Mar 31, 2023
01. General corporate information
TRF Limited (âthe Companyâ) incorporated and domiciled in India has its Registered Office at 11, Station Road, Burma Mines, Jamshedpur - 831 007. The Company is a public limited company incorporated on November 20, 1962, having its equity shares listed on the National Stock Exchange of India Limited, and BSE Limited. The Company undertakes turnkey projects of material handling for the infrastructure sector such as power and ports and industrial sector such as steel plants, cement, fertilisers and mining. The Company is also engaged in production of such material handling equipments at its manufacturing facility at Jamshedpur and rendering professional services by deployment of manpower, in the area of project & construction, design & engineering, manufacturing and other technical service.
The standalone financial statements of the Company are presented in Indian Rupee (INR) which is also the Companyâs functional currency, being the currency of the primary economic environment in which the Company operates.
02. Summary of significant accounting policies
The significant accounting policies applied by the Company in the preparation of its financial statements are listed below. Such accounting policies have been applied consistently to all the periods presented in these financial statements, unless otherwise indicated.
The financial statements for the year ended March 31, 2023 have been prepared in accordance with Indian Accounting Standards (âInd ASâ) prescribed under Section 133 of Companies Act, 2013 (âthe Actâ) read with Companies (Indian Accounting Standard) Rules 2015 (the Rules), as amended, and other relevant provisions of the Act.
The financial statements of the Company are prepared under the historical cost convention except the following:
- Certain financial assets and liabilities that is measured at fair value.
- Defined benefit plans - plan assets measured at fair value
Historical cost is generally based on fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.
Fair value measurements are categorised into Level 1,2 or 3, based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety. (refer note 39.10)
⢠Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities thatthe entity can access at the measurement date;
⢠Level 2 inputs are inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly; and
⢠Level 3 inputs are unobservable inputs for the asset or liability.
Above levels of fair value hierarchy are applied consistently and generally, there are no transfers between the levels of the fair value hierarchy unless the circumstances change warranting such transfer.
2.03 Operating cycle for current and non-current classification
All the assets and liabilities have been classified as current and non-current, wherever applicable, as per the operating cycle of the Company as per the guidance set out in the Schedule III of the Act. Operating cycle for the business activities of the Company covers the duration of the specific project / contract / product line / service including the defect liability period wherever applicable and extends up to the realisation of receivables (including retention monies) within the agreed credit period normally applicable to the respective lines of business.
2.04 Use of estimates and critical accounting judgement
The preparation of financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the separate financial statements and the reported amounts of income and expense for the periods presented. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are included in the following notes:
⢠Revenue from construction contracts [refer notes 2.05(ii) & 27 ]
⢠Useful lives of Property, plant and equipment [refer notes 2.11 and 3]
⢠Assets and obligations relating to employee benefits [refer notes 2.09 & 38]
⢠Valuation and measurement of income taxes and deferred taxes [refer notes 2.10, 21 & 35]
⢠Allowances for expected credit losses on financial assets including retention money receivable [refer notes 2.17.5,12 & 39.06]
⢠Provisions and Contingencies [refer notes 2.15, 20 & 42]
⢠Estimation of impairment in value of investment in subsidiaries [refer notes 2.17.04 & 6]
⢠Going Concern (refer note 46.02)
The Company is in the business of supply and erection and commissioning of bulk material handling equipment. The equipment and services are sold both on their own in separate identified contracts with customers and together as a bundled package of goods and/or services. The Company is also engaged in production of material handling equipment at its manufacturing plant in Jamshedpur.
The Company recognizes revenue from contract with customers when it satisfies the performance obligations by the transferring the promised goods or services to the customer. The revenue is recognised to the extent of transaction price allocated to the performance obligation is satisfied. Performance obligation is satisfied over time when the transfer of control of asset (good or service) to a customer is done over time and in other cases, performance obligation is satisfied at a point in time. For performance obligation satisfied over time, the revenue recognition is done by measuring the progress towards complete satisfaction of performance obligation. The progress is measured in terms of a proportion of actual cost incurred to-date, to the total estimated cost attributable to the performance obligation.
Transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring good or service to a customer excluding amounts collected on behalf of a third party (e.g. taxes collected on behalf of the Government). Variable consideration is estimated using the expected value method or most likely amount as appropriate in a given circumstance.
Payment terms agreed with a customer are as per business practice and there is no significant financing component involved in the transaction price.
Costs to obtain a contract which are incurred regardless of whether the contract was obtained are recognised as expense in the Statement of Profit and Loss, immediately in the period in which such costs are incurred. Incremental costs of obtaining a contract, if any, and costs incurred to fulfil a contract are amortised over the period of execution of the contract in proportion to the progress measured in terms of a proportion of actual cost incurred to-date, to the total estimated cost attributable to the performance obligation.
i) Sale of goods
For contracts with customers for sale of equipment, revenue is recognised net of discount and rebates, at a point in time when control of the asset is transferred to the customer, which is when the goods are delivered to the customers as per the terms of the contracts. Delivery happens when the goods have been shipped or delivered to the specific location, as the case may be, the risk of loss has been transferred, and either the customer has accepted the goods in accordance with the contracts or the Company has objective evidence that all criteria related for acceptance has been satisfied.
No element of significant financing is deemed present as the sales are generally made with a credit term which is consistent with the market practice. A receivable is recognised when the goods are delivered and this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
ii) Construction contracts
Revenue from contracts are recognised with reference to the stage of completion method in accordance with Ind AS - 115 Revenue from Contracts with Customers. Obligations under the long-term construction contracts are satisfied over time given that the customer simultaneously receives and consumes the benefits provided by the Company. Revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of the stage of completion.
The outcome of a construction contract is considered as estimated reliably when (a) all critical approvals necessary for commencement of the project have been obtained; (b) the stage of completion of the project reaches reasonable level of development. The stage of completion is determined as a proportion that contract costs incurred for work performed up to the closing date bear to the estimated total costs of respective project. Profit (contract revenue less contract cost) is recognised when the outcome of the contract can be estimated reliably and for contracts valued up to Rs. 100 Crore, profit is recognised when stage of completion is 40% or more, and for contracts valued more than Rs. 100 Crore, profit is recognised either at 25% stage of completion or an expenditure of Rs. 40 Crore whichever is higher. When it is probable that the total cost will exceed the total revenue from the contract, the expected loss is recognised immediately. For this purpose, total contract costs are ascertained on the basis of contract costs incurred and cost to completion of contracts which is arrived at by the management based on current technical data, forecast and estimate of net expenditure to be incurred in future including for contingencies etc. For determining the expected cost to completion of the contracts, cost of steel, cement and other related items are considered at current market price based on fixed cost purchase orders placed or firm commitments received from suppliers / contractors as these purchase orders and future firm commitments are enforceable over the period of the contracts.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that is probably recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When contract costs incurred to date plus recognised profit less recognised losses exceed progress billing, the surplus (i.e., contract assets) is shown as amount due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus (i.e., contract liability), is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included under âOther current liabilitiesâ as advances received. Amounts billed for work performed but not yet paid by customer are included under trade receivables.
Revenue from service contracts are recognised in the accounting period in which the services are rendered. Where the contracts include multiple performance obligations, the transaction price is allocated to each performance obligation based on the standalone selling price and revenue is recognised over time as and when the customer receives the benefit of the Companyâs performance based on the actual service provided to as proportion of the total services to be provided. In case, the service contracts include one performance obligation revenue is recognised based on the actual service provided to the end of the reporting period as proportion of the total services to be provided. This is determined based on the actual expenditure incurred to the total estimated cost.
iv) Dividend and interest income
Dividend income is recognised when the companyâs right to receive payment has been established and that the economic benefits will flow to the Company and amount of income can be measured reliably.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the assetâs net carrying amount on initial recognition.
Company assesses whether a contract is or contains a lease, at inception of the contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (leases with a lease term of 12 months or less) and leases of low value assets. For short term leases and leases of low value assets, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate, which is determined using the risk free rate for the same tenor adjusted for the credit risk associated with the lease, security etc.
Lease payments included in the measurement of the lease liability comprise fixed lease payments (including insubstance fixed payments), less any lease incentives receivable; and any variable lease payments that are based on an index or a rate, initially measure using the index or rate at the commencement date. Lease payments to be made under reasonably certain extension options are also included in the measurement of lease liabilities.
Lease payments are allocated between the principal and finance cost. The finance cost is recognized in the Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any.
Right-of-use assets are depreciated on straight-line basis over the period of lease term and useful life of the underlying asset whichever is lower. If a lease transfers ownership of the underlying asset or where it is reasonably certain that the Company will exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.
The Company has used the following practical expedients permitted by the standard.
i) applying single discount rate to a portfolio of leases with reasonably similar character.
ii) accounted for operating leases with remaining lease term of less than 12 months as short term lease.
iii) excluding initial direct cost for the measurement of the right-of-use assets at the date of initial application and
iv) using hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
Transactions in currencies other than entityâs functional currency (foreign currency) are recorded at the rates of exchange prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies remaining unsettled at the end of each reporting period are remeasured at the rates of exchange prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
Exchange difference on the re-translation or settlement of monetary items are recognised in the Statement of Profit and Loss in the period in which they arise except for exchange differences on restatement of long-term receivables from non-integral foreign operations that are considered as net investment in such operations in earlier years and carried on transition to Ind AS until disposal of such net investment, in which case the accumulated balance in Foreign exchange fluctuation reserve will be recognised as income / expense in the same period in which the gain or loss on disposal will be recognised.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing cost eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
i) Short-term benefits
Short term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.
ii) Defined contribution plans
Contribution to defined contribution plans are recognised as an expense when employees have rendered services entitling them to the contributions. Defined contribution plans are those plans where the Company pays fixed contributions to funds/schemes managed by independent trusts or authority. Contributions are paid in return for services rendered by the employees during the year. The Company has no legal or constructive obligation to pay further contributions if the fund / scheme does not hold sufficient assets to pay / extend employee benefits.
The Company provides Provident Fund facility to all employees and Superannuation benefits to selected employees. The contributions are expensed as they are incurred in line with the treatment of wages and salaries. The Companyâs Provident Fund is exempted under section 17 of Employeesâ Provident Fund and Miscellaneous Provision Act, 1952. Conditions for exemption stipulate that the Company shall make good deficiency, if any, in the interest rate declared by the trust vis-s-vis interest rate declared by the Employeesâ Provident Fund Organisation. The liability as on the balance sheet date is ascertained by an independent actuarial valuation.
iii) Defined benefit plans
The cost of providing defined benefit plans are determined using the projected unit credit method, with independent actuarial valuations being carried out at the end of each reporting period. The Company provides gratuity to its employees and pension to retired whole-time directors. Gratuity liabilities are funded and managed through separate trust (except in case of some of the employees of Port and Yard Equipment Division where the funds are managed by Life Insurance Corporation of India). The liabilities towards pension to retired whole-time directors are not funded.
Remeasurements, comprising actuarial gains and losses, return on plan assets excluding amounts included in net interest on the net benefit liability (asset) and any change in the effect of the asset ceiling (if applicable) are recognised in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in the comprehensive income are not reclassified to the statement of profit and loss but recognised directly in the retained earnings. Past service costs are recognised in the statement of profit and loss in the period in which the amendment to plan occurs. Net interest is calculated by applying the discount rate to the net defined liability or asset at the beginning of the period, taking into account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payments.
Defined benefit costs which are recognised in the statement of profit and loss are categorised as follows :
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements); and
- net interest expense or income.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Companyâs defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reduction in future contributions to the plans.
Other Long-term benefits
The liability for termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised based on actuarial valuation at the present value of the obligation as on the reporting date.
Tax expense for the year comprises of current and deferred tax.
i) Current tax
Current tax is payable based on taxable profit for the year. Taxable profit differs from âprofit before taxâ as reported in the Statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
ii) Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences and unused tax losses only if and to the extent that it is probable that taxable profits will be available against which those deductible temporary differences and losses can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax assets arising from the deductible temporary differences and unused tax losses are recognised only if and to the extent it is probable that there will be sufficient taxable profits against which the benefits of the temporary difference and losses can be utilised and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Any such reduction shall be reversed to the extent that it becomes probable that sufficient taxable profit will be available. At the end of each reporting period, an entity reassesses unrecognised deferred tax assets. The entity recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
iii) Current and deferred tax are recognised in the Statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
iv) Current and deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
2.11 Property, Plant and Equipment
An item of property, plant and equipment is recognised as an asset if it is probable that future economic benefits associated with the item will flow to the Company and its cost can be measured reliably. This recognition principle is applied to costs incurred initially to acquire an item of property, plant and equipment and also to costs incurred subsequently to add to, replace part of, or service it. All other repair and maintenance costs, including regular servicing, are recognised in the statement of profit and loss as incurred. When a replacement occurs, the carrying value of the replaced part is de-recognised. Where an item of property, plant and equipment comprises major components having different useful lives, these components are accounted for as separate items.
Property, Plant and Equipment held for use in the production or supply of goods or services, or for administrative purposes are stated at cost or deemed cost applied on transition to Ind AS, less accumulated depreciation and accumulated impairment losses, if any. Cost includes purchase cost of materials, including import duties and nonrefundable taxes, any directly attributable costs of bringing an asset to the location and condition of its intended use and borrowing costs capitalised in accordance with the Companyâs accounting policy.
Properties in the course of construction for production or supply of goods or services or for administrative purposes are carried at cost, less any recognised impairment losses.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is recognised in the Statement of Profit and Loss.
Depreciation is recognised so as to write off the cost/deemed cost of property, plant and equipment including right of use assets (other than properties under construction) less their residual values over the useful lives, using the straight-line method. Depreciation of assets commences when the assets are ready for their intended use. The estimated useful lives and residual values are reviewed at the end of each reporting period, with the effect of any changes is accounted as change in estimate on a prospective basis.
Estimated useful lives of the assets are as follows:
Buildings and Roads |
5 to 60 years |
Plant and Equipment |
3 to 15 years |
Electrical Installations |
10 years |
Laboratory Equipment |
10 years |
Furniture and Fixtures |
10 years |
Office Equipments |
: 3 to 5 years |
Computers |
: 3 years |
Motor Vehicles |
: 5 to 8 years |
Right of use assets |
: Lease period 4 to 7 years |
Intangible assets with finite useful lives that are acquired separately are carried at cost/deemed cost less accumulated amortisation and accumulated impairment losses, if any. Amortisation is recognised on straight-line basis over the estimated useful lives of assets. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses, if any. Estimated useful lives of the intangible assets are as follows:
Estimated useful lives of the intangible assets are as follows:
Computer Software : 1 to 10 years
An intangible asset is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of intangible assets is recognised in the Statement of Profit and Loss.
2.13 Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset or cash generating unit is estimated to be less than the carrying amount, the carrying amount of the asset or cash generating unit is reduced to its recoverable amount. An impairment loss is recognised immediately in the Statement of Profit and Loss as and when the carrying value of an asset exceeds its recoverable amount. When an impairment loss subsequently reverses, the carrying value of the asset or cash generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash generating unit in prior years. Any reversal of an impairment loss is recognised immediately in the Statement of Profit and Loss.
Raw materials, work-in-progress and finished products are valued at lower of cost and net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes purchase price, non-refundable taxes and duties and other directly attributable costs incurred in bringing the goods to the point of sale. Cost of Work-inprogress and finished goods comprises direct materials, direct labour and an appropriate proportion of overheads.
Stores and spares are valued at cost comprising of purchase price, non refundable taxes and duties and other directly attributable costs after providing for obsolescence and other losses, where considered necessary.
Value of inventories are ascertained on the "weighted averageâ basis.
2.15 Provisions and Contingent liabilities2.15.01 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products, at the managementâs best estimate of the expenditure required to settle the Companyâs warranty obligation.
An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Present obligation arising under onerous contracts are recognised and measured as provisions.
2.15.04 Contingent liabilities
Contingent liability is a possible obligation that arises from past events and 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 is a present obligation that arises from past events but is not recognised because either it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or a reliable estimate of the amount of the obligation cannot be made. Contingent liabilities are disclosed and not recognised. In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Although there can be no assurance regarding the final outcome of the legal proceedings in which the Company is involved, it is not expected that such contingencies will have a material effect on its financial position or profitability.
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets (other than Trade Receivable, refer 2.17.10) and financial liabilities are initially measured at fair value. Transactions cost that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transactions cost directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognised immediately in the Statement of Profit and Loss.
All regular purchases or sales of financial assets are recognised and derecognised on a transaction date basis. Regular purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
Financial assets having contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding and that are held within a business model whose objective is to hold such assets in order to collect such contractual cash flows are classified in this category. Subsequently, these are measured at amortised cost using the effective interest method less any impairment losses.
2.17.02 Investments in equity instruments at fair value through other comprehensive income (FVTOCI)
On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the âReserve for equity instruments through other comprehensive incomeâ. The cumulative gain or loss is not reclassified to the Statement of Profit and Loss even on disposal of the investments.
The Company has equity investments in two entities (refer Note 7 to the standalone financial statements), and elected the irrevocable option to carry these at FVTOCI.
2.17.03 Financial assets at fair value through profit and loss (FVTPL)
Investments in equity instruments and units of mutual funds are classified as at FVTPL (except for those carried at FVTOCI, as stated above in 2.17.02). Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognised in the Statement of Profit and Loss and are included in âOther Incomeâ.
2.17.04 Investment in Subsidiaries
Investments in subsidiaries are carried at cost/deemed cost applied on transition to Ind AS, less accumulated impairment losses, if any. Where an indication of impairment exists, the carrying amount of investment is assessed and an impairment provision is recognised, if required immediately to its recoverable amount. On disposal of such investments, difference between the net disposal proceeds and carrying amount is recognised in the statement of profit and loss.
2.17.05 Impairment of financial assets
Loss allowance for expected credit losses is recognised for financial assets measured at amortised cost and fair value through other comprehensive income.
The Company recognises lifetime expected credit losses (the simplified approach required by Ind AS 109) for all trade receivables that do not contain a financing component. The Company uses the practical expedient by computing the expected credit loss allowance based on a provision matrix, as permitted under Ind AS 109. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information.
For financial assets (apart from trade receivables, as above) whose credit risk has not significantly increased since initial recognition, loss allowance equal to twelve months expected credit losses is recognised. Loss allowance equal to the lifetime expected credit losses is recognised if the credit risk of the financial asset has significantly increased since initial recognition.
2.17.06 Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flow from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of financial asset in its entirety, the difference between the assetâs carrying amounts and the sum of the consideration received and receivable is recognised in the Statement of Profit and Loss.
2.17.07 Foreign exchange gain and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in the Statement of Profit and Loss.
Changes in the carrying amount of investments in equity instruments at FVTOCI relating to changes in foreign currency rates are recognised in other comprehensive income.
2.17.08 Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income / expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premium or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period to the net carrying amount on initial recognition. Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in the statement of profit and loss and is included in the âOther incomeâ line item.
2.17.09 Cash and Cash equivalent
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short term deposits with an original maturity of three months or less (if any) which are subject to an insignificant risk of changes in value.
Trade receivables are amounts due from customers for goods sold or services rendered in the ordinary course of business and reflects groupâs unconditional right to consideration. Trade Receivables are recognised initially at transaction price being the amount of consideration that is unconditional unless they contain significant financing components, when they recognised at fair value. The Company holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance.
2.18 Financial liabilities and equity instruments2.18.01 Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definition of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.
(i) Financial liabilities subsequently measured at amortised cost
All financial liabilities (other than those mention in (ii) below) are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method.
(ii) Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either a derivative instrument (not designated in hedging relationship), contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies, is held for trading, it is designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in the Statement of Profit or Loss and is included in the âOther incomeâ.
2.18.04 Financial guarantee contracts
These are initially measured at their fair values and, are subsequently measured at the higher of the amount of loss allowance determined or the amount initially recognised less, the cumulative amount of income recognised.
2.18.05 Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in the Statement of Profit and Loss and are included in âOther expenses/Other incomeâ.
For financial liabilities carried at FVTPL, the fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. The gain or loss on translation of foreign exchange is recognised in the Statement of Profit and Loss and forms part of the fair value gains or losses.
2.18.06 Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. An exchange between lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in the Statement of Profit and Loss.
2.18.07 Derivative financial instruments
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in the Statement of Profit and Loss immediately unless the derivative is designated as a hedging instrument, in which event the timing of the recognition in the Statement of Profit and Loss depends on the nature of the hedging relationship and the nature of the hedged item.
Information reported to the Chief operating decision maker (CODM) for the purpose of resource allocation and assessment of segment performance focuses based on products and services. Accordingly, directors of the Company have chosen to organise the segment based on its product and services as follows:
⢠Products & services
⢠Project & services.
The Companyâs chief operating decision maker is the Managing Director.
Revenue and expenses directly attributable to segment are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of associated revenue of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as Unallocable expenses.
Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as Unallocable.
The companyâs financing and income taxes are managed on a company level and are not allocated to operating segment.
Basic earnings per share is computed by dividing the profit attributable to the ordinary equity holders (i.e., Profit after tax) by the weighted average number of shares outstanding during the financial year.
Diluted earnings per share is computed using the weighted average number of share outstanding during the financial year and dilutive potential shares, except where the result would be anti-dilutive.
All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs (upto two decimals) as per the requirements of Schedule III, unless otherwise stated.
2.22 New amendments issued but not effective
The Ministry of Corporate Affairs has vide notification dated March 23, 2023 notified Companies (Indian Accounting Standards) Amendment Rules, 2022 which amends certain accounting standards, and are effective April 1,2023. The Rules predominantly amend Ind AS 12, Income taxes, and Ind AS 1, Presentation of financial statements. The other amendments to Ind AS notified by these rules are primarily in the nature of clarifications.
These amendments are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions. Specifically, no changes would be necessary as a consequence of amendments made to Ind AS 12 as the Companyâs accounting policy already complies with the now mandatory treatment.
2.23 New and amended standards adopted by the Company
The Ministry of Corporate Affairs had vide notification dated March 23, 2022 notified Companies (Indian Accounting Standards) Amendment Rules, 2022 which amended certain accounting standards, and are effective April 1,2022. These amendments did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.
Mar 31, 2019
1. Summary of significant accounting policies
1.01 Statement of compliance
The financial statements for the year ended March 31, 2019 have been prepared in accordance with Indian Accounting Standards (âInd ASâ) under Section 133 of Companies Act, 2013 and Companies (Indian Accounting Standard) Rules 2015 (the Rules) issued by Ministry of Corporate Affairs (MCA).
1.02 Basis of preparation and presentation
These separate financial statements of the Company are prepared under the historical cost convention except for certain financial instruments that are measured at fair value at the end of each reporting period. Historical cost is generally based on fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. In these separate financial statements, the fair value for measurement and/or disclosure purpose is determined on such basis except for leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are catergorised in to Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety. (Refer note 40.09)
i Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; i Level 2 inputs are inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly; and i Level 3 inputs are unobservable inputs for the asset or liability.
1.03 Use of estimates
The preparation of separate financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the separate financial statements and the reported amounts of income and expense for the periods presented.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.
In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are included in the following notes:
i Revenue from construction contracts (Refer Note 2.04(ii))
i Useful lives of Property, plant and equipment & intangible assets (Refer Note 2.10 and 2.11) i Assets and obligations relating to employee benefits (Refer Note 39)
i Valuation and measurement of income taxes and deferred taxes (Refer Note 2.09) i Provisions and Contingencies (Refer Note 2.14) i Retention money receivable (Refer foot note below Note 10) i Going Concern (Refer Note 44.02)
1.04 Revenue recognition
The Ministry of Corporate Affairs (MCA), on March 28, 2018, notified Ind AS 115 âRevenue from Contracts with Customersâ as part of the Companies (India Accounting Standard) Amendment Rules, 2018. The new standard is effective for accounting periods beginning on or after April 1, 2018. The Company has adopted Ind As 115 using the modified retrospective approach. The adoption of the standard did not have any material impact to the financial statement of the Company.
The Company is in the business of supply and erection and commissioning of bulk material handling equipment. The equipment and services are sold both on their own in separate identified contracts with customers and together as a bundled package of goods and/or services. The Company is also engaged in production of material handling equipment at its manufacturing plant in Jamshedpur.
Revenue is measured at fair value of the consideration received or receivable and is reduced by rebates, allowances and taxes and duties collected on behalf of the government.
i) Sale of goods
For contracts with customers in which the sale of equipment is generally expected to be the only performance obligation, adoption of Ind AS 115 does not have any material impact on the Companyâs revenue and profit or loss. The Company has concluded that the revenue recognition to occur at a point in time when control of the asset is transferred to the customer, generally on delivery of the goods as per the terms of the contracts with the customers.
Revenue from the sale of goods is recognised when the goods are delivered and titles have been passed, at which time all the following conditions are satisfied:
i the Company has transferred to the buyer the significant risks and rewards of ownership of the goods; i the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; i the amount of revenue can be measured reliably;
i it is probable that the economic benefits associated with the transaction will flow to the Company; and
i the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The Company provides normal warranty for general repairs for 12 to 18 months on products sold in line with industry practice. A liability is recognised at the time the product is sold.
ii) Construction contracts
Revenue from contracts are recognised with reference to the stage of completion method in accordance with Ind AS - 115. Obligations under the long term construction contracts are satisfied over time given that the customer simultaneously receives and consumes the benefits provided by the company. Revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of the stage of completion.
The outcome of a construction contract is considered as estimated reliably when (a) all critical approvals necessary for commencement of the project have been obtained; (b) the stage of completion of the project reaches reasonable level of development. The stage of completion is determined as a proportion that contract costs incurred for work performed up to the closing date bear to the estimated total costs of respective project. Profit (contract revenue less contract cost) is recognised when the outcome of the contract can be estimated reliably and for contracts valued up to Rs. 100 crore, profit is recognised when stage of completion is 40% or more, and for contracts valued more than Rs. 100 crore, profit is recognised either at 25% stage of completion or an expenditure of Rs. 40 crore whichever is higher. When it is probable that the total cost will exceed the total revenue from the contract, the expected loss is recognised immediately. For this purpose total contract costs are ascertained on the basis of contract costs incurred and cost to completion of contracts which is arrived at by the management based on current technical data, forecast and estimate of net expenditure to be incurred in future including for contingencies etc. For determining the expected cost to completion of the contracts, cost of steel, cement and other related items are considered at current market price based on fixed cost purchase orders placed or firm commitments received from suppliers / contractors as these purchase orders and future firm commitments are enforceable over the period of the contracts.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that is probably recoverable. Contract costs are recognised as expenses in the period in which they are incurred.
When contract costs incurred to date plus recognised profit less recognised losses exceed progress billing, the surplus is shown as amount due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included as a liability as advances received. Amounts billed for work performed but not yet paid by customer are included under trade receivables.
iii) Service Contracts
Revenue from service contracts are recognised in the accounting period in which the services are rendered. Where the contracts include multiple performance obligations, the transaction price is allocated to each performance obligation based on the standalone selling price and revenue is recognised at point in time on fulfillment of respective performance obligation. In case ,the service contracts include one performance obligation revenue is recognised based on the actual service provided to the end of the reporting period as proportion of the total services to be provided. This is determined based on the actual expenditure incurred to the total estimated cost.
iv) Dividend and interest income
Dividend income is recognised when the companyâs right to receive payment has been established and that the economic benefits will flow to the Company and amount of income can be measured reliably.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the assetâs net carrying amount on initial recognition.
1.05 Lease
The Company as lessee
Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. The Companyâs significant operating leasing arrangements are for premises (office, residence etc.,). The leasing arrangements which normally have a tenure of eleven months to three years are cancellable with a reasonable notice, and are renewable by mutual consent at agreed terms. The aggregate lease rent payable is charged as rent in the statement of profit and loss.
1.06 Foreign currencies
Transactions in currencies other than entityâs functional currency (foreign currency) are recorded at the rates of exchange prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies (other than derivative contracts and net investment in non-integral foreign operations) remaining unsettled at the end of the each reporting period are remeasured at the rates of exchange prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange difference on monetary items are recognised in the statement of profit and loss in the period in which they arise except for exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to the statement of profit and loss on disposal of the net investments.
1.07 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing cost eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
1.08 Employee benefits
i) Short-term benefits
Short term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.
ii) Defined contribution plans
Payments to defined contribution plans are recognised as an expense when employees have rendered services entitling them to the contributions. Defined contribution plans are those plans where the Company pays fixed contributions to funds/schemes managed by independent trusts or authority. Contributions are paid in return for services rendered by the employees during the year. The company has no legal or constructive obligation to pay further contributions if the fund/scheme does not hold sufficient assets to pay/extend employee benefits. The Company provides Provident Fund facility to all employees and Superannuation benefits to selected employees. The contributions are expensed as they are incurred in line with the treatment of wages and salaries. The Companyâs Provident Fund is exempted under section 17 of Employeesâ Provident Fund and Miscellaneous Provision Act, 1952. Conditions for exemption stipulate that the Company shall make good deficiency, if any, in the interest rate declared by the trust vis-s-vis interest rate declared by the Employeesâ Provident Fund Organisation. The liability as on the balance sheet date is ascertained by an independent actuarial valuation.
iii) Defined benefit plans
The cost of providing defined benefit plans are determined using the projected unit credit method, with independent actuarial valuations being carried out at the end of each reporting period. The Company provides gratuity to its employees and pension to retired whole-time directors. Gratuity liabilities are funded and managed through separate trust (except in case of some of the employees of Port and Yard Equipment Division where the funds are managed by Life Insurance Corporation of India). The liabilities towards pension to retired whole-time directors are not funded.
Remeasurements, comprising actuarial gains and losses, return on plan assets excluding amounts included in net interest on the net benefit liability (asset) and any change in the effect of the asset ceiling (if applicable) are recognised in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in the comprehensive income are not reclassified to the statement of profit and loss but recognised directly in the retained earnings. Past service costs are recognised in the statement of profit and loss in the period in which the amendment to plan occurs. Net interest is calculated by applying the discount rate to the net defined liability or asset at the beginning of the period, taking into account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payments.
Defined benefit costs which are recognised in the statement of profit and loss are categorised as follows :
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements); and
- net interest expense or income.
The retirement benefit obligation recognised in the standalone balance sheet represents the actual deficit or surplus in the Companyâs defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or red uction in future contributions to the plans.
The liability for termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
iv) Other Long-term benefits
The Company provides annual leave which are accumulating and vesting to its employees. The annual leave benefit is not funded. The cost of providing annual leave benefits are determined using the projected unit credit method, with independent actuarial valuations being carried out at the end of each reporting period. All actuarial gains or losses are recognised in the statement of profit and loss in the period in which they occur.
1.09 Taxation
i) Current tax
Current tax is payable based on taxable profit for the year. Taxable profit differs from âprofit before taxâ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The current tax is calculated using tax rates that have been enacted or substantially enacted by the end of the reporting period.
ii) Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax assets arising from the deductible temporary differences are only recognised to the extent it is probable that there will be sufficient taxable profits against which the benefits of the temporary difference can be utilised and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period.
iii) Current and deferred tax are recognised in the statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
1.10 Property, Plant and Equipment
Property, Plant and Equipment held for use in the production or supply of goods or services, or for administrative purposes are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes purchase cost of materials, including import duties and non-refundable taxes, any directly attributable costs of bringing an asset to the location and condition of its intended use and borrowing costs capitalised in accordance with the Companyâs accounting policy.
Properties in the course of construction for production or supply of goods or services or for administrative purposes are carried at cost, less any recognised impairment losses.
Depreciation is recognised so as to write off the cost of assets (other than properties under construction) less their residual values over the useful lives, using the straight-line method. Depreciation of assets commences when the assets are ready for their intended use. The estimated useful lives and residual values are reviewed at the end of each reporting period, with the effect of any changes is accounted as change in estimate on a prospective basis.
Estimated useful lives of the assets are as follows:
Buildings and Roads : 5 to 60 years
Plant and Equipment : 3 to 15 years
Electrical Installations : 10 years
Laboratory Equipment : 10 years
Furniture and Fixtures : 10 years
Office Equipments : 3 to 5 years
Computers : 3 years
Motor Vehicles : 5 to 8 years
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is recognised in the statement of profit and loss.
1.11 Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment (if any) losses. Amortisation is recognised on straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Estimated useful lives of the intangible assets are as follows:
Software : 1 to 10 years
An intangible asset is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of intangible assets is recognised in the statement of profit and loss.
1.12 Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or cash generating unit is estimated to be less than the carrying amount, the carrying amount of the asset or cash generating unit is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of profit and loss.
When an impairment loss subsequently reverses, the carrying value of the asset or cash generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash generating unit in prior years. Any reversal of an impairment loss is recognised immediately in the statement of profit and loss.
1.13 Inventories
Raw materials, work-in-progress and finished products are valued at lower of cost and net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes purchase price, non refundable taxes and duties and other directly attributable costs incurred in bringing the goods to the point of sale. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty.
Stores and spares are valued at cost comprising of purchase price, non refundable taxes and duties and other directly attributable costs after providing for obsolescence and other losses, where considered necessary.
Value of inventories are generally ascertained on the âweighted averageâ basis.
1.14 Provisions, Contingent liabilities and Contingent assets
1.14.01 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
1.14.02 Warranties
Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products, at the managementâs best estimate of the expenditure required to settle the Companyâs warranty obligation.
1.14.03 Onerous contracts
An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Present obligation arising under onerous contracts are recognised and measured as provisions.
1.14.04 Contingent liabilities and assets
Contingent liability is a possible obligation that arises from past events and 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 is a present obligation that arises from past events but is not recognised because either it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or a reliable estimate of the amount of the obligation cannot be made. Contingent liabilities are disclosed and not recognised. In the normal course of business, contingent liabilities may arise from litigation and other claims against the company. Guarantees are also provided in the normal course of business. There are certain obligations which management has concluded, based on all available facts and circumstances, are not probable of payment or are very difficult to quantify reliably, and such obligations are treated as contingent liabilities and disclosed in the notes but are not reflected as liabilities in the separate financial statements. Although there can be no assurance regarding the final outcome of the legal proceedings in which the company is involved, it is not expected that such contingencies will have a material effect on its financial position or profitability.
1.15 Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transactions cost that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transactions cost directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognised immediately in the statement of profit and loss.
1.16 Financial assets
All regular purchases or sales of financial assets are recognised and derecognised on a transaction date basis. Regular purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
1.16.01 Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premium or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in the statement of profit and loss and is included in the âOther incomeâ line item.
1.16.02 Investments in equity instruments at fair value through other comprehensive income (FVTOCI)
On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the âReserve for equity instruments through other comprehensive incomeâ. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
i it has been acquired principally for the purpose of selling it in the near term; or
i on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
i it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
The Company has equity investments in two entities, and elected to FVTOCI irrevocable option for both of these investments.
Dividends on these investments in equity instruments are recognised in the statement of profit and loss when the Companyâs right to receive dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably. Dividends are included as part of âOther incomeâ in the profit and loss.
1.16.03 Financial assets at fair value through profit and loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading (see note 2.16.02 above).
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss is included in the âOther incomeâ line item.
1.16.04 Investment in Subsidiaries, Joint ventures and Associates
Investments in subsidiaries, joint venture and associates are measured at cost as per Ind AS 27 - Separate Financial Statement.
1.16.05 Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on trade receivables, other contractual rights to receive cash or other financial instruments. Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate. The Company estimates cash flows by considering all contractual terms of the financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-months expected credit losses. 12-months expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Company measures loss allowance for a financial instrument at life time expected credit loss model in the previous period, but determines at the end of reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowances based on 12 months expected credit loss.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For the trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 115, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at FVTOCI except that the loss allowance is recognised in other comprehensive income and is not reduced from the carrying amount in the balance sheet.
1.16.06 Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flow from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of financial asset in its entirety, the difference between the assetâs carrying amounts and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in the statement of profit and loss if such gain or loss would have otherwise been recognised in the statement of profit and loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
1.16.07 Foreign exchange gain and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in the statement of profit and loss.
Changes in the carrying amount of investments in equity instruments at FVTOCI relating to changes in foreign currency rates are recognised in other comprehensive income.
1.17 Financial liabilities and equity instruments
1.17.01 Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definition of a financial liability and an equity instrument.
1.17.02 Classification as debt or equity
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
1.17.03 Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL. However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
1.17.03 (i) Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the âOther incomeâ line item.
1.17.03 (ii) Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the âFinance costsâ line item.
1.17.04 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by a Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 115
1.17.05 Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in âOther incomeâ.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
1.17.06 Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Companyâs obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
1.17.07 Derivative financial instruments
The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts, interest rate swaps and cross currency swaps.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
1.18 Segment
Information reported to the Chief operating decision maker (CODM) for the purpose of resource allocation and assessment of segment performance focuses based on products and services. Accordingly, directors of the Company have chosen to organise the segment based on its product and services as follows:
- Products & services
- Project & services.
The Companyâs chief operating decision maker is the Managing Director.
Revenue and expenses directly attributable to segment are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of associated revenue of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as Unallocable expenses.
Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as Unallocable.
The companyâs financing and income taxes are managed on a company level and are not allocated to operating segment.
1.19 Earning per share
Basic earnings per share is computed by dividing the profit after tax before other comprehensive income by the weighted average number of equity shares outstanding during the financial year.
Diluted earning per share is computed by dividing the profit after tax by the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.
1.20 Recent accounting pronouncements - Standards issued but not yet effective :
Ind AS - 116 : Leases
The Ministry of Corporate Affairs (MCA) has notified (Indian Accounting Standards) (Amendment) Rules 2018 to amend the above Ind AS. The amendment will come into force from accounting period commencing on or after April 1, 2019. The company is in the process of assessing the possible impact of Ind AS - 116 and shall adopt the amendment from effective date.
Mar 31, 2018
1. Summary of significant accounting policies
1.01 Statement of compliance
The financial statements for the year ended March 31, 2018 have been prepared in accordance with Indian Accounting Standards ("Ind AS") under Section 133 of Companies Act, 2013 and Companies (Indian Accounting Standard) Rules 2015 (the rules) issued by Ministry of Corporate Affairs (MCA).
2.02 Basis of preparation and presentation
These separate financial statements of the Company are prepared under the historical cost convention except for certain financial instruments that are measured at fair value at the end of each reporting period. Historical cost is generally based on fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. In these separate financial statements, the fair value for measurement and/or disclosure purpose is determined on such basis except for leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are catergorised in to Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety. (Refer note 39.10).
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2.03 Use of estimates
The preparation of separate financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the separate financial statements and the reported amounts of income and expense for the periods presented.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and future periods are affected.
In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are included in the following notes:
- Revenue from construction contracts (Refer Note 2.04(ii))
- Useful lives of Property, plant and equipment & intangible assets (Refer Note 2.10 and 2.11)
- Assets and obligations relating to employee benefits (Refer Note 38)
- Valuation and measurement of income taxes and deferred taxes (Refer Note 2.09)
- Provisions and Contingencies (Refer Note 2.14)
- Retention money receivable (Refer foot note below Note 11)
- Going Concern (Refer Note 43.02)
2.04 Revenue recognition
Revenue is measured at fair value of the consideration received or receivable and is reduced by rebates, allowances and taxes and duties collected on behalf of the government. The Company has assumed that recovery of excise duty flows to the Company on its own account, for the reason that it is a liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not. Accordingly revenue includes excise duty.
i) Sale of goods
Revenue from the sale of goods is recognised when the goods are delivered and titles have been passed, at which time all the following conditions are satisfied:
- the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
- the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
- the amount of revenue can be measured reliably;
- it is probable that the economic benefits associated with the transaction will flow to the Company; and
- the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The Company provides normal warranty for general repairs for 12 to 18 months on products sold in line with industry practice. A liability is recognised at the time the product is sold.
ii) Construction contracts
Revenue from contracts are recognised on percentage completion method specified under Indian Accounting Standard (Ind AS) 11 - Construction contracts. Profit (contract revenue less contract cost) is recognised when the outcome of a construction contract can be estimated reliably. Revenue and costs are recognised by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of the stage of completion.
The outcome of a construction contract is considered as estimated reliably when (a) all critical approvals necessary for commencement of the project have been obtained; (b) the stage of completion of the project reaches reasonable level of development. The stage of completion is determined as a proportion that contract costs incurred for work performed up to the closing date bear to the estimated total costs of respective project. Profit (contract revenue less contract cost) is recognised when the outcome of the contract can be estimated reliably and for contracts valued up to Rs. 100 crore, profit is recognised when stage of completion is 40% or more, and for contracts valued more than Rs. 100 crore, profit is recognised either at 25% stage of completion or an expenditure of Rs. 40 crore whichever is higher. When it is probable that the total cost will exceed the total revenue from the contract, the expected loss is recognised immediately. For this purpose total contract costs are ascertained on the basis of contract costs incurred and cost to completion of contracts which is arrived at by the management based on current technical data, forecast and estimate of net expenditure to be incurred in future including for contingencies etc. For determining the expected cost to completion of the contracts, cost of steel, cement and other related items are considered at current market price based on fixed cost purchase orders placed or firm commitments received from suppliers / contractors as these purchase orders and future firm commitments are enforceable over the period of the contracts.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that is probably recoverable. Contract costs are recognised as expenses in the period in which they are incurred.
When contract costs incurred to date plus recognised profit less recognised losses exceed progress billing, the surplus is shown as amount due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included as a liability as advances received. Amounts billed for work performed but not yet paid by customer are included under trade receivables.
iii) Dividend and interest income
Dividend income is recognised when the company''s right to receive payment has been established and that the economic benefits will flow to the Company and amount of income can be measured reliably.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the asset''s net carrying amount on initial recognition.
2.05 Lease
The Company as lessee
Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalised at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. The Company''s significant operating leasing arrangements are for premises (office, residence etc.,). The leasing arrangements which normally have a tenure of eleven months to three years are cancellable with a reasonable notice, and are renewable by mutual consent at agreed terms. The aggregate lease rent payable is charged as rent in the statement of profit and loss.
2.06 Foreign currencies
Transactions in currencies other than entity''s functional currency (foreign currency) are recorded at the rates of exchange prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies (other than derivative contracts and net investment in non-integral foreign operations) remaining unsettled at the end of the each reporting period are remeasured at the rates of exchange prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange difference on monetary items are recognised in the statement of profit and loss in the period in which they arise except for exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to the statement of profit and loss on disposal of the net investments.
2.07 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing cost eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.08 Employee benefits
i) Short-term benefits
Short term employee benefits are recognised as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.
ii) Defined contribution plans
Payments to defined contribution plans are recognised as an expense when employees have rendered services entitling them to the contributions. Defined contribution plans are those plans where the Company pays fixed contributions to funds/schemes managed by independent trusts or authority. Contributions are paid in return for services rendered by the employees during the year. The company has no legal or constructive obligation to pay further contributions if the fund/scheme does not hold sufficient assets to pay/extend employee benefits. The Company provides Provident Fund facility to all employees and Superannuation benefits to selected employees. The contributions are expensed as they are incurred in line with the treatment of wages and salaries. The Company''s Provident Fund is exempted under section 17 of Employees'' Provident Fund and Miscellaneous Provision Act, 1952. Conditions for exemption stipulate that the Company shall make good deficiency, if any, in the interest rate declared by the trust vis-s-vis interest rate declared by the Employees'' Provident Fund Organisation. The liability as on the balance sheet date is ascertained by an independent actuarial valuation.
iii) Defined benefit plans
The cost of providing defined benefit plans are determined using the projected unit credit method, with independent actuarial valuations being carried out at the end of each reporting period. The Company provides gratuity to its employees and pension to retired whole-time directors. Gratuity liabilities are funded and managed through separate trust (except in case of some of the employees of Port and Yard Equipment Division where the funds are managed by Life Insurance Corporation of India). The liabilities towards pension to retired whole-time directors are not funded.
Remeasurements, comprising actuarial gains and losses, return on plan assets excluding amounts included in net interest on the net benefit liability (asset) and any change in the effect of the asset ceiling (if applicable) are recognised in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in the comprehensive income are not reclassified to the statement of profit and loss but recognised directly in the retained earnings. Past service costs are recognised in the statement of profit and loss in the period in which the amendment to plan occurs. Net interest is calculated by applying the discount rate to the net defined liability or asset at the beginning of the period, taking into account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payments.
Defined benefit costs which are recognised in the statement of profit and loss are categorised as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements); and
- net interest expense or income.
The retirement benefit obligation recognised in the standalone balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reduction in future contributions to the plans.
The liability for termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
iv) Other Long-term benefits
The Company provides annual leave which are accumulating and vesting to its employees. The annual leave benefit is not funded. The cost of providing annual leave benefits are determined using the projected unit credit method, with independent actuarial valuations being carried out at the end of each reporting period. All actuarial gains or losses are recognised in the statement of profit and loss in the period in which they occur.
2.09 Taxation
i) Current tax
Current tax is payable based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
ii) Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the separate financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax assets arising from the deductible temporary differences are only recognised to the extent it is probable that there will be sufficient taxable profits against which the benefits of the temporary difference can be utilised and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period.
iii) Current and deferred tax are recognised in the statement of profit and loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
2.10 Property, Plant and Equipment
Property, Plant and Equipment held for use in the production or supply of goods or services, or for administrative purposes are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes purchase cost of materials, including import duties and non-refundable taxes, any directly attributable costs of bringing an asset to the location and condition of its intended use and borrowing costs capitalised in accordance with the Company''s accounting policy.
Properties in the course of construction for production or supply of goods or services or for administrative purposes are carried at cost, less any recognised impairment losses.
Depreciation is recognised so as to write off the cost of assets (other than properties under construction) less their residual values over the useful lives, using the straight-line method. Depreciation of assets commences when the assets are ready for their intended use. The estimated useful lives and residual values are reviewed at the end of each reporting period, with the effect of any changes is accounted as change in estimate on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is recognised in the statement of profit and loss.
2.11 Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment (if any) losses. Amortisation is recognised at straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses.
Estimated useful lives of the intangible assets are as follows:
Software : 1 to 10 years
An intangible asset is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of intangible assets is recognised in the statement of profit and loss.
2.12 Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or cash generating unit is estimated to be less than the carrying amount, the carrying amount of the asset or cash generating unit is reduced to its recoverable amount. An impairment loss is recognised immediately in the statement of profit and loss.
When an impairment loss subsequently reverses, the carrying value of the asset or cash generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash generating unit in prior years. Any reversal of an impairment loss is recognised immediately in the statement of profit and loss.
2.13 Inventories
Raw materials, work-in-progress and finished products are valued at lower of cost and net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes purchase price, non refundable taxes and duties and other directly attributable costs incurred in bringing the goods to the point of sale. Work-in-progress and finished goods include appropriate proportion of overheads and where applicable, excise duty.
Stores and spares are valued at cost comprising of purchase price, non refundable taxes and duties and other directly attributable costs after providing for obsolescence and other losses, where considered necessary.
Value of inventories are generally ascertained on the "weighted average" basis.
2.14 Provisions, Contingent liabilities and Contingent assets
2.14.01 Provisions
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
2.14.02 Warranties
Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognised at the date of sale of the relevant products, at the management''s best estimate of the expenditure required to settle the Company''s warranty obligation.
2.14.03 Onerous contracts
An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Present obligation arising under onerous contracts are recognised and measured as provisions.
2.14.04 Contingent liabilities and assets
Contingent liability is a possible obligation that arises from past events and 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 is a present obligation that arises from past events but is not recognised because either it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or a reliable estimate of the amount of the obligation cannot be made. Contingent liabilities are disclosed and not recognised. In the normal course of business, contingent liabilities may arise from litigation and other claims against the company. Guarantees are also provided in the normal course of business. There are certain obligations which management has concluded, based on all available facts and circumstances, are not probable of payment or are very difficult to quantify reliably, and such obligations are treated as contingent liabilities and disclosed in the notes but are not reflected as liabilities in the separate financial statements. Although there can be no assurance regarding the final outcome of the legal proceedings in which the company is involved, it is not expected that such contingencies will have a material effect on its financial position or profitability.
2.15 Financial instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transactions cost that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transactions cost directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognised immediately in the statement of profit and loss.
2.16 Financial assets
All regular purchases or sales of financial assets are recognised and derecognised on a transaction date basis. Regular purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
2.16.01 Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premium or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognised in the statement of profit and loss and is included in the "Other income" line item.
2.16.02 Investments in equity instruments at fair value through other comprehensive income (FVTOCI)
On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the ''Reserve for equity instruments through other comprehensive income''. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
- it has been acquired principally forthe purpose ofselling it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee. The Company has equity investments in two entities, and elected to FVTOCI irrevocable option for both of these investments.
Dividends on these investments in equity instruments are recognised in the statement of profit and loss when the Company''s right to receive dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably. Dividends are included as part of ''Other income'' in the profit and loss.
2.16.03 Financial assets at fair value through profit and loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading (see note 2.16.02 above).
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss is included in the ''Other income'' line item.
2.16.04 Investment in Subsidiaries, Joint ventures and Associates
Investments in subsidiaries, joint venture and associates are measured at cost as per Ind AS 27 - Separate Financial Statement.
2.16.05 Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on trade receivables, other contractual rights to receive cash or other financial instruments. Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate. The Company estimates cash flows by considering all contractual terms of the financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result if default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months.
If the Company measures loss allowance for a financial instrument at life time expected credit loss model in the previous period, but determines at the end of reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowances based on 12 months expected credit loss.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For the trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at FVTOCI except that the loss allowance is recognised in other comprehensive income and is not reduced from the carrying amount in the balance sheet.
2.16.06 Derecognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flow from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of financial asset in its entirety, the difference between the asset''s carrying amounts and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in the statement of profit and loss if such gain or loss would have otherwise been recognised in the statement of profit and loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
2.16.07 Foreign exchange gain and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
For foreign currency denominated financial assets measured at amortised cost and FVTPL, the exchange differences are recognised in the statement of profit and loss.
Changes in the carrying amount of investments in equity instruments at FVTOCI relating to changes in foreign currency rates are recognised in other comprehensive income.
2.17 Financial liabilities and equity instruments
2.17.01 Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definition of a financial liability and an equity instrument.
2.17.02 Classification as debt or equity
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
2.17.03 Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL. However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
2.17.03 (i) Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognised by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ''Other income'' line item.
2.17.03 (ii) Financial liabilities subsequently measured at amortised cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalised as part of costs of an asset is included in the ''Finance costs'' line item.
2.17.04 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantee contracts issued by a Company are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of:
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with the principles of Ind AS 18
2.17.05 Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments and are recognised in ''Other income''
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognised in profit or loss.
2.17.06 Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
2.17.07 Derivative financial instruments
The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts, interest rate swaps and cross currency swaps.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
2.18 Segment
Information reported to the Chief operating decision maker (CODM) for the purpose of resource allocation and assessment of segment performance focuses based on products and services. Accordingly, directors of the Company have chosen to organise the segment based on its product and services as follows:
- Products & services
- Project & services.
The Company''s chief operating decision maker is the Managing Director.
Revenue and expenses directly attributable to segment are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of associated revenue of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as Unallocable expenses.
Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as Unallocable.
The company''s financing and income taxes are managed on a company level and are not allocated to operating segment.
2.19 Earning per share
Basic earnings per share is computed by dividing the profit after tax before other comprehensive income by the weighted average number of equity shares outstanding during the financial year.
Diluted earning per share is computed by dividing the profit after tax by the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.
2.20 Recent accounting pronouncements - Standards issued but not yet effective:
The Standards issued but not yet effective upto the date of issuance of the Company''s financial statements is disclosed below. The Company intends to adopt this Standard when it becomes effective.
- Ind AS - 115 : Revenue from contracts with customers.
- Ind AS - 12 : Income taxes
- Ind AS - 40 : Investment property
- Ind AS - 21 : Foreign currency transaction and advance considerations
The Ministry of Corporate Affairs (MCA) has notified (Indian Accounting Standards ) (Amendment) Rules 2017 to amend the above Ind ASs. The amendment will come into force from accounting period commencing on or after April 1, 2018. The company is in the process of assessing the possible impact of Ind AS - 115, Ind AS - 12 and Ind AS - 21 and will adopt the amendment on required effective date where as Ind AS - 40 is not applicable to the company.
Mar 31, 2017
1. General corporate information
TRF Limited, ("the Company") incorporated in 1962 has its Registered Office at 11 Station Road, Burma Mines, Jamshedpur 831007. The Company is listed on the National Stock Exchange of India Limited, BSE Limited and The Calcutta Stock Exchange Limited. The Company undertakes turnkey projects of material handling for the infrastructure sector such as power and ports and industrial sector such as steel plants, cement, fertilizers and mining. The Company is also engaged in production of such material handling equipments at its manufacturing plant at Jamshedpur.
The financial statements are presented in Indian Rupee (INR) which is also Functional Currency of the Company.
2. First time adoption of Ind AS
The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from 1st April 2016, with a transition date of 1st April 2015. The adoption of Ind AS has been carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards. Ind AS 101 requires that all Ind AS standards and interpretations that are issued and effective for the ''first Ind AS financial statements'' for the year ended. 31st March 2017, be applied retrospectively and consistently for all financial years presented. However, in preparing these Ind AS financial statements, the Company has availed certain exemptions and exceptions in accordance with Ind AS 101, as explained in note 4. The resulting difference between the carrying values of the assets and liabilities in the financial statements as at the transition date under Ind AS and Previous GAAP have been recognized directly in retained earnings.
3. Summary of significant accounting policies
3.01 Statement of compliance
The financial statements have been prepared in accordance with Ind ASs notified under the Companies (Indian Accounting Standard) Rules, 2015. Up to the financial year ended March 31, 2016, the Company prepared its financial statements in accordance with the requirements of Previous GAAP, which includes Standards notified under the Section 133 of the Companies Act, 2013. These are the Companies first Ind AS financial statements. The date of transition to Ind AS is April 1, 2015. Refer Note 4 for the details of first time adoption exemptions availed by the Company.
3.02 Basis of preparation and presentation
These separate financial statements of the Company are prepared under the historical cost except for certain financial instruments that are measured at fair value at the end of each reporting period. Historical cost is generally based on fair value of the consideration given in exchange for goods and services.
Fairdale is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. In these separate financial statements, the fair value for measurement and/or disclosure purpose is determined on such basis except for leasing transactions that are within the scope of Ind AS 17, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in Ind AS 2 or value in use in Ind AS 36.
In addition, for financial reporting purposes, fair value measurements are categorized into Level 1,2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirely. (Refer note 41.10)
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
3.03 Use of estimates
The preparation of separate financial statements in conformity with the recognition and measurement principles of Ind AS requires the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the separate financial statements and the reported amounts of income and expense for the periods presented.
3. Summary of significant accounting policies (Contd.)
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and future periods are affected.
In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are included in the following notes:
- Revenue from construction contracts (Refer Note 3.04(ii))
- Useful lives of Property, plant and equipment & intangible assets (Refer Note 3.10and 3.11)
- Assets and obligations relating to employee benefits (Refer Note 40)
- Valuation and measurement of income taxes and deferred taxes (Refer Note 3.09)
- Provisions and Contingencies (Refer Note 3.14)
- Retention money receivable (Refer foot note below Note 13)
- Going Concern(ReferNote45.02)
3.04 Revenue recognition
Revenue is measured at fair value of the consideration received or receivable and is reduced by rebates, allowances and taxes and duties collected on behalf of the government. The Company has assumed that recovery of excise duty flows to the Company on its own account, for the reason that it is a liability of the manufacturer which forms part of the cost of production, irrespective of whether the goods are sold or not. Accordingly revenue includes excise duty.
i) Sale of goods
Revenue from the sale of goods is recognized when the goods are delivered and titles have been passed, at which time all the following conditions are satisfied:
- the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
- The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
- the amount of revenue can be measured reliably;
- it is probable that the economic benefits associated with the transaction will flow to the Company; and
- the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The Company provides normal warranty for general repairs for 12 to 18 months on products sold in line with industry practice. A liability is recognized at the time the product is sold.
ii) Construction contracts
Revenue from contracts are recognized on percentage completion method specified under Indian Accounting Standard (Ind AS) 11 - Construction Contracts. Profit (contract revenue less contract cost) is recognized when the outcome of a construction contract can be estimated reliably. Revenue and costs are recognized by reference to the stage of completion of the contract activity at the end of the reporting period, measured based on the proportion of contract costs incurred for work performed to date relative to the estimated total contract costs, except where this would not be representative of the stage of completion.
The outcome of a construction contract is considered as estimated reliably when (a) all critical approvals necessary for commencement of the project have been obtained; (b) the stage of completion of the project reaches reasonable level of development. The stage of completion is determined as a proportion that contract costs incurred for work performed up to the closing date bear to the estimated total costs of respective project. Profit (contract revenue less contract cost) is recognized when the outcome of the contract can be estimated reliably and for contracts valued up to Rs. 100 crore, profit is recognized when stage of completion is 40% or more, and for contracts valued more than Rs. 100 crore, profit is recognized either at 25% stage of completion or an expenditure of Rs. 40 crore whichever is higher. When it is probable that the total cost will exceed the total revenue from the contract, the expected loss is recognized immediately. For this purpose total contract costs are ascertained on the basis of contract costs incurred and cost to completion of contracts which is arrived at by the management based on current technical data, forecast and estimate of net expenditure to be incurred in future including for contingencies etc. For determining the expected cost to completion of the contracts, cost of steel, cement and other related items are considered at current market price based on fixed cost purchase orders placed or firm commitments received from suppliers / contractors as these purchase orders and future firm commitments are enforceable over the period of the contracts.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized to the extent of contract costs incurred that is probably recoverable. Contract costs are recognized as expenses in the period in which they are incurred.
When contract costs incurred to date plus recognized profit less recognized losses exceed progress billing, the surplus is shown as amount due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognized profits less recognized losses, the surplus is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included as a liability as advances received. Amounts billed for work performed but not yet paid by customer are included under trade receivables.
iii) Dividend and interest income
Dividend income is recognized when the company''s right to receive payment has been established and that the economic benefits will flow to the Company and amount of income can be measured reliably. Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the asset''s net carrying amount on initial recognition.
3.05 Lease
The Company as lessee
Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalized at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognized as operating leases. The Company''s significant operating leasing arrangements are for premises (office, residence etc.). The leasing arrangements which normally have a tenure of eleven months to three years are cancellable with a reasonable notice, and are renewable by mutual consent at agreed terms. The aggregate lease rent payable is charged as rent in the statement of profit and loss.
3.06 Foreign currencies
Transactions in currencies other than entity''s functional currency (foreign currency) are recorded at the rates of exchange prevailing on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies (other than derivative contracts and net investment in non-integral foreign operations) remaining unsettled at the end of the each reporting period are re-measured at the rates of exchange prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange difference on monetary items are recognized in the statement of profit and loss in the period in which they arise except for exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognized initially in other comprehensive income and reclassified from equity to the statement of profit and loss on repayment of the monetary items.
The Company has opted under Ind AS 101 First time adoption of Indian Accounting Standards to defer/capitalize the exchange difference arising on reporting of long-term foreign currency monetary items recognized up to March 31, 2016, in line with the paragraph 46A of Accounting Standard (AS) 11 - Effects of changes in foreign exchange rates. Accordingly, exchange differences arising on settlement and re-measurement of other long-term
foreign currency monetary items are accumulated in "Foreign Currency Monetary Item Translation Difference Account âand amortized over the maturity period or up to the date of settlement of such monetary items, whichever is earlier, and charged to the statement of profit and loss.
3.07 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing cost eligible for capitalization.
All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
3.08 Employee benefits
i) Short-term benefits
Short term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.
ii) Defined contribution retirement benefits
Payments to defined contribution retirement benefits are recognized as an expense when employees have rendered services entitling them to the contributions. Defined contribution plans are those plans where the Company pays fixed contributions to funds/schemes managed by independent trusts or authority.
Contributions are paid in return for services rendered by the employees during the year. The company has no legal or constructive obligation to pay further contributions if the fund/scheme does not hold sufficient assets to pay/extend employee benefits. The Company provides Provident Fund facility to all employees and Superannuation benefits to selected employees. The contributions are expensed as they are incurred in line with the treatment of wages and salaries. The Company''s Provident Fund is exempted under section 17 of Employees'' Provident Fund and Miscellaneous Provision Act, 1952. Conditions for exemption stipulate that the Company shall make good deficiency, if any, in the interest rate declared by the trust vis-a-vis interest rate declared by the Employees'' Provident Fund Organization. The liability as on the balance sheet date is ascertained by an independent actuarial valuation.
iii) Defined benefit retirement benefits
The cost of providing defined benefit retirement benefits are determined using the projected unit credit method, with independent actuarial valuations being carried out at the end of each reporting period. The Company provides gratuity to its employees and pension to retired whole-time directors. Gratuity liabilities are funded and managed through separate trust (except in case of some employee of Port and Yard Equipment Division where the funds are managed by Life Insurance Corporation of India). The liabilities towards pension to retired whole-time directors are not funded.
Re-measurements, comprising actuarial gains and losses, return on plan assets excluding amounts included in net interest on the net benefit liability (asset) and any change in the effect of the asset ceiling (if applicable) are recognized in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur. Re-measurement recognized in the comprehensive income are not reclassified to the statement of profit and loss but recognized directly in the retained earnings. Past service costs are recognized in the statement of profit and loss in the period in which the amendment to plan occurs. Net interest is calculated by applying the discount rate to the net defined liability or asset at the beginning of the period, taking into account of any changes in the net defined benefit liability (asset) during the period as a result of-contribution and benefit payments.
Defined benefit costs which are recognized in the statement of profit and loss are categorized as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements); and
- net interest expense or income;
The retirement benefit obligation recognized in the standalone balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reduction in future contributions to the plans.
The liability for termination benefit is recognized at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs.
iv) Other Long-term benefits
The Company provides annual leave which are accumulating and vesting to its employees. The annual leave benefit is not funded. The cost of providing annual leave benefits are determined using the projected unit credit method, with independent actuarial valuations being carried out at the end of each reporting period. All actuarial gains or losses are recognized in the statement of profit and loss in the period in which they occur.
3.09 Taxation
i) Current tax
Current tax is payable based on taxable profit for the year. Taxable profit differs from ''profit before tax'' as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
ii) Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the separate financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from the deductible temporary differences are only recognized to the extent it is probable that there will be sufficient taxable profits against which the benefits of the temporary difference can be utilized and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realized, based on tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period.
iii) Current and deferred tax are recognized in the statement of profit and loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively.
3.10 Property, Plant and Equipment
Buildings and Roads, Plant and Equipment, Furniture and Fixtures and Vehicles held for use in the production or supply of goods or services, or for administrative purposes are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes purchase cost of materials, including import duties and non-refundable taxes, any directly attributable costs of bringing an asset to the location and condition of its intended use and borrowing costs capitalized in accordance with the Company''s accounting policy.
Properties in the course of construction for production or supply of goods or services or for administrative purposes are carried at cost, less any recognized impairment losses.
Depreciation is recognized so as to write off the cost of assets (other than properties under construction) less their residual values over the useful lives, using the straight-line method. Depreciation of assets commences when the assets are ready for their intended use. The estimated useful lives and residual values are reviewed at the end of each reporting period, with the effect of any changes is accounted as change in estimate on a prospective basis. Estimated useful lives of the assets are as follows:
Buildings and Roads : 5to60years
Plant and Equipment : 3to15years
Furniture and Fixtures : 10years
Office Equipments : 3to5years
Computers : 3years
Motor Vehicles : 5to8years
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is recognized in the statement of profit and loss.
The Company has elected to continue with the carrying value of all of its property, plant and equipment recognized as of April 1,2015 measured as per the Previous GAAP and use that carrying value as its deemed cost as of the transition date.
3.11 Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment (if any) losses. Amortization is recognized at straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. Estimated useful lives of the intangible assets are as follows:
Software : 1to10years
An intangible asset is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of intangible assets is recognized in the statement of profit and loss.
The Company has elected to continue with the carrying value of all of its intangible assets recognized as of April 1,2015 measured as per the Previous GAAP and use that carrying value as its deemed cost as of the transition date.
3.12 Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or cash generating unit is estimated to be less than the carrying amount, the carrying amount of the asset or cash generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in the statement of profit and loss.
When an impairment loss subsequently reverses, the carrying value of the asset or cash generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash generating unit in prior years. Any reversal of an impairment loss is recognized immediately in the statement of profit and loss.
3.13 Inventories
Raw materials, work-in-progress and finished products are valued at lower of cost and net realizable value after providing for obsolescence and other losses, where considered necessary. Cost includes purchase price, non refundable taxes and duties and other directly attributable costs incurred in bringing the goods to the point of sale. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty.
Stores and spares are valued at cost comprising of purchase price, non refundable taxes and duties and other directly attributable costs after providing for obsolescence and other losses, where considered necessary. Value of inventories are generally ascertained on the "weighted average" basis.
3.14 Provisions, Contingent liabilities and Contingent assets
3.14.01 Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of past event, it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
3.14.02 Warranties
Provisions for the expected cost of warranty obligations under local sale of goods legislation are recognized at the date of sale of the relevant products, at the management''s best estimate of the expenditure required to settle the Company''s warranty obligation.
3.14.03 Onerous contracts
An onerous contract is considered to exist where the Company has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract. Present obligation arising under onerous contracts are recognized and measured as provisions.
3.14.04 Contingent liabilities and assets
Contingent liability is a possible obligation that arises from past events and 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 is a present obligation that arises from past events but is not recognized because either it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or a reliable estimate of the amount of the obligation cannot be made. Contingent liabilities are disclosed and not recognized. In the normal course of business, contingent liabilities may arise from litigation and other claims against the company. Guarantees are also provided in the normal course of business. There are certain obligations which management has concluded, based on all available facts and circumstances, are not probable of payment or are very difficult to quantify reliably, and such obligations are treated as contingent liabilities and disclosed in the notes but are not reflected as liabilities in the separate financial statements. Although there can be no assurance regarding the final outcome of the legal proceedings in which the company is involved, it is not expected that such contingencies will have a material effect on its financial position or profitability.
3.15 Financial instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value. Transactions cost that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transactions cost directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognized immediately in the statement of profit and loss.
3.16 Financial assets
All regular purchases or sales of financial assets are recognized and derecognized on a transaction date basis. Regular purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
All recognized financial assets are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial assets.
3.16.01 Effective interest method
The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premium or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period to the net carrying amount on initial recognition.
Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. Interest income is recognized in the statement of profit and loss and is included in the "Other income" line item.
3.16.02 Investments in equity instruments at FVTOCI
On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in other comprehensive income pertaining to investments in equity instruments. This election is not permitted if the equity investment is held for trading.
These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in the âReserve for equity instruments through other comprehensive income''. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments.
A financial asset is held for trading if:
- it has been acquired principally for the purpose of selling it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee.
The Company has equity investments in two entities, and elected to FVTOCI irrevocable option for both of these investments.
Dividends on these investments in equity instruments are recognized in the statement of profit and loss when the Company''s right to receive dividends is established, it is probable that the economic benefits associated with the dividend will flow to the entity, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably. Dividends are included as part of'' Other income âin the profit and loss.
3.16.03 Financial assets at fair value through profit and loss (FVTPL)
Investments in equity instruments are classified as at FVTPL, unless the Company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investments in equity instruments which are not held for trading (see note 3.16.02 above).Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognized in profit or loss. The net gain or loss recognized in profit or loss is included in the'' Other income'' line item.
3.16.04 Investment in Subsidiaries, Joint ventures and Associates
Investments in subsidiaries, joint venture and associates are measured at cost as per Ind AS 27 - Separate Financial Statement.
3.16.05 Impairment of financial assets
The Company applies the expected credit loss model for recognizing impairment loss on trade receivables, other contractual rights to receive cash or other financial instruments. Expected credit losses are the weighted average of credit losses with the respective risks of default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate. The Company estimates cash flows by considering all contractual terms of the financial instrument.
The Company measures the loss allowance for a financial instrument at an amount equal to the lifetime _ expected credit losses if the credit risk on that financial instrument has increased significantly since initial recognition. If the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses. 12-month expected credit losses are portion of the life-time expected credit losses and represent the lifetime cash shortfalls that will result in default occurs within the 12 months after the reporting date and thus, are not cash shortfalls that are predicted over the next 12 months. If the Company measures loss allowance for a financial instrument at life time expected credit loss model in the previous period, but determines at the end of reporting period that the credit risk has not increased significantly since initial recognition due to improvement in credit quality as compared to the previous period, the Company again measures the loss allowances based on 12 months expected credit loss. When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the Company uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the change in the amount of expected credit losses. To make that assessment, the Company compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information, that is available without undue cost or effort, that is indicative of significant increases in credit risk since initial recognition.
For the trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18, the Company always measures the loss allowance at an amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Company has used a practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt instruments at FVTOCI except that the loss allowance is recognized in other comprehensive income and is not reduced from the carrying amount in the balance sheet.
3.16.06 De-recognition of financial assets
The Company de-recognizes a financial asset when the contractual rights to the cash flow from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
On de-recognition of financial asset in its entirety, the difference between the asset''s carrying amounts and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in the statement of profit and loss if such gain or loss would have otherwise been recognized in the statement of profit and loss on disposal of that financial asset.
On de-recognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss if such gain or loss would have otherwise been recognized in profit or loss on disposal of that financial asset. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.
3.16.07 Foreign exchange gain and losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of each reporting period.
- For foreign currency denominated financial assets measured at amortized cost and FVTPL, the exchange differences are recognized in the statement of profit and loss.
- Changes in the carrying amount of investments in equity instruments at FVTOCI relating to changes in foreign currency rates are recognized in other comprehensive income.
3.17 Financial liabilities and equity instruments
3.17.01 Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definition of a financial liability and an equity instrument.
3.17.02 Classification as debt or equity
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.
3.17.03 Financial liabilities
All financial liabilities are subsequently measured at amortized cost using the effective interest method or at FVTPL. However, financial liabilities that arise when a transfer of a financial asset does not qualify for de-recognition or when the continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
3.17.03(i) Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either contingent consideration recognized by the Company as an acquirer in a business combination to which Ind AS 103 applies or is held for trading or it is designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in the ''Other income'' line item.
3.17.03(ii) Financial liabilities subsequently measured at amortized cost
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method.
Interest expense that is not capitalized as part of costs of an asset is included in the ''Finance costs'' line item.
3.17.04 Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of debt instrument.
Financial guarantee contracts issued by a Company are initially measured at their fair values and, if not
- the amount of loss allowance determined in accordance with impairment requirements of Ind AS 109; and
- the amount initially recognized less, when appropriate, the cumulative amount of income recognized in accordance with the principles of Ind AS 18
3.17.05 Foreign exchange gains and losses
For financial liabilities that are denominated in a foreign currency and are measured at amortized cost at the end of each reporting period, the foreign exchange gains and losses are determined based on the amortized cost of the instruments and are recognized in ''Other income''.
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or losses and is recognized in profit or loss.
3.17.06 De-recognition of financial liabilities
The Company de-recognizes financial liabilities when, and only when, the Company''s obligations are discharged, cancelled or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.
3.17.07 Derivative financial instruments
The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts, interest rate swaps and cross currency swaps.
Derivatives are initially recognized at fair-value at the date the derivative contracts are entered into and are subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.
3.18Segment
Information reported to the Chief operating decision maker (CODM) for the purpose of resource allocation and assessment of segment performance focuses based on products and services. Accordingly, directors of the Company have chosen to organize the segment based on its product and services as follows:
- Products & Services
- Projects & Services
The Company''s chief operating decision maker is the Managing Director.
Revenue and expenses directly attributable to segment are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of associated revenue of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as Unallocable expenses.
Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as Unallocable.
The company''s financing and income taxes are managed on a company level and are not allocated to operating segment.
3.19 Earning per share
Basic earnings per share is computed by dividing the profit after tax before other comprehensive income by the weighted average number of equity shares outstanding during the financial year.
Diluted earnings per share is computed by dividing the profit after-tax by the weighted average number of equity and dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.
3.20 Recent accounting pronouncements - Standards issued but not yet effective:
In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7,''Statement of cash flows âand Ind AS 102,''Share-based payment''. These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7,''Statement of cash flows âand IFRS 2,''Share-based payment'' respectively. The amendments are applicable to the company from 1st April 2017.
Amendment to Ind AS 7
The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and noncash changes, suggesting inclusion of a reconciliation between the opening and closing balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.
This amendment may have impact on the Company which is yet to be assessed.
Amendment to IndAS102
The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes. It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the ''fair values'' but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that includes a net settlement feature in respect of withholding taxes to be treated as equity settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement.
The Company does not have share based payments hence there will be no impact on the financial statements.
4. First-time adoption - mandatory exceptions and optional exemptions
4.01 Overall principle
The Company has prepared the opening standalone balance sheet as per Ind AS as of April 1,2015 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from Previous GAAP to Ind AS as required under Ind AS, and applying Ind AS in measurement of recognized assets and liabilities. However, this principle is subject to the certain exception and certain optional exemptions availed by the Company as detailed below.
4.02 De-recognition of financial assets and liabilities
The Company has applied the de-recognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after April 1,2015 (the transition date).
4.03 Classification of debt instruments
The Company has determined the classification of debt instruments in terms of whether they meet the amortized cost criteria or the FVTOCI criteria based on the facts and circumstances that existed as of the transition date.
4.04 Impairment of financial assets
The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind ASs, whether there have been significant increases in credit risk since initial recognition, as permitted byIndAS101.
4.05 Deemed cost of property, plant and equipment and intangible assets
The Company has elected to continue with the carrying value of all of its property, plant and equipment and intangible assets recognized as of April 1,2015 (transition date) measured as per the Previous GAAP and use that carrying value as its deemed cost as of the transition date.
4.06 Determining whether an arrangement contains lease
The Company has applied Appendix C of Ind AS 17 determining whether an arrangement contains a lease to determine whether an arrangement existing at the transition date contains a lease on the basis of facts and circumstances existing at that date.
4.07 Equity investments at FVTOCI
The Company has designated investment in equity shares of HDFC Bank Limited, Rujuvalika Investments Limited as at FVTOCI on the basis of facts and circumstances that existed at the transition date.
4.08 Assessment of embedded derivatives
The Company has assessed whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative on the basis of the conditions that existed at the later of the date it first became a party to the contract and the date when there has been a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract.
Mar 31, 2016
. General corporate information
TRF Limited, ("the Company") incorporated in 1962 has its Registered Office at 11 Station Road, Burma Mines, Jamshedpur 831007. The Company is listed on the National Stock Exchange of India Limited, BSE Limited and The Calcutta Stock Exchange Limited. The Company undertakes turnkey projects of material handling for the infrastructure sector such as power and ports and industrial sector such as steel plants, cement, fertilizers and mining. The Company is also engaged in production of such material handling equipments at its manufacturing plant at Jamshedpur.
2. Summary of significant accounting policies
2.01 Basis of accounting
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act 2013 ("the 2013 Act"). The financial statements are prepared under the historical cost convention on going concern and on accrual basis. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
2.02 Use of estimates
The presentation of financial Statements in accordance with Generally Accepted Accounting Principles in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the year. Examples of such estimates include estimated cost of contracts, useful life of fixed assets, provision for doubtful debts, employee benefits, provision for taxes. Actual results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in the current and future periods.
2.03 Cash flow statement
Cash flows are reported using the indirect method, whereby profit/(loss) before extraordinary items and taxes is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
2.04 Fixed assets
i) Tangible assets
Tangible assets are stated at cost less accumulated depreciation and impairment losses (if any) The cost of an asset includes the purchase cost of materials, including import duties and non-refundable taxes, and any directly attributable costs of bringing an asset to the location and condition of its intended use. Interest on borrowings used to finance the construction of qualifying assets are capitalized as part of the cost of the asset until such time that the asset is ready for its intended use. Subsequent expenditure relating to tangible assets are capitalized only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance. The Company has adopted the provisions of para 46 /46A of Accounting Standard (AS) 11 - The Effects of Changes in Foreign Exchange Rates, accordingly, exchange differences arising on restatement/settlement of long-term foreign currency monetary items relating to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets.
Depreciation on all tangible fixed assets are provided on a straight line basis using the useful lives prescribed in Schedule II to the Companies Act, 2013.
ii) Intangible assets
Intangible assets are stated at acquisition cost, less accumulated amortization and accumulated impairment (if any) The cost of an intangible asset includes purchase cost (net of rebates and discounts), including any import duties and non-refundable taxes, and any directly attributable costs on making the asset ready for its intended use. Subsequent expenditure on an intangible asset after its purchase/completion is recognized as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.
The Cost of Intangible assets are amortized on a straight line basis over their estimated useful life. The cost incurred to acquire any technical knowhow is amortized over its estimated useful life not exceeding six years from the date of transfer of technical know how and cost incurred to acquire software is amortized on a straight line basis over an estimated useful life of five years.
iii) Capital work-in-Progress
Expenditure incurred on construction of assets which are not ready for their intended use are carried at cost less impairment (if any), under Capital work-in-progress. The cost includes the purchase cost of materials, including import duties and non-refundable taxes, any directly attributable costs and Interest on borrowings used to finance the construction of the asset.
2.05 Impairment of assets
The carrying values of assets/cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognized for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognized in the Statement of Profit and Loss, except in case of revalued assets.
2.06 Investments
Long term investments are carried at cost less provision for diminution other than temporary (if any) in value of such investments. Current investments are carried at lower of cost and fair value.
2.07 Lease
Assets leased by the Company in its capacity as a lessee, where substantially all the risks and rewards of ownership vest in the Company are classified as finance leases. Such leases are capitalized at the inception of the lease at the lower of the fair value and the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognized as operating leases. The Company''s significant operating leasing arrangements are for premises (Office, Residence etc.,) The leasing arrangements which normally have a tenure of eleven months to six years are cancellable with a reasonable notice, and are renewable by mutual consent at agreed terms. The aggregate lease rent payable is charged as rent in the statement of profit and loss.
2.08 Inventories and Contract in Progress
Raw materials, work-in-progress and finished products are valued at lower of cost and net realizable value after providing for obsolescence and other losses, where considered necessary. Cost includes purchase price, non refundable taxes and duties and other directly attributable costs incurred in bringing the goods to the point of sale. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty.
Stores and spares are valued at cost comprising of purchase price, non refundable taxes and duties and other directly attributable costs after providing for obsolescence and other losses, where considered necessary. Value of inventories are generally ascertained on the "weighted average" basis.
2.09 Cash and cash equivalents
Cash and cash equivalents comprises of cash and cheques on hand, remittances in transit, balances in current accounts and deposit accounts with banks having original maturity of three months or less from the date of deposit.
2.10 Revenue recognition
i) Sale of products
Revenue from the sale of products is recognized in the statement of profit and loss when the significant risks and rewards of ownership have been transferred to the buyer, which generally coincides with the delivery of goods to customers. Revenue includes consideration received or receivable, excise duty but net of discounts and other sales related taxes.
ii) Revenue from contracts
Revenue from contracts are recognized on percentage completion method specified under Accounting Standard (AS) 7-Construction Contracts. The stage of completion is determined as a proportion that contract costs incurred for work performed up to the closing date bear to the estimated total costs of respective project. Profit (contract revenue less contract cost) is recognized when the outcome of the contract can be estimated reliably and for contracts valued up to Rs. 100crore, profit is recognized when stage of completion is 40% or more, and for contracts valued more than Rs. 100 crore, profit is recognized either at 25% stage of completion or an expenditure of Rs. 40 crore whichever is higher. When it is probable that the total cost will exceed the total revenue from the contract, the expected loss is recognized immediately. For this purpose total contract costs are ascertained on the basis of contract costs incurred and cost to completion of contracts which is arrived at by the management based on current technical data, forecast and estimate of net expenditure to be incurred in future including for contingencies etc. For determining the expected cost to completion of the contracts, cost of steel, cement and other related items are considered at current market price based on fixed cost purchase orders placed or firm commitments received from suppliers / contractors as these purchase orders and future firm commitments are enforceable over the period of the contracts. Cost incurred in excess of that considered for revenue recognition, if any, in respect of a contract is carried forward in the Balance Sheet as contracts in progress.
iii) Dividend and Interest income
Dividend income is recognized when the company''s right to receive dividend is established. Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.
2.11 Employee benefits
i) Short term benefits
Short term employee benefits are recognized as an expense at the undiscounted amount in the statement of profit and loss of the year in which the related service is rendered.
ii) Defined contribution plans
Defined contribution plans are those plans where the Company pays fixed contributions to funds/schemes managed by independent trusts or authority. Contributions are paid in return for services rendered by the employees during the year. The Company has no legal or constructive obligation to pay further contributions if the fund/scheme does not hold sufficient assets to pay/extend employee benefits. The Company provides Provident Fund facility to all employees, Superannuation benefits to selected employees. The contributions are expensed as they are incurred inline with the treatment of wages and salaries. The Company''s Provident Fund is exempted under section 17 of Employees'' Provident Fund and Miscellaneous Provision Act, 1952. Conditions for exemption stipulate that the Company shall make good deficiency, if any, in the interest rate declared by the trust vis-s-vis interest rate declared by the Employees'' Provident Fund Organization. The liability as on the balance sheet is ascertained by an independent actuarial valuation.
iii) Defined benefit plans
The Company provides gratuity, compensated absence to its employees and pension to retired whole-time directors. Gratuity liabilities are funded and managed through separate trust (except in case of Port and Yard Equipment Division in which the funds are managed by Life Insurance Corporation of India) The liabilities towards leave encashment and pension to retired whole-time directors are not funded. The present value of these defined benefit obligations are ascertained by an independent actuarial valuation as per the requirements of Accounting Standards (AS) 15 - Employee Benefits. The liability recognized in the balance sheet is the present value of the defined benefit obligations on the balance sheet date less the fair value of the plan assets (for funded plans), together with adjustments for unrecognized past service costs. Past service cost is recognized immediately to the extent that the benefits are already vested and otherwise is amortized on a straight-line basis over the average period until the benefits become vested. All actuarial gains and losses are recognized in the statement of profit and loss in full in the year in which they occur.
2.12 Borrowing costs
Borrowing costs include interest, amortization of ancillary costs incurred. Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets till such time the asset is ready for its intended use. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are recognized as an expense in the statement of profit and loss in the period in which they are incurred.
2.13 Earnings Per Share
The basic earnings per share is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares together with any dilutive equity equivalent shares outstanding during the year, except where the results would be anti-dilutive.
2.14 Foreign currency transactions
i) Foreign currency transactions are recorded on initial recognition in the reporting currency i.e. Indian rupees, using the exchange rates prevailing on the date of the transaction. Monetary assets and liabilities in currencies other than the reporting currency (other than derivative contracts and net investment in non-integral foreign operations) and foreign exchange contracts remaining unsettled are re measured at the rates of exchange prevailing at the balance sheet date. Exchange difference arising on the settlement of monetary items, and on the re measurement of monetary items, other than long-term foreign currency monetary items are included in the statement of profit and loss.
ii) Net investment in non-integral foreign operations is accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction. Foreign currency monetary items (other than derivative contracts) of the Company''s net investment in non-integral foreign operations outstanding at the balance sheet date are restated at the year-end rates. The exchange differences on restatement of long-term receivables from non-integral foreign operations that are considered as net investment in such operations are accounted as per policy for long-term foreign currency monetary items stated in para (iv) below until disposal of such net investment, in which case the accumulated balance in "Foreign exchange fluctuation reserve" is recognized as income/expense in the same period in which the gain or loss on disposal is recognized.
iii) Foreign Currency forward contracts, other than those entered into to hedge foreign currency risk on unexecuted firm commitments or highly probable forecast transactions are treated as foreign currency transactions and accounted accordingly as per Accounting Standard (AS) 11 - Effects of changes in foreign exchange rates. The difference between the contract rate and spot rate on the date of transaction is recognized as premium/discount and recognized over the life of the contract. Exchange differences arising on account of re measurement and gains and losses arising on account of roll over/cancellation of foreign currency forward contracts are recognized in the statement of profit and loss.
iv) The Company has opted for accounting the exchange difference arising on reporting of long-term foreign currency monetary items in line with the paragraph 46A of Accounting Standard (AS) 11 - Effects of changes in foreign exchange rates. Accordingly exchange difference arising on the settlement and re measurement of long-term foreign currency monetary items relating to the acquisition of depreciable capital asset are accounted by addition or deduction to the cost of the depreciable assets and depreciated over the remaining useful life of such assets. Exchange differences arising on settlement and re measurement of other long-term foreign currency monetary items are accumulated in "Foreign Currency Monetary Item Translation Difference Account" and amortized over the maturity period/up to the date of settlement of such monetary items, whichever is earlier, and charged to the Statement of Profit and Loss except in case of exchange differences arising on net investment in non-integral foreign operations, where such amortization is taken to "Foreign exchange fluctuation reserve" until disposal of the net investment.
2.15 Segment reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information are available and for which operating results are evaluated regularly by the executive management in assessing performance and to take decision on allocation of resources. The accounting policies adopted for the segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of the their relationship to the operating activities of the segment. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocable revenue/expenses/asset/liabilities".
2.16 Taxes on Income
i) Current tax
Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of the Income-tax Act, 1961.
ii) Deferred tax
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets against unabsorbed depreciation and carried forward loss under tax laws, are recognized only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets on other timing differences are recognized only to the extent that there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.
iii) Minimum alternate tax
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is recognized as an asset in the balance sheet when there is convincing evidence that the Company will pay normal income tax during the specified period and it is probable that future economic benefit associated with it will flow to the Company.
iv) Current and Deferred taxis measured based on the provisions of tax laws and tax rates enacted or substantively enacted as at the Balance Sheet date.
2.17 Provisions, Contingent liabilities and Contingent assets
i) Provision
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an out flow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
ii) Provision for warranty
The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims and management estimates regarding possible future incidence based on corrective actions on product failures.
iii) Contingent liabilities and assets
Contingent liability is a possible obligation that arises from past events and 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 is a present obligation that arises from past events but is not recognized because either it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or a reliable estimate of the amount of the obligation cannot be made. Contingent liabilities are disclosed and not recognized. Contingent assets are neither recognized nor disclosed.
2.18 Research and development expenses
Research and development costs (other than cost of fixed assets acquired) are charged to the statement of profit and loss in the year in which they are incurred. Fixed assets utilized for research and development are capitalized and depreciated in accordance with the policies stated for fixed assets.
2.19 Derivative contracts
The Company enters into derivative contracts in the nature of foreign currency and interest rate swaps, option contracts to hedge its existing assets and liabilities and foreign currency forward contracts to hedge firm commitments and highly probable transactions. Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign Currency Transactions and Translations. All other derivative contracts are marked-to-market and losses are recognized in the statement of profit and loss. Gains arising on the same are not recognized, until realized, on grounds of prudence.
Rights, preferences and restrictions attached to shares
i) Equity Shares
The company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is entitled 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 entitled to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to the number of equity shares held by the shareholders.
Mar 31, 2014
1. General corporate information
TRF Limited, ("the Company") incorporated in 1962 has its Registered
Office at 11 Station Road, Burma Mines, Jamshedpur 831007. The Company
is listed on the National Stock Exchange of India Limited, BSE Limited
and The Calcutta Stock Exchange Limited. The Company undertakes turnkey
projects of material handling for the infrastructure sector such as
power, ports and industrial sector such as steel plants, cement,
fertilisers and mining. The Company is also engaged in production of
such material handling equipments at its manufacturing plant at
Jamshedpur.
2. Summary of significant accounting policies
2.01 Basis of accounting
The financial statements of the Company have been prepared in
accordance with the Generally Accepted Accounting Principles in India
(Indian GAAP) to comply with the Accounting Standards notified under
Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which
continue to be applicable in respect of Section 133 of the Companies
Act, 2013 ("the 2013 Act") in terms of General Circular 15/2013 dated
13 September, 2013 of the Ministry of Corporate Affairs, Government of
India) and the relevant provisions of the 1956 Act/ 2013 Act, as
applicable. The financial statements are prepared under the historical
cost convention on going concern and on accrual basis. The accounting
policies adopted in the preparation of the financial statements are
consistent with those followed in the previous year.
2.02 Use of estimates
The presentation of financial statements in accordance with Generally
Accepted Accounting Principles in India requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosures of contingent liabilities as at the
date of the financial statements and the reported amounts of revenue
and expenses during the year. Examples of such estimates include
estimated cost of contracts, useful life of fixed assets, provision for
doubtful debts, employee benefits, provision for taxes. Actual results
could differ from those estimates. Any revision to accounting estimates
is recognised prospectively in the current and future periods.
2.03 Cash flow statement
Cash flows are reported using the indirect method, whereby
profit/(loss) before extraordinary items and taxes is adjusted for the
effects of transactions of non-cash nature and any deferrals or
accruals of past or future cash receipts or payments. The cash flows
from operating, investing and financing activities of the Company are
segregated based on the available information.
2.04 Fixed assets
i) Tangible assets
Tangible assets are stated at cost less accumulated depreciation and
impairment losses (if any). The cost of an asset includes the purchase
cost of materials, including import duties and non-refundable taxes,
and any directly attributable costs of bringing an asset to the
location and condition of its intended use. Interest on borrowings used
to finance the construction of qualifying assets are capitalised as
part of the cost of the asset until such time that the asset is ready
for its intended use. Subsequent expenditure relating to tangible
assets are capitalised only if such expenditure results in an increase
in the future benefits from such asset beyond its previously assessed
standard of performance. The Company has adopted the provisions of para
46 / 46A of AS 11 The Effects of Changes in Foreign Exchange Rates,
accordingly, exchange differences arising on restatement / settlement
of long-term foreign currency monetary items relating to acquisition of
depreciable fixed assets are adjusted to the cost of the respective
assets and depreciated over the remaining useful life of such assets.
Depreciation on all tangible fixed assets are provided on a straight
line basis applying the rates and in the manner prescribed in Schedule
XIV to the Companies Act, 1956.
2.04 Fixed assets
ii) Intangible assets
Intangible assets are stated at acquisition cost, less accumulated
amortisation and accumulated impairment (if any). The cost of an
intangible asset includes purchase cost (net of rebates and discounts),
including any import duties and non-refundable taxes, and any directly
attributable costs on making the asset ready for its intended use.
Subsequent expenditure on an intangible asset after its purchase /
completion is recognised as an expense when incurred unless it is
probable that such expenditure will enable the asset to generate future
economic benefits in excess of its originally assessed standards of
performance and such expenditure can be measured and attributed to the
asset reliably, in which case such expenditure is added to the cost of
the asset.
The Cost of Intangible assets are amortised on a straight line basis
over their estimated useful life. The cost incurred to acquire any
technical know-how is amortised over its estimated useful life not
exceeding six years from the date of transfer of technical know how and
cost incurred to acquire software is amortised on a straight line basis
over an estimated useful life of five years.
iii) Capital work-in-Progress
Expenditure incurred on construction of assets which are not ready for
their intended use are carried at cost less impairment (if any), under
Capital work-in-progress. The cost includes the purchase cost of
materials, including import duties and non-refundable taxes, any
directly attributable costs and Interest on borrowings used to finance
the construction of the asset.
2.05 Impairment of assets
The carrying values of assets/cash generating units at each balance
sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss,
except in case of revalued assets.
2.06 Investments
Long term investments are carried at cost less provision for diminution
other than temporary ( if any) in value of such investments. Current
investments are carried at lower of cost and fair value.
2.07 Lease
Assets leased by the Company in its capacity as a lessee, where
substantially all the risks and rewards of ownership vest in the
Company are classified as finance leases. Such leases are capitalised
at the inception of the lease at the lower of the fair value and the
present value of the minimum lease payments and a liability is created
for an equivalent amount. Each lease rental paid is allocated between
the liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. The Company''s significant operating leasing
arrangements are for premises (Office, Residence etc.,). The leasing
arrangements which normally have a tenure of eleven months to six years
are cancellable with a reasonable notice, and are renewable by mutual
consent at agreed terms. The aggregate lease rent payable is charged as
rent in the statement of profit and loss.
2.08 Inventories
Raw materials, work-in-progress and finished products are valued at
lower of cost and net realisable value after providing for obsolescence
and other losses, where considered necessary. Cost includes purchase
price, non refundable taxes and duties and other directly attributable
costs incurred in bringing the goods to the point of sale.
Work-in-progress and finished goods include appropriate proportion of
overheads and, where applicable, excise duty.
Stores and spares are valued at cost comprising of purchase price, non
refundable taxes and duties and other directly attributable costs after
providing for obsolescence and other losses, where considered
necessary.
Value of inventories are generally ascertained on the "weighted
average" basis.
2.09 Cash and cash equivalents
Cash and cash equivalents comprises of cash and cheques on hand,
remittances in transit, balances in current accounts and deposit
accounts with banks having original maturity of three months or less
from the date of deposit.
2.10 Revenue recognition
i) Sale of products
Revenue from the sale of products is recognised in the statement of
profit and loss when the significant risks and rewards of ownership
have been transferred to the buyer, which generally coincides with the
delivery of goods to customers. Revenue includes consideration received
or receivable, excise duty but net of discounts and other sales related
taxes.
ii) Revenue from contracts
Revenue from contracts are recognised on percentage completion method
specified under Accounting Standard (AS) 7 - Construction Contracts.
The stage of completion is determined as a proportion that contract
costs incurred for work performed up to the closing date bear to the
estimated total costs of respective project. Profit (contract revenue
less contract cost) is recognised when the outcome of the contract can
be estimated reliably and for contracts valued up to Rs. 100 crores,
profit is recognised when stage of completion is 40% or more, and for
contracts valued more than Rs. 100 crores, profit is recognised either
at 25% stage of completion or an expenditure of Rs. 40 crores whichever
is higher. When it is probable that the total cost will exceed the
total revenue from the contract, the expected loss is recognised
immediately. For this purpose total contract costs are ascertained on
the basis of contract costs incurred and cost to completion of
contracts which is arrived at by the management based on current
technical data, forecast and estimate of net expenditure to be incurred
in future including for contingencies etc.
iii) Dividend and Interest income
Dividend income is recognised when the company''s right to receive
dividend is established. Interest income is recognised on a time
proportion basis taking into account the amount outstanding and the
rate applicable.
iv) Government grants
Incentives of revenue in nature from the government are recognised in
the statement of profit and loss on accrual basis.
2.11 Employee benefits
i) Short term benefits
Short term employee benefits are recognised as an expense at the
undiscounted amount in the statement of profit and loss of the year in
which the related service is rendered.
ii) Defined contribution plans
Defined contribution plans are those plans where the Company pays fixed
contributions to funds/schemes managed by independent trusts or
authority. Contributions are paid in return for services rendered by
the employees during the year. The company has no legal or constructive
obligation to pay further contributions if the fund/scheme does not
hold sufficient assets to pay/extend employee benefits. The Company
provides Provident Fund facility to all employees, Superannuation
benefits to selected employees. The contributions are expensed as they
are incurred in line with the treatment of wages and salaries.
iii) Defined benefit plans
The Company provides gratuity, compensated absence to its employees and
pension to retired whole-time directors. Gratuity liabilities are
funded and managed through separate trust (except in case of Port and
Yard Equipment Division in which the funds are managed Life Insurance
Corporation of India). The liabilities towards leave encashment and
pension to retired whole-time directors are not funded. The present
value of these defined benefit obligations are ascertained by an
independent actuarial valuation as per the requirements of Accounting
Standards (AS) 15 - Employee Benefits. The liability recognised in the
balance sheet is the present value of the defined benefit obligations
on the balance sheet date less the fair value of the plan assets (for
funded plans), together with adjustments for unrecognised past service
costs. Past service cost is recognised immediately to the extent that
the benefits are already vested and otherwise is amortised on a
straight-line basis over the average period until the benefits become
vested. All actuarial gains and losses are recognised in the statement
of profit and loss in full in the year in which they occur.
2.12 Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred. Borrowing costs that are attributable to the acquisition,
construction or production of qualifying assets are capitalised as part
of the cost of such assets till such time the asset is ready for its
intended use. A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended use. All other
borrowing costs are recognised as an expense in the statement of profit
and loss in the period in which they are incurred.
2.13 Earnings Per Share
The basic earnings per share is computed by dividing the net profit
attributable to the equity shareholders for the year by the weighted
average number of equity shares outstanding during the year. Diluted
earnings per share is computed by dividing the net profit attributable
to the equity shareholders for the year by the weighted average number
of equity shares together with any dilutive equity equivalent shares
outstanding during the year, except where the results would be
anti-dilutive.
2.14 Foreign currency transactions
i) Foreign currency transactions are recorded on initial recognition in
the reporting currency i.e. Indian rupees, using the exchange rates
prevailing on the date of the transaction. Monetary assets and
liabilities in currencies other than the reporting currency (other than
derivative contracts and net investment in non-integral foreign
operations) and foreign exchange contracts remaining unsettled are
remeasured at the rates of exchange prevailing at the balance sheet
date. Exchange difference arising on the settlement of monetary items,
and on the remeasurement of monetary items, other than long-term
foreign currency monetary items are included in the statement of profit
and loss.
ii) Net investment in non-integral foreign operations is accounted at
the exchange rates prevailing on the date of the transaction or at
rates that closely approximate the rate at the date of the transaction.
Foreign currency monetary items (other than derivative contracts) of
the Company''s net investment in non-integral foreign operations
outstanding at the balance sheet date are restated at the year-end
rates. The exchange differences on restatement of long-term receivables
from non-integral foreign operations that are considered as net
investment in such operations are accounted as per policy for long-term
foreign currency monetary items stated in para (iv) below until
disposal of such net investment, in which case the accumulated balance
in "Foreign Exchange Fluctuation Reserve" is recognised as income /
expense in the same period in which the gain or loss on disposal is
recognised
iii) Foreign Currency forward contracts, other than those entered into
to hedge foreign currency risk on unexecuted firm commitments or highly
probable forecast transactions are treated as foreign currency
transactions and accounted accordingly as per Accounting Standard (AS)
11 - Effects of changes in foreign exchange rates. The difference
between the contract rate and spot rate on the date of transaction is
recognised as premium/discount and recognised over the life of the
contract. Exchange differences arising on account of remeasurement and
gains and losses arising on account of roll over/cancellation of
foreign currency forward contracts are recognised in the statement of
profit and loss.
iv) The Company has opted for accounting the exchange difference
arising on reporting of long-term foreign currency monetary items in
line with the paragraph 46A of Accounting Standards (AS) 11 - Effects
of changes in foreign exchange rates. Accordingly exchange difference
arising on the settlement and remeasurement of long-term foreign
currency monetary items relating to the acquisition of depreciable
capital asset are accounted by addition or deduction to the cost of the
depreciable assets and depreciated over the remaining useful life of
such assets. Exchange differences arising on settlement and
remeasurement of other long-term foreign currency monetary items are
accumulated in "Foreign Currency Monetary Item Translation Difference
Account" and amortised over the maturity period/upto the date of
settlement of such monetary items, whichever is earlier, and charged to
the Statement of Profit and Loss except in case of exchange differences
arising on net investment in non-integral foreign operations, where
such amortisation is taken to "Foreign Exchange Fluctuation Reserve"
until disposal of the net investment.
2.15Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information are available and for which operating
results are evaluated regularly by the executive management in
assessing performance and to take decision on allocation of resources.
The accounting policies adopted for the segment reporting are in line
with the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment. Revenue, expenses assets and liabilities
which relate to the Company as a whole and are not allocable to
segments on reasonable basis have been included under "unallocable
revenue/expenses/asset/liabilities".
2.16 Taxes on Income
i) Current tax
Current tax is measured at the amount expected to be paid to the tax
authorities in accordance with the provisions of the Income-tax Act,
1961.
ii) Deferred tax
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax assets against unabsorbed depreciation and
carried forward loss under tax laws, are recognised only to the extent
that there is virtual certainty supported by convincing evidence that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. Deferred tax assets on other
timing differences
are recognised only to the extent that there is a reasonable certainty
that sufficient future taxable income will be available against which
such deferred tax assets can be realised.
iii) Minimum alternate tax
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is recognised as an asset in the Balance Sheet
when there is convincing evidence that the Company will pay normal
income tax during the specified period and it is probable that future
economic benefit associated with it will flow to the Company.
iv) Current and Deferred tax is measured based on the provisions of tax
laws and tax rates enacted or substantively enacted as at the Balance
Sheet date.
2.17 Provisions, Contingent liabilities and Contingent assets
i) Provision
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates.
ii) Provision for warranty
The estimated liability for product warranties is recorded when
products are sold. These estimates are established using historical
information on the nature, frequency and average cost of warranty
claims and management estimates regarding possible future incidence
based on corrective actions on product failures.
iii) Contingent liabilities and assets
Contingent liability is a possible obligation that arises from past
events and 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 is a present obligation
that arises from past events but is not recognised because either it is
not probable that an outflow of resources embodying economic benefits
will be required to settle the obligation, or a reliable estimate of
the amount of the obligation cannot be made. Contingent liabilities are
disclosed and not recognised. Contingent Assets are neither recognised
not disclosed.
2.18Research and development expenses
Research and development costs (other than cost of fixed assets
acquired) are charged to the Statement of Profit and Loss in the year
in which they are incurred. Fixed assets utilised for research and
development are capitalised and depreciated in accordance with the
policies stated for fixed assets.
2.19 Derivative contracts
The Company enters into derivative contracts in the nature of foreign
currency and interest rate swaps, option contracts to hedge its
existing assets and liabilities and foreign currency forward contracts
to hedge firm commitments and highly probable transactions. Derivative
contracts which are closely linked to the existing assets and
liabilities are accounted as per the policy stated for Foreign Currency
Transactions and Translations. All other derivative contracts are
marked-to- market and losses are recognised in the Statement of Profit
and Loss. Gains arising on the same are not recognised, until realised,
on grounds of prudence.
Mar 31, 2013
(a) Basis of accounting and preparation of financial statements
The financial statements are prepared as a going concern under
historical cost convention on an accrual basis and comply on all
material respects with the Generally Accepted Accounting Principles in
India and the relevant provisions of the Companies Act, 1956. The
accounting policies adopted in the preparation of the financial
statements are consistent with those followed in the previous year.
(b) Use ofestimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Examples of such estimates include
provisions for doubtful debts, employee benefits, assessment of income
taxes, estimated cost of contracts and useful lives of fixed assets.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Difference between actual results and estimates are recognized
in the periods in which the results are known/materialised.
(c) Inventories
Raw materials, work-in- progress and finished goods are valued at lower
of cost and net realizable value on weighted average basis. Stores and
spare parts and loose tools are valued at lower of cost and net
realizable value.
Cost of work- in- progress and finished goods is determined on full
absorption cost basis.
(d) Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
(e) Fixed assets Tangible fixed assets
Tangible fixed assets are stated at original cost net of tax/duty
credits availed, if any, less accumulated depreciation and impairement
losses, if any. Cost comprises of the purchase price and any
attributable cost of bringing the assets to its working condition for
its intended use. Interest on borrowings during the period of
construction is added to the cost of fixed assets. Subsequent
expenditure relating to fixed assets is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.
Intangible assets
Intangible assets are carried at cost less accumulated amortisation and
impairment losses, if any. The cost of an intangible asset comprises
its purchase price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing authorities), and
any directly attributable expenditure on making the asset ready for its
intended use net of any trade discounts and rebates. Subsequent
expenditure on an intangible asset after its purchase / completion is
recognised as an expense when incurred unless it is probable that such
expenditure will enable the asset to generate future economic benefits
in excess of its originally assessed standards of performance and such
expenditure can be measured and attributed to the asset reliably, in
which case such expenditure is added to the cost of the asset.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
(f) Depreciation and amortisation
Depreciation on all tangible fixed assets is provided on straight line
basis at the rates and in the manner specified in Schedule XIV to the
Companies Act,1956.
Technical knowhow is amortized over the estimated period of benefit,
not exceeding six years commencing from the date of purchase of the
technology.
Software expenditure is amortised over five years commencing from the
date when the expenditure is incurred.
(g) Impairment of assets
The carrying value of assets are reviewed at each Balance Sheet date
for impairment. If any indication of impairment exists, the recoverable
amount of such assets is estimated and impairment is recognised, if the
carrying amount of these assets exceeds their recoverable amount. The
recoverable amount is the greater of the net selling price and their
value in use. Value in use is arrived at by discounting the future cash
flows to their present value based on an appropriate discount factor.
When there is indication that an impairment loss recognised for an
asset in earlier accounting periods no longer exists or may have
decreased, such reversal of impairment loss is recognised in the
Statement of Profit and Loss, except in case of revalued assets.
(h) Revenue recognition (other than contracts)
Revenue from sale of goods / rendering of services is recognized on
transfer of significant risks and rewards of ownership to the buyer.
Sales excludes sales tax collected from customers.
(i) Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
(j) Accounting of contracts
Contract Revenue is recognised on percentage completion method as
required under Accounting Standard 7 - Construction Contracts. The
stage of completion is determined as a proportion that contract costs
incurred for work performed up to the closing date bear to the
estimated total costs. Profit (contract revenue less contract cost) is
recognised when the outcome of the contract can be estimated reliably
and for contracts valued up to Rs.100 crores, profit is recognised when
stage of completion is 40% or more, and for contracts valued more than
Rs. 100 crores, profit is recognised either at 25% stage of completion
or an expenditure of Rs.40 crores whichever is higher. When it is
probable that the total cost will exceed the total contract revenue,
the expected loss is recognised immediately. For this purpose total
contract costs are ascertained on the basis of contract costs incurred
and cost to completion of contracts which is arrived at by the
management based on current technical data, forecast and estimate of
net expenditure to be incurred in future including for contingencies
etc.
(k) Foreign exchange transactions
(i) Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
(ii) Measurement of foreign currency monetary items at the Balance
Sheet date
Foreign currency monetary items (other than derivative contracts) of
the Company and its net investment in non- integral foreign operations
outstanding at the Balance Sheet date are restated at the year-end
rates.
(iii) Treatment of exchange differences
Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company are
recognised as income or expense in the Statement of Profit and Loss.
The exchange differences on restatement / settlement of loans to
non-integral foreign operations that are considered as net investment
in such operations are accumulated in a "Foreign currency translation
reserve" until disposal / recovery of the net investment.
The exchange differences arising on restatement / settlement of
long-term foreign currency monetary items are capitalised as part of
the depreciable fixed assets to which the monetary item relates and
depreciated over the remaining useful life of such assets or amortised
on settlement / over the maturity period of such items if such items do
not relate to acquisition of depreciable fixed assets. The unamortised
balance is carried in the Balance Sheet as "Foreign currency monetary
item translation difference" .
During the previous year, in line with the Notification dated 29th
December,2011 issued by the Ministry of Corporate Affairs, the Company
had opted for the option given in Paragraph 46A of the Accounting
Standard-11 "The Effects of Changes in Foreign Exchange Rates".
Accordingly, the Company has, with effect from April 1, 2011, amortized
the foreign exchange loss/(gain) incurred on foreign currency monetary
items over the balance period of such long term foreign currency
monetary items . The amortized portion of foreign exchange loss (net)
incurred on long term foreign currency monetary items for the year
ended March 31, 2013 is Rs. 526.61 lakhs (previous year Rs. 313.61
lakhs). The unamortized portion carried forward as on 31st March, 2013
is Rs. 284.75 lakhs (previous year Rs. 226.94 lakhs).
(l) Accounting of forward contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortised over the
period of the contracts if such contracts relate to monetary items as
at the Balance Sheet date.
(m) Investments
Long term investments are carried at cost and provisions are recorded
to recognize any decline, other than temporary, in the carrying value
of each investment. Current investments are carried at lower of cost
and fair value.
(n) Employee Benefits
Employee benefits include provident fund, superannuation fund, gratuity
fund and compensated absences.
Defined contribution plans
The Company''s contribution to provident fund and superannuation fund
are considered as defined contribution plans and are charged as an
expense as they fall due based on the amount of contribution required
to be made.
Defined benefit plans
For defined benefit plans in the form of gratuity fund the cost of
providing benefits is determined using the Projected Unit Credit
method, with actuarial valuations being carried out at each Balance
Sheet date. Actuarial gains and losses are recognised in the Statement
of Profit and Loss in the period in which they occur. Past service cost
is recognised immediately to the extent that the benefits are already
vested and otherwise is amortised on a straight-line basis over the
average period until the benefits become vested. The retirement benefit
obligation recognised in the Balance Sheet represents the present value
of the defined benefit obligation as adjusted for unrecognised past
service cost, as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to past service cost, plus
the present value of available refunds and reductions in future
contributions to the schemes.Long Service Awards are recognised as a
liability at the present value of the defined benefit obligation as at
the Balance Sheet date.
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognised
during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service.
Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognised as a liability at the present value of
the defined benefit obligation as at the Balance Sheet date less the
fair value of the plan assets out of which the obligations are expected
to be settled.
(o) Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
(p) Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment.
Revenue, expenses, assets and liabilities which relate to the Company
as a whole and are not allocable to segments on reasonable basis have
been included under''''Unallocated revenue/expenes/assets/liabilities".
(q) Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets are reviewed at each Balance
Sheet date for their realisability.
(r) Research and development
Research and development costs (other than cost of fixed assets
acquired) are charged as an expense in the year in which they are
incurred. Fixed assets utilised for research and development are
capitalised and depreciated in accordance with the policies stated for
Fixed Assets.
(s) Provisions, contingent liabilities and contingent assets
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation
and in respect of which a reliable estimate can be made. Provisions are
determined based on best estimates of the expenditure required to
settle the present obligation. Contingent Liabilities are not
recognised but disclosed in the notes. A disclosure for a contingent
liability is made, unless the possibility of an outflow of resources is
remote.
Provision for anticipated warranty costs is made on the basis of
technical and available cost estimates.
Contingent Assets are neither recognised nor disclosed in the
Financials Statements.
(t) Derivative
The Company enters into derivative contracts in the nature of foreign
currency swaps, forward contracts with an intention to hedge its
existing assets and liabilities, firm commitments and highly probable
transactions. Derivative contracts which are closely linked to the
existing assets and liabilities are accounted as per the policy stated
for Foreign Currency Transactions and Translations.
All other derivative contracts are marked-to-market and losses are
recognised in the Statement of Profit and Loss. Gains arising on the
same are not recognised, until realised, on grounds of prudence.
Mar 31, 2012
(a) Basis of accounting and preparation of financial statements.
The financial statements are prepared as a going concern under
historical cost convention on an accrual basis and comply on all
material respects with the Generally Accepted Accounting Principles in
India and the relevant provisions of the Companies Act, 1956. The
accounting policies adopted in the preparation of the financial
statements are consistent with those followed in the previous year
except for change in the accounting policy for 'Foreign exchange
transactions' as more fully described in Note 1. (k). (iii).
(b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Examples of such estimates include
provisions for doubtful debts, employee benefits, assessment of income
taxes, estimated cost of contracts and useful lives of fixed assets.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Difference between actual results and estimates are recognized
in the periods in which the results are known/materialized.
(c) Inventories
Raw materials, work-in- progress and finished goods are valued at lower
of cost and net realizable value on weighted average basis. Stores and
spare parts and loose tools are valued at lower of cost and net
realizable value.
Cost of work- in- progress and finished goods is determined on full
absorption cost basis.
(d) Cash flow statement
Cash flows are reported using the indirect method, whereby profit /
(loss) before extraordinary items and tax is adjusted for the effects
of transactions of non-cash nature and any deferrals or accruals of
past or future cash receipts or payments. The cash flows from
operating, investing and financing activities of the Company are
segregated based on the available information.
(e) Fixed assets Tangible fixed assets
Tangible fixed assets are stated at original cost net of tax/duty
credits availed, if any, less accumulated/ depreciation. Cost comprises
of the purchase price and any attributable cost of bringing the assets
to its working condition for its intended use. Interest on borrowings
during the period of construction is added to the cost of fixed assets.
Subsequent expenditure relating to fixed assets is capitalized only if
such expenditure results in an increase in the future benefits from
such asset beyond its previously assessed standard of performance.
Intangible assets
Intangible assets are carried at cost less accumulated amortization and
impairment losses, if any. The cost of an intangible asset comprises
its purchase price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing authorities), and
any directly attributable expenditure on making the asset ready for its
intended use and net of any trade discounts and rebates. Subsequent
expenditure on an intangible asset after its purchase / completion is
recognized as an expense when incurred unless it is probable that such
expenditure will enable the asset to generate future economic benefits
in excess of its originally assessed standards of performance and such
expenditure can be measured and attributed to the asset reliably, in
which case such expenditure is added to the cost of the asset.
Capital work-in-progress
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
(f) Depreciation and amortization
Depreciation on all tangible fixed assets is provided on straight line
basis at the rates and in the manner specified in Schedule XIV to the
Companies Act,1956.
Technical know-how is amortized over the estimated period of benefit,
not exceeding six years commencing from the date of purchase of the
technology.
Software expenditure is a mortised over five years commencing from the
date when the expenditure is incurred.
(g) Impairment of assets
The carrying values of assets are reviewed at each Balance Sheet date
for impairment. If any indication of impairment exists, the recoverable
amount of such assets is estimated and impairment is recognized, if the
carrying amount of these assets exceeds their recoverable amount. The
recoverable amount is the greater of the net selling price and their
value in use. Value in use is arrived at by discounting the future
cash flows to their present value based on an appropriate discount
factor. When there is indication that an impairment loss recognized
for an asset in earlier accounting periods no longer exists or may have
decreased, such reversal of impairment loss is recognized in the
Statement of Profit and Loss, except in case of revalued assets.
(h) Revenue recognition (other than contracts)
Revenue from sale of goods / rendering of services is recognized on
transfer of significant risks and rewards of ownership to the buyer.
Sales excludes sales tax collected from customers.
(i) Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
(j) Accounting of contracts
Revenue from long-term contracts, where the outcome can be estimated
reliably is recognized on percentage completion method by reference to
the stage of completion of the contract activity as required under
Accounting Standard 7 - Construction Contracts. The stage of completion
is determined as a proportion that contract costs incurred for work
performed up to the closing date bear to the estimated total costs of
the contract. Profit (contract revenue less contract cost) is
recognized when the outcome of the contract can be estimated reliably
and for contracts valued up to Rs.100 crores, profit is recognized when
stage of completion is 40% or more, and for contracts valued more than
Rs. 100 crores, profit is recognized either at 25% stage of completion
or an expenditure of Rs. 40 crores is incurred whichever is higher.
When it is probable that the total cost will exceed the total contract
revenue, the expected loss is recognized immediately, irrespective of
the work done. For this purpose total contract costs are ascertained on
the basis of contract costs incurred and cost to completion of
contracts which is estimated based on current technical data and
estimate of costs to be incurred in future. Contract Revenue earned in
excess of billing has been reflected under 'Other Current Assets' and
billing in excess of contract revenue is reflected under 'Other Current
Liabilities' in the Balance Sheet.
(k) Foreign exchange transactions
(i) Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
(ii) Measurement of foreign currency monetary items at the Balance
Sheet date
Foreign currency monetary items (other than derivative contracts) of
the Company and its net investment in non- integral foreign operations
outstanding at the Balance Sheet date are restated at the year-end
rates.
(iii) Treatment of exchange differences
Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company are
recognized as income or expense in the Statement of Profit and Loss.
The exchange differences on restatement / settlement of loans to
non-integral foreign operations that are considered as net investment
in such operations are accumulated in a "Foreign currency translation
reserve" until disposal / recovery of the net investment.
The exchange differences arising on restatement / settlement of
long-term foreign currency monetary items are capitalized as part of
the depreciable fixed assets to which the monetary item relates and
depreciated over the remaining useful life of such assets or amortized
on settlement / over the maturity period of such items if such items do
not relate to acquisition of depreciable fixed assets. The unamortized
balance is carried in the Balance Sheet as" Foreign currency monetary
item translation difference".
During the year, in line with the Notification dated 29th December,2011
issued by the Ministry of Corporate Affairs, the Company has opted for
the option given in Paragraph 46A of the Accounting Standard-11" The
Effects of Changes in Foreign Exchange Rates". Accordingly, the Company
has, with effect from April 1, 2011, amortized the foreign exchange
loss/(gain) incurred on foreign currency monetary items over the
balance period of such long term foreign currency monetary items . The
amortized portion of foreign exchange loss (net) incurred on long term
foreign currency monetary items for the year ended 31st March, 2012 is
Rs. 313.61 lakhs. The unamortized portion carried forward as on 31st
March, 2012 is Rs. 226.93 lakhs. Had the Company, followed the earlier
policy of charging the entire amount to Statement of Profit and Loss,
the profit before tax for the year would have been lower by Rs. 226.93
lakhs.
(l) Accounting of forward contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortized over the
period of the contracts if such contracts relate to monetary items as
at the Balance Sheet date.
(m) Investments
Long term investments are carried at cost and provisions are recorded
to recognize any decline, other than temporary, in the carrying value
of each investment. Current investments are carried at lower of cost
and fair value.
(n) Employee Benefits
Employee benefits include provident fund, superannuation fund, gratuity
fund and compensated absences.
Defined contribution plans
The Company's contribution to provident fund and superannuation fund
are considered as defined contribution plans and are charged as an
expense as they fall due based on the amount of contribution required
to be made.
Defined benefit plans
For defined benefit plans in the form of gratuity fund the cost of
providing benefits is determined using the Projected Unit Credit
method, with actuarial valuations being carried out at each Balance
Sheet date. Actuarial gains and losses are recognized in the Statement
of Profit and Loss in the period in which they occur. Past service cost
is recognized immediately to the extent that the benefits are already
vested and otherwise is a mortised on a straight-line basis over the
average period until the benefits become vested. The retirement benefit
obligation recognized in the Balance Sheet represents the present value
of the defined benefit obligation as adjusted for un recognized past
service cost, as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to past service cost, plus
the present value of available refunds and reductions in future
contributions to the schemes. Long Service Awards are recognized as a
liability at the present value of the defined benefit obligation as at
the Balance Sheet date.
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognized
during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service.
Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognized as a liability at the present value of
the defined benefit obligation as at the Balance Sheet date less the
fair value of the plan assets out of which the obligations are expected
to be settled.
(o) Borrowing costs
Borrowing costs include interest, amortization of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilized for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset up to the date of
capitalisation of such asset is added to the cost of the assets.
(p) Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organization and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the Executive Management
in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment.
Revenue, expenses, assets and liabilities which relate to the Company
as a whole and are not allocable to segments on reasonable basis have
been included under "Unallocated revenue/expenses/assets/liabilities"
(q) Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognized as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognized on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred tax
liabilities are recognized for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognized only if there is virtual certainty that there
will be sufficient future taxable income available to realize such
assets. Deferred tax assets are recognized for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realized. Deferred tax assets are reviewed at each Balance
Sheet date for their reliability.
(r) Research and development
Research and development costs (other than cost of fixed assets
acquired) are charged as an expense in the year in which they are
incurred. Fixed assets utilized for research and development are
capitalized and depreciated in accordance with the policies stated for
Fixed Assets.
(s) Provisions, contingent liabilities and contingent assets
A provision is recognized when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation
and in respect of which a reliable estimate can be made. Provisions are
determined based on best estimates of the expenditure required to
settle the present obligation. Contingent Liabilities are not
recognized but disclosed in the notes. A disclosure for a contingent
liability is made, unless the possibility of an outflow of resources is
remote.
Provision for anticipated warranty costs is made on the basis of
technical and available cost estimates.
Contingent Assets are neither recognized nor disclosed in the Financial
Statements.
(t) Derivative
The Company enters into derivative contracts in the nature of foreign
currency swaps, forward contracts with an intention to hedge its
existing assets and liabilities, firm commitments and highly probable
transactions. Derivative contracts which are closely linked to the
existing assets and liabilities are accounted as per the policy stated
for Foreign Currency Transactions and Translations.
(ii) Terms/Rights attached to Equity Shares
The company has only one class of equity shares having a par value of
Rs 10 per share. Each equity shareholder is entitled to one vote per
share. The company declares and pays dividend in Indian Rupees. The
dividend proposed by the Board of Directors is subject to the approval
by the shareholders in the ensuing Annual General Meeting.
During the year ended 31st March 2012, the amount of per share dividend
recognized as distribution to equity shareholders was Rs 4 per share
(Previous year: Rs 2 per share).
In the event of the liquidation of the company, the holders of equity
shares will be entitled to receive remaining assets of the company,
after the distribution of all preferential amounts. The distribution
will be in proportion to the number of equity shares held by the
shareholders.
Notes :
(i) Long term loan from DBS Bank aggregating Rs. 5,746.91 lakhs
(previous year Rs. 6,090.53 lakhs) is secured by pari passu first
charge on the fixed assets of the Company.
(ii) Long term loan from Dena Bank aggregating Rs. 3,000 lakhs
(previous year Rs 3,000 lakhs) is secured by pari passu first charge on
the fixed assets and second charge on the current assets of the
Company.
(iii) Long term loan from Axis Bank aggregating Rs. 4,267.17 lakhs
(previous year Rs. nil) is secured by first pari passu first charge on
the fixed assets of the company, present and future except asset
charged exclusively to Small Industries Development Bank of India
(SIDBI), and second charge on the current assets of the Company.
Note : Details of the security for the short-term borrowings
Buyers' line of credit, cash credit and short term loans from banks are
secured by hypothecation, ranking pari passu, of all tangible movable
assets including in particular stocks of raw materials other than those
purchased under Bill discounting (components) scheme of Small
Industries Development Bank of India (SIDBI), finished goods,
work-in-progress, consumables, spares and other movable assets and book
debts, out standings and all other receivables. Facilities from Canara
Bank and Central Bank of India aggregating Rs. 3,780.88 lakhs (previous
year Rs. 26.64 lakhs) and Rs. 4,490.55 lakhs (previous year Rs.
4,458.92 lakhs) respectively, are also secured, by hypothecation
ranking pari passu, of fixed assets, present and future, except on an
asset hypothecated to SIDBI as first charge.
Mar 31, 2011
(a) BASIS OF PREPARATION OF ACCOUNTS
The financial statements have been prepared on accrual basis following
the historical cost convention in accordance with generally accepted
accounting principles in India and the Accounting Standards notified by
the Companies (Accounting Standards) Rules, 2006 and the relevant
presentation requirements of the Companies Act, 1956
(b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Examples of such estimates include
provisions for doubtful debts, employee benefits, assessment of income
taxes, estimated cost of contract and useful lives of fixed assets.
Actual results could differ from those estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate
is revised if the revision affects only that period or in the period of
the revision and future periods if the revision affects both current
and future periods.
(c) FIXED ASSETS
Tangible Fixed Assets
Tangible fixed assets are stated at original cost net of tax/duty
credits availed, if any, less accumulated/ depreciation. Cost comprises
of the purchase price and any attributable cost of bringing the assets
to its working condition for its intended use. Interest on borrowings
during the period of construction is added to the cost of fixed assets.
Intangible Assets
Intangible assets are initially measured at cost and amortised so as to
reflect the pattern in which the assets economic benefits are consumed.
(d) DEPRECIATION AND AMORTISATION
Tangible Assets
Depreciation on all tangible fixed assets is provided on straight line
basis at the rates and in the manner specified in Schedule XIV to the
Companies Act,1956.
Intangible Assets
(a) Technical Knowhow
The expenditure is amortised over the estimated period of benefit, not
exceeding six years commencing with the date of purchase of the
technology.
(b) Software Expenditure
The expenditure incurred is amortised over five years commencing from
the date when the expenditure is incurred.
(e) IMPAIRMENT OF ASSETS
The carrying amount of fixed assets are reviewed at each Balance Sheet
date to assess if there is any indication of impairment based on
internal/external factors. An impairment loss will be recognised
wherever the carrying amount of an asset exceeds its recoverable amount
which is higher of net realisable value and value in use.
(f) INVESTMENTS
Long term investments are carried at cost and provisions are recorded
to recognise any decline, other than temporary, in the carrying value
of each investment. Current investments are carried at lower of cost
and fair value.
(g) INVENTORIES
Raw materials, work-in-progress and finished goods are valued at lower
of cost and net realisable value. Stores and spare parts and loose
tools are carried at cost less obsolescence.
Cost of inventories is ascertained on the weighted average basis.
Cost of work-in-progress and finished goods is determined on full
absorption cost basis.
(h) REVENUE RECOGNITION (OTHER THAN CONTRACTS)
Revenue is recognised on completion of sale of goods / rendering of
services. Sales excludes sales tax collected from customers.
(i) ACCOUNTING OF CONTRACTS
Contract Revenue is recognised on percentage completion method as
required under Accounting Standard 7 - Construction Contracts. The
stage of completion is determined as a proportion that contract costs
incurred for work performed up to the closing date bear to the
estimated total costs. Profit (contract revenue less contract cost) is
recognised when the outcome of the contract can be
20. NOTES TO THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2011 (Contd.)
estimated reliably and for contracts valued up to Rs.100 crores, profit
is recognised when stage of completion is 40% or more, and for
contracts valued more than Rs. 100 crores, profit is recognised either
at 25% stage of completion or an expenditure of Rs.40 crores whichever
is higher. When it is probable that the total cost will exceed the
total contract revenue, the expected loss is recognised immediately.
For this purpose total contract costs are ascertained on the basis of
contract costs incurred and cost to completion of contracts which is
arrived at by the management based on current technical data, forecast
and estimate of net expenditure to be incurred in future including for
contingencies etc.
(j) FOREIGN EXCHANGE TRANSACTIONS
i) Transactions in foreign currencies are recorded at the exchange
rates prevailing on the date of transaction. Monetary assets and
liabilities relating to foreign currency transactions are translated at
year end exchange rates. The difference in translation and realised
gains/losses are recognised in the Profit and Loss Account. ii) In
respect of items covered by forward exchange contracts, the premium or
discount arising at the inception of such a forward exchange contract
is amortised as expense or income over the life of the contract. Any
Profit or Loss arising on cancellation or renewal of such a forward
exchange contract is recognised in the Profit and Loss Account.
(k) EMPLOYEE BENEFITS
i) All employee benefits falling due wholly within twelve months of
rendering the service are classified as short term employee benefits.
Short -term Employee Benefits are recognised as an expense in the
profit and loss account of the year in which the related service is
rendered.
ii) Companys contributions towards Provident Fund and Superannuation
Fund paid /payable during the year are charged to the Profit and Loss
Account of the year in which the employee renders the related service.
iii) Companys liability towards gratuity, long term compensated
absences and pension to whole time directors are determined by
independent actuaries, using the projected unit credit method. Past
services are recognised on a straight line basis over the average
period until the benefit become vested. Actuarial gains or losses are
recognised immediately in the statement of profit & loss account as
income or expense. Obligation is measured at present value of estimated
future cash flows using a discounted rate that is determined by
reference to the market yields at the balance sheet date on Government
Bonds where the currency and terms of the Government Bonds are
consistent with the currency and estimated terms of the defined benefit
obligation.
iv) Companys liabilities towards post -retirement medical benefits for
separated employees, farewell gifts, long service awards and Early
Separation Compensation (ESS) are measured at the present value of
estimated future cash flows as per the requirements of Accounting
Standard-15 on "Employee Benefits".
v) Actuarial gains and losses in respect of post employment and other
long term benefits are charged to the profit and loss account.
(l) SEGMENT REPORTING
Segment accounting policies are in line with policies of the company.
In addition, the following policies have been followed for segment
reporting:
i) Segment revenues include sale and other income directly attributable
with/allocable to the segment including inter segment revenue. ii)
Expenses that are directly identifiable with/ allocable to segments are
considered for determining the segment result. Expenses which relate to
the company as a whole and not allocable to Segments are included under
" unallocable corporate expenditure". iii) Incomes which relate to the
company as a whole and not allocable to segments are included under
"unallocable corporate income". iv) Segment assets and liabilities
include those which are directly identifiable with the respective
segments. Unallocable corporate assets and liabilities are those which
relate to the company as a whole and are not allocable to any segment.
(m) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
A provision is recognised when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation
and in respect of which a reliable estimate can be made. Provisions are
determined based on best estimate of the expenditure required to settle
the present obligation. The company does not recognise contingent
liability. A disclosure for a contingent liability is made, unless the
possibility of an outflow of resources is remote. Provision for
anticipated warranty costs is made on the basis of technical and
available cost estimates.
(n) TAXES ON INCOME
Tax on income for the current period is determined on the basis of
taxable income and tax credits computed in accordance with the
provisions of the Income Tax Act, 1961.
Deferred tax is recognised, subject to the consideration of prudence in
respect of Deferred tax assets, 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 in respect of unabsorbed depreciation and carry
forward of losses are recognised if there is virtual certainty
supported by convincing evidence that sufficient future taxable income
will be available against which such deferred tax can be realised.
(o) BORROWING COST
Borrowing costs that are attributable to the manufacturing, acquisition
or construction of qualifying assets are included as part of the cost
of such assets.
A qualifying asset is one that necessarily takes more than twelve
months to get ready for intended use or sale.
Other borrowing costs are recognised as expense in the period in which
they are incurred.
Mar 31, 2010
(a) BASIS OF PREPARATION OF ACCOUNTS
The financial statements have been prepared in compliance with the
generally accepted accounting principles in India and the Accounting
Standards notified by the Companies (Accounting Standards) Rules, 2006
and the relevant presentation requirements of the Companies Act, 1956
(b) FIXED ASSETS
All fixed assets are stated at original cost net of tax/duty credits
availed, if any less amortisation/ depreciation. Cost comprises of the
purchase price and any attributable cost of bringing the assets to its
working condition for its intended use. Interest on borrowings during
the period of construction is added to the cost of fixed assets.
(c) DEPRECIATION AND AMORTISATION
Tangible Assets
Depreciation on all tangible fixed assets is provided on straight line
basis at the rates and in the manner specified in Schedule XIV to the
Companies Act,1956.
Intangible Assets
Technical know-how fees are amortised over a period of six years.
Computer software is amortised over a period of five years.
(d) IMPAIRMENT OF ASSETS
The carrying amount of fixed assets are reviewed at each Balance Sheet
date to assess if there is any indication of impairment based on
internal/external factors. An impairment loss will be recognised
wherever the carrying amount of an asset exceeds its recoverable amount
which is higher of net realisable value and value in use.
(e) INVESTMENTS
Long term investments are carried at cost and provisions are recorded
to recognise any decline, other than temporary, in the carrying value
of each investment. Current investments are carried at lower of cost
and fair value.
(f) INVENTORIES
Raw materials, work-in- progress and finished goods are valued at lower
of cost and net realisable value. Stores and spare parts and loose
tools are carried at cost less obsolescence.
Cost of inventories is ascertained on the Ãweighted average à basis.
Cost of work- in- progress and finished goods is determined on full
absorption cost basis.
(g) REVENUE RECOGNITION (OTHER THAN CONTRACTS)
Revenue is recognised on completion of sale of goods / rendering of
services. Sales excludes sales tax collected from customers.
(h) ACCOUNTING OF CONTRACTS
Contract Revenue is recognised on percentage completion method as
required under revised Accounting Standard 7 - Construction Contracts.
The stage of completion is determined as a proportion that contract
costs incurred for work performed up to the closing date bear to the
estimated total costs. Profit (contract revenue less contract cost) is
recognised when the outcome of the contract can be estimated reliably
and for contracts valued up to Rs.100 crores, profit is recognised when
stage of completion is 40% or more, and for contracts valued more than
Rs. 100 crores, profit is recognised either at 25% stage of completion
or an expenditure of Rs.40 crores whichever is higher. When it is
probable that the total cost will exceed the total contract revenue,
the expected loss is recognised immediately. For this purpose total
contract costs are ascertained on the basis of contract costs incurred
and cost to completion of contracts which is arrived at by the
management based on current technical data, forecast and estimate of
net expenditure to be incurred in future including for contingencies
etc.
(i) FOREIGN EXCHANGE TRANSACTIONS
1. Transactions in foreign currencies are recorded at the exchange
rates prevailing on the date of transaction. Monetary assets and
liabilities relating to foreign currency transactions are translated at
year end exchange rates. The difference in translation and realised
gains/losses are recognised in the Profit and Loss Account.
2. In respect of items covered by forward exchange contracts, the
premium or discount arising at the inception of such a forward exchange
contract is amortised as expense or income over the life of the
contract. Any Profit or Loss arising on cancellation or renewal of such
a forward exchange contract is recognised in the Profit and Loss
Account.
(j) EMPLOYEE BENEFITS
1. All employee benefits falling due wholly within twelve months of
rendering the service are classified as short term employee benefits.
Short -term Employee Benefits are recognised as an expense in the
profit and loss account of the year in which the related service is
rendered
2. Companys contributions towards Provident Fund and Superannuation
Fund paid /payable during the year are charged to the Profit and Loss
Account of the year in which the employee renders the related service
3. Companys liabilities towards Gratuity [other than Port & Yard
Equipment (P&YE Division)] and pension for whole- time directors are
ascertained by an independent actuarial valuation as per the
requirements of Accounting Standard- 15 (revised 2005) on ÃEmployee
BenefitsÃ.The gratuity liability in respect of P & YE division is
determined based on premiums paid to the Life Insurance Corporation of
India (LIC) under the group gratuity scheme. Provision for leave
salaries is made on the basis of an independent actuarial valuation.
4. Companys liabilities towards post -retirement medical benefits for
separated employees, farewell gifts, long service awards and Early
Separation Compensation (ESS) are measured at the present value of
estimated future cash flows as per the requirements of Accounting
Standard-15 (revised 2005) on ÃEmployee BenefitsÃ.
5. Actuarial gains and losses in respect of post employment and other
long term benefits are charged to the profit and loss account
(k) SEGMENT REPORTING
Segments are identified based on the dominant source and nature of
risks and return and the internal organisation and management
structure.
Revenue and expenses has been identified to segments on the basis of
their relationship to the operating activities of the segment.
(l) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
A provision is recognised when the Company has a present obligation as
a result of past event and it is probable that an outflow of resources
embodying economic benefit will be required to settle the obligation
and in respect of which a reliable estimate can be made. Provisions are
determined based on best estimate of the expenditure required to settle
the present obligation. Reimbursement against a provision is recognised
as a separate asset based on virtual certainty. Provision for
anticipated warranty costs is made on the basis of technical and
available cost estimates.
(m) TAXES ON INCOME
Tax on income for the current period is determined on the basis of
taxable income and tax credits computed in accordance with the
provisions of the Income Tax Act,1961.
Deferred tax is recognised, subject to the consideration of prudence in
respect of Deferred tax assets, 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 in respect of unabsorbed depreciation and carry
forward of losses are recognised if there is virtual certainty
supported by convincing evidence that sufficient future taxable income
will be available against which such deferred tax can be realised.
(n) MISCELLANEOUS EXPENDITURE
Compensation to employees who have opted for retirement under Early
Separation / Voluntary Retirement offered under various schemes of the
Company is amortised over two to ten years depending upon the maximum
balance period of service of the employees under the relevant schemes
so as to amortise it entirely upto March 31, 2010. Accordingly the
balance as on March 31, 2010 is Nil.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article