Mar 31, 2023
NOTE 1 - CORPORATE INFORMATION
Trident Limited (âthe Company") is a public company domiciled in India and incorporated on April 18, 1990 under the provisions of the Companies Act, 1956. The name of the Company was changed from Abhishek Industries Limited to Trident Limited on April 18, 2011. The equity shares of the Company are listed on two stock exchanges in India i.e. National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). The Company is engaged in manufacturing, trading and selling of Textiles (Yarn, Terry Towels & Bedsheets) and Paper & Chemicals.
The registered office of the Company is situated at Sanghera, India. The principal activities of the Company are described in Note 40. These standalone Ind AS financial statements were approved for issuance by the Board of Directors of the Company in their meeting held on May 24, 2023.
NOTE 2.1 - SIGNIFICANT ACCOUNTING POLICIES
The standalone Ind AS financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013 (IND AS compliant Schedule III), to the extent applicable.
The standalone Ind AS financial statements have been prepared under the historical cost convention on accrual basis except for following assets and liabilities which have been measured at fair value:
1. Derivative financial instruments
2. Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments in Note O)
3. Defined benefit plans - plan assets are measured at fair value
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The standalone Ind AS financial statements of the Company are presented in Indian Rupee (''INR'') and all values are rounded to the nearest million with one decimal place (INR 000,000), except when otherwise indicated.
31, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1,2023, as below:
(i) Definition of Accounting Estimates - Amendments to Ind AS 8
The amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. It has also been clarified how entities use measurement techniques and inputs to develop accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are âmonetary amounts in financial statements that are subject to measurement uncertainty". Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty.
The amendments are effective for annual reporting periods beginning on or after 1 April 2023 and apply to changes in accounting policies and changes in accounting estimates that occur on or after the start of that period.
The amendments are not expected to have a material impact on the Company''s financial statements.
(ii) Disclosure of Accounting Policies - Amendments to Ind AS 1
The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ''significant'' accounting policies with a requirement to disclose their ''material'' accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements.
The amendments to Ind AS 1 are applicable for annual periods beginning on or after 1 April 2023. Consequential amendments have been made in Ind AS 107.
The Company is currently revisiting its accounting policy information disclosures to ensure consistency with the amended requirements.
(iii) Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to Ind AS 12
The amendments narrow the scope of the initial recognition exception under Ind AS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences.
The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standard) Amendment Rules 2022 dated March 23, 2022, to amend the following Ind AS which were effective from April 01,2022:
(i) Onerous Contracts - Costs of Fulfilling a Contract -Amendments to Ind AS 37
An onerous contract is a contract under which the unavoidable costs of meeting the obligations under the contract (i.e., the costs that the company cannot avoid because it has the contract) exceed the economic benefits expected to be received under it.
The amendments specify that when assessing whether a contract is onerous or loss-making, an entity needs to include costs that relate directly to a contract to provide goods or services including both incremental costs (e.g., the costs of direct labour and materials) and an allocation of costs directly related to contract activities (e.g., depreciation of equipment used to fulfil the contract and costs of contract management and supervision). General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract.
(ii) Property, Plant and Equipment: Proceeds before Intended Use - Amendments to Ind AS 16
The amendments modified paragraph 17(e) of Ind AS 16 to clarify that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment.
(iii) Ind AS 109 Financial Instruments - Fees in the ''10 per cent'' test for derecognition of financial liabilities
The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other''s behalf.
All aforesaid amendments had no impact on the standalone Ind AS financial statement of the Company for the year ended March 31, 2023.
Standards notified but not yet effective
Recent pronouncements Ministry of Corporate Affairs (âMCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March
The amendments should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period presented, a deferred tax assets (provided that sufficient taxable profit is available) and a deferred tax liability should also be recognised for all deductible and taxable temporary differences associated with leases and decommissioning obligations. Consequential amendments have been made in Ind AS 101. The amendments to Ind AS 12 are applicable for annual periods beginning on or after 1 April 2023.
The Company is currently assessing the impact of the amendments on its financial statements.
Revenue from contracts with customers is recognised when control of the goods is transferred to the customer on satisfaction of performance obligations. The Performance obligations as per contracts with customers are fulfilled at the time of dispatch or delivery of goods depending upon the terms agreed with customer. .
The Company has generally concluded that it is the principal in its revenue arrangements because it typically controls the goods before transferring them to the customer.
Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold is net of variable considerable on account of trade discounts and rebates offered by the Company as part of the contract.
Amounts disclosed as revenue are net of returns and allowances. The Company collects goods and services tax on behalf of the government and therefore, these are not economic benefits flowing to the Company. Hence, these are excluded from the revenue.
Variable consideration includes trade discounts, volume rebates and incentives, etc. The Company estimates the variable consideration with respect to above based on an analysis of accumulated historical experience. The Company adjusts estimate of revenue at the earlier of when the most likely amount of consideration expected to be received changes or when the consideration becomes fixed.
The revenue in respect of duty drawback and similar other export benefits (Refer Note C) is recognized on post export basis at the rate at which the entitlements accrue and is included in the ''sale of products''.
For aU debt instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial assets or to the amortised cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the Statement of Profit and Loss.
Dividend on financial assets is recognised when the Company''s right to receive the 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.
Insurance claims are recognised when there exists no significant uncertainty with regards to the amounts to be realized and the ultimate collection thereof.
A trade receivable is recognised if the amount of consideration is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section -Financial instruments - initial recognition and subsequent measurement.
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, the government grant related to assets is presented by deducting the grant in arriving at the carrying amount of the asset.
Borrowing costs include interest and amortisation of ancillary costs incurred in relation to borrowings. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities
relating to construction/development of the qualifying assets upto the date of capitalisation of such assets are added to the cost of the assets. Qualifying assets is one that necessarily takes substantial period of time to get ready for its intended use. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
Interest revenue earned on the temporary investment of specific borrowings for qualifying assets pending their expenditure, is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in Statement of Profit and Loss in the period in which they are incurred.
Income tax expense comprises current income tax and deferred tax.
Current tax expense for the year is ascertained on the basis of assessable profits computed in accordance with the provisions of the Income Tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Deferred tax is recognised using the liability method on temporary differences between the carrying amounts of assets and liabilities in the standalone Ind AS financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets are generally recognised for all deductible temporary differences, the carry forward of unused tax credits and unused tax losses to the extent that it 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 (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
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 assets realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
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. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company shall reflect the effect of uncertainty for each uncertain tax treatment by using either most likely method or expected value method, depending on which method predicts better resolution of the treatment.
The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority.
F Retirement and Employee benefits
The Company has schemes of employees benefits such as Provident fund, Gratuity and Compensated absences, which are dealt with as under:
Provident fund is the defined contribution scheme. The contribution to this scheme is charged to Statement of Profit and Loss of the year in which contribution to such scheme become due and when services are rendered by the employees. The Company has no obligation other than the contribution payable to the provident fund. If the contribution payable to the scheme for services received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
Gratuity liability in respect of employees of the Company is covered through trusts'' gratuity schemes managed by Life Insurance Corporation of India, SBI Life Insurance Company Limited, Kotak Mahindra and Bajaj Allianz. The cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date by an independent valuer. Remeasurement gains and losses are recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to Statement of Profit and Loss. Past service cost is recognised in Statement of Profit and Loss in the period of a plan amendment. Net interest is calculated
by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
⢠re-measurement
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 on an undiscounted accrual basis during the year when the employees render the services. 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 services.
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. 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. The Company presents the entire leave liability as current liability, since it does not have an unconditional right to defer its settlement for 12 months after the reporting period.
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the Balance Sheet at cost less accumulated depreciation and accumulated impairment losses (if any). Freehold land is not depreciated and have been measured at fair value at the date of transition i.e. April 01,2015 to Ind AS. The Company regards the fair value as deemed cost at the transition date.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Property, plant and equipment except freehold land acquired before the date of transition to Ind AS is carried at cost net of accumulated depreciation and accumulated impairment losses if any. Freehold land acquired before the date of transition to Ind AS are carried at deemed cost being fair value as at the date of transition
to Ind AS. Cost comprises of its purchase price including non-refundabte duties and taxes and excluding any trade discount and rebates and any directly attributable costs of bringing the asset to it working condition and location for its intended use. Cost also includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Company''s accounting policy (refer note 2.1 (D)). Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets commences when the assets are ready for their intended use.
The Company reviews the estimated residual values and expected useful lives of assets at least annually. In particular, the Company considers the impact of health, safety and environmental legislation in its assessment of expected useful lives and estimated residual values.
Subsequent expenditure related to an item of PPE is capitalised only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Such cost includes the cost of replacing part of the plant and equipment. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
Gains or losses arising from derecognition of the assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Statement of Profit and Loss when the asset is derecognized.
Depreciable amount for assets is the cost (net of amount received towards government grant) of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation on tangible property, plant and equipment has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.:
As per management estimate |
As per schedule II |
|
General plant and equipment on |
- 9.5 years |
- 7.5 |
triple shift basis |
years |
|
End user devices, such as, |
- 5 years |
- 3 years |
desktops, laptops, etc (included |
||
under Computers) |
||
Servers and networks (included |
- 5 years |
- 6 years |
under Computers) |
||
Office equipment |
- 10 years |
- 5 years |
Vehicles |
- 6 years |
- 8 years |
Tube wells and water reservoirs |
- 10 years |
- 5 years |
Boundary walls |
-20 years |
-30 years |
Roads |
- 10 years |
- 5 years |
Leasehold improvements are depreciated over the remaining lease period.
Foreign exchange gains/losses capitalised in earlier years as a part of PPE are depreciated over the remaining useful life of the assets to which it relates.
When parts of an item of Property, plant and equipment have different useful life, they are accounted for as separate items (Major components) and are depreciated over the useful life of part or the parent asset to which it relates, whichever is lower.
When significant spare parts, stand-by equipment and servicing equipment have useful life of more than one period, they are accounted for as separate items and are depreciated over the useful life of such item or the parent asset to which it relates, whichever is lower.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets with finite lives are amortised on a straight line basis over the estimated useful economic life. The estimated useful life and amortisation method are reviewed at the end of each reporting period.
Development expenditures on an individual project are recognised as an intangible asset when the Company can demonstrate:
⢠The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
⢠Its intention to complete and its ability and intention to use or sell the asset
⢠How the asset will generate future economic benefits
⢠The availability of resources to complete the asset
⢠The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. Amortisation expense is recognised in the Statement of Profit and Loss unless such expenditure forms part of carrying value of another asset.
Intangible assets are amortised on the straight-line method as per the useful life assessed based on expected future benefit, taking into account the nature of the asset and the estimated usage of the asset:
As per management estimate |
|
SAP ECC 6 licences |
- 10 years |
SAP Hana licences |
- 5 years |
Other softwares and Websites |
- 5 years |
During the period of development, the asset is tested for impairment annually.
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss. when the asset is derecognised.
Raw materials, work in progress, finished goods, process waste and stores and spares are valued at cost and net realisable value, whichever is lower. Raw materials inventories held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. However, when a decline in the price of raw materials indicates that the cost of the finished products exceeds net realisable value, the raw materials are written down to net realisable value. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and cost necessary to make the sale. The basis of determining cost for various categories of inventories is as follows:
- Raw materials: moving weighted average cost *- Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
- Work in progress: cost of raw materials plus conversion cost depending upon the stage of completion. Cost is determined on a moving weighted average basis except for work-in-progress inventory of towel and sheeting divisions for which cost is determined on a monthly weighted average basis.
- Stock-in-trade (acquired for trading) - Cost is determined on a moving weighted average basis.
- Finished goods (including stock in transit): cost of raw materials plus conversion cost and packing cost. Cost is determined on a moving weighted average basis except for finished goods inventory of towel and sheeting divisions for which cost is determined on a monthly weighted average basis.
- Process waste is valued at net realisable value.
- Stores and spares: moving weighted average cost -Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
* Includes by products which is valued at net realisable value
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
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 the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if available, and if no such transactions can be identified an appropriate valuation model is used.
The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Company''s CGU''s to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long term growth rate is calculated and applied to projected future cash flows after the fifth year.
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases except in case of lease contracts with related parties since there exist economic incentive for the Company to continue using the leased premises for a period longer than the 11 months and considering the contract is with the related parties, it does not foresee non-renewal of the lease term for future periods, thus basis the substance and economics of the arrangements, management believes that under Ind AS 116, the lease terms in the arrangements with related parties have been determined considering the period for which management has an economic incentive to use the leased asset (i.e. reasonable certain to use the asset for the said period of economic incentive). Such assessment of incremental period is based on management assessment of various factors including the remaining useful life of the asset as on the date of transition. The management has assessed period of arrangements with related parties as 10 years as at April 01, 2019. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Company as a lessor
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
N Provisions, contingent liabilities and contingent assets Provisions
A provision is recognised when the Company has a present obligation (legal or constructive) 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 are determined based on the best estimate required to settle the obligation at the balance sheet date and measured using the present value of cash flows estimated to settle the present obligations (when the effect of time value of money is material). These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Impairment tosses, including impairment on inventories, are recognized in the Statement of Profit and Loss.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment tosses may no tonger exist or may have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment toss been recognized for the asset in prior years. Such reversal is recognized in the Statement of Profit and Loss.
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the chief operating decision maker in deciding how to attocate resources and in assessing performance.
Operating segments are reported in a manner consistent with the internat reporting provided to the Chief Operating Decision Maker. Chief Operating Decision Maker review the performance of the Company according to the nature of products manufactured with each segment representing a strategic business unit that offers different products and serves different markets. The anatysis of geographicat segments is based on the locations of customers.
The Company assesses at contract inception whether a contract is, or contains, a tease. That is, if the contract conveys the right to controt the use of an identified asset for a period of time in exchange for consideration.
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
⢠Leasehold land |
30 to 99 years |
⢠Office premises and guest houses |
5 to 20 years |
⢠Factory premises (including plant & |
10 years |
equipment) |
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (K) Impairment of non-financial assets.
At the commencement date of the lease, the Company recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments are fixed payments.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Company''s lease liabilities are disclosed separately in the balance sheet (see Note 41).
If the Company has a contract that is onerous, the present obligation under the contract is recognised and measured as a provision. However, before a separate provision for an onerous contract is established, the Company recognises any impairment loss that has occurred on assets dedicated to that contract.
An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Company cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it.
A 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 enterprise. Contingent liabilities are disclosed by way of note to the standalone Ind AS financial statements.
Contingent Assets
A contingent asset is a possible asset that arises from past events the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise.
Contingent assets are neither recognised nor disclosed in the standalone Ind AS financial statements.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ''solely payments of principal and interest (SPPI)'' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial
assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.
ALL financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair vaLue through profit or Loss, transaction costs that are attributabLe to the acquisition of the financiaL asset. Transaction costs of financiaL assets carried at fair vaLue through profit or Loss are expensed in the Statement of Profit and Loss. Purchases or sales of financiaL assets that require deLivery of assets within a time frame estabLished by reguLation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset. Trade receivables that do not contain a significant financing component are measured transaction price.
Subsequent measurement of financial assets depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. For the purposes of subsequent measurement, financiaL assets are classified in four categories:
- Financial assets at amortised cost (debt instruments)
- FinanciaL assets at fair vaLue through other comprehensive income (FVTOCI) with recycling of cumuLative gains and Losses (debt instruments)
- FinanciaL assets designated at fair vaLue through OCI with no recycLing of cumuLative gains and Losses upon derecognition (equity instruments); and
- FinanciaL assets at fair vaLue through profit or Loss
A ''financial asset'' is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash fLows, and
b) ContractuaL terms of the asset give rise on specified dates to cash fLows that are soLeLy payments of principaL and interest (SPPI) on the principaL amount outstanding.
After initial measurement, such financial assets are subsequentLy measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is caLcuLated by taking into account any discount or premium on acquisition and fees or costs that are an integraL part of the EIR. The EIR amortisation is incLuded in finance income in the Statement of Profit and Loss. The Losses arising from impairment are recognised in the Statement of Profit and Loss.
A ''financial asset'' is classified as at the FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and seLLing the financiaL assets, and
b) The asset''s contractuaL cash fLows represent SPPI.
Debt instruments included within the FVTOCI category are measured initiaLLy as weLL as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment Losses and reversals and foreign exchange gain or Loss in the Statement of Profit and Loss. On derecognition of the asset, cumuLative gain or Loss previousLy recognised in OCI is recLassified from the equity to the Statement of Profit and Loss. Interest earned whiLst hoLding FVTOCI debt instrument is reported as interest income using the EIR method.
In the case of equity instruments which are not heLd for trading and where the Company has taken irrevocabLe eLection to present the subsequent changes in fair vaLue in other comprehensive income, these eLected investments are initiaLLy measured at fair vaLue pLus transaction costs and 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 ''Equity instruments through other comprehensive income'' under the head ''Other Equity''. The cumuLative gain or Loss is not recLassified to profit or Loss on disposaL of the investments. The Company makes such eLection on an instrument -byinstrument basis.
If the Company decides to cLassify an equity instrument as at FVTOCI, then aLL fair vaLue changes on the instrument, excLuding dividends, are recognized in OCI. There is no recycLing of the amounts from OCI to Statement of Profit and Loss, even on saLe of investment. However, the Company may transfer the cumuLative gain or Loss within equity.
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.
Gains and Losses on these financiaL assets are never recycLed to Statement of Profit and Loss. Dividends are recognised as other income in the Statement of Profit and Loss when the right of payment has been estabLished, except when the Company benefits from such proceeds as a recovery of part of the cost of the financiaL asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair vaLue through OCI are not subject to impairment assessment.
FinanciaL assets at fair vaLue through profit or Loss are carried in the BaLance Sheet at fair vaLue with net changes in fair vaLue recognised in the Statement of Profit and Loss.
In case of equity instruments which are heLd for trading are initiaLLy measured at fair vaLue pLus transaction costs and subsequentLy, they are measured at fair vaLue with gains and Losses arising from changes in fair vaLue recognised in Statement of Profit and Loss.
This category incLudes derivative instruments and Listed equity investments which the Company had not irrevocabLy eLected to cLassify at fair vaLue through OCI. Dividends on Listed equity investments are recognised in the Statement of Profit and Loss when the right of payment has been estabLished.
Investment in Subsidiaries and Associates
Investment in Subsidiaries and Associates is carried at deemed cost in the separate financiaL statements.
A financiaL asset (or, where appLicabLe, a part of a financiaL asset or part of a group of simiLar financiaL assets) is primariLy derecognised when:
- The rights to receive cash fLows from the asset have expired, or
- The Company has transferred its rights to receive cash fLows from the asset or has assumed an
obLigation to pay the received cash fLows in fuLL without materiaL deLay to a third party under a ''pass-through'' arrangement and either (a) the Company has transferred substantiaLLy aLL the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantiaLLy aLL the risks and rewards of the asset, but has transferred controL of the asset.
Impairment of financial assets
The Company appLies the expected credit Loss modeL for recognising impairment Loss on financiaL assets measured at amortised cost, debt instruments at FVTOCI, trade receivabLes and other contractuaL rights to receive cash or other financiaL asset.
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 (i.e. aLL cash shortfaLLs), discounted at the originaL effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financiaL assets). The Company estimates cash fLows by considering aLL contractuaL terms of the financiaL instrument (for exampLe, prepayment, extension, caLL and simiLar options) through the expected Life of that 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.
For trade receivabLes, the Company foLLows "simpLified approach for recognition of impairment Loss. The appLication of simpLified approach does not require the Company to track changes in credit risk.
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 toss experience and adjusted for forward-looking information.
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives as hedging instruments in an effective hedge, as appropriate. Att financiat tiabitities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, loans and borrowings including derivative financial instruments.
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss (FVTPL) include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also inctudes derivative financiat instruments entered into by the Company that are not designated as hedging instruments in hed ge retationships as defined by Ind AS 109 ''Financial instruments''.
Gains or tosses on tiabitities hetd for trading are recognised in the Statement of Profit and Loss.
Financial liabilities at amortised cost (Loans and borrowings)
After initiat recognition, interest-bearing toans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and tosses are recognised in Statement of Profit and Loss when the tiabitities are derecognised as wett as through the EIR amortisation process. Amortised cost is catcutated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss. This category generally applies to borrowings.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another financiat tiabitity from the same tender on substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Offsetting of financial instruments
Financiat assets and financiat tiabitities are offset and the net amount is reported in the balance sheet if there is a currently enforceable tegat right to offset the recognised amounts and there is an intention to settte on a net basis, to reatise the assets and settte the liabilities simultaneously.
Basic earnings per share are calculated by dividing the net profit or toss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For catcutating dituted earnings per share, the net profit or toss for the year attributabte to equity sharehotders and the weighted average number of shares outstanding during the year are adjusted for the effects of att ditutive potentiat equity shares.
Treasury shares are reduced white computing basic and dituted earnings per share.
Based on the nature of products/activities of the Company and the normat time between acquisition of assets and their reatisation in cash or cash equivatents, the Company has determined its operating cycte as 12 months for the purpose of ctassification of its assets and tiabitities as current and non-current.
The Company uses derivative financiat instruments such as foreign currency forward contracts and option currency contracts to hedge its foreign currency risks arising from highty probabte forecast transactions. The counterparty for these contracts is generatty a bank.
This category has derivative assets or tiabitities which are not designated as hedges.
Atthough the Company betieves that these derivatives constitute hedges from an economic perspective, they may not quatify for hedge accounting under Ind AS 109. Any derivative that is either not designated a hedge, or is so designated but is ineffective, is recognized on batance sheet
and measured initiatty at fair vatue. Subsequent to initiat recognition, derivatives are re-measured at fair vatue, with changes in fair vatue being recognized in the Statement of Profit and Loss. Derivatives are carried as financiat assets when the fair vatue is positive and as financiat tiabitities when the fair vatue is negative.
Hedge Accounting
The derivatives that are designated as hedging instrument under Ind AS 109 to mitigate risk arising out of foreign currency transactions are accounted for as cash ftow hedges. The Company enters into hedging instruments in accordance with poticies as approved by the Board of Directors with written principtes which is consistent with the risk management strategy of the Company.
The hedge instruments are designated and documented as hedges at the i
Mar 31, 2022
NOTE 1 - CORPORATE INFORMATION
Trident Limited ("the Company") is a public company domiciled in India and incorporated on April 18, 1990 under the provisions of the Companies Act, 1956. The name of the Company was changed from Abhishek Industries Limited to Trident Limited on April 18, 2011. The equity shares of the Company are listed on two stock exchanges in India i.e. National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). The debt securities of the Company are also listed on BSE. The Company is engaged in manufacturing, trading and selling of Textiles (Yarn, Terry Towels & Bedsheets) and Paper & Chemicals.
The registered office of the Company is situated at Sanghera, India. The principal activities of the Company are described in Note 40. These standalone Ind AS financial statements were approved for issuance by the Board of Directors of the Company in their meeting held on May 30, 2022.
NOTE 2.1 - SIGNIFICANT ACCOUNTING POLICIES
The standalone Ind AS financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013 (IND AS compliant Schedule III), to the extent applicable.
The standalone Ind AS financial statements have been prepared under the historical cost convention on accrual basis except for following assets and liabilities which have been measured at fair value:
1. Derivative financial instruments
2. Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments in Note O)
3. Defined benefit plans - plan assets are measured at fair value
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The standalone Ind AS financial statements of the Company are presented in Indian Rupee (âH'') and all values are rounded to the nearest million with one decimal place (H 000,000), except when otherwise indicated.
The Ministry of Corporate Affairs ("MCA") has carried out amendments to the following accounting standards. The effect on adoption of following mentioned amendments had no impact on the standalone Ind AS financial statements of the Company. The Company has not early adopted any standards or amendments that have been issued but are not yet effective.
(i) Ind AS 116: Covid-19-Related Rent Concessions
(ii) Ind AS 103: Business Combinations
(iii) Amendment to Ind AS 105, Ind AS 16 and Ind AS 28
(iv) Conceptual framework for financial reporting under Ind AS issued by ICAI
(v) Interest Rate Benchmark Reform - Phase 2: Amendments to Ind AS 109, Ind AS 107, Ind AS 104 and Ind AS 116
Ministry of Corporate Affairs ("MCA") issued notification dated March 24, 2021 to amend Schedule III to the Companies Act, 2013 to enhance the disclosures required to be made by a Company in its financial statements. These amendments are applicable to the Company for the financial period starting from April 01, 2021.
Revenue from contracts with customers is recognised when control of the goods is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements because it typically controls the goods before transferring them to the customer.
Revenue from sale of products is recognised at the point in time when control of the asset is transferred to the customer. Amounts disclosed as revenue are net of returns and allowances, trade discounts and rebates. The Company collects Goods & Service Tax (GST) on behalf of the government and therefore, these are not economic benefits flowing to the Company. Hence, these are excluded from the revenue.
Variable consideration includes trade discounts, volume rebates and incentives, etc. The Company estimates the
variable consideration with respect to above based on an analysis of accumulated historical experience. The Company adjusts estimate of revenue at the earlier of when the most likely amount of consideration we expect to receive changes or when the consideration becomes fixed.
The revenue in respect of duty drawback and similar other export benefits (Refer Note C) is recognized on post export basis at the rate at which the entitlements accrue and is included in the ''sale of products''.
For all debt instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Dividend on financial assets is recognised when the Company''s right to receive the 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.
Insurance claims are recognised when there exists no significant uncertainty with regards to the amounts to be realized and the ultimate collection thereof.
A trade receivable is recognised if the amount of consideration is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section - Financial instruments - initial recognition and subsequent measurement.
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the
related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, the government grant related to asset is presented by deducting the grant in arriving at the carrying amount of the asset.
Borrowing costs include interest and amortisation of ancillary costs incurred in relation to borrowings. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction/development of the qualifying asset upto the date of capitalisation of such asset are added to the cost of the assets. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
Interest revenue earned on the temporary investment of specific borrowings for qualifying assets pending their expenditure, is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in statement of profit and loss in the period in which they are incurred.
Income tax expense comprises current income tax and deferred tax.
Current tax expense for the year is ascertained on the basis of assessable profits computed in accordance with the provisions of the Income Tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Deferred tax is recognised using the liability method on temporary differences between the carrying amounts of assets and liabilities in the standalone Ind AS financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets are generally recognised for all deductible temporary differences, the carry forward of unused tax credits and unused tax losses to the extent that it 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 (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
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 realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Current and deferred tax are recognised in 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. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company shall reflect the effect of uncertainty for each uncertain tax treatment by using either most likely method or expected value method, depending on which method predicts better resolution of the treatment.
The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority.
The Company has schemes of employees benefits such as Provident fund, Gratuity and Compensated absences, which are dealt with as under:
Provident fund is the defined contribution scheme. The contribution to this scheme is charged to statement of profit and loss of the year in which contribution to such scheme become due and when services are rendered by the employees. The Company has no obligation other than the contribution payable to the provident fund. If the contribution payable to the scheme for services received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
Gratuity liability in respect of employees of the Company is covered through trusts'' gratuity schemes managed by Life Insurance Corporation of India, SBI Life Insurance Company Limited, Kotak Mahindra and Bajaj Allianz. The cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date by an independent valuer. Remeasurement gains and losses are recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to statement of profit and loss. Past service cost is recognised in statement of profit and loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised on an undiscounted accrual basis during the year when the employees render the services. 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 services.
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. 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. The Company presents the entire leave liability as current liability, since it does not have an unconditional right to defer its settlement for 12 months after the reporting period.
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses (if any). Freehold land is not depreciated and have been measured at fair value at the date of transition i.e. April 01, 2015 to Ind AS. The Company regards the fair value as deemed cost at the transition date.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Property, plant and equipment except freehold land acquired before the date of transition to Ind AS is carried at cost net of accumulated depreciation and accumulated impairment losses if any. Freehold land acquired before the date of transition to Ind AS are carried at deemed cost being fair value as at the date of transition to Ind AS. Cost comprises of its purchase price including non-refundable duties and taxes and excluding any trade discount and rebates and any directly attributable costs of bringing the asset to it working condition and location for its intended use. Cost also includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Company''s accounting policy (refer note 2.1 (D)). Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets commences when the assets are ready for their intended use.
The Company reviews the estimated residual values and expected useful lives of assets at least annually. In particular, the Company considers the impact of health, safety and environmental legislation in its assessment of expected useful lives and estimated residual values.
Subsequent expenditure related to an item of PPE is capitalised only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Such cost includes the cost of replacing part of the plant and equipment. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
Gains or losses arising from derecognition of the assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
Depreciable amount for assets is the cost (net of amount received towards government grant) of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation on tangible property, plant and equipment has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.:
As per management estimate |
As per schedule II |
|
General plant and equipment on triple shift basis |
- 9.5 years |
- 7.5 years |
End user devices, such as, desktops, laptops, etc (included under Computers) |
- 5 years |
- 3 years |
Servers and networks (included under Computers) |
- 5 years |
- 6 years |
Office equipment |
- 10 years |
- 5 years |
Vehicles |
- 6 years |
- 8 years |
Tube wells and water reservoirs |
- 10 years |
- 5 years |
Boundary Walls |
-20 years |
-30 years |
Roads |
- 10 years |
- 5 years |
Leasehold improvements are depreciated over the remaining lease period.
Foreign exchange gains/losses capitalised in earlier years as a part of PPE are depreciated over the remaining useful life of the asset to which it relates.
When parts of an item of Property, plant & equipment have different useful life, they are accounted for as separate items (Major components) and are depreciated over the useful life of part or the parent asset to which it relates, whichever is lower.
When significant spare parts, stand-by equipment and servicing equipment have useful life of more than one period, they are accounted for as separate items and are depreciated over the useful life of such item or the parent asset to which it relates, whichever is lower.
intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets with finite lives are amortised on a straight line basis over the estimated useful economic life. The estimated useful life and amortisation method are reviewed at the end of each reporting period.
Development expenditures on an individual project are recognised as an intangible asset when the Company can demonstrate:
⢠The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
⢠Its intention to complete and its ability and intention to use or sell the asset
⢠How the asset will generate future economic benefits
⢠The availability of resources to complete the asset
⢠The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. Amortisation expense is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Intangible assets are amortised on the straight-line method as per the useful life assessed based on expected future benefit, taking into account the nature of the asset and the estimated usage of the asset:
As per management |
|
estimate |
|
SAP ECC 6 licences |
- 10 years |
SAP Hana licences |
- 5 years |
Other softwares and Websites |
- 5 years |
During the period of development, the asset is tested for impairment annually.
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss. when the asset is derecognised.
Raw materials, work in progress, finished goods, process waste and stores and spares are valued at cost or net realizable value, whichever is lower. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and cost necessary to make the sale. The basis of determining cost for various categories of inventories is as follows:
- Raw materials: moving weighted average cost *-Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
- Work in progress: cost of raw materials plus conversion cost depending upon the stage of completion. Cost is determined on a moving weighted average basis except for work-inprogress inventory of towel and sheeting divisions for which cost is determined on a monthly weighted average basis.
- Finished goods (including stock in transit): cost of raw materials plus conversion cost and packing cost. Cost is determined on a moving weighted average basis except for finished goods inventory of towel and sheeting divisions for which cost is determined on a monthly weighted average basis.
- Process waste is valued at net realizable value.
- Stores and spares: moving weighted average cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
* Includes by products which is valued at net realizable value
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
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 the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if available, and if no such transactions can be identified an appropriate valuation model is used.
The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Company''s CGU''s to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long term growth rate is calculated and applied to projected future cash flows after the fifth year.
Impairment losses, including impairment on inventories, are recognized in the statement of profit and loss.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit and loss.
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker. Chief Operating Decision Maker review the performance of the Company
according to the nature of products manufactured with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the locations of customers.
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
⢠Leasehold land 30 to 99 years
⢠Office premises and guest 5 to 20 years houses
⢠Factory premises (including 10 years
plant & equipment)
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (K) Impairment of non-financial assets.
At the commencement date of the lease, the Company recognises lease liabilities measured at the present
value of lease payments to be made over the lease term. The lease payments are fixed payments.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Company''s lease liabilities are disclosed separately in the balance sheet (see Note 41).
The Company applies the short-term lease recognition exemption to its short-term leases except in case of lease contracts with related parties since there exist economic incentive for the Company to continue using the leased premises for a period longer than the 11 months and considering the contract is with the related parties, it does not foresee non-renewal of the lease term for future periods, thus basis the substance and economics of the arrangements, management believes that under Ind AS 116, the lease terms in the arrangements with related parties have been determined considering the period for which management has an economic incentive to use the leased asset (i.e. reasonable certain to use the asset for the said period of economic incentive). Such assessment of incremental period is based on management assessment of various factors including the remaining useful life of the asset as on the date of transition. The management has assessed period of arrangements with related parties as 10 years as at April 01, 2019. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Leases in which the Company does not transfer
substantially all the risks and rewards of ownership of an
asset are classified as operating leases. Rental income
from operating lease is recognised on a straight-line
basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
Provisions
A provision is recognised when the Company has a present obligation (legal or constructive) 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 are determined based on the best estimate required to settle the obligation at the balance sheet date and measured using the present value of cash flows estimated to settle the present obligations (when the effect of time value of money is material). These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Onerous contracts
If the Company has a contract that is onerous, the present obligation under the contract is recognised and measured as a provision. However, before a separate provision for an onerous contract is established, the Company recognises any impairment loss that has occurred on assets dedicated to that contract.
An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Company cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it.
Contingent liabilities
A 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 enterprise. Contingent liabilities are disclosed by way of note to the standalone Ind AS financial statements.
Contingent Assets
A contingent asset is a possible asset that arises from past events the existence of which will be confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the enterprise.
Contingent assets are neither recognised nor disclosed in the standalone Ind AS financial statements.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are âsolely payments of principal and interest (SPPI)'' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed statement of profit and loss. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement
Subsequent measurement of financial assets depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. For the purposes of subsequent measurement, financial assets are classified in four categories:
- Financial assets at amortised cost (debt instruments)
- Financial assets at fair value through other comprehensive income (FVTOCI) with
recycling of cumulative gains and losses (debt instruments)
- Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments); and
- Financial assets at fair value through profit or loss
A ''financial asset'' is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss.
Financial assets at FVTOCI (debt instrument)
A âfinancial asset'' is classified as at the FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The asset''s contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to the statement of profit and
loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
In the case of equity instruments which are not held for trading and where the Company has taken irrevocable election to present the subsequent changes in fair value in other comprehensive income, these elected investments are initially measured at fair value plus transaction costs and 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 âEquity instruments through other comprehensive income'' under the head âOther Equity''. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments. The Company makes such election on an instrument -by-instrument basis.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
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.
Gains and losses on these financial assets are never recycled to statement of profit and loss. Dividends are recognised as other income in the statement of profit and loss when the right of payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.
Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognised in the statement of profit and loss.
In case of equity instruments which are held for trading are initially measured at fair value plus transaction costs and subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in statement of profit and loss.
This category includes derivative instruments and listed equity investments which the Company had not irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are recognised in the statement of profit and loss when the right of payment has been established.
Investment in Subsidiaries and Associates is carried at deemed cost in the separate financial statements.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, trade receivables and other contractual rights to receive cash or other financial asset.
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 (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that 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.
For trade receivables, the Company follows "simplified approach for recognition of impairment loss. The application of simplified approach does not require the Company to track changes in credit risk.
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 forwardlooking information.
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The
Company''s financial liabilities include trade and other payables, loans and borrowings including derivative financial instruments.
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss (FVTPL) include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109 âFinancial instruments''.
Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in statement of profit and loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss. This category generally applies to borrowings.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another financial liability from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
Financial assets and financial liabilities are offset and the net amount is reported in the balance
sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
Treasury shares are reduced while computing basic and diluted earnings per share.
Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
Derivative financial instruments and hedge accounting
The Company uses derivative financial instruments such as foreign currency forward contracts and option currency contracts to hedge its foreign currency risks arising from highly probable forecast transactions. The counterparty for these contracts is generally a bank.
This category has derivative assets or liabilities which are not designated as hedges.
Although the Company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109. Any derivative that is either not designated a hedge, or is so designated but is ineffective, is recognized on balance sheet and measured initially at fair value. Subsequent to initial recognition, derivatives are re-measured at fair value, with changes in fair value being recognized in the statement of profit and loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
The derivatives that are designated as hedging instrument under Ind AS 109 to mitigate risk arising out of foreign currency transactions are accounted for as cash flow hedges. The Company enters into hedging instruments in accordance with policies as approved by the Board of Directors with written principles which is consistent with the risk management strategy of the Company.
The hedge instruments are designated and documented as hedges at the inception of the contract. The effectiveness of hedge instruments is assessed and measured at inception and on an ongoing basis.
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in OCI, e.g., cash flow hedging reserve and accumulated in the cash flow hedging reserve. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in the statement of profit and loss. The amount accumulated is retained in cash flow hedge reserve and reclassified to profit or loss in the same period or periods during which the hedged item affects the statement of profit and loss. Under fair value hedge, the change in the fair value of a hedging instrument is recognized in the statement of profit and loss. The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognized in the statement of profit and loss.
If the hedging instrument no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument is terminated or exercised prior to its maturity/ contractual term, the cumulative gain or loss on the hedging instrument recognized in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the forecasted transaction occurs. The cumulative gain or loss previously recognized in the cash flow hedging reserve is reclassified to the Statement of Profit and Loss upon the occurrence of the related forecasted transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified immediately in the statement of profit and loss.
The Company measures financial instruments, such as, derivatives at fair value at each reporting date. Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the standalone Ind AS financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1- Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2-Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3-Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the standalone Ind AS financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Company''s management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for disposal in discontinued operation.
External valuers are involved for valuation of significant assets, such as properties and unquoted financial assets, and significant liabilities, such as contingent consideration, if any.
At each reporting date, the management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company''s accounting policies. For this analysis, the management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The management, in conjunction with the Company''s external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fai
Mar 31, 2021
NOTE 1- CORPORATE INFORMATION
Trident Limited (âthe Company") is a public company domiciled in India and incorporated on April 18, 1990 under the provisions of the Companies Act, 1956. The name of the Company was changed from Abhishek Industries Limited to Trident Limited on April 18, 2011. The equity shares of the Company are listed on two stock exchanges in India i.e. National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). The debt securities of the Company are also listed on BSE. The Company is engaged in manufacturing, trading and selling of Textiles (Yarn, Terry Towels & Bedsheets) and Paper & Chemicals.
The registered office of the Company is situated at Sanghera, India. The principal activities of the Company are described in Note 38. These standalone Ind AS financial statements were approved for issuance by the Board of Directors of the Company in their meeting held on May 15, 2021.
NOTE 2.1- SIGNIFICANT ACCOUNTING POLICIES A. Statement of compliance
The standalone Ind AS financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013 (IND AS compliant Schedule III), to the extent applicable.
Basis of preparation and presentation
The standalone Ind AS financial statements
have been prepared under the historical cost convention on accrual basis except for following assets and liabilities which have been measured at fair value:
1. Derivative financial instruments
2. Certain financial assets and liabilities
measured at fair value (refer accounting policy regarding financial instruments in
Note O)
3. Defined benefit plans - plan assets are
measured at fair value
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The standalone Ind AS financial statements of the Company are presented in Indian Rupee (T) and all values are rounded to the nearest million with one decimal place ('' 000,000), except when otherwise indicated.
New and amended standards and interpretations
The Ministry of Corporate Affairs (âMCA") has carried out amendments to the following accounting standards. The effect on adoption of following mentioned amendments had no impact on the standalone Ind AS financial statements of the Company. The Company has not early adopted any standards or amendments that have been issued but are not yet effective.
(i) Ind AS 116: Covid-19-Related Rent Concessions
(ii) Ind AS 103: Business Combinations
(iii) Ind AS 1 and Ind AS 8: Definition of Material
(iv) Ind AS 107 and Ind AS 109: Interest Rate Benchmark Reform
MCA issued notification dated March 24, 2021 to amend Schedule III to the Companies Act, 2013 to enhance the disclosures required to be made by a company in its financial statements. These amendments are effective for financial years starting on or after April 01, 2021.
Ministry of Corporate Affairs (MCA) has amended Section 135 of the Companies Act 2013 vide The Companies (Amendment) Act 2020, wherein a proviso has been added to Sub-Section (5) of Section 135 which states that if a company spends an amount in excess of the requirements provided under the said Sub-Section, a company may set off such excess amount against the requirement to spend under the said sub-section up to immediate succeeding three financial years.
Accordingly, the Company has availed the option to carry forward the excess amount spent of '' 16.0 million for the succeeding financial years and presented the same as asset in the standalone Ind AS financial statements.
Revenue from contracts with customers is recognised when control of the goods is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally
concluded that it is the principal in its revenue arrangements because it typically controls the goods before transferring them to the customer.
Revenue from sale of products is recognised at the point in time when control of the asset is transferred to the customer. Amounts disclosed as revenue are net of returns and allowances, trade discounts and rebates. The Company collects Goods & Service Tax (GST) on behalf of the government and therefore, these are not economic benefits flowing to the Company. Hence, these are excluded from the revenue.
Variable consideration includes trade discounts, volume rebates and incentives, etc. The Company estimates the variable consideration with respect to above based on an analysis of accumulated historical experience. The Company adjusts estimate of revenue at the earlier of when the most likely amount of consideration we expect to receive changes or when the consideration becomes fixed.
The revenue in respect of duty drawback and similar other export benefits (Refer Note C) is recognized on post export basis at the rate at which the entitlements accrue and is included in the ''sale of products''.
For all debt instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Dividend on financial assets is recognised when the Company''s right to receive the 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.
Insurance claims are recognised when there exists no significant uncertainty with regards to the amounts to be realized and the ultimate collection thereof.
Contract balances - Trade receivables A trade receivable is recognised if the amount of consideration is unconditional (i.e., only the passage of time is required before payment of the consideration is due). Refer to accounting policies of financial assets in section - Financial instruments - initial recognition and subsequent measurement.
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, the government grant related to asset is presented by deducting the grant in arriving at the carrying amount of the asset.
Borrowing costs include interest and amortisation of ancillary costs incurred in relation to borrowings. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction/development of the qualifying asset upto the date of capitalisation of such asset are added to the cost of the assets. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.
Interest revenue earned on the temporary investment of specific borrowings for qualifying assets pending their expenditure, is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in statement of profit and loss in the period in which they are incurred.
Income tax expense comprises current income tax and deferred tax.
Current tax expense for the year is ascertained on the basis of assessable profits computed in accordance with the provisions of the Income Tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Deferred tax is recognised using the liability method on temporary differences between the carrying amounts of assets and liabilities in the standalone Ind AS financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets are generally recognised for all deductible temporary differences, the carry forward of unused tax credits and unused tax losses to the extent that it 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 (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
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 realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Current and deferred tax are recognised in 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. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The Company shall reflect the effect
of uncertainty for each uncertain tax treatment by using either most likely method or expected value method, depending on which method predicts better resolution of the treatment.
The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority.
F Retirement and Employee benefits
The Company has schemes of employees benefits such as Provident fund, Gratuity and Compensated absences, which are dealt with as under:
Provident fund is the defined contribution scheme. The contribution to this scheme is charged to statement of profit and loss of the year in which contribution to such scheme become due and when services are rendered by the employees. The Company has no obligation other than the contribution payable to the provident fund. If the contribution payable to the scheme for services received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
Gratuity liability in respect of employees of the Company is covered through trusts'' gratuity schemes managed by Life Insurance Corporation of India, SBI Life Insurance Company Limited, Kotak Mahindra and Bajaj Allianz. The cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date by an independent valuer. Remeasurement gains and losses are recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to statement of profit and loss. Past service cost is recognised in statement of profit and loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
⢠re-measurement
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised on an undiscounted accrual basis during the year when the employees render the services. These benefits i nclude performance i ncenti ve and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related services.
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. 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. The Company presents the entire leave liability as current liability, since it does not have an unconditional right to defer its settlement for 12 months after the reporting period.
G Property, Plant and Equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses (if any). Freehold land is not depreciated and have been measured at fair value at the date of transition i.e. April 01, 2015 to Ind AS. The Company regards the fair value as deemed cost at the transition date.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment
loss. Property, plant and equipment except freehold land acquired before the date of transition to Ind AS is carried at cost net of accumulated depreciation and accumulated impairment losses if any. Freehold land acquired before the date of transition to Ind AS are carried at deemed cost being fair value as at the date of transition to Ind AS. Cost comprises of its purchase price including non-refundable duties and taxes and excluding any trade discount and rebates and any directly attributable costs of bringing the asset to it working condition and location for its intended use. Cost also includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Company''s accounting policy (refer note 2.1 (D)). Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets commences when the assets are ready for their intended use.
Subsequent expenditure related to an item of PPE is capitalised only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably. Such cost includes the cost of replacing part of the plant and equipment. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
Gains or losses arising from derecognition of the assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
H Depreciation on tangible assets
Depreciable amount for assets is the cost (net of amount received towards government grant) of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation on tangible property, plant and equipment has been provided on the straightline method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated
technological changes, manufacturers warranties and maintenance support, etc.:
As per management estimate |
As per schedule ii |
|
General plant and equipment on triple shift basis |
- 9.5 years |
- 7.5 years |
End user devices, such as, desktops, laptops, etc (included under Computers) |
- 5 years |
- 3 years |
Servers and networks (included under Computers) |
- 5 years |
- 6 years |
Office equipment |
- 10 years |
- 5 years |
Vehicles |
- 6 years |
- 8 years |
Tube wells and water reservoirs |
- 10 years |
- 5 years |
Boundary Walls |
-20 years |
-30 years |
Roads |
- 10 years |
- 5 years |
Leasehold improvements are depreciated over the remaining lease period.
Foreign exchange gains/losses capitalised in earlier years as a part of PPE are depreciated over the remaining useful life of the asset to which it relates.
When parts of an item of Property, plant & equipment have different useful life, they are accounted for as separate items (Major components) and are depreciated over the useful life of part or the parent asset to which it relates, whichever is lower.
When significant spare parts, stand-by equipment and servicing equipment have useful life of more than one period, they are accounted for as separate items and are depreciated over the useful life of such item or the parent asset to which it relates, whichever is lower.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets with finite lives are amortised on a straight line basis over the estimated useful economic life. The estimated useful life and amortisation method are reviewed at the end of each reporting period.
Development expenditures on an individual project are recognised as an intangible asset when the Company can demonstrate:
⢠The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
⢠I ts intention to complete and its ability and intention to use or sell the asset
⢠How the asset will generate future economic benefits
⢠The availability of resources to complete the asset
⢠The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. Amortisation expense is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
I ntangible assets are amortised on the straightline method as per the useful life assessed based on expected future benefit, taking into account the nature of the asset and the estimated usage of the asset:
As per management estimate |
|
SAP ECC 6 licences |
- 10 years |
SAP Hana licences |
- 5 years |
Other softwares |
- 5 years |
During the period of development, the asset is tested for impairment annually.
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss, when the asset is derecognised.
Raw materials, work in progress, finished goods, process waste and stores and spares are valued at cost or net realizable value, whichever is lower.
Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and cost necessary to make the sale. The basis of determining cost for various categories of inventories is as follows:
- Raw materials: moving weighted average cost*- Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
- Work in progress: cost of raw materials plus conversion cost depending upon the stage of completion. Cost is determined on a moving weighted average basis
- Finished goods (including stock in transit): cost of raw materials plus conversion cost and packing cost. Cost is determined on a moving weighted average basis except for finished goods inventory of towel division for which cost is determined on a yearly weighted average basis.
- Process waste is valued at net realizable value
- Stores and spares: moving weighted average cost - Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
* Includes by products which is valued at net realizable value
K impairment of Non Financial Assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
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 the risks specific to the asset. In determining
fair value less costs of disposal, recent market transactions are taken into account, if available, and if no such transactions can be identified an appropriate valuation model is used.
The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Company''s CGU''s to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long term growth rate is calculated and applied to projected future cash flows after the fifth year.
Impairment losses, including impairment on inventories, are recognized in the statement of profit and loss.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit and loss.
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker. Chief Operating Decision Maker review the performance of the Company according to the nature of products manufactured with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the locations of customers.
The Company assesses at contract inception whether a contract is, or contains, a tease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, as follows:
Leasehold land |
30 to 99 years |
Office premises and guest |
5 to 20 years |
houses |
|
Factory premises (including |
10 years |
plant & equipment) |
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (K) Impairment of non-financial assets.
At the commencement da te of the lea se, the Company recognises lease liabilities mea su red a t the present va lu e of lea se payments to be made over the lease term. The lease payments are fixed payments.
I n ca lcu lati ng the present va lu e of lea se payments, the Company uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.
The Company''s lease liabilities are disclosed separately in the balance sheet (see Note 39).
iii) Short-term leases and leases of low-value assets
The Company applies the short-term lea se recognition exemption to its short-term leases except in case of lease contracts with related parties since there exist economic incentive for the Company to continue using the leased premises for a period longer than the 11 months and considering the contract is with the related parties, it does not foresee non-renewal of the lease term for future periods, thus basis the substance and economics of the arrangements, management believes that under Ind AS 116, the lease terms in the arrangements with related parties have been determined considering the period for which mana gement has a n economic incentive to use the leased asset (i.e. reasonable certain to use the asset for the said period of economic incentive). Such assessment of incremental period is based on management assessment of various factors including the remaining useful life of the asset as on the date of transition. The management has assessed period of arrangements with related parties as 10 years as at April 01, 2019. Lease payments on short-term leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are
classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
N provisions, contingent liabilities and contingent assets Provisions
A provision is recognised when the Company has a present obligation (legal or constructive) 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 are determined based on the best estimate required to settle the obligation at the balance sheet date and measured using the present value of cash flows estimated to settle the present obligations (when the effect of time value of money is material). These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
If the Company has a contract that is onerous, the present obligation under the contract is recognised and measured as a provision. However, before a separate provision for an onerous contract is established, the Company recognises any impairment loss that has occurred on assets dedicated to that contract.
An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Company cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it.
A contingent liability is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the enterprise. Contingent liabilities are disclosed by way of note to the standalone Ind AS financial statements.
A contingent asset is a possible asset that arises from past events the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the enterprise.
Contingent assets are neither recognised nor disclosed in the standalone Ind AS financial statements.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(a) Financial assets
initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.
I n order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ''solely payments of principal and interest (SPPI)'' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed statement of profit and loss. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset.
Subsequent measurement of financial assets depends on the Company''s business model for managing the asset and the cash flow characteristics of the asset. For the
purposes of subsequent measurement, financial assets are classified in four categories:
- Financial assets at amortised cost (debt instruments)
- Financial assets at fair value through other comprehensive income (FvTOCI) with recycling of cumulative gains and losses (debt instruments)
- Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments); and
- Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
A ''financial asset'' is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss.
Financial assets at FVTOCI (debt instrument)
A ''financial asset'' is classified as at the FvTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The asset''s contractual cash flows represent SPPI.
Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to the statement of profit and loss. Interest earned whilst holding FvTOCI debt instrument is reported as interest income using the EIR method.
Financial assets designated at fair value through OCI (equity instruments)
In the case of equity instruments which are not held for trading and where the Company has taken irrevocable election to present the subsequent changes in fair value in other comprehensive income, these elected investments are initially measured at fair value plus transaction costs and 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 ''Equity instruments through other comprehensive income'' under the head ''Other Equity''. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments. The Company makes such election on an instrument -by-instrument basis.
I f the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
A financial asset is held for trading if:
⢠I t 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
⢠I t is a derivative that is not designated
and effective as a hedging instrument or a financial guarantee.
Gains and losses on these financial assets are never recycled to statement of profit and loss. Dividends are recognised as other income in the statement of profit and loss when the right of payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.
Financial assets at FVTPL (equity instruments)
Financial assets at fair value through profit or loss are carried in the balance sheet at fair value with net changes in fair value recognised in the statement of profit and loss.
In case of equity instruments which are held for trading are initially measured at fair value plus transaction costs and subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in statement of profit and loss.
This category includes derivative instruments and listed equity investments which the Company had not irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are recognised in the statement of profit and loss when the right of payment has been established.
Investment in Subsidiaries and Associates
Investment in Subsidiaries and Associates is carried at deemed cost in the separate financial statements.
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset
or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets
The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, trade receivables and other contractual rights to receive cash or other financial asset.
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 (i.e. all cash shortfalls), discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that 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 lifetime 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.
For trade receivables, the Company follows âsimplified approach for recognition of impairment loss. The application of simplified approach does not require the Company to track changes in credit risk.
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 forwardlooking information.
(b) Financial liabilities
Initial recognition and measurement
Fina nci al lia biliti es are classi fied, at initia l recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, loans and borrowings including derivative financial instruments.
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss (FvTPL) include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FvTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109 ''Financial instruments''.
Gains or losses on liabilities held for trading are recognised in the statement of profit and loss.
Financial liabilities at amortised cost (Loans and borrowings)
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in statement of profit and loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss. This category generally applies to borrowings.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another financial liability from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
Treasury shares are reduced while computing basic and diluted earnings per share.
Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
R Derivative financial instruments and hedge accounting
Derivative financial instruments and hedge accounting
The Company uses derivative financial instruments such as foreign currency forward contracts and option currency contracts to hedge its foreign currency risks arising from highly probable forecast transactions. The counterparty for these contracts is generally a bank.
Derivatives not designated as hedging instruments
This category has derivative assets or liabilities which are not designated as hedges.
Although the Company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109. Any derivative that is either not designated a hedge, or is so designated but is ineffective, is recognized on balance sheet and measured initially at fair value. Subsequent to initial recognition, derivatives are re-measured at fair value, with changes in fair value being recognized in the statement of profit and loss. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
The derivatives that are designated as hedging instrument under Ind AS 109 to mitigate risk arising out of foreign currency transactions are accounted for as cash flow hedges. The Company enters into hedging instruments in accordance with policies as approved by the Board of Directors with written principles which is consistent with the risk management strategy of the Company.
The hedge instruments are designated and documented as hedges at the inception of the contract. The effectiveness of hedge instruments is assessed and measured at inception and on an ongoing basis.
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in OCI, e.g., cash flow hedging reserve and accumulated in the cash flow hedging reserve. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in the statement of profit and loss. The amount accumulated is retained in cash flow hedge reserve and reclassified to profit or loss in the sa me period or periods d uring which the hedged item affects the statement of profit and loss. Under fair value hedge, the change in the fair value of a hedging instrument is recognized in the statement of profit and loss. The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognized in the statement of profit and loss.
If the hedging instrument no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument is terminated orexercised prior to its maturity/ contractual term, the cumulative gain or loss on the hedging instrument recognized in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the forecasted transaction occurs. The cumulative gain or loss previously recognized in the cash flow hedging reserve is reclassified to the Statement of Profit and Loss upon the occurrence of the related forecasted transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified immediately in the statement of profit and loss.
The Company measures financial instruments, such as, derivatives at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- I n the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the standalone Ind AS financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1- Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2-valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3-valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the standalone Ind AS financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Company''s management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for disposal in discontinued operation.
External valuers are involved for valuation of significant assets, such as properties and unquoted financial assets, and significant liabilities, such as contingent consideration, if any.
At each reporting date, the management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Company''s accounting policies. For this analysis, the management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.
The management, in conjunction with the Company''s external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Company has determined cl
Mar 31, 2018
NOTE 1 - CORPORATE INFORMATION
Trident Limited (âthe Companyâ) is a public company domiciled in India and incorporated on April 18,1990 under the provisions of the Companies Act, 1956. The name of the Company was changed from Abhishek Industries Limited to Trident Limited on April 18, 2011. The equity shares of the Company are listed on two stock exchanges in India i.e. National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). The Company is engaged in manufacturing, trading and selling of Textiles (Yarn, Terry Towels, Bedsheets), Paper and Chemicals.
The address of its registered office and principal place of business are disclosed in the introduction to the annual report. The principal activities of the Company are described in Note40. These financial statements were authorised for issuance by the Board of Directors of the Company in their meeting held on May 7,2018.
NOTE 2.1 - SIGNIFICANTACCOUNTING POLICIES A Statement of compliance
The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.
Basis of preparation and presentation The financial statements have been prepared under the historical cost convention on accrual basis except for following assets and liabilities which have been measured at fair value:
1. Derivative financial instruments
2. Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments in NoteO).
3. Defined benefit plans - plan assets are measured at fair value
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. The financial statements of the Company are presented in Indian Rupee (Rs,) and all values are rounded to the nearest million with one decimal place (Rs, 000,000), except when otherwise indicated.
Changes in accounting policies and disclosures New and amended standards and interpretations
TheCompany applied for thefirsttimecertain amendments to the standards, which are effective for annual periods beginning on or after April 1, 2017. The nature and the impact of each amendment is described below:
Amendments to Ind AS 7 Statement of Cash Flows: Disclosure Initiative
The amendments require entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and noncash changes (such as foreign exchange gains or losses). The Company has provided the information for both the current and the comparative period in Cash flow statement. Amendments to Ind AS 102 Classification and Measurement of Share-based Payment Transactions The amendments to Ind AS 102 Share-based Payment addresses three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding tax obligations; and accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash settled to equity settled.
On adoption, entities are required to apply the amendments without restating prior periods, but retrospective application is permitted if elected for all three amendments and other criteria are met. The Company applied these amendments without restating prior periods. However, their application has no effect on the Companyâs financial position and performance as the Company had no such transaction.
B Revenue recognition
Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government. The following specific criteria must also be met before revenue is recognised.
Sale of products
Revenue in respect of sale of products is recognised when the significant risks and rewards of ownership of the goods are passed on to the buyer. Amounts disclosed as revenue are inclusive of excise duty and net of returns and allowances, trade discounts and rebates. The Company has assumed that recovery of excise duty flows to the Company on its own account. This is 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. Since the recovery of excise duty flows to the Company on its own account, revenue includes excise duty. The Company collects sales tax, value added tax (âVATâ) and Goods & Service Tax (GST) on behalf of the government and therefore, these are not economic benefits flowing to the Company. Hence, these are excluded from the revenue. The revenue in respect of duty drawback and similar other export benefits is recognized on post export basis at the rate at which the entitlements accrue and is included in the âsale of productsâ
Interest Income
For all debt instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected I if e of th e financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.
Dividend income
Dividend on financial assets at FVTPL is recognised when the Companyâs right to receive the 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.
Other income
Insurance claims are recognised when there exists no significant uncertainty with regard to the amounts to be realized and the ultimate collection thereof.
C Government grants/subsidies
Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in the statement of profit or loss on a systematic basis over the periods in which the Company recognises as expenses the related costs for which the grants are intended to com pen sate. Specifically, Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in balance sheet and transferred to statement of profit or loss on a systematic and rational basis over the useful lives of the related assets and is netted off from the related expenses. Subsidy from government in the form of refund of taxes are recognised on accrual basis when there is reasonable assurance that the Company will comply with the conditions attaching to them and that the subsidy will be received.
D Borrowing costs
Borrowing costs include interest and amortisation of ancillary costs incurred in relation to borrowings. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construct ion/development of the qualifying asset unto the date of capitalisation of such asset are added to the cost of the assets. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs. Interest revenue earned on the temporary investment of specific borrowings for qualifying assets pending their expenditure, is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in statement of profit and loss in the period in which they are incurred.
E Income taxes
Income tax expense comprises current income tax and deferred tax.
Current tax expense for the year is ascertained on the basis of assessable profits computed in accordance with the provisions of the Income-tax Act, 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Deferred tax is recognised using the liability method on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets are generally recognised for all deductible temporary differences, the carry forward of unused tax credits and unused tax losses to the extent that it 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 (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The Company is entitled to a tax holiday under the income-tax Act, 1961 enacted in India, no deferred tax (asset or liability) is recognized in respect of temporary differences which reverse during the tax holiday period, to the extent the concerned entityâs gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of temporary differences which reverse after the tax holiday period is recognized in the year in which the temporary differences originate. However, the Company restricts recognition of deferred tax assets to the extent it is probable that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the temporary differences which originate first are considered to reverse first.
Minimum Alternate Tax (MAT) paid as current tax expense in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability,
i s con s i dered a s tax c red it and recognised a s deferred tax a sset when there is reasonable certainty that the Company will pay normal income tax in the future years and future economic benefit associated with it will flow to the Company.
Thecarryingamountofd ef er redtaxassetsisrevi ewed at th e 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 realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Current and deferred tax are recogn ised in 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 d irectly in equ ity respectively. Deferred tax assets and deferred tax liabilities are off-set if a legally enforceable right exists to set off current tax assets aga instcurrenttaxliabilitiesandthedefer red taxes relates to the same taxable entity and the same taxation authority.
F Retirement and Employee benefits
The Company has various schemes of employees benefits such as Provident fund, Gratuity and Compensated absences, which are dealt with as under:
Defined Contribution
Provident fund is the defined contribution scheme. The contribution to this scheme is charged to statement of profit and loss of the year in which contribution to such scheme become due and when services are rendered by the employees. The Company has no obligation other than the contribution payable to the provident fund. If the contribution payable to the scheme for services received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.
Defined Benefit plan
The gratuity liability in respect of employees of the Company is covered through trustsâgroup gratuity schemes managed by Life Insurance Corporation of India, SBI Life Insurance Company Limited, Kotak Mahindra and Bajaj Allianz. The cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date by an independent valuer. Re measurement gains and losses are recognised in other comprehensive income in the period in which they occur. Re measurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to statement of profit or loss. Past service cost is recognised in statement of profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate atthebeginningoftheperiodtothenetdefined benefitliabilityorasset. Def i ned be nef it costs a re catego r i sed as follows:
- service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- net interest expense or income; and
- remeasurement 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 on an undiscounted accrual basis during the year when the employees render the services. 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 services.
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. 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. The Company presents the entire leave liability as current liability, since it does not have an unconditional right to defer its settlement for 12 months after the reporting period.
G Property,Plant and Equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses (if any). Freehold land is not depreciated and have been measured at fair value at the date of transition to Ind AS. The Company regards the fair value as deemed cost at the transition date, viz., April 01, 2016.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognised impairment loss. Property, plant and equipment except freehold land is carried at cost net of accumulated depreciation and accumulated impairment losses if any. Freehold land are carried at deemed cost being fair value as at the date of transition to Ind AS (April 01, 2015). Cost comprises of its purchase price including non refundable duties and taxes and excluding any trade discount and rebates and any directly attributable costs of bringing the asset to it working condition and location for its intended use. Cost also includes professional fees and, for qualifying assets, borrowing costs capitalised in accordance with the Companyâs accounting policy (refer note 2.1 (D)). Such properties are classified to the appropriate categories of pro perty, p la n t a nd eq u i p me nt whe n co m p leted a n d ready for intended use. Depreciation of these assets commences when the assets are ready for their intended use.
Subsequent expenditure related to an item of PPE is capitalised only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably Such cost includes the cost of replacing part of the plant and equipment. When significant parts of plant and equipment are required to be replaced at intervals, the Company depreciates them separately based on their specific useful lives.
Gains or losses arising from DE recognition of the assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
H Depreciation on tangible assets
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation on tangible property, plant and equipment has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.:
Leasehold improvements are depreciated over the remaining lease period.
When parts of an item of Property, plant & equipment have different useful life, they are accounted for as separate items (Major components) and are depreciated over the useful life of part or the parent asset to which it relates, whichever is lower. When significant spare parts, stand-by equipment and servicing equipment have useful life of more than one period, they are accounted for as separate items and are depreciated over the useful life of such item or the parent asset to which it relates, whichever is lower.
I Intangible assets Intangible assets acquired separately
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets with finite lives are amortised on a straight line basis over the estimated useful economic life. The estimated useful life and amortisation method are reviewed at the end of each reporting period.
Development expenditure on an individual project are recognised as an intangible asset when the Group can demonstrate
- The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
- Its intention to complete and its ability and intention to use or sell the asset
- How the asset will generate future economic benefits
- The availability of resources to complete the asset
- The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation expense is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
During the period of development, the asset is tested for impairment annually.
Gains or losses arising from DE recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised.
J Inventories
Raw materials, work in progress, finished goods, process waste and stores and spares are valued at cost or net realizable value, whichever is lower. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and cost necessary to make the sale. The basis of determining cost for various categories of inventories is as follows:
- Raw materials: weighted average cost * - Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
- Work in progress: cost of raw materials plus conversion cost depending upon the stage of completion. Cost is determined on a weighted average basis
- Finished goods (including stock in transit): cost of raw materials plus conversion cost and packing cost. Cost
is determined on a weighted average basis
- Process waste is valued at net realizable value
- Stores and spares: weighted average cost - Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.
- Includes by products which is valued at net realizable value
K Impairment of tangible & intangible assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash-generating unitâs (CGU) fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to the i r p resent values using a p re-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if available, and if no such transactions can be identified an appropriate valuation model is used.
The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Companyâs CGUâs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term growth rate is calculated and applied to projected future cash flows after the fifth year.
Impairment losses, including impairment on inventories, are recognized in the statement of profit and loss.
An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the assetâs or CGUâs recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the assetâs recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit and loss.
L Segment reporting
The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker. Chief Operating Decision Maker review the performance of the Company according to the nature of products manufactured with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the locations of customers.
M Leases
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases.
basis over the relevant lease term other than where the rentals are structured solely to increase in line with expected general inflation to compensate for the increase in lessorâs expected inflationary cost, such increase is recognised in the year in which such benefits accrue. In the event that lease premiums are paid to enter into operating leases, such premiums are recognised as a prepaid expenditure and amortised over the period of lease.
N Provisions, contingent liabilities and contingent assets Provisions
A provision is recognised when the Company has a present obligation (legal or constructive) 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 are determined based on the best estimate required to settle the obligation at the balance sheet date and measured using the present value of cash flows estimated to settle the present obligations (when the effect of time value of money is material). These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Contingent liabilities
A 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 enterprise. Contingent liabilities are disclosed by way of note to the financial statements.
Contingent Assets
A contingent asset is a possible asset that arises from past events the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise. Contingent assets are neither recognised nor disclosed in the financial statements.
0 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity
(a) Financial assets
Initial recognition and measurement All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the Company commits to purchase or sell the asset. Subsequent measurement Debt Instruments-
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. For the purposes of subsequent measurement, debt instruments are classified in three categories:
- Debt instruments at amortised cost;
- Debt instruments at fair value through other comprehensive income (FVTOCI);
- Debt instruments at fair value through profit or loss (FVTPL).
Debt instruments at amortised cost A debt instrument is measured at the amortised cost if both the following conditions are met:
a) The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and
b) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.
Debt instrument at FVTOCI
A âdebt instrumentâ is classified as at the FVTOCI if both of the following criteria are met:
a) The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
b) The assetâs contractual cash flows represent SPPI. Debt instruments included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognized in the other comprehensive income (OCI). However, the Company recognizes interest income, impairment losses & reversals and foreign exchange gain or loss in the statement of profit and loss. On recognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to the statement of profit and loss. Interest earned whilst holding FVTOCI debt instrument is reported as interest income using the EIR method.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorisation as at amortised cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as âaccounting mismatchâ). Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the statement of profit and loss.
Equity Instruments-
For the purposes of subsequent measurement, equity instruments are classified in two categories:
- Equity instruments at fair value through profit or loss (FVTPL)
- Equity instruments measured at fair value through other comprehensive income (FVTOCI)
Equity instruments at fair value through profit or loss (FVTPL)
Incise of equity instruments which are held for trading are initially measured at fair value plus transaction costs and subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in statement of profit and loss.
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. Equity instruments at fair value through Other Comprehensive Income (FVTOCI)
In the case of equity instruments which are not held for trading and where the Company has taken irrevocable election to present the subsequent changes in fair value in other comprehensive income, these elected investments are initially measured at fair value plus transaction costs and 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 theâ Equity instruments through other comprehensive incomeâ under the head âOther Equityâ. The cumulative gain or loss is not reclassified to profit or loss on disposal of the investments. The Company makes such election on an instrument -by-instrument basis.
If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to statement of profit and loss, even on sale of investment. However, the Company may transfer the cumulative gain or loss within equity.
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 effect i ve as a hedging instrument or a financial guarantee.
Investment in Subsidiaries and Associates Investment in Subsidiaries and Associates is carried at deemed cost in the separate financial statements.
DE recognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Impairment of financial assets The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments at FVTOCI, trade receivables and other contractual rights to receive cash or other financial asset.
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 (i.e. all cash shortfalls), discounted at the original effective interest rate (or cred it-adjusted effective interest rate for purchased or originated cred it-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that 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 cred it losses are portion of the life-time expected cred it 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.
For trade receivables, 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.
(b) Financial liabilities
Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Companyâs financial liabilities include trade and other payables, loans and borrowings including derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss (FVTPL) include financial liabilities held for trading and financial liabilities designated upon initial recognition as at FVTPL. Financial liabilities are classified as
held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by Ind AS 109âFinancial instrumentsâ.
Gains or losses on liabilities held for trading are recognised in the profit or loss.
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in statement of profit and loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss. This category generally applies to borrowings.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another financial liability from the same lender on substantially different terms ,or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
P Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
Q Operating cycle
Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
R Derivative financial instruments
The derivative financial instruments i.e. forward exchange contracts 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 statement of profit and loss immediately. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to statement of profit and loss.
S FairValue Measurement
The Company measures financial instruments, such as, derivatives at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transact ion to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2-Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3-Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
The Companyâs management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets measured at fair value, and for non-recurring measurement, such as assets held for disposal in discontinued operation.
External valuers are involved for valuation of significant assets, such as properties and unquoted financial assets, and significant liabilities, such as contingent consideration, if any. At each reporting date, the management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Companyâs accounting policies. For this analysis, the management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents. The management, in conjunction with the Companyâs external valuers, also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. This note summarises accounting policy for fair value. Other fair value related disc losu res a re given in the relevant notes.
T Cash and Cash Equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short term deposits with an original maturity of three months or less, which are subject to an insignificant risk of change in value.
U Dividend to equity holders of the Company
The Company recognises a liability to make dividend distributions to equity holders of the Company when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India a distribution is authorised when it is approved by the shareholders, However, Board of Directors of a company may declare interim dividend during any financial year out of the surplus in statement of profit and loss and out of the profits of the financial year in which such interim dividend is sought to be declared. A corresponding amount is recognised directly in equity.
V Foreign exchange gains and losses
The Companyâs functional and reporting currency is INR (Rs,) Exchange differences are dealt with as follows:
Foreign currency transactions are recorded at the exchange rate that approximates the actual rate at the date of transaction. Monetary items denominated in a foreign currency are reported at the closing rate as at the date of balance sheet. Non-monetary items, which are carried at fair value denominated in foreign currency, are reported at the exchange rate that existed when such values were determined, otherwise on historical exchange rate that existed on the date of transaction.
The exchange difference arising on the settlement of monetary items or on reporting these items at rates different from the rates at which these were initially recorded/ reported in previous financial statements are recognized as income/expense in the period in which they arise. Further, where foreign currency liabilities have been incurred in connection with property, plant and equipment, the exchange differences arising on reinstatement, settlement thereof during the construction period are adjusted in the cost of the concerned property, plant and equipment to the extent of exchange differences arising from foreign currency borrowings are regarded as an adjustment to interest costs in accordance of para 6 (e) as per Ind AS 23.
NOTE 2.2 Standards issued but not yet effective
The amendments to the standards are issued, but not yet effective, upto the date of issuance of the financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.
The Ministry of Corporate affairs (MCA) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and Companies (Indian Accounting Standards) Amendment Rules, 2018 amending the following standard :
(i) IND AS 115 Revenue From Contracts With Customers: INDAS115 was issued on 28th March, 2018 and establishes a five -step model to account for revenue arising from contracts with customers. Under IND AS 115, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
The new revenue standard will supersede all current revenue recognition requirements under IND AS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after April 01, 2018. The Company plans to adopt the new standard on the required effective date using the modified retrospective method.
The Company is in the process of making an assessment of the impact of IND AS 115 upon initial recognition, which is subject to c hanges ar i s i ng from more deta i led ongo i ng ana lys i s.
(ii) Amendment to existing issued Ind AS
The MCA has also carried out amendments in following accounting standards. These are:
a) Ind AS 21 - The Effects of Changes in Foreign Exchange Rates
b) Ind AS 40 - Investment Property
c) Ind AS 12 - Income Taxes
d) Ind AS 28 - Investments in Associates and Joint Ventures and
e) Ind AS 112 - Disclosure of Interests in Other Entities Application of above standards are not expected to have any significant impact on the Companyâs financial statements.
Mar 31, 2017
CORPORATE INFORMATION
Trident Limited ("the Company") is a public Company domiciled in India and incorporated on April 18, 1990 under the provisions of the Companies Act, 1956. The name of the Company was changed from Abhishek Industries Limited to Trident Limited on April 18, 2011. The equity shares of the Company are listed on two stock exchanges in India i.e. National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). The Company is engaged in manufacturing, trading and selling of Textiles (Yarn, Terry Towels, Bedsheets], Paper, Chemicals and IT enabled and business related services.
The address of its registered office and principal place of business are disclosed in the introduction to the annual report. The principal activities of the Company are described in Note 41.
NOTE-2
2.1 Significant accounting policies A Statement of Compliance
The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Companies Act, 2013 read with the rule 3 of the Companies (Indian Accounting Standards) Rules, 2015.
Basis of Preparation and Presentation
The financial statements have been prepared under the historical cost convention on accrual basis except for certain financial instrument which are measured at fair value as explained in Note 2.1 (S). Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
The Company has adopted all the Ind AS standards and the adoption was carried out in accordance with Ind AS 101 First Time adoption of Indian Accounting Standards. Upto the year ended March 31, 2016 the Company prepared its financial statement in accordance with the requirement of previous GAAP which includes standards notified under Company (Accounting Standards) Rules, 2006. These are Companyâs first Ind AS financial statements. The date of transition to Ind AS is April 1, 2015. The details of optional exemptions and certain exceptions availed on first time adoption are mentioned in Note 2.2.
B Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated sale returns, trade discounts and other similar allowances.
Sale of products
Revenue is recognized at the time of transfer of all significant risks and rewards of ownership to the buyer and when the Company does not retain effective control on the transferred goods to a degree usually associated with ownership and cost has been incurred and it is probable that the economic benefit will flow to the Company and the amount of revenue can be measured reliably.
The revenue in respect of duty drawback and similar other export benefits is recognized on post export basis at the rate at which the entitlements accrue and is included in the sale of products''.
Rendering of Services
Revenue from sale of IT enabled annual maintenance contracts services is recognized on time proportion basis. Revenue from job charges is recognized when services are rendered and where no significant uncertainty exists regarding the collection of amount of consideration.
Other Income
Insurance claims are recognized when there exists no significant uncertainty with regard to the amounts to be realized and the ultimate collection thereof.
C Government grants/subsidies
Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received.
Government grants are recognized in profit or loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognized as deferred revenue in balance sheet and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets and is netted off from the related expenses.
D Borrowing costs
Borrowing costs include interest and amortization of ancillary costs incurred in relation to borrowing, etc. 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 upto the date of capitalization of such asset are added to the cost of the assets. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
Interest revenue earned on the temporary investment of specific borrowings for qualifying assets pending their expenditure, is deducted from the borrowing costs eligible for capitalization.
All other borrowing costs are recognized in statement of profit and loss in the period in which they are incurred.
E Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax expense for the year is ascertained on the basis of assessable profits computed in accordance with the provisions of the Income-tax Act, 1961.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Minimum Alternate Tax (MAT) paid as current tax expense in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as tax credit and recognized as deferred tax asset when there is reasonable certainty that the Company will pay normal income tax in the future years and future economic benefit associated with it will flow to the Company.
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 realised, based on tax rates (and tax laws] that have been enacted or substantively enacted by the end of the reporting period.
Current and deferred tax are recognized in 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.
F Employee benefits
The Company has various schemes of employees benefits such as provident fund, Employees State Insurance Corporation (ES 1C], gratuity and compensated absences, which are dealt with as under:
Defined Contribution
Provident fund and Employees State Insurance Corporation (ESIC] are the defined contribution schemes offered by the Company. The contribution to these schemes are charged to statement of profit and loss of the year in which contribution to such schemes become due and when services are rendered by the employees.
Defined Benefit plan
The gratuity liability in respect of employees of the Company is covered through trustsâ group gratuity schemes managed by Life Insurance Corporation of India, SBI Life Insurance Company Limited, Kotak Mahindra and Bajaj Allianz. The cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date by an independent valuer. Actuarial gains and losses are recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognized in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorized as follows:
- Service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
- Net interest expense or income; and
- Remeasurement 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 on an undiscounted accrual basis during the year when the employees render the services. 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 services.
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. 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.
G Property, Plant and Equipment
Land and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at cost less accumulated depreciation and accumulated impairment losses (if any). Freehold land is not depreciated.
Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalized in accordance with the Companyâs accounting policy refer note 2.1(D). Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Other items of property plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
H Depreciation on tangible assets
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.
Depreciation on tangible property, plant and equipment has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.:
General plant and machinery on triple shift basis - 9.5 years
Computers including servers, network and end user devices - 5 years
Office equipments -10 years
Vehicles -6 years
Leasehold improvements - over the term of lease period
When parts of an item of Property, plant & equipment have different useful life, they are accounted for as separate items (Major components) and are depreciated over the useful life respectively.
When items such as spare parts, stand-by equipment and servicing equipment have useful life of more than one period, they are accounted for as separate items and are depreciated over the useful life respectively.
I Intangible assets
Intangible assets acquired separately
Intangible assets that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization is recognized on a 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.
J Inventories
Raw materials, stores and spares, stock in trade, work in progress and finished goods are valued at cost or net realizable value, whichever is lower. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and cost necessary to make the sale. The basis of determining cost for various categories of inventories is as follows:
- Raw materials: weighted average cost
- Work in progress: cost of raw materials plus conversion cost depending upon the stage of completion
- Finished goods (including stock in transit): cost of raw materials plus conversion cost, packing cost and excise duty
- Stores and spares: weighted average cost K Impairment of tangible & intangible assets
The carrying values of tangible and intangible assets 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.
L 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 chief operating decision maker in deciding how to allocate resources and in assessing performance.
M Leases
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as operating leases.
Rental expense from operating leases is generally recognized on a straight-line basis over the relevant lease term other than where the rentals are structured solely to increase in line with expected general inflation to compensate for the increase in less orâs expected inflationary cost, such increase is recognized in the year in which such benefits accrue. In the event that lease premiums are paid to enter into operating leases, such premiums are recognized as a prepaid expenditure and amortized over the period of lease.
N Provisions and contingent liabilities
A provision is recognized when the Company has a present obligation (legal or constructive) 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 are determined based on the best estimate required to settle the obligation at the balance sheet date and measured using the present value of cash flows estimated to settle the present obligations (when the effect of time value of money is material). These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the notes.
0 Financial instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.
(i) Initial Recognition
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit and loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit and loss are recognized immediately in profit and loss.
(ii) Subsequent measurement
(a) Financial assets
(1) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
(2) Investments in equity instruments at FVTOCI
In the case of equity instruments which are not held for trading and where the Company has taken irrevocable election to present the subsequent changes in fair value in other comprehensive income, these elected investments are initially measured at fair value plus transaction costs and 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 âEquity instruments through other comprehensive incomeâ under the head âOther Equity''. 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.
Dividends on these investments in equity instruments are recognized in profit and loss when the Companyâs right to receive the 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 recognized in profit and loss are included in the âOther incomeâ line item.
(3) Financial assets at fair value through profit or 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 0 (2) above]
Debt instruments that do not meet the amortized cost criteria or FVTOCI criteria (see above] are measured at FVTPL. In addition, debt instruments that meet the amortized cost criteria or the FVTOCI criteria but are designated as at FVTPL are measured at FVTPL.
A financial asset that meets the amortized cost criteria or debt instruments that meet the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases. The Company has not designated any debt instrument as at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognized in statements of profit or loss. The net gain or loss recognized in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the âOther incomeâ line item. Dividend on financial assets at FVTPL is recognized when the Company''s right to receive the 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.
(b) 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 paid or received that form an integral part of the effective interest rate, transaction costs and other premiums 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 profit or loss and is included in the "Other incomeâ line item.
(c) Impairment of financial assets
The Company applies the expected credit loss model for recognizing impairment loss on financial assets measured at amortized cost, debt instruments at FVTOCI, trade receivables and other contractual rights to receive cash or other financial asset.
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 (i.e. all cash shortfalls], discounted at the original effective interest rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired financial assets). The Company estimates cash flows by considering all contractual terms of the financial instrument (for example, prepayment, extension, call and similar options) through the expected life of that 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.
For trade receivables, 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.
(d) Foreign exchange gains and losses
The Company''s functional and reporting currency is Exchange differences are dealt with as follows:
Foreign currency transactions are recorded at the exchange rate notified by the customs for invoice purpose. Monetary items denominated in a foreign currency are reported at the closing rate as at the date of balance sheet. Non-monetary items, which are carried at fair value denominated in foreign currency, are reported at the exchange rate that existed when such values were determined, otherwise on historical exchange rate that existed on the date of transaction.
The exchange difference arising on the settlement of monetary items or on reporting these items at rates different from the rates at which these were initially recorded/re ported in previous financial statements are recognized as income/expense in the period in which they arise. Further, where foreign currency liabilities have been incurred in connection with property, plant and equipment the exchange differences arising on reinstatement, settlement thereof during the construction period are adjusted in the cost of the concerned property, plant and equipment to the extent of exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs in accordance of para 6 (e) as per Ind AS 23.
Mar 31, 2016
Trident Limited ("the Company") is a public company domiciled in India and incorporated on April 18, 1990 under the provisions of the Companies Act, 1956. The name of the Company was changed from Abhishek Industries Limited to Trident Limited on April 18, 2011. The equity shares of the Company are listed on two stock exchanges in India i.e. National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). The Company is engaged in manufacturing, trading and selling of Textiles (Yarn, Terry towels, Bedsheets), Paper, Chemicals and IT enabled and business related services.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES_
A Accounting convention
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 (AS) specified under Section 133 of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.
B Use of estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known/materialize.
C Revenue recognition
Revenue is recognized at the time of transfer of all significant risks and rewards of ownership to the buyer and when the Company does not retain effective control of goods transferred to a degree usually associated with ownership i.e. at the point of dispatch of finished goods to the customers.
Revenue from sale of IT enabled annual maintenance contracts services is recognized on time proportion basis. Revenue from job charges is recognized when services are rendered and where no significant uncertainty exists regarding the collection of amount of consideration.
The revenue in respect of duty drawback and similar other export benefits is recognized on post export basis at the rate at which the entitlements accrue and is included in the ''sale of products''.
Insurance claims are recognized when there exists no significant uncertainty with regard to the amounts to be realized and the ultimate collection thereof.
D Borrowing costs
Borrowing costs include interest and amortization of ancillary costs incurred in relation to borrowing, etc. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction/development of the qualifying asset up to the date of capitalization of such asset are added to the cost of the assets. Qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
E Government grants/subsidies
Government grants and subsidies are recognized when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants/subsidy will be received. Government grants, whose primary condition is that the Company should purchase, construct or otherwise acquire capital assets are presented as capital grant under "Reserves and surplus". The capital grant so received is recognized in the Statement of Profit and Loss on a systematic basis by way of allocation in the proportion in which depreciation on those assets is charged and as a deduction from the depreciation expense for the year.
F Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of assessable profits computed 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 highly probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognized, subject to the consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originates in one period and are capable of reversal in one or more subsequent periods. In respect of carry forward of losses and unabsorbed depreciation, deferred tax assets are recognized based on virtual certainty that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date.
G Employee benefits
The Company has various schemes of employees benefits such as provident fund, employees state insurance corporation (ESIC),
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (contd.)_ gratuity and compensated absences, which are dealt with as under:
Provident fund and Employees State Insurance Corporation (ESIC) are the defined contribution schemes offered by the Company. The contribution to these schemes are charged to statement of profit and loss of the year in which contribution to such schemes become due and when services are rendered by the employees.
The gratuity liability in respect of employees of the Company is covered through trusts'' group gratuity schemes managed by Life Insurance Corporation of India, SBI Life Insurance Company Limited and Bajaj Allianz. The cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date by an independent value. Actuarial gains and losses are recognized in the statement of profit and loss in the period in which they occur.
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 on an undiscounted accrual basis during the year when the employees render the services. 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 services.
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. 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.
H Fixed assets
Fixed assets are stated at cost (net of CENVAT) less accumulated depreciation and impairment losses, if any. Cost of acquisition is inclusive of freight, duties, taxes and other incidental expenses and interest on loan taken for the acquisition of qualifying assets up to the date the assets is ready for its intended use.
The Company has adopted the provisions of para 46/46A of AS 11 "The Effects of Changes in Foreign Exchange Rates", accordingly, the exchange differences arising after April 1, 2007 on reinstatement/settlement of long term foreign currency borrowings 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.
I Depreciation/amortization
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.:
General plant and machinery on triple shift basis - 9.5 years
Computers including servers, network and end user devices - 5 years
Office equipments -10 years
Vehicles -6 years
Leasehold land is amortized over the duration of the lease.
The intangible asset (software) is amortized over the period of software license or estimated useful life thereof, whichever is less.
J Investments
Long-term investments are carried at cost less provision, if any, for diminution in value which is other than temporary. Current investments are carried at lower of cost and fair value.
K Inventories
Raw materials, stores and spares, work in progress and finished goods are valued at cost or net realizable value, whichever is lower. The basis of determining cost for various categories of inventories is as follows:
- Raw materials : weighted average cost
- Work in progress : cost of raw materials plus conversion cost depending upon the stage of completion
- Finished goods : cost of raw materials plus conversion cost, packing cost and excise duty
- Stores and spares : weighted average cost L Foreign currency transactions
Exchange differences are dealt with as follows:
Foreign currency transactions are recorded at the exchange rate notified by the customs for invoice purpose.
Monetary items denominated in a foreign currency are reported at the closing rate as at the date of balance sheet. Non-monetary items, which are carried at fair value denominated in foreign currency, are reported at the exchange rate that existed when such values were determined, otherwise on historical exchange rate that existed on the date of transaction.
The exchange difference arising on the settlement of monetary items or on reporting these items at rates different from the rates at which these were initially recorded/reported in previous financial statements are recognized as income/expense in the period in which they arise. Further, where foreign currency liabilities have been incurred in connection with fixed assets, the exchange differences arising on reinstatement, settlement thereof during the construction period are adjusted in the cost of the concerned fixed assets.
In case of forward exchange contracts (other than for the fixed assets), the premium or discount arising at the inception of such contracts is amortized as income or expense over the life of the contract. Further, exchange difference on such contracts i.e. difference between the exchange rate at the reporting/settlement date and the exchange rate on the date of inception of contract/the last reporting date, is recognized as income/expense for the period. Further, where such contracts have been entered in connection with long term loans taken for fixed assets, the exchange differences are adjusted in the cost of concerned fixed assets.
M 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.
N 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.
O Employee share-based payments
The Company has constituted Employee Stock Option Plans - 2007, 2009 and 2015. Employee stock options granted are accounted under the ''Intrinsic Value Method'' stated in the guidance note on employee share based payments issued by the Institute of Chartered Accountants of India.
P Leases
Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the less or are recognized as operating leases. Lease rentals under operating leases are recognized in the statement of profit and loss.
Q Provisions and contingent liabilities
A provision is recognized when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the notes.
R Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.
For calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
S Operating cycle
Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.
T Derivative Contracts
The derivative contracts i.e forward cover contacts 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.
U Material events
Material events occurring after the balance sheet date are taken into cognizance in accordance with the principles laid down in AS 4 "Contingencies and events occurring after the balance sheet date".
(b) (i) Rights, preferences and restrictions attached to the equity shareholders:
The Company has one class of equity shares having par value of Rs,10 per share. Each shareholder is eligible for one vote per equity share held. In the event of liquidation of the Company, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
(b) (ii) Rights, preferences and restrictions attached to the preference shareholders:
6% Non-convertible, Cumulative, Redeemable Unlisted Preference Shares (NCCRPS)
The Company has one class of preference shares having par value of Rs,10 per share. The holders of Preference Shares shall have a right to vote only on resolutions which directly affect their rights. The holders of Preference Shares shall also have a right to vote on every resolution placed before the Company at any meeting of the equity shareholders if dividend or any part of the dividend has remained unpaid on the said Preference Shares for an aggregate period of at least two years preceding the date of the meeting. NCCRPS are redeemable at par within 20 years from the date of allotment subject to the exercise of put and call option at the end of every year from the date of allotment. In the event of liquidation of the Company, NCCRPS shall be entitled to rank, as regards payment of Capital, in priority to the equity shares and the participation in surplus funds shall be limited to the arrears of dividend or unpaid dividend and redemption of NCCRP Shares.
Term loans
Term loans from banks and financial institutions are secured by way of equitable mortgage created or to be created on all the present and future immovable properties including all land, buildings, structures, all plant and machinery attached thereon of the Company and hypothecation of all the movable properties including movable machinery, spares, tools and accessories, etc., present and future, subject to prior charges created and / or to be created in favor of the Company''s bankers on stocks of raw materials, semi finished and finished goods, consumable stores and other movable, as may be required for working capital requirements in the ordinary course of business. The mortgages and charges referred to above rank pari-passu among the lenders (refer note 41 A for repayment terms).
With respect to the term loans from banks obtained by erstwhile Trident Corporation Limited (the Amalgamating Company), amalgamated with the Company with effect from the appointed date i.e. April 1, 2014, the same are secured by way of equitable mortgage created on the immovable properties including all buildings, structures, plant and machinery attached thereon and hypothecation of all the movable properties including movable machinery, spares, tools and accessories stocks of raw materials, semi finished goods, consumable stores and other moveableâs of the Amalgamating Company, as existing immediately prior to the amalgamation of the Amalgamating Company with the Company, (refer note 41 B for repayment terms).
Vehicles loans
Vehicle loans are secured by hypothecation of vehicles acquired against such loans (refer C for repayment terms).
For the current maturities of long-term borrowings, refer note 9 - other current liabilities.
Mar 31, 2015
A Accounting convention
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, read with Rule 7 of the
Companies (Accounts) Rules, 2014 and the relevant provisions of the
Companies Act, 2013 ("the 2013 Act") / Companies Act, 1956 ("the 1956
Act"), as applicable. The financial statements have been prepared on
accrual basis under the historical cost convention. The accounting
policies adopted in the preparation of the financial statements are
consistent with those followed in the previous year.
B Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known/materialise.
C Revenue recognition
Revenue is recognized at the time of transfer of all significant risks
and rewards of ownership to the buyer and when the Company does not
retain effective control of goods transferred to a degree usually
associated with ownership, i.e., at the point of dispatch of finished
goods to the customers.
Revenue from sale of IT enabled annual maintenance contracts services
is recognized on time proportion basis. Revenue from job charges is
recognized when services are rendered and where no significant
uncertainty exists regarding the collection of amount of consideration.
The revenue in respect of duty drawback and similar other export
benefits is recognized on post export basis at the rate at which the
entitlements accrue and is included in the ''sale of products''.
Insurance claims are recognised when there exists no significant
uncertainty with regard to the amounts to be realized and the ultimate
collection thereof.
D Borrowing costs
Borrowing costs include interest and amortisation of ancillary costs
incurred in relation to borrowing, etc. Borrowing costs, allocated to
and utilised for qualifying assets, pertaining to the period from
commencement of activities relating to construction/development of the
qualifying asset upto the date of capitalisation of such asset are
added to the cost of the assets. Qualifying asset is one that
necessarily takes substantial period of time to get ready for its
intended use.
E Government grants/subsidies
Government grants and subsidies are recognized when there is reasonable
assurance that the Company will comply with the conditions attached to
them and the grants/subsidy will be received. Government grants whose
primary condition is that the Company should purchase, construct or
otherwise acquire capital assets are presented by deducting them from
the carrying value of the assets. The grant is recognized as income
over the life of a depreciable asset by way of a reduced depreciation
charge. Government grants with respect to Technology Upgradation Fund
(TUF) subsidy is deducted from related finance costs.
F Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of
assessable profits computed 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 highly
probable that future economic benefit associated with it will flow to
the Company.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. In respect of carry forward
of losses and unabsorbed depreciation, deferred tax assets are
recognized based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax asset can be
realized. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date.
G Employee benefits
The Company has various schemes of employees benefits such as provident
fund, employees state insurance corporation (ESIC), gratuity and
compensated absences, which are dealt with as under:
Provident fund and employees state insurance corporation (ESIC) are the
defined contribution schemes offered by the Company. The contribution to
these schemes are charged to statement of profit and loss of the year in
which contribution to such schemes become due and when services are
rendered by the employees.
The gratuity liability in respect of employees of the Company is
covered through trusts'' group gratuity schemes managed by Life
Insurance Corporation of India, SBI Life Insurance Company Limited,
ICICI Prudential Life Insurance, Bajaj Allianz and PNB Metlife India
Insurance Company Limited. The cost of providing benefits is determined
using the projected unit credit method, with actuarial valuations being
carried out at each balance sheet date by an independent valuer.
Actuarial gains and losses are recognised in the statement of profit
and loss in the period in which they occur.
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
on an undiscounted accrual basis 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. 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.
H Fixed assets
Fixed assets are stated at cost (net of CENVAT) less accumulated
depreciation and impairment losses, if any. Cost of acquisition is
inclusive of freight, duties, taxes and other incidental expenses and
interest on loan taken for the acquisition of qualifying assets up to
the date the assets is ready for its intended use.
The Company has adopted the provisions of para 46/46A of AS 11 "The
Effects of Changes in Foreign Exchange Rates", accordingly, the
exchange differences arising after April 1, 2007 on
reinstatement/settlement of long term foreign currency borrowings
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.
I Depreciation/amortization
Depreciable amount for assets is the cost of an asset, or other amount
substituted for cost, less its estimated residual value.
Depreciation on tangible fixed assets has been provided on the
straight-line method as per the useful life prescribed in Schedule II
to the Companies Act, 2013 except in respect of the following
categories of assets, in whose case the life of the assets has been
assessed as under based on technical advice, taking into account the
nature of the asset, the estimated usage of the asset, the operating
conditions of the asset, past history of replacement, anticipated
technological changes, manufacturers warranties and maintenance
support, etc.:
General plant and machinery on triple shift basis - 9.5 years
Computers including servers, network and end
user devices - 5 years
Office equipments - 10 years
Vehicles - 6 years
Leasehold land is amortised over the duration of the lease.
The intangible asset (software) is amortised over the period of software
license or 5 years, whichever is less.
J Investments
Long-term investments are carried at cost less provision, if any, for
diminution in value which is other than temporary. Current investments
are carried at lower of cost and fair value.
K Inventories
Raw materials, stores and spares, finished goods and work in progress
are valued at cost or net realizable value, whichever is lower. The
basis of determining cost for various categories of inventories is as
follows:
* Raw materials : weighted average cost
* Work in progress : cost of raw materials plus conversion cost
depending upon the stage of completion
* Finished goods : cost of raw materials plus conversion cost, packing
cost and excise duty
* Stores and spares : weighted average cost
L Foreign currency transactions
Exchange differences are dealt with as follows:
Foreign currency transactions are recorded at the exchange rate
notified by the customs for invoice purposes.
Monetary items denominated in a foreign currency are reported at the
closing rate as at the date of balance sheet. Non-monetary items, which
are carried at fair value denominated in foreign currency, are reported
at the exchange rate that existed when such values were determined,
otherwise on historical exchange rate that existed on the date of
transaction.
The exchange difference arising on the settlement of monetary items or
on reporting these items at rates different from the rates at which
these were initially recorded/reported in previous financial statements
are recognized as income/expense in the period in which they arise.
Further, where foreign currency liabilities have been incurred in
connection with fixed assets, the exchange differences arising on
reinstatement/settlement thereof during the construction period are
adjusted in the cost of the concerned fixed assets.
In case of forward exchange contracts (other than for the fixed
assets), the premium or discount arising at the inception of such
contracts is amortized as income or expense over the life of the
contract. Further, exchange difference on such contracts i.e.
difference between the exchange rate at the reporting/settlement date
and the exchange rate on the date of inception of contract/the last
reporting date, is recognized as income/expense for the period.
Further, where such contracts have been entered in connection with
fixed assets, the exchange differences arising during construction
period are adjusted in the cost of concerned fixed assets.
M 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.
N 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.
O Employee share-based payments
The Company has constituted Employee Stock Option Plans - 2007 and
2009. Employee stock options granted are accounted under the ''Intrinsic
Value Method'' stated in the guidance note on employee share based
payments issued by the Institute of Chartered Accountants of India.
P Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the statement of profit and loss.
Q Provisions and contingent liabilities
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 are not discounted to their
present value and are determined based on the best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates. Contingent liabilities are disclosed in the notes.
R Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For calculating diluted earnings per share, the net profit or loss for
the year attributable to equity shareholders and the weighted average
number of shares outstanding during the year are adjusted for the
effects of all dilutive potential equity shares.
S Operating cycle
Based on the nature of products/activities of the Company and the
normal time between acquisition of assets and their realisation in cash
or cash equivalents, the Company has determined its operating cycle as
12 months for the purpose of classification of its assets and
liabilities as current and non-current.
T Derivative Contracts
The derivative contracts i.e forward cover contacts are
marked-to-market and losses are recognized in the statement of profit
and loss other than forward cover contracts entered in relation to
fixed assets. Gains arising on the same are not recognized until
realized on grounds of prudence.
U Material events
Material events occurring after the balance sheet date which provides
evidence of condition that existed as on balance sheet date, are taken
into cognizance in accordance with the principles laid down in AS 4
"Contingencies and events occurring after the balance sheet date".
Mar 31, 2014
A Accounting convention
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
September 13, 2013 read with General Circular 08/2014 dated April 04,
2014 of the Ministry of Corporate Affairs] and the relevant provisions
of the 1956 Act/2013 Act, as applicable. The financial statements have
been prepared on accrual basis under the historical cost convention.
The accounting policies adopted in the preparation of the financial
statements are consistent with those followed in the previous year.
B Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known/materialise.
C Revenue recognition
Revenue is recognized at the time of transfer of all significant risks
and rewards of ownership to the buyer and when the Company does not
retain effective control of goods transferred to a degree usually
associated with ownership, i.e., at the point of dispatch of finished
goods to the customers.
Revenue from sale of IT enabled annual maintenance contracts services
is recognized on time proportion basis. Revenue from job charges is
recognized when services are rendered and where no significant
uncertainty exists regarding the collection of amount of consideration.
The revenue in respect of duty drawback and similar other export
benefits is recognized on post export basis at the rate at which the
entitlements accrue and is included in the revenue from operations.
Insurance claims are recognised when there exists no significant
uncertainty with regard to the amounts to be realized and the ultimate
collection thereof.
D 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. Borrowing costs, allocated to and utilised for
qualifying assets, pertaining to the period from commencement of
activities relating to construction/development of the qualifying asset
upto the date of capitalisation of such asset are added to the cost of
the assets. Qualifying asset is one that necessarily takes substantial
period of time to get ready for its intended use.
E Government grants/subsidies
Government grants and subsidies are recognized when there is reasonable
assurance that the Company will comply with the conditions attached to
them and the grants/subsidy will be received. Government grants whose
primary condition is that the Company should purchase, construct or
otherwise acquire capital assets are presented by deducting them from
the carrying value of the assets. The grant is recognized as income
over the life of a depreciable asset by way of a reduced depreciation
charge. Government grants with respect to Technology Upgradation Fund
(TUF) subsidy is deducted from related finance costs.
F Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of
assessable profits computed 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 highly
probable that future economic benefit associated with it will flow to
the Company. Deferred tax is recognized, subject to the consideration
of prudence, on timing differences, being the difference between
taxable income and accounting income that originates in one period and
are capable of reversal in one or more subsequent periods. In respect
of carry forward of losses and unabsorbed depreciation, deferred tax
assets are recognized based on virtual certainty that sufficient future
taxable income will be available against which such deferred tax asset
can be realized. Deferred tax is measured using the tax rates and the
tax laws enacted or substantively enacted as at the reporting date.
G Employee benefits
The Company has various schemes of employees benefits such as provident
fund, employees state insurance corporation (ESIC), gratuity and
compensated absences, which are dealt with as under:
Provident fund and employees state insurance corporation (ESIC) are the
defined contribution schemes offered by the Company. The contribution
to these schemes are charged to statement of profit and loss of the
year in which contribution to such schemes become due and when services
are rendered by the employees.
The gratuity liability in respect of employees of the Company is
covered through trusts'' group gratuity schemes managed by Life
Insurance Corporation of India, SBI Life Insurance Company Limited,
ICICI Prudential Life Insurance and Metlife India Insurance Company
Limited. The cost of providing benefits is determined using the
projected unit credit method, with actuarial valuations being carried
out at each balance sheet date by an independent valuer. Actuarial
gains and losses are recognised in the statement of profit and loss in
the period in which they occur.
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
on an undiscounted accrual basis 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. 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.
H Fixed assets
Fixed assets are stated at cost (net of CENVAT) less accumulated
depreciation and impairment losses, if any. Cost of acquisition is
inclusive of freight, duties, taxes and other incidental expenses and
interest on loan taken for the acquisition of qualifying assets up to
the date the assets is ready for its intended use.
The Company has adopted the provisions of para 46/46A of AS 11 "The
Effects of Changes in Foreign Exchange Rates", accordingly, the
exchange differences arising after April 1, 2007 on
reinstatement/settlement of long term foreign currency borrowings
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.
I Depreciation/amortization
i) Depreciation on fixed assets [other than those referred to in (ii)
to (iv) below] is provided on straight line method in accordance with
Schedule XIV to the Companies Act, 1956.
ii) Assets costing Rs.5,000 or less are fully depreciated in the year
of purchase.
iii) The intangible asset (software) is amortised over the period of
software license or 5 years, whichever is less.
iv) The leasehold land is amortized over the lease term.
J Investments
Long-term investments are carried at cost less provision, if any, for
diminution in value which is other than temporary. Current investments
are carried at lower of cost and fair value.
K Inventories
Raw materials, stores and spares, finished goods and work in process
are valued at cost or net realizable value, whichever is lower. The
basis of determining cost for various categories of inventories is as
follows:
- Raw materials: weighted average cost
- Work in progress: cost of raw materials plus conversion cost
depending upon the stage of completion.
- Finished goods: cost of raw materials plus conversion cost, packing
cost and excise duty.
- Stores and spares: weighted average cost
L Foreign currency transactions
Exchange differences are dealt with as follows:
Foreign currency transactions are recorded at the exchange rate
prevailing as at the date of transactions except export sales which are
recorded at a rate notified by the customs for invoice purposes, such
rate is notified in the last week of the month and is adopted for
recording export sales of the next month.
Monetary items denominated in a foreign currency are reported at the
closing rate as at the date of balance sheet. Non-monetary items, which
are carried at fair value denominated in foreign currency, are reported
at the exchange rate that existed when such values were determined,
otherwise on historical exchange rate that existed on the date of
transaction.
The exchange difference arising on the settlement of monetary items or
on reporting these items at rates different from the rates at which
these were initially recorded/reported in previous financial statements
are recognized as income/expense in the period in which they arise
except that such exchange differences which relate to fixed assets
(Refer H above). Further, where foreign currency liabilities have been
incurred in connection with fixed assets where the exchange difference
during the construction period are adjusted in the cost of the
concerned fixed assets.
In case of forward exchange contracts, the premium or discount arising
at the inception of such contracts is amortized as income or expense
over the life of the contract. Further, exchange difference on such
contracts i.e. difference between the exchange rate at the
reporting/settlement date and the exchange rate on the date of
inception of contract/the last reporting date, is recognized as
income/expense for the period except that such exchange differences
which relate to fixed assets are capitalized in the carrying amount of
these assets. Further, where such contracts have been entered in
connection with fixed assets, the exchange differences arising during
construction period are adjusted in the cost of concerned fixed assets.
M 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.
N Segment reporting
The Company identifies primary segments based on the dominantsource,
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.
O Employee share-based payments
The Company has constituted Employee Stock Option Plans - 2007 and
2009. Employee stock options granted are accounted under the ''Intrinsic
Value Method'' stated in the guidance note on employee share based
payments issued by the Institute of Chartered Accountants of India.
P Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the statement of profit and loss.
Q Provisions and contingent liabilities
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 are not discounted to their
present value and are determined based on the best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates. Contingent liabilities are disclosed in the notes.
R Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For calculating diluted earnings per share, the net profit or loss for
the year attributable to equity shareholders and the weighted average
number of shares outstanding during the year are adjusted for the
effects of all dilutive potential equity shares.
S Operating cycle
Based on the nature of products/activities of the Company and the
normal time between acquisition of assets and their realisation in cash
or cash equivalents, the Company has determined its operating cycle as
12 months for the purpose of classification of its assets and
liabilities as current and non-current.
T Derivative Contracts
The derivative contracts i.e option contacts 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.
U Material events
Material events occurring after the balance sheet date which provides
evidence of condition that existed as on balance sheet date, are taken
into cognizance in accordance with the principles laid down in AS 4
"Contingencies and events occurring after the balance sheet date".
Mar 31, 2013
A Accounting convention
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
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention
B Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognised in the periods in which
the results are known / materialise
C Revenue recognition
Revenue is recognized at the time of transfer of all significant risk
and reward of ownership to the buyer and company do not retain
effective control of goods transferred to a degree usually associated
with ownership i.e., at the point of dispatch of finished goods to the
customers
Revenue from sale of IT enabled annual maintenance contracts services
is recognized on time proportion basis
The revenue in respect of duty entitlement duty drawback and similar
other export benefits are recognized on post export basis at the rate
at which the entitlements accrues and is included in the revenue from
operations nsurance claims are recognised when there exists no
significant uncertainty with regard to the amounts to be realized and
the ultimate collection thereof
D 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. 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. Qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use
E Government grants /subsidies
Government grants and subsidies are recognised when there is reasonable
assurance that the Company will comply with the conditions attached to
them and the grants / subsidy will be received. Government grants whose
primary condition is that the Company should purchase, construct or
otherwise acquire capital assets are presented by deducting them from
the carrying value of the assets. The grant is recognised as income
over the life of a depreciable asset by way of a reduced depreciation
charge. Government grants with respect to TUF subsidy is deducted from
related finance costs and with respect to refundable sales tax is
accounted for on accrual basis as other income
F Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of
assessable profits computed 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 recognized, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. In respect of carry forward
of losses and unabsorbed depreciation, deferred tax assets are
recognized based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax asset can be
realized. Deferred tax is measured using the tax rates and the tax
laws enacted or substantively enacted as at the reporting date
G Employee benefits
The Company has various schemes of employees benefits such as provident
fund, employees state insurance corporation (ESIC), gratuity and
compensated absences which is dealt with as under:
Provident fund and employees state insurance corporation (ESIC) are the
defined contribution schemes offered by the Company. The contribution
to these schemes are charged to statement of profit and loss of the
year in which contribution to such schemes become due
The gratuity liability in respect of employees of the Company is
covered through trusts'' group gratuity schemes managed by Life
Insurance Corporation of India, SBI Life Insurance Company Limited,
ICICI Prudential Life nsurance and Metlife India Insurance Company
Limited 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
Short-term employee benefits
Theundiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognised
on an undiscounted accrual basis 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. 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
H Fixed assets
Fixed assets are stated at cost (net of CENVAT) less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses and interest on loan taken for the
acquisition of qualifying assets up to the date of commissioning of
assets
The Company has adopted the provisions of para 46 / 46A of AS 11 The
Effects of Changes in Foreign Exchange Rates, accordingly, the exchange
differences arising after April 1, 2007 on reinstatement/settlement of
long term foreign currency borrowings 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
I Depreciation/amortization
i) Depreciation on fixed assets [other than those referred to in (ii)
to (iv) below] is provided on straight line method in accordance with
Schedule XIV to the Companies Act, 1956
ii) Assets costing Rs.5,000 or less are fully depreciated in the year of
purchase
iii) The intangible asset (software) is amortised over a period of
software license or 5 year, whichever is less
iv) The leasehold land is amortized over the lease period
J Investments
Long-term investments are carried at cost less provision, if any, for
diminution in value which is other than temporary Current investments
are carried at lower of cost and fair value
K Inventories
Raw materials, stores and spares, finished goods and work in process
are valued at cost or net realizable value, whichever is lower. The
basis of determining cost for various categories of inventories are as
follows:
- Raw materials: weighted average cost
- Work in process: cost of raw materials plus conversion cost depending
upon the stage of completion
- Finished goods: cost of raw materials plus conversion cost, packing
cost and excise duty
- Stores and spares: weighted average cost
L Foreign currency transactions
Exchange differences are dealt with as follows:
Foreign currency transactions are recorded at the exchange rate
prevailing as at the date of transactions except export sales which are
recorded at a rate notified by the customs for invoice purposes, such
rate is notified in the last week of the month and is adopted for
recording export sales of the next month
Monetary items denominated in a foreign currency are reported at the
closing rate as at the date of balance sheet. Non-monetary items, which
are carried at fair value denominated in a foreign currency, are
reported at the exchange rate that existed when such values were
determined, otherwise on historical exchange rate that existed on the
date of transaction
The exchange difference arising on the settlement of monetary items or
on reporting these items at rate different from the rates at which
these were initially recorded/ reported in previous financial
statements are recognized as income/expense in the period in which they
arise except that such exchange differences which relate to fixed
assets (Refer H above). Further, where foreign currency liabilities
have been incurred in connection with fixed assets where the exchange
difference during the construction period are adjusted in the cost of
the concerned fixed assets
In case of forward exchange contracts, the premium or discount arising
at the inception of such contracts is amortized as income or expense
over the life of the contract. Further exchange difference on such
contracts i.e. difference between the exchange rate at the reporting /
settlement date and the exchange rate on the date of inception of
contract / the last reporting date, is recognized as income/expense for
the period except that such exchange difference which relate to fixed
assets are capitalized in the carrying amount of these assets. Further
where such contracts have been entered in connection with fixed assets,
the exchange differences arising during construction period are
adjusted in the cost of concerned fixed assets.
M 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
N 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
O Employee share-based payments
The Company has constituted employee stock option plans - 2007 and
2009. Employee stock options granted are accounted under the Intrinsic
Value Method'' stated in the guidance note on employee share based
payments issued by the Institute of Chartered Accountants of India
P Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the statement of profit and loss.
Q Provisions and contingent liabilities
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 are not discounted to their
present value and are determined based on the best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates. Contingent liabilities are disclosed in the notes
R Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year
For calculating diluted earnings per share, the net profit or loss for
the year attributable to equity shareholders and the weighted average
number of shares outstanding during the year are adjusted for the
effects of all dilutive potential equity shares
S Operating cycle
Based on the nature of products / activities of the Company and the
normal time between acquisition of assets and their realisation in cash
or cash equivalents, the Company has determined its operating cycle as
12 months for the purpose of classification of its assets and
liabilities as current and non-current
T Derivative Contracts
The derivative contracts i.e option 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
U Material events
Material events occurring after the Balance Sheet date are taken into
cognizance
Mar 31, 2012
A. Accounting convention
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
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1 956. The financial
statements have been prepared on accrual basis under the historical
cost convention.
B. Use of estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates are recognized in the periods in which
the results are known / materialize.
C. Revenue recognition
Revenue is recognized at the time of transfer of all significant risk
and reward of ownership to the buyer and company do not retain
effective control of goods transferred to a degree usually associated
with ownership, i.e., at the point of dispatch of finished goods to the
customers. Revenue from sale of IT enabled annual maintenance
contracts services is recognized on time proportion basis.
The revenue in respect of duty entitlement pass book(DEPB) benefit,
duty drawback and similar other benefits are recognized on post export
basis at the rate at which the entitlements accrues and is included in
the revenue from operations.
Insurance claims are recognized when there exists no significant
uncertainty with regard to the amounts to be realized and the ultimate
collection thereof.
D. 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. Borrowing costs, allocated to and utilized for
qualifying assets, pertaining to the period from commencement of
activities relating to construction / development of the qualifying
asset up to the date of capitalization of such asset is added to the
cost of the assets. Qualifying asset is one that necessarily takes
substantial period of time to get ready for its intended use.
E. Government grants / subsidies
Government grants and subsidies are recognized when there is reasonable
assurance that the Company will comply with the conditions attached to
them and the grants / subsidy will be received. Government grants whose
primary condition is that the Company should purchase, construct or
otherwise acquire capital assets are presented by deducting them from
the carrying value of the assets. The grant is recognized as income
over the life of a depreciable asset by way of a reduced depreciation
charge. Government grants with respect to TUF subsidy is deducted from
related finance costs and with respect to refundable sales tax is
accounted for on accrual basis as other income.
F. Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of
assessable profits computed 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, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. In respect of carry forward
of losses and unabsorbed depreciation, deferred tax assets are
recognized based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax asset can be
realized.
G. Employee benefits
The Company has various schemes of employees benefits such as provident
fund, employees state insurance, gratuity and compensated absences,
which is dealt with as under:
Provident fund and employees state insurance are the defined
contribution schemes offered by the Company. The contribution to these
schemes are charged to statement of profit and loss of the year in
which contribution to such schemes become due.
The gratuity liability in respect of employees of the Company is
covered through trusts' group gratuity schemes managed by Life
Insurance Corporation of India, SBI Life Insurance Company Limited,
ICICI Prudential Life Insurance and MetLife India Insurance Company
Limited. 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.
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
on an undiscounted accrual basis 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. The cost
of providing benefits is determined using the projected unit credit
method, with actuarial valuations being carried out at each balance
sheet
Note g SIGNIFICANT ACCOUNTING POLICIES (Contd.)
date. Actuarial gains and losses are recognized in the statement of
profit and loss in the period in which they occur.
H. Fixed assets
Fixed assets are stated at cost (net of CENVAT) less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses and interest on loan taken for the
acquisition of qualifying assets up to the date of commissioning of
assets.
The exchange differences arising after April 1, 2007 on
reinstatement/settlement of long term foreign currency borrowings
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.
I. Depreciation/amortization
i) Depreciation on fixed assets [other than those referred to in (ii)
to (iv) below] is provided on straight line method in accordance with
Schedule XIV to the Companies Act, 1956.
ii) Assets costing Rs. 5,000 or less are fully depreciated in the year
of purchase.
iii) The intangible asset (software) is amortized over a period of
software license or 5 year, whichever is less.
iv) The leasehold land is amortized over the lease period.
J. Investments
Long-term investments are carried at cost less provision, if any, for
diminution in value which is other than temporary. Current investments
are carried at lower of cost and fair value.
K. Inventories
Raw materials, stores and spares, finished goods and work in process
are valued at cost or net realizable value, whichever is lower. The
basis of determining cost for various categories of inventories are as
follows:
- Raw materials: weighted average cost
- Work in process: cost of raw materials plus conversion cost depending
upon the stage of completion.
- Finished goods: cost of raw materials plus conversion cost, packing
cost and excise duty.
- Stores and spares: weighted average cost
L. Foreign currency transactions
Exchange differences are dealt with as follows:
Foreign currency transactions are recorded at the exchange rate
prevailing as at the date of transactions except export sales which are
recorded at a rate notified by the customs for invoice purposes, such
rate is notified in the last week of the month and is adopted for
recording export sales of the next month. The exchange fluctuation
arising on billing through banker is accounted for as difference in
exchange rates. The amount of such differences in exchange rate is
included under turnover.
Monetary items denominated in a foreign currency are reported at the
closing rate as at the date of balance sheet. Non-monetary items, which
are carried at fair value denominated in a foreign currency, are
reported at the exchange rate that existed when such values were
determined, otherwise on historical exchange rate that existed on the
date of transaction.
The exchange difference arising on the settlement of monetary items or
on reporting these items at rate different from the rates at which
these were initially recorded/reported in previous financial statements
are recognized as income/expense in the period in which they arise
except that such exchange differences which relate to fixed assets
(Refer FI above). Further, where foreign currency liabilities have been
incurred in connection with fixed assets where the exchange difference
during the construction period are adjusted in the cost of the
concerned fixed assets.
In case of forward exchange contracts, the premium or discount arising
at the inception of such contracts is amortized as income on expense
over the life of the contract. Further exchange difference on such
contracts i.e. difference between the exchange rate at the reporting /
settlement date and the exchange rate on the date of inception of
contract / the last reporting date, is recognized as income / expense
for the period except that such exchange difference which related to
fixed assets are capitalized in the carrying amount of these assets.
Further, where such contracts have been entered in connection with
fixed assets, the exchange differences arising during construction
period are adjusted in the cost of concerned fixed assets.
M. 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.
N. 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 howto allocate resources and in assessing performance.
O. Employee share-based payments
The Company has constituted employee stock option plans - 2007 and
2009. Employee stock options granted are accounted under the 'Intrinsic
Value Method' stated in the guidance note on employee share based
payments issued by the Institute of Chartered Accountants of India.
P. Leases
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the less or are recognized as
operating leases. Lease rentals under operating leases are recognized
in the statement of profit and loss.
Q. Provisions and contingent liabilities
A provision is recognized when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions are not discounted to their
present value and are determined based on the best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates. Contingent liabilities are disclosed in the notes.
R. Earnings per share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For calculating diluted earnings per share, the net profit or loss for
the year attributable to equity shareholders and the weighted average
number of shares outstanding during the year are adjusted for the
effects of all dilutive potential equity shares.
S. Material events
Material events occurring after the Balance Sheet date are taken into
cognizance.
Mar 31, 2011
A. Accounting convention
The accounts are prepared on accrual basis under the Historical Cost
Convention in accordance with the Accounting Standards referred to in
sub section (3C) of Section 211 of the Companies Act, 1956 and other
relevant presentational 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 assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses for the years presented. Actual results could differ from
those estimates.
C. Revenue recognition
- Revenue is recognized at the time of transfer of all significant risk
and reward of ownership to the buyer and Company do not retain
effective control of goods transferred to a degree usually associated
with ownership.
- The revenue in respect of DEPB benefit and similar other benefits are
recognized on post export basis at the rate at which the entitlement
accrues and is included in the turnover.
- Insurance claims are recognized when there exists no significant
uncertainty with regard to the amounts to be realized and the ultimate
collection thereof.
D. Borrowing costs
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset are capitalized as part of cost of such assets.
Qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use. All other borrowing costs are
recognized as expenses in the period in which they are incurred.
E. Government grants/subsidies
Government grants/subsidies are accrued only on conclusive evidence
that conditions attaching to the grants have been fulfilled and
deducted from the related expenses.
F. Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of
assessable profits computed in accordance with the provisions of the
Income- tax Act, 1961.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. In respect of carry forward
of losses and unabsorbed depreciation, deferred tax assets are
recognized based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax asset can be
realized.
G. Employee benefits
The Company has various schemes of retirement benefits such as
provident fund, gratuity and leave encashment, which is dealt with as
under:
a) Contributions to provident fund are made in accordance with the
provisions of Employee's Provident Fund and Miscellaneous Provisions
Act, 1952 and are charged to revenue every year.
b) The gratuity liability is covered through trusts' group gratuity
schemes managed by Life Insurance Corporation of India, SBI Life
Insurance Company Ltd, ICICI Prudential Life Insurance Company Limited
and Metlife India Insurance Company Limited. The contributions paid to
trusts towards the premium of such group gratuity schemes, is on the
basis of actuarial valuation and is charged to revenue every year.
(Refer note 7 also).
c) Provision for leave encashment (including long term compensated
absences) is made based on actuarial valuation.
Liability attributing to the long-term period of service, comprising
mainly of bonus etc., is recognized on a straight-line basis to the
period of service to which it relates.
Liability on account of short term employee benefits, comprising mainly
compensated absences and performance incentives, is recognized on an
undiscounted accrual basis during the period, when the employee renders
services/ vesting period of the benefit.
H. Fixed assets
Fixed assets are stated at cost (net of CENVAT) less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses and interest on loan taken for the
acquisition of qualifying assets up to the date of commissioning of
assets.
In line with Notification No. G.S.R. 225 (E) dated March 31, 2009 and
subsequent notification dated May 11, 2011 issued by The Ministry of
Corporate Affairs, Government of India, the exchange differences
arising after April 1, 2007 upto March 31, 2012 on reporting of long
term foreign currency monetary items at rates different from those at
which they were initially recorded during the period, or reported in
previous financial statements, in so far as they relate to the
acquisition of a depreciable capital asset, have been added to or
deducted from the cost of the asset and are depreciated over the
balance useful life of the asset. `
I. Depreciation/amortization
i. Depreciation on fixed assets [other than those referred to in (ii)
to (v) below] is provided on straight line method in accordance with
Schedule XIV to the Companies Act 1956.
ii. Assets costing Rs.5,000 or less are fully depreciated in the year
of purchase.
iii. The depreciable amount of intangible asset (software) is
systematically allocated over a period of software license or 5 year,
whichever is less.
iv. The leasehold land is amortized over the lease period.
v. Capital expenditure in respect of assets not owned by the Company
is amortized over the period of five years.
J. Investments
Long-term investments are carried at cost less provision, if any, for
diminution in value which is other than temporary. Current investments
are carried at lower of cost and fair value.
K. Inventories
Raw materials, finished goods and work in process are valued at cost or
net realizable value, whichever is lower. Stores and spares are valued
at cost or under. The cost formulas adopted in respect of inventories
are as under:
à Stores and spares: weighted average cost
à Raw materials: weighted average cost
à Finished goods: cost of raw materials plus conversion cost, packing
cost and excise duty.
à Work in process: cost of raw materials plus conversion cost depending
upon the stage of completion.
L. Foreign currency transactions
i) Foreign currency transactions are recorded at the exchange rate
prevailing as at the date of transactions except export sales which are
recorded at a rate notified by the customs for invoice purposes. Such
rate is notified in the last week of the month and is adopted for
recording export sales of the next month. The exchange fluctuation
arising on billing through banker is accounted for as difference in
exchange rates. The amount of such differences in exchange rate is
included under turnover.
ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. Non-monetary items,
which are carried at fair value denominated in a foreign currency, are
reported at the exchange rate that existed when such values were
determined, otherwise on historical exchange rate that existed on the
date of transaction.
iii) The exchange difference arising on the settlement of monetary
items or on reporting these items at rate different from the rates at
which these were initially recorded/reported in previous financial
statements are recognized as income/expense in the period in which they
arise except that such exchange differences which relate to fixed
assets acquired up to March 31, 2011 are capitalized in the carrying
amount of these assets (Refer H above also). Further, where foreign
currency liabilities have been incurred in connection with fixed assets
where the exchange difference during the construction period are
adjusted in the cost of the concerned assets.
iv) In case of forward exchange contracts, the premium or discount
arising at the inception of such contracts is amortized as income or
expense over the life of the contract. Further exchange difference on
such contracts i.e. difference between the exchange rate at the
reporting / settlement date and the exchange rate on the date of
inception of contract / the last reporting date, is recognized as
income / expense for the period except that such exchange difference
which relate to fixed assets acquired up to March 31, 2011 are
capitalized in the carrying amount of these assets. Further, where such
contracts have been entered in connection with fixed assets, the
exchange differences arising during construction period are adjusted in
the cost of concerned assets.
M. Impairment of assets
At each balance sheet date an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss, i.e., the amount by which the carrying amount of
asset exceeds its recoverable amount is provided in the books of
account.
N. Employee Share-based Payments
Intrinsic Value Method is used to account for share based payments to
employees.
O. Leases
Lease rentals are expensed with reference to lease terms.
P. Earnings per Share
Basic earnings per share are calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
For calculating diluted earnings per share, the net profit or loss for
the year attributable to equity shareholders and the weighted average
number of shares outstanding during the year are adjusted for the
effects of all dilutive potential equity shares.
Q. Material Events
Material events occurring after the Balance Sheet date are taken into
cognisance.
Mar 31, 2010
A. Accounting convention
The accounts are prepared on accrual basis under the Historical Cost
Convention in accordance with the Accounting Standards referred to in
sub section (3C) of Section 211 of the Companies Act, 1956 and other
relevant presentational requirements of the Companies Act, 1956.
B. Revenue recognition
- The revenue in respect of sales is recognized as and when the risk
and reward in the goods is transferred to the buyer.
- The revenue in respect of DEPB benefit and similar other benefits are
recognized on post export basis at the rate at which the entitlement
accrues and is included in the turnover.
- Insurance claims are recognized when there exists no significant
uncertainty with regard to the amounts to be realized and the ultimate
collection thereof.
C. Borrowing costs
Borrowing costs that are attributable to acquisition or construction of
a qualifying asset are capitalized as part of cost of such assets.
Qualifying asset is one that necessarily takes substantial period of
time to get ready for its intended use. All other borrowing costs are
recognized as expenses in the period in which they are incurred.
D. Government grants / subsidies
Government grants/ subsidies are accrued only on conclusive evidence
that conditions attaching to the grants have been fulfilled and
deducted from the related expenses.
E. Accounting for taxes on income
Provision for taxation for the year is ascertained on the basis of
assessable profits computed in accordance with the provisions of the
Income- tax Act, 1961.
Deferred tax is recognized, subject to the consideration of prudence,
on timing differences, being the difference between taxable income and
accounting income that originates in one period and are capable of
reversal in one or more subsequent periods. In respect of carry forward
of losses and unabsorbed depreciation, deferred tax assets are
recognized based on virtual certainty that sufficient future taxable
income will be available against which such deferred tax asset can be
realized.
F. Employee benefits
The Company has various schemes of retirement benefits such as
provident fund, gratuity and leave encashment, which is dealt with as
under:
a) Contributions to provident fund are made in accordance with the
provisions of EmployeeÃs Provident Fund and Miscellaneous Provisions
Act, 1952 and are charged to revenue every year.
b) The gratuity liability in respect of employees of the Company is
covered through trustsà group gratuity schemes managed by Life
Insurance Corporation of India and SBI Life Insurance Company Ltd. The
contributions paid to trusts towards the premium of such group gratuity
schemes are charged to revenue every year. (Refer note 7 also).
c) Provision for leave encashment (including long term compensated
absences) is made based on actuarial valuation.
Liability attributing to the long-term period of service, comprising
mainly of bonus etc., is recognized on a straight-line basis to the
period of service to which it relates.
Liability on account of short term employee benefits, comprising mainly
compensated absences and performance incentives, is recognized on an
undiscounted accrual basis during the period when the employee renders
services/ vesting period of the benefit.
G. Fixed assets
Fixed assets are stated at cost (net of CENVAT) less accumulated
depreciation. Cost of acquisition is inclusive of freight, duties,
taxes and other incidental expenses and interest on loan taken for the
acquisition of qualifying assets up to the date of commissioning of
assets.
In line with Notification No. G.S.R. 225 (E) dated March 31, 2009
issued by The Ministry of Corporate Affairs, Government of India, the
exchange differences arising after April 1, 2007 on reporting of long
term foreign currency monetary items at rates different from those at
which they were initially recorded during the period, or reported in
previous financial statements, in so far as they relate to the
acquisition of a depreciable capital asset, have been added to or
deducted from the cost of the asset and shall be depreciated over the
balance useful life of the asset.
H. Depreciation/amortization
i. Depreciation on fixed assets [other than those referred to in (ii)
to (v) below] is provided on straight line method in accordance with
Schedule XIV to the Companies Act 1956, except in case of one of the
Co-generation and Recovery Plants, in respect of which higher
depreciation is provided on the basis of technological evaluation of a
Chartered Engineer and ManagementÃs estimate of useful life of these
plants
ii. Assets costing Rs. 5,000 or less are fully depreciated in the year
of purchase.
iii. The depreciable amount of intangible asset is systematically
allocated over its useful life. The software acquired for internal use
is amortized over a period of five years.
iv. The leasehold land is amortized over the lease period.
v. Capital Expenditure in respect of assets not owned by the Company
is amortized over the period of five years.
I. Investments
Long-term investments are carried at cost less provision, if any, for
diminution in value which is other than temporary. Current investments
are carried at lower of cost and fair value.
J. Inventories
Raw materials, finished goods and work in process are valued at cost or
net realisable value, whichever is lower. Stores and spares are valued
at cost or under. The cost formulas adopted in respect of inventories
are as under:
- Stores and spares: weighted average cost
- Raw materials: weighted average cost
- Finished goods: cost of raw materials plus conversion cost, packing
cost and excise duty.
- Work in process: cost of raw materials plus conversion cost depending
upon the stage of completion.
K. Foreign currency transactions
i) Foreign currency transactions are recorded at the exchange rate
prevailing as at the date of transactions except export sales which are
recorded at a rate notified by the customs for invoice purposes. Such
rate is notified in the last week of the month and is adopted for
recording export sales of the next month. The exchange fluctuation
arising on billing through banker is accounted for as difference in
exchange rates. The amount of such differences in exchange rate is
included under turnover.
ii) Monetary items denominated in a foreign currency are reported at
the closing rate as at the date of balance sheet. Non-monetary items,
which are carried at fair value denominated in a foreign currency, are
reported at the exchange rate that existed when such values were
determined, otherwise on historical exchange rate that existed on the
date of transaction.
iii) The exchange difference arising on the settlement of monetary
items or on reporting these items at rate different from the rates at
which these were initially recorded/reported in previous financial
statements are recognized as income/expense in the period in which they
arise except that such exchange differences which relate to fixed
assets acquired up to March 31,2004 and after April 1, 2007 are
capitalised in the carrying amount of these assets and those exchange
difference which relate to fixed assets acquired from outside India
during April 1, 2004 to March 31, 2007 have been capitalized till March
31, 2007. Further, where foreign currency liabilities have been
incurred in connection with fixed assets where the exchange difference
during the construction period are adjusted in the cost of the
concerned assets.
iv) In case of forward exchange contracts, the premium or discount
arising at the inception of such contracts is amortized as income or
expense over the life of the contract. Further exchange difference on
such contracts i.e. difference between the exchange rate at the
reporting / settlement date and the exchange rate on the date of
inception of contract / the last reporting date, is recognized as
income / expense for the period except that such exchange difference
which relate to fixed assets acquired up to March 31, 2004 and after
April 1, 2007 are capitalized in the carrying amount of these assets
and those exchange differences which relate to fixed assets acquired
from outside India during April 1,2004 to March 31,2007 have been
capitalised till March 31, 2007. Further where such contracts have been
entered in connection with fixed assets, the exchange differences
arising during construction period are adjusted in the cost of
concerned assets.
L. Impairment of assets
At each balance sheet date an assessment is made whether any indication
exists that an asset has been impaired. If any such indication exists,
an impairment loss, i.e., the amount by which the carrying amount of
asset exceeds its recoverable amount is provided in the books of
account.
M. Employee Share-based Payments
Intrinsic Value Method is used to account for share based payments to
employees