess of lease payments over the recorded lease
obligations are treated as Finance charges which are allocated to each
lease term so as to produce a constant rate of charge on the remaining
balance of the obligations. The assets are depreciated as owned
depreciable assets.
I. FOREIGN CURRENCY TRANSACTIONS.
A. INITIAL RECOGNITION.
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of the transaction. Exchange differences arising
on foreign exchange transactions settled during the year are recognised
in the Statement of Profit & Loss of the year.
B. MEASUREMENT OF FOREIGN CURRENCY ITEMS AT THE BALANCE SHEET DATE.
Foreign currency monetary items of the Company are restated at the
closing exchange rates. Non monetary items are recorded at the exchange
rate prevailing on the date of the transaction. Exchange differences
arising out of these transactions are charged to the Statement of
Profit & Loss.
C. FORWARD EXCHANGE CONTRACTS.
The premium or discount arising at the inception of forward exchange
contract is amortized and recognized as an expense/ income over the
life of the contract. Exchange differences on such contracts are
recognized in the Statement of Profit & Loss in the period in which the
exchange rates change. Any profit or loss arising on cancellation or
renewal of such forward exchange contract is also recognized as income
or expense for the period.
The Company uses foreign currency forward contracts to hedge its actual
underlying exposures and not for trading or speculation purpose. The
use of these forward contracts reduces the risk and/or cost to the
company.
J. EMPLOYEE BENEFITS.
1. Short Term Benefits are recognised as an expense at the
undiscounted amount in the statement of profit and loss of the year in
which related service is rendered.
2. Post Employment Benefits :-
(a) Defined Contribution Plan.
Company's contribution to the superannuation scheme, State Governed
Provident Fund Scheme, etc. are recognised during the year in which
related service is rendered.
(b) Defined Benefit Plan :- Gratuity.
The present value of obligation is determined based on an actuarial
valuation, using the Projected Unit Credit Method. Actuarial gains and
losses arising on such valuation are recognized immediately in the
statement of profit and loss. The Gratuity Funds for the employees' are
administered by Life Insurance Corporation of India under Group
Gratuity Scheme.
Provident Fund.
For few employees, monthly contributions are made to a trust
administered by the company. The interest rate payable to the
beneficiaries shall not be lower than the statutory rate of interest
notified by the government. The company has obligation to make good
shortfall, if any, between return on investment of the Trust and rates
notified by the Government.
For those employees not covered by above, monthly contributions are
deposited with Government.
3. Leave Liability.
The liability on account of leave encashment is accounted for on
accrual basis.
K. RESEARCH & DEVELOPMENT EXPENDITURE.
Revenue expenditure on research and development is charged to the
statement of profit and loss. Expenditure, which results in creation of
capital asset, is capitalised in the year in which it is incurred and
depreciation is provided on such assets as applicable.
L. SHARE / DEBENTURE ISSUE EXPENSES AND DEBENTURE REDEMPTION RESERVE.
Issue expenses are adjusted against the Securities Premium Account.
Debenture Redemption Reserve is created pursuant to SEBI (Disclosure
and Investor Protection) Guidelines, 2000.
Premium paid / payable on redemption is adjusted against the Securities
Premium Account.
M. TAXES ON INCOME.
Current tax is determined based on the amount of tax payable in respect
of taxable income for the financial year ending 31st March.
Deferred tax is recognised, subject to consideration of prudence, on
timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets, are
recognized only to the extent there is virtual certainty supported by
convincing evidence of its realization.
N. PROVISIONS AND CONTINGENT LIABILITIES.
Provisions involving substantial degree of estimation in measurement
are recognized when there is a permanent obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised but are disclosed in the
notes.
O. CONSTRUCTION BUSINESS.
The company has ventured into real estate development business and thus
the accounting policies relevant specifically in relation to
construction business are as under:-
a. Revenue recognition.
Income from real estate sales is recognized on the transfer of all
significant risk and rewards of ownership to the buyers and is not
unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration.
b. Cost recognition.
Proportionate cost including estimated cost of completion of real
estate sold is recognized in statement of profit and loss and shown
separately under the head "Cost of materials".
c. Valuation of inventory.
Finished / under construction inventory of real estate is stated at
cost or net realizable value whichever is lower.
Construction work in progress includes cost of land, premium for
development rights, construction cost, materials, services and
allocated interest and expenses incidental to the construction
business.
Other accounting policies, wherever applicable, are same as followed in
normal course of business.
Jun 30, 2011
A. BASIS OF ACCOUNTING
i. The financial statements are prepared under the historical cost
convention, in accordance with generally accepted accounting
principles, the Companies Accounting Standards Rules, 2006 and relevant
provisions of Companies Act; 1956. The accounting is on the basis of a
going concern concept.
ii. The preparation of financial statements requires estimates and
assumptions to be made that affects the reported amount of assets and
liabilities on the date of financial statements and the reported
amounts of revenue and expenses during the reported year. Differences
between the actual results are recognized in the year in which the
results are known/ materialized.
B. REVENUE RECOGNITION
i. Sales & Services are accounted for net of Excise duty, Service tax,
Returns & Claims etc.
ii. The Company adopts the accrual concept in the preparation of the
accounts. Claims / Refunds not ascertainable with reasonable certainty
are accounted for, on final settlement.
iii. Benefit on account of entitlement to import duty-free raw
materials under any Scheme as announced by the government, is estimated
and accounted for in the year of export.
iv. Industrial promotion subsidy / government grants are recognized on
accrual basis on compliance of stipulated conditions as notified under
the respective scheme.
C FIXED ASSETS
i. Certain Land, Buildings, Plant & Machinery and Moulds & Dies are
stated at revalued amounts as a result of their revaluation less
depreciation.
ii. Other fixed assets are stated at cost less accumulated
depreciation and amortisation.
iii. Interest on borrowings and incidental expenses incurred during the
period of construction/installation and till the acquired assets are
put to use, are added to the cost of fixed assets.
iv. Leasehold land is stated at historical cost less amounts written
off proportionate to expired lease period.
v. The company assesses at each balance sheet date whether there is any
indication that an asset may be impaired. If any such indication
exists, the company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash-generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognised in the profit and loss account. If at the balance sheet date
there is an indication that if a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount.
D. CAPITAL WORK-IN-PROGRESS AND PREOPERATIVE EXPENSES DURING
CONSTRUCTION PERIOD
Capital Work In Progress includes expenditure during construction
period incurred on projects under implementation treated as
pre-operative expenses pending allocation to the assets. These expenses
are apportioned to the respective fixed assets on their completion /
commencement of commercial production.
E. DEPRECIATION & AMORTISATION Tangible Assets
i. Depreciation on Building, Plant & Machinery and Moulds & Dies is
provided on Straight Line Method and on other assets on Written Down
Value Method at the rates and in the manner specified in Schedule XIV
of the Companies Act, 1956, except certain specific assets on which
depreciation is provided at higher rates based on useful life of the
assets estimated by the management.
ii. Certain class of assets acquired after 1-7-2009/ 1-7-2010 have been
depreciated at rates higher than as specified in Schedule XIV of the
Companies Act, 1956 , the details thereof are as under:-
Injection moulding machines - 8.33% on SLM basis.
Ancillary Equipments & utilities -14.28% on SLM basis
Electronic equipments: - 60% on WDV basis
Computers:- 60 % on WDV basis
iii. Depreciation on additions to the assets during the year is being
provided on pro-rata basis from the date of acquisition / installation.
iv. Depreciation on assets sold or discarded during the year is being
provided on pro-rata basis upto the date on which such assets are sold
or discarded.
v. Leasehold Land is amortised over the period of lease.
vi. Assets costing upto Rs. 5,000/- each are depreciated fully in the
year of purchase.
Intangible Assets
Cost of software and ERP package is amortised over a period of four
years.
F. INVESTMENTS
Investments are stated at cost. Provision for diminution, if any, is
made to recognize a decline, other than temporary, in the value of
investments as per the opinion of the management.
G. INVENTORIES
Inventories of plastic goods are valued as under:
i. Raw Material & Components - at cost using identified lot basis /
First in first out (FIFO) or net realizable value whichever is lower.
ii. Finished Goods - at cost using weighted average cost basis or net
realisable value whichever is lower.
iii. Stores, Spare Parts, Packing Materials etc. - at cost using FIFO
basis except obsolete and non-moving items stated at net realisable
value.
iv. Goods for Resale - at cost using FIFO basis or net realisable
value whichever is lower.
v. Inter divisional transfers are valued either at works/factory costs
of the transferor unit/division, plus transport and other charges.
Cost comprises all cost of purchase, cost of conversion and other costs
incurred in bringing the inventory to their respective present location
and condition.
H. FOREIGN CURRENCY TRANSACTIONS
(a) All transaction in foreign currency, are recorded at the rates of
exchange prevailing on dates when the relevant transactions take place.
(b) Monetary assets and liabilities in foreign currency, outstanding at
end of the year, are converted in Indian Currency at appropriate rate
of exchange prevailing on date of Balance Sheet. Resultant Gain or Loss
is accounted for during the year.
(c) In respect of forward exchange contracts entered into to hedge
foreign currency risks, the difference between the forward rate and
exchange rate at the inception of the contract is recognised as income
or expense over the life of the contract. Further, the exchange
differences arising on such contracts are recognised as income or
expense along with the exchange differences on the underlying
assets/liabilities. Profit or loss on cancellations/renewals of forward
exchange contracts is recognised during the year.
(d) Non-monetary foreign currency items are carried at cost.
I. EMPLOYEE BENEFITS
1. Short Term Benefits are recognised as an expense at the
undiscounted amount in the Profit and Loss Account of the year in which
related service is rendered.
2. Post Employment Benefits:
(a) Defined Contribution Plan:
Company's contribution to the superannuation scheme, state governed
provident fund scheme, etc. are recognised during the year in which
related service is rendered.
(b) Defined Benefit Plan:
- Gratuity
The present value of obligation is determined based on an actuarial
valuation, using the Projected Unit Credit Method. Actuarial gains and
losses arising on such valuation are recognised immediately in the
Profit and Loss Account. The Gratuity Funds for the employees are
administered by Life Insurance Corporation of India under Group
Gratuity Scheme.
- Provident Fund
For few employees, monthly contributions are made to a trust
administered by the company. The interest rate payable to the
beneficiaries is notified by the government. The company has obligation
to make good shortfall, if any, between return on investment of the
Trust and rates notified by the Government.
For those employees not covered by above, monthly contributions are
deposited into Government.
3. Leave Liability
The liability on account of leave encashment is accounted for on
accrual basis.
J RESEARCH & DEVELOPMENT EXPENDITURE
Revenue expenditure on research and development is charged to the
Profit & Loss Account. Expenditure, which results in creation of
capital asset, is capitalised in the year in which it is incurred and
depreciation is provided on such assets as applicable.
K. SHARE / DEBENTURE ISSUE EXPENSES AND DEBENTURE REDEMPTION RESERVE
i. Issue expenses are adjusted against the Share Premium Account.
ii. Debenture Redemption Reserve is created pursuant to SEBI
(Disclosure and Investor Protection) Guidelines, 2000.
iii. Premium paid / payable on redemption is adjusted against the
Share Premium Account.
L. TAXES ON INCOME
Current tax is determined based on the amount of tax payable in respect
of taxable income for the financial year ending 31st March 2011.
Deferred tax is recognised, subject to consideration of prudence, on
timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets, are
recognized only to the extent there is virtual certainty supported by
convincing evidence of its realization.
M. PROVISIONS AND CONTINGENT LIABILITIES
Provisions involving substantial degree of estimation in measurement
are recognized when there is a permanent obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised but are disclosed in the
notes.
N. CONSTRUCTION BUSINESS
The company has ventured into real estate development business and thus
the accounting policies relevant specifically in relation to
construction business are as under:
a. Revenue recognition
Income from real estate sales is recognized on the transfer of all
significant risk and rewards of ownership to the buyers and is not
unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration.
b. Cost recognition
Proportionate cost including estimated cost of completion of real
estate sold is recognized in Profit & Loss Account and shown separately
under Cost of materials.
c. Valuation of inventory
Finished / under construction inventory of real estate is stated at
cost or net realizable value whichever is lower.
Construction work in progress includes cost of land, premium for
development rights, construction cost, materials, services and
allocated interest and expenses incidental to the construction
business.
Other accounting policies, wherever applicable, are same as followed in
normal course of business.
Jun 30, 2010
A. BASIS OF ACCOUNTING
i. The financial statements are prepared under the historical cost
convention, in accordance with generally accepted accounting
principles, the Companies Accounting Standards Rules, 2006 and relevant
provisions of Companies Act; 1956. The accounting is on the basis of a
going concern concept.
ii. The preparation of financial statements requires estimates and
assumptions to be made that affects the reported amount of assets and
liabilities on the date of financial statements and the reported
amounts of revenue and expenses during the reported year. Differences
between the actual results and estimates are recognized in the year in
which the results are known/ materialized.
B. REVENUE RECOGNITION
i. Sales & Services are accounted for net of excise duty, service tax,
returns & claims etc.
ii. The Company adopts the accrual concept in the preparation of the
accounts. Claims / Refunds not ascertainable with reasonable certainty
are accounted for, on final settlement.
iii. Benefit on account of entitlement to import duty-free raw
materials under any Scheme as announced by the government, is estimated
and accounted for in the year of export.
iv. Industrial promotion subsidy / government grants are recognized on
accrual basis on compliance of stipulated conditions as notified under
the respective scheme.
C. FIXED ASSETS
i. Certain Land, Buildings, Plant & Machinery and Moulds & Dies are
stated at revalued amounts as a result of their revaluation less
depreciation.
ii. Other fixed assets are stated at cost less accumulated
depreciation and amortisation.
iii. Interest on borrowings and incidental expenses incurred during the
period of construction/installation and till the acquired assets are
put to use, are added to the cost of fixed assets.
iv. The company assesses at each balance sheet date whether there is
any indication that an asset may be impaired. If any such indication
exists, the company estimates the recoverable amount of the asset. If
such recoverable amount of the asset or the recoverable amount of the
cash-generating unit to which the asset belongs is less than its
carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is
recognised in the profit and loss account. If at the balance sheet date
there is an indication that if a previously assessed impairment loss no
longer exists, the recoverable amount is reassessed and the asset is
reflected at the recoverable amount.
D. CAPITAL WORK-IN-PROGRESS AND PREOPERATIVE EXPENSES DURING
CONSTRUCTION PERIOD
Capital Work In Progress includes expenditure during construction
period incurred on projects under implementation is treated as
pre-operative expenses pending allocation to the assets. These expenses
are apportioned to the respective fixed assets on their completion /
commencement of commercial production.
E. DEPRECIATION & AMORTISATION Tangible Assets
i. Depreciation on Building, Plant & Machinery and Moulds & Dies is
provided on Straight Line Method and on other assets on Written Down
Value Method at the rates and in the manner specified in Schedule XIV
of the Companies Act, 1956, except certain specific assets on which
depreciation is provided at higher rates based on useful life of the
assets estimated by the management.
ii. Certain class of assets acquired after 1-7-2009 have been
depreciated at rates higher than as specified in Schedule XIV of the
Companies Act, 1956, the details thereof are as under
Injection moulding machines- 8.33% on SLM basis.
Electronic equipments: - 60% on WDV basis
Computers:- 60 % on WDV basis
iii. Depreciation on additions to the assets during the year is being
provided on pro-rata basis from the date of acquisition / installation.
iv. Depreciation on assets sold or discarded during the year is being
provided on pro-rata basis upto the date on which such assets are sold
or discarded.
v. Leasehold Land is amortised over the period of lease.
vi. Assets costing upto I 5,000/- each are depreciated fully in the
year of purchase.
Intangible Assets
Cost of software and ERP package is amortised over a period of four
years.
F. INVESTMENTS
Investments are stated at cost. Provision for diminution, if any, in
the value of investments is made to recognize decline other than
temporary in the opinion of the management.
G. INVENTORIES
Inventories of plastic goods are valued as under:
i. Raw Material & Components - at cost using identified lot basis /
First in first out (FIFO) or net realizable value whichever is lower.
ii. Finished Goods - at cost using weighted average cost basis or net
realisable value whichever is lower.
iii. Stores, Spare Parts, Packing Materials etc. - at cost using FIFO
basis except obsolete and non-moving items stated at net realisable
value.
iv. Goods for Resale - at cost using FIFO basis or net realisable
value whichever is lower.
v. Inter divisional transfers are valued either at works/factory costs
of the transferor unit/division, plus transport and other charges.
Cost comprises all cost of purchase, cost of conversion and other costs
incurred in bringing the inventory to their respective present location
and condition.
H. FOREIGN CURRENCY TRANSACTIONS
(a) All transaction in foreign currency, are recorded at the rates of
exchange prevailing on dates when the relevant transactions take place.
(b) Monetary assets and liabilities in foreign currency, outstanding at
end of the year, are converted in Indian Currency at appropriate rate
of exchange prevailing on date of Balance Sheet. Resultant Gain or Loss
is accounted for during the year.
(c) In respect of forward exchange contracts entered into to hedge
foreign currency risks, the difference between the forward rate and
exchange rate at the inception of the contract is recognised as income
or expense over the life of the contract. Further, the exchange
differences arising on such contracts are recognised as income or
expense along with the exchange differences on the underlying
assets/liabilities. Profit or loss on cancellations/renewals of forward
exchange contracts is recognised during the year.
(d) Non-monetary foreign currency items are carried at cost.
I. EMPLOYEE BENEFITS
1. Short Term Benefits are recognised as an expense at the
undiscounted amount in the Profit and Loss Account of the year in which
related service is rendered.
2. Post Employment Benefits:
(a) Defined Contribution Plan:
Companys contribution to the superannuation scheme, state governed
provident fund scheme, etc. are recognised during the year in which
related service is rendered.
(b) Defined Benefit Plan: Ã Gratuity
The present value of obligation is determined based on an actuarial
valuation, using the Projected Unit Credit Method. Actuarial gains and
losses arising on such valuation are recognised immediately in the
Profit and Loss Account. The Gratuity Funds for the employees are
administered by Life Insurance Corporation of India under Group
Gratuity Scheme.
à Provident Fund
For few employees, monthly contributions are made to a trust
administered by the company. The interest rate payable to the
beneficiaries is notified by the government. The company has obligation
to make good shortfall, if any, between return on investment of the
Trust and rates notified by the Government.
For those employees not covered by above, monthly contributions are
deposited into Government.
3. Leave Liability
The liability on account of leave encashment is accounted for on
accrual basis.
J. RESEARCH & DEVELOPMENT EXPENDITURE
Revenue expenditure on research and development is charged to the
Profit & Loss Account. Expenditure, which results in creation of
capital asset, is capitalised in the year in which it is incurred and
depreciation is provided on such assets as applicable.
K. SHARE / DEBENTURE ISSUE EXPENSES AND DEBENTURE REDEMPTION RESERVE
i. Issue expenses are adjusted against the Share Premium Account.
ii. Debenture Redemption Reserve is created pursuant to SEBI
(Disclosure and Investor Protection) Guidelines, 2000.
iii. Premium paid / payable on redemption is adjusted against the
Share Premium Account.
L. TAXES ON INCOME
Current tax is determined based on the amount of tax payable in respect
of taxable income for the financial year ending 31st March, 2010.
Deferred tax is recognised, subject to consideration of prudence, on
timing differences, being the difference between taxable income and
accounting income that originate in one period and are capable of
reversal in one or more subsequent periods. Deferred tax assets, are
recognized only to the extent there is virtual certainty supported by
convincing evidence of its realization.
M. PROVISIONS AND CONTINGENT LIABILITIES
Provisions involving substantial degree of estimation in measurement
are recognized when there is a permanent obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities are not recognised but are disclosed in the
notes.
N. CONSTRUCTION BUSINESS
The company has ventured into real estate development business and thus
the accounting policies relevant specifically in relation to
construction business are as under:
a. Revenue recognition
Income from real estate sales is recognized on the transfer of all
significant risk and rewards of ownership to the buyers and is not
unreasonable to expect ultimate collection and no significant
uncertainty exists regarding the amount of consideration.
b. Cost recognition
Proportionate cost including estimated cost of completion of real
estate sold is recognized in Profit & Loss Account and shown separately
under Cost of materials.
c. Valuation of inventory
Finished / under construction inventory of real estate is stated at
cost or net realizable value whichever is lower.
Construction work in progress includes cost of land, premium for
development rights, construction cost, materials, services and
allocated interest and expenses incidental to the construction
business.
Other accounting policies, wherever applicable, are same as followed in
normal course of business.
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