Accounting Policies of Vikas WSP Ltd. Company
Mar 31, 2018
Notes to financial statements for the year ended on March 31, 2018
1. Background of the Company
The Company Vikas WSP Limited was established in 1988. The Hindi word "Vikas" means "Development" and WSP Stands for "Water Soluble Polymers". The Company is one of India''s foremost guar gum powder (GGP) manufacturer, supplying to all sectors of the food industry with an extensive range of quality products. Besides food, the company also offers guar gum for technical applications such as pet food, oil drilling, textile printing, mining paper, etc. The Company has its registered office at Railway Road, Siwani, Haryana and its corporate office at Sri Ganganagar, Rajasthan, India.
2. Significant Accounting Policies
2.1 Basis of preparation
(i) Compliance with Ind AS-
The financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act. The financial statements have been prepared on going concern and historical cost basis in accordance with accounting principles generally accepted in India.
2.2 Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. The operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
An asset is treated as current when it is:
- Expected to be realized or intended to be sold or consumed in normal operating cycle of the Company
- Held primarily for the purpose of trading
- Expected to be realized within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period all other assets are classified as non -current.
The Company classifies all other assets as non-current.
A liability is treated as current when:
- It is expected to be settled in normal operating cycle of the Company
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months from the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities (as the case may be).
2.3 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty and net of returns, trade allowances, rebates, goods, and services tax, value added taxes and amounts collected on behalf of third parties.
The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and specific criteria if any has been met.
2.4 Taxes
a) The income tax expense for the year is the tax payable on the current year''s taxable income based on the applicable income tax rate as per the Income tax Act, 1961 adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
b) The current income tax charge is calculated on the basis of the tax laws enacted at the end of the reporting year. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
c) Deferred income tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax
asset are recognized to the extent it is probable that sufficient taxable profit will be available against which such deferred tax can be realized.
d) Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the Company has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
e) Current and deferred tax is recognized in the Statement of profit and loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity and in this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.
f) Minimum Alternative Tax (''MAT'') credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.
2.5 Property, plant and equipment
a) Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the assets incurred up to the date when asset is ready for its intended use. Cost may also include transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
b) Subsequent costs are included in the asset''s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to the Statement of profit and loss during the reporting year in which they are incurred.
c)
d) Depreciation method, estimated useful lives and residual value-
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives or, in the case of certain leased furniture, fittings and equipment, the shorter lease term as follows:
Freehold buildings 25-60 years
Machinery 8-15 years
Furniture, fittings and equipment 8-10 years
The useful lives have been determined based on those specified by Schedule II to the Companies Act; 2013, in order to reflect the actual usage of the assets. The residual values are not more than 5% of the original cost of the asset. The assets'' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting year.
e) An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the Statement of Profit and Loss. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of profit and loss within other gains/ (losses).
2.6 Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Subsequent to initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalized development costs, are not capitalized and the related expenditure is reflected in profit or loss in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or infinite.
The Company does not have any intangible assets with infinite life. Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset
may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
2.7 Leases
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Statement of profit and loss on a straight-line basis over the period of the lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessor''s expected inflationary cost increases.
2.8 Inventories
Raw materials, stores and spares, work in progress, traded and finished goods are stated at the lower of cost and net realizable value.
Cost of raw materials and traded goods comprises cost of purchases. Cost of work-in- progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on weighted average basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
2.9 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. 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. When 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 no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
Impairment losses of continuing operations, including impairment on inventories, are recognized in the statement of profit and loss, except for properties previously revalued with the revaluation surplus taken to OCI. For such properties, the impairment is recognized in OCI up to the amount of any previous revaluation surplus.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the 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 unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.
2.10 Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
2.11 Employee Benefits
(i) Short-term obligations-
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employees'' services up to the end of the reporting year and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
(ii) Post-employment obligations-
The Company operates the following post-employment schemes:
(a) Defined benefit plans such as gratuity; and
(b) Defined contribution plans such as provident fund and Employee State Insurance.
Gratuity obligations (defined benefit)-
A defined benefit plan is a post-employment benefit plan other a defined contribution plan. Gratuity is a post-employment benefit and is in the nature of a defined benefit plan.
Gratuity is a post-employment benefit and is in the nature of a defined benefit plan. The liability recognized in the balance sheet in respect of gratuity is the present value of the defined benefit/obligation at the balance sheet date, together with adjustments for un-recognized actuarial gains or losses and past service costs. The defined benefit/obligation is calculated at or near the balance sheet date by an independent actuary using the projected unit credit method. This is based on standard rates of inflation, salary growth rate and mortality. Discount factors are determined close to each year-end by reference to market yields on government bonds that have terms to maturity approximating the terms of the related liability. Service cost on the Company''s defined benefit plan is included in employee benefits expense. Net interest expense on the net defined benefit liability is included in finance costs. Actuarial gains/losses resulting from remeasurements of the liability are included in other comprehensive income.
Provident fund and Employee State Insurance (Defined contribution plans) -
The Company pays contributions towards provident fund and employee state insurance scheme to publicly administered funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due.
2.12 Financial assets
(i) Classification-
The Company classifies its financial assets in the following measurement categories:
Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and those measured at amortized cost.
The classification depends on the Company''s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income.
(ii) Measurement of financial assets
Financial assets are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method.
(iii) Impairment of financial assets-
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortized cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables.
(iv) Derecognition of financial assets-
A financial asset is derecognized only when:
The Company has transferred the rights to receive cash flows from the financial asset or, retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
Where the Company has transferred an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognized.
2.13 Off-setting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
2.14 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. Accordingly, segmental reporting is performed on the basis of geographical location of customer which is also used by the chief financial decision maker of the company for allocation of available resources and future prospects.
2.15 Cash and cash equivalents
Cash and cash equivalent 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 changes in value.
2.16 Foreign currency translation or transaction
a) Functional and presentation currency:
Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The financial statements are presented in Indian rupee (INR), which is Company''s functional and presentation currency.
b) Transactions and balances:
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognized in statement of profit and loss.
All foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other gains/(losses). Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on nonmonetary assets and liabilities such as equity instruments held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equity investments classified as FVOCI are recognized in other comprehensive income.
2.17 Financial liabilities
Initial recognition and measurement:
All financial liabilities are recognized 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 bank overdrafts and financial guarantee contracts.
Subsequent measurement-
The measurement of financial liabilities depends on their classification, as described below:
(a) Loans and borrowings-
All the borrowings of the Company are short terms in the nature and are in the form of packing credit, bank overdrafts, cash credit limits or foreign documentary bills purchased by the banks. Therefore, the costs at which these liabilities have been initially recognized necessarily reflect the value at which they are likely to be settled.
2.18 Contingencies
Contingent liabilities are possible obligations whose existence will be confirmed only on the occurrence or non-occurrence of uncertain future events outside the Company''s control, or present obligations that are not recognized because of the following: (a) It is not probable that an outflow of economic benefits will be required to settle the obligation; or (b) the amount cannot be measured reliably.
Contingent liabilities are not recognized but are disclosed and described in the notes to the financial statements, including an estimate of their potential financial effect and uncertainties relating to the amount or timing of any outflow, unless the possibility of settlement is remote.
Contingent assets are possible assets whose existence will be confirmed only on the occurrence or non-occurrence of uncertain future events outside the Company''s control. Contingent assets are not recognized. When the realization of income is virtually certain, the related asset is not a contingent asset; it is recognized as an asset.
Contingent assets are disclosed and described in the notes to the financial statements, including an estimate of their potential financial effect if the inflow of economic benefits is probable.
2.19 Earnings per share
Basic: Basic earnings per share is calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of shares outstanding during the year.
Diluted: For computing diluted earnings per share the net profit for the period attributable to equity shareholders divided by the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. The number of shares and potentially dilutive equity shares are adjusted for any stock splits and bonus shares issued.
2.20 Borrowing Costs:
Borrowing costs consist of interest and other costs that the company incurs in connection with the borrowing of funds. General and specific borrowing costs directly attributable to the acquisition or construction of qualifying assets that necessarily takes a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Borrowing costs that are not directly attributable to a qualifying asset are recognized in the Statement of Profit or Loss using the effective interest method.
2.21 Recent accounting pronouncements
Standards issued but not yet effective:
In March 2018, the Ministry of Corporate Affairs (''MCA'') issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying amendments to Ind AS 12, ''Income taxes'', Ind AS 21, ''The effects of changes in foreign exchange rates and also introduced new revenue recognition standard Ind AS 115 ''Revenue from contracts with customers''. These amendments rules are applicable to the Company from April 1, 2018.
Ind AS 115 ''Revenue from Contracts with Customers'' (Ind AS 115)
MCA has notified new standard for revenue recognition which overhauls the existing revenue recognition standards including Ind AS 18 - Revenue and Ind AS 11 - Construction contracts. The new standard provides a control-based revenue recognition model and provides a five step application principle to be followed for revenue recognition:
a) Identification of the contracts with the customer
b) Identification of the performance obligations in the contract
c) Determination of the transaction price
d) Allocation of transaction price to the performance obligations in the contract (as identified in step ii)
e) Recognition of revenue when performance obligation is satisfied.
f) The management is yet to assess the impact of this new standard on the Company''s financial statements.
Amendment to Ind AS 12
The amendment to Ind AS 12 requires the entities to consider restriction in tax laws in sources of taxable profit against which entity may make deductions on reversal of deductible temporary difference (may or may not have arisen from same source) and also consider probable future taxable profit. The Company is evaluating the requirements of the amendment and its impact on the financial statements.
Amendment to Ind AS 21
The amendment to Ind AS 21 requires the entities to consider exchange rate on the date of initial recognition of advance consideration (asset/liability), for recognizing related expense/income on the settlement of said asset/liability. The Company is evaluating the requirements of the amendment and its impact on the financial statements.
2.22 Significant accounting judgments, estimates and assumptions
The preparation of the Company''s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the financial statements. Estimates and assumptions are continuously evaluated and are based on management''s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
In particular, the Company has identified the following areas where significant judgments, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the financial statements. Changes in estimates are accounted for prospectively. Judgments
In the process of applying the Company''s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the financial statements:
Contingencies
Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor, land access and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgments and the use of estimates regarding the outcome of future events. Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Existing circumstances and assumptions about future developments, however, may change due to market change or circumstances arising beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
a) Defined benefit plans
The cost of the defined benefit plan and other post-employment benefits and the present value of such obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
b) Recognition of deferred tax assets - The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Company''s future taxable income against which the deferred tax assets can be utilized.
c) Useful life of property, plant & equipment and intangible assets:
As described in the significant accounting policies, the Company reviews the estimated useful lives of property, plant and equipment and intangible assets at the end of each reporting period
(ii) Terms/Rights attached to equity shares
The Company has one class of equity shares having a par value of Re. 1 per share. Each holder of equity shares is entitled to one vote per share. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of Interim dividend.
In the event of liquidation of the Company, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
(iii) The members of the Company in their extra ordinary general meeting held on April 21, 2017 had approved the issue of 5,10,00,000 equity shares to qualified investors (other than promoters) and 170,00,000 equity shares to promoters, on a preferential basis at Rs. 10/- per share (including premium of Rs.9/- per equity share).
The Company had applied for in-principle approval of allotment of these equity shares to the Bombay Stock Exchange ("the stock exchange"). The Company received the in-principle approval from the stock exchange vide its letter no. DCS/PREF/SD/PRE/1947/2017-2018 granted on May 25, 2017 to allot 5,10,00,000 equity shares to qualified investors (other than promoters) and 85,00,000 equity shares to promoters, on a preferential basis, with certain ratification to be made in next general meeting."
The Board Meeting of the Company was held on June 08, 2017 for approval of allotment of 4,85,00,000 Equity Shares of Re.1/- each at Premium of Rs. 9/- per equity shares (i.e. Rs. 10 including premium) fully paid aggregate amounting to Rs. 48,50,00,000 (Rupees Forty Eight Crores Fifty Lakhs Only) on preferential basis to qualified investor (other than Promoter) and allotment of 85,00,000 Equity Shares of Re.1/- each at Premium of Rs. 9/- per equity shares (i.e. Rs. 10 including premium) fully paid aggregate amounting to Rs. 8,50,00,000 (Rupees Eight Crore Fifty Lakhs Only) on preferential basis to Promoters. The details of allottees and lock in share is given below:
# As per the records of the company, including register of members
(v) The Company has not issued/allotted any class of shares as fully paid up pursuant to contract(s) without payment being received in cash or by way of bonus shares during the period of five year immediately preceding the reporting date. Further, no shares of any class were bought back during the period of five year immediately preceding the reporting date.
(vi) Employee Stock Options
The members of the Company in their extra ordinary general meeting held on April 21, 2017 have approved the issue of 1,00,00,000 equity shares of Re.1/- each (face value) to its permanent employees (excluding employees of its subsidiary) under Vikas Employee Stock Option Plan 2017 (ESOP 2017). The Company had applied for in-principle approval of allotment of these equity shares to the Bombay Stock Exchange ("the stock exchange"). The Company has received in-principle approval from the stock exchange vide its letter no. DCS/IPO/ST/ESOP-
IP/1918/2017-2018 granted on May 18, 2017 to issue and allot a maximum of 100,00,000 equity shares which are likely to arise out of exercise of options as and when exercised under the scheme. All these schemes are in compliance with SEBI (Share Based Employee Benefits) Regulation 2014.
a) Retained Earnings: This Reserve represents the cumulative profits of the Company and effects of remeasurement of defined benefit obligations. This Reserve can be utilized in accordance with the provisions of the Companies Act, 2013.
b) Capital Reserve: this Reserve represents grants of capital nature.
c) Securities Premium Account: this Reserve represents the premium on issue of shares and can be utilized in accordance with the provision of the Companies Act, 2013.
d) General Reserve: this Reserve is created by an appropriation from one component of equity (generally retained earnings) to another, not being an item of Other Comprehensive Income. There same can be utilized by the Company in accordance with the provisions of the Companies Act, 2013.
12 (a) Deferred tax assets is recognized to the extent that it is probable that future taxable profits will be available against which carried forward tax losses can be utilized. The cumulative unabsorbed business losses amount to
Rs._lacs (March 31, 2017: Rs.200,97.84 lacs) and cumulative unabsorbed depreciation of Rs.69,53.83 lacs (March 31, 2017 Rs. 69,53.83 lacs) on which no deferred tax asset has been recognized in accordance with accounting principles laid under Ind AS for recognition of deferred tax assets. Further, these losses are available to offset for maximum period of eight years from the date of incurrence of loss.
***Owing to net loss attributable to equity shareholders, there is no dilutive effect of potential equity share
Mar 31, 2016
1. SIGNIFICANT ACCOUNTING POLICIES
1.1. Basis of preparation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013 read together with paragraph 7 of the Companies (Accounts) Rules 2014 and the other relevant provisions of Companies Act, 2013 (''Act'').
The financial statements have been prepared on an accrual basis and under the historical cost convention. The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.
All assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the schedule III to the Companies Act, 2013. The Company has determined its operating cycle as twelve months for the purpose of current/ non-current classification of assets and liabilities.
1.2. Use of estimates
The preparation of the financial statements in conformity with the generally accepted accounting principles requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates.
1.3. Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
Revenue from sale of goods is recognized when the significant risks and rewards of ownership of the goods are transferred to the customer as per the terms of the contract and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. Sales are recognized net of any discounts, rebates, taxes or duties.
Interest income is recognized on a time proportion basis taking into account the amounts invested and the rate of interest.
1.4. Fixed assets Tangible assets
Tangible assets are stated at acquisition cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes inward freight, duties, taxes and incidental expenses related to acquisition and installation incurred up to the date of commissioning of the assets. Subsequent expenditures related to an item of tangible asset are added to its book value only if they increase the future benefits from the existing asset beyond its previously assessed standard of performance.
Items of tangible assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realizable value and are shown separately in the financial statements under "Other current assets". Any expected loss is recognized immediately in the Statement of Profit and Loss.
Tangible assets not ready for the intended use on the date of Balance Sheet are disclosed as "Capital work-in-progress".
Losses arising from the retirement of, and gains or losses arising from disposal of tangible assets which are carried at cost are recognized in the Statement of Profit and Loss
Intangible assets
Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any.
1.5. Depreciation and amortization Tangible assets
Depreciation is provided under the straight-line method based on the estimated useful lives of the assets at the rates specified under Schedule II to the Companies Act, 2013.
Assets costing below Rs. 5,000 are depreciated fully in the year of purchase.
Intangible assets
Computer Software are amortized over a period of 5 years.
1.6. Inventories
Inventories are valued as follows:
Raw materials, stores and spares Lower of cost and net realizable value. However, materials and packing materials other items 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. Cost is determined on a weighted average basis. Work in progress and finished goods Lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion to make the sale.
1.7. Foreign exchange transactions
Foreign exchange transactions are recorded at the exchange rates prevailing at the date of transaction. All monetary items remaining unsettled at the Balance Sheet date are translated at the rates of exchange prevailing on that date. Gains/ losses arising on account of realization/ settlement of foreign exchange transactions and on translation of foreign currency assets and liabilities are recognized in the statement of profit and loss. Subsequent to initial recognition all non-monetary items are carried at Historical costs.
1.8. Employee benefits
Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries, wages, and bonus etc. are recognized in the statement of profit and loss in the period in which the employee renders the related service.
Defined contribution plans
The employee''s provident fund scheme is a defined contribution plan. The Company''s contribution paid / payable under the scheme is recognized as an expense in the statement of profit and loss during the period in which the employee renders the related service.
Defined benefit plans
The Company''s gratuity plan is a defined benefit plan. The present value of the obligation under such defined benefit plan is determined based on an actuarial valuation carried out by an independent actuary using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rate used for determining the present value of the obligation under defined benefit plans, is based on the market yields on Government securities as at the Balance Sheet date. Actuarial gains and losses are recognized immediately in the statement of profit and loss.
1.9. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or productions of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets until such time they are ready for intended use. All other borrowing costs are recognized as an expense in the statement of profit and loss in the period in which they are incurred.
1.10. Segment reporting
Segment accounting policies are in line with the accounting policies of the Company. In addition, the following specific accounting policies have been followed for segment reporting:
- Segment revenue includes sales and other income directly identifiable with/allocable to the segment.
- Expenses that are directly identifiable with/allocable to segments are considered for determining the segment result. Expenses which relate to the Company as a whole and not allocable to segments are included under "Unallowable expenditure".
- Income which relates to the Company as a whole and not allocable to segment is included in "Un-allocable income"
- Segment assets and liabilities include those directly identifiable with the respective segments.
1.11. Leases
Assets leased by the Company in its capacity as lessee, where the Company has substantially transferred all the risks and rewards of ownership are classified as finance lease. Such lease are capitalized at the inception of the lease at lower of the fair value or the present value of the minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost so as to obtain a constant periodic rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incident to ownership of an asset substantially vest with the less or, are recognized as operating lease. Lease payments under operating leases are recognized in the statement of profit and loss on a straight line basis.
1.12. Earnings per share
Basic earnings per share is calculated by dividing the net profit for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares, that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
1.13. Taxation
Income tax expense comprises current tax, (that is amount of tax for the period determined in accordance with the Income tax laws) and deferred tax charge or credit (reflecting the tax effects of timing difference between accounting income and taxable income for the period).
The deferred tax charge or credit and the corresponding deferred tax liability and/ or deferred tax assets is recognized using the tax rates that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that the assets can be realized in future. However, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each balance sheet date and are written down or written up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realized.
In accordance with the provisions of Section 115JAA of the Income-tax Act, 1961, the Company is allowed to avail credit equal to the excess of Minimum Alternate Tax (MAT) over normal income tax for the assessment year for which MAT is paid. MAT credit so determined can be carried forward for set-off for ten succeeding assessment years from the year in which such credit becomes allowable. MAT credit can be set-off only in the year in which the Company is liable to pay tax as per the normal provisions of the Income-tax Act, 1961 and such tax is in excess of MAT for that year. Accordingly, MAT credit entitlement is recognized only to the extent there is convincing evidence that the Company will pay normal tax during the specified period.
1.14. Impairment of assets
Management reviews the carrying amount of all assets at each Balance Sheet date using internal and external sources of information to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the assets or its cash generating unit is estimated. Impairment occurs where the carrying value of the assets or its cash generating unit exceeds the present value of future cash flows expected to arise from the continuing use of the asset or its cash generating unit and its eventual disposal. An impairment loss is recognized in the statement of profit and loss whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount and is determined as the excess of the carrying amount over the higher of the asset''s net sales price or present value as determined above. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortization, if no impairment loss had been recognized.
1.15. Provisions and contingencies
Provisions are recognized when there is a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance Sheet date and are not discounted to its present value. These are reviewed at each year end date and adjusted to reflect the best current estimate.
Contingent liabilities are disclosed when there is a possible obligation arising 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 Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.
Mar 31, 2015
1.1. Basis of preparation
The financial statements are prepared under historical cost convention
on accrual basis in accordance with Generally Accepted Accounting
Principles (GAAP) in India, applying the accounting standards notified
under Section 133 of the Companies Act, 2013, read with Rule 7 of the
CompanL (Accounts) Rules, 2014, as applicable and the relevant
provisions of Companies Act. 2013 ('Act').
All assets and liabilities have been classified as current or
non-current as per the company's normal operating cycle and other
criteria set out in the schedule III to the companies Act, 2013.
Company has determined its operating cycle as twelve months for the
purpose of current/ non-curreni classification of assets and
liabilities.
1.2. Use of estimates
The preparation of financial statements requires estimates and
assumptions which affect the reported amount of assets, liabilities,
revenues and expenses of the reporting period. The Difference between
the actual results and estimates are recognized in the period in which
the results are known/ materialized.
1.3. Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
1.4. Sale of goods
Revenue from sale of goods is recognised when the significant risks and
rewards of ownership of the goods are transferred to the customer. In
case of export sales this coincides with shipment of goods.
Revenue in case of sale of domestic products is recognised at the point
of dispatch which coincides with the transfer of risks and rewards of
ownership.
1.5. Fixed Assets
Fixed assets are stated at acquisition cost less accumulated
depreciation and impairment, if any. Cost includes inward freight,
duties, taxes and incidental expenses related to acquisition and
installation incurred up to the date of commissioning of the assets.
1.6. Depreciation and Amortisation Tangible Assets
Depreciation is provided under the straight-line method based on the
estimated useful lives of the assets at the rates specified under
Schedule II to the Companies Act, 2013.
Assets costing below Rs. 5,000 are depreciated fully in the year of
purchase.
Intangible Assets
Computer Software are amortised over a period of 5 years.
1.7. Inventories
Inventories are valued as follows:
1.8. Foreign exchange transactions
Foreign exchange transactions are recorded at the exchange rates
prevailing at the date of transaction. Foreign currency assets and
liabilities remaining unsettled at the Balance Sheet date are
translated at the rates of exchange prevailing on
that date. Gains/ losses arising on account of realisation/ settlement
of foreign exchange transactions and on translation of foreign currency
assets and liabilities are recognised in the statement of profit and
loss.
1.9. Employee benefits Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. Benefits
such as salaries, wages, and bonus etc. are recognised in the statement
of profit and loss in the period in which the employee renders the
related service.
Defined contribution plans
The employee's provident fund scheme is a defined contribution plan.
The Company's contribution paid / payable under the scheme is
recognised as an expense in the statement of profit and loss during the
period in which the employee renders the related service.
Defined benefit plans
The Company's gratuity plan is a defined benefit plan. The present
value of the obligation under such defined benefit plan is determined
based on an actuarial valuation carried out by an independent actuary
using the Projected Unit Credit Method, which recognizes each period of
service as giving rise to additional unit of employee benefit
entitlement and measures each unit separately to build up the final
obligation. The obligation is measured at the present value of the
estimated future cash flows. The discount rate used for determining the
present value of the obligation under defined benefit plans, is based
on the market yields on Government securities as at the Balance Sheet
date Actuarial gains and losses are recognised immediately in the
statement of profit and loss.
1.10. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction
or productions of qualifying assets is capitalised as part of assets.
Other borrowing costs are recognized as an expense in the period in
which they are incurred
1.11. Segment Reporting
Segment accounting policies are in line with the accounting policies of
the company. In addition, the following specific accounting policies
have been followed for segment reporting:
- Segment revenue includes sales and other income directly identifiable
with/allocable to the segment.
- Expenses that are directly identifiable with/allocable to segments
are considered for determining the segment result. Expenses which
relate to the company as a whole and not allocable to segments are
included under "Unallocable expenditure".
- Income which relates to the company as a whole and not allocable to
segment is included in "Unallocable income"
- Segment assets and liabilities include those directly identifiable
with the respective segments.
1.12. Leases
Assets leased by the Company in its capacity as lessee, where the
Company has substantially all the risks and rewards of ownership are
classified as finance lease. Such lease are capitalised at the
inception of the lease at lower of the fair value or the present value
of the minimum lease payments and a liability is created for an
equivalent amount. Each lease rental paid is allocated between the
liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incident to ownership of
an asset substantially vest with the lessor, are recognized as
operating lease. Lease payments under operating leases are recognized
in the statement of profit and loss on a straight line basis.
1.13. Earnings per share
Basic earnings per share are computed using the weighted average number
of equity shares outstanding during the year. Diluted earnings per
share are computed using the weighted average number of equity and
dilutive equity equivalent shares outstanding during the year, except
where results would be anti-dilutive.
1.14. Taxation
Income tax expense comprises current tax, (that is amount of tax for
the period determined in accordance with the Income tax laws) and
deferred tax charge or credit (reflecting the tax effects of timing
difference between accounting income and taxable income for the
period).
The deferred tax charge or credit and the corresponding deferred tax
liability and/ or deferred tax assets is recognised using the tax rates
that have been enacted or substantively enacted by the Balance Sheet
date. Deferred tax assets are recognised only to the extent that there
is reasonable certainty that the assets can be realised in future.
However, where there is unabsorbed depreciation or carried forward loss
under taxation laws, deferred tax assets are recognised only if there
is virtual certainty of realisation of such assets. Deferred tax assets
are reviewed as at each balance sheet date and are written down or written
up to reflect the amount that is reasonably/ virtually certain (as the
case may be) to be realised.
In accordance with the provisions of Section 115JAA of the Income-tax
Act, 1961, the Company is allowed to avail credit equal to the excess
of Minimum Alternate Tax (MAT) over normal income tax for the
assessment year for which MAT is paid. MAT credit so determined can be
carried forward for set-off for ten succeeding assessment years from
the year in which such credit becomes allowable. MAT credit can be
set-off only in the year in which the Company is liable to pay tax as
per the normal provisions of the Income-tax Act, 1961 and such tax is
in excess of MAT for that year. Accordingly, MAT credit entitlement is
recognised only to the extent there is convincing evidence that the
Company will pay normal tax during the specified period
1.15. Impairment of assets
Management reviews the carrying amount of all assets at each Balance
Sheet date using internal and external sources of information to
determine whether there is any indication of impairment. If any such
Indication exists, the recoverable amount of the assets or its cash
generating unit is estimated. Impairment occurs where the carrying
value of the assets or its cash generating unit exceeds the present
value of future cash flows expected to arise from the continuing use of
the asset or its cash generating unit and its eventual disposal. An
impairment loss is recognized in the statement of profit and loss
whenever the carrying amount of an asset or its cash generating unit
exceeds its recoverable amount and is determined as the excess of the
carrying amount over the higher of the asset's net sales price or
present value as determined above. An impairment loss is reversed if
there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the extent
that the assets carrying amount does not exceed the carrying amount
that would have been determined net of depreciation or amortisation, if
no impairment loss had been recognised.
1.16. Contingencies
A provision is created when there is a present obligation as a result
of a past event that probably requires an outflow of resources and a
reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Mar 31, 2013
1.1. Basis of preparation
The financial statements are prepared under historical cost convention
on accrual basis in accordance with Generally Accepted Accounting
Principles (GAAP) in India, applying the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006, (as amended)
and other relevant provisions of the Companies Act, 1956.
All assets and liabilities have been classified as current or
non-current as per the company''s normal operating cycle and other
criteria set out in Revised Schedule VI to the companies Act, 1956.
Company has determined its operating cycle as twelve months for the
purpose of current/ non-current classification of assets and
liabilities.
1.2. Use of estimates
The preparation of financial statements requires estimates and
assumptions which affect the reported amount of assets, liabilities,
revenues and expenses of the reporting period. The Difference between
the actual results and estimates are recognized in the period in which
the results are known/ materialized.
1.3. Fixed Assets
Fixed assets are stated at acquisition cost less accumulated
depreciation and impairment, if any. Cost includes inward freight,
duties, taxes and incidental expenses related to acquisition and
installation incurred up to the date of commissioning of the assets.
1.4. Depreciation
Depreciation is provided under the straight-line method based on the
estimated useful lives of the assets which are equal to the rates
specified in Schedule XIV to the Companies Act, 1956 except in case of
plant and machinery where depreciation is provided at the rate of
7.69%.
Assets costing below Rs. 5,000 are depreciated fully in the year of
purchase.
1.5. Inventories
Inventories are valued as follows:
Raw materials, stores and spares and packing materials
Lower of cost and net realisable value. However, materials and other
items 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. Cost is
determined on a weighted average basis.
Work in progress and finished goods
Lower of cost and net realisable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion to make the
sale.
1.6. Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
1.7. Sale of goods
Revenue from sale of goods is recognised when the significant risks and
rewards of ownership of the goods are transferred to the customer. In
case of export sales this coincides with shipment of goods.
Revenue in case of sale of domestic products is recognised at the point
of despatch which coincides with the transfer of risks and rewards of
ownership.
1.8. Foreign exchange transactions
Foreign exchange transactions are recorded at the exchange rates
prevailing at the date of transaction. Foreign currency assets and
liabilities remaining unsettled at the Balance Sheet date are
translated at the rates of exchange prevailing on that date. Gains/
losses arising on account of realisation/ settlement of foreign
exchange transactions and on translation of foreign currency assets and
liabilities are recognised in the statement of profit and loss.
1.9. Employee benefits Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. Benefits
such as salaries, wages, and bonus etc. are recognised in the statement
of profit and loss in the period in which the employee renders the
related service.
Defined contribution plans
The employee''s provident fund scheme is a defined contribution plan.
The Company''s contribution paid / payable under the scheme is
recognised as an expense in the statement of profit and loss during the
period in which the employee renders the related service.
Defined benefit plans
The Company''s gratuity plan is a defined benefit plan. The present
value of the obligation under such defined benefit plan is determined
based on an actuarial valuation carried out by an independent actuary
using the Projected Unit Credit Method, which recognizes each period of
service as giving rise to additional unit of employee benefit
entitlement and measures each unit separately to build up the final
obligation. The obligation is measured at the present value of the
estimated future cash flows. The discount rate used for determining the
present value of the obligation under defined benefit plans, is based
on the market yields on Government securities as at the Balance Sheet
date. Actuarial gains and losses are recognised immediately in the
statement of profit and loss.
1.10. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction
or productions of qualifying assets is capitalised as part of assets.
Other borrowing costs are recognized as an expense in the period in
which they are incurred.
1.11. Segment Reporting
Segment accounting policies are in line with the accounting policies of
the company. In addition, the following specific accounting policies
have been followed for segment reporting:
- Segment revenue includes sales and other income directly
identifiable with/allocable to the segment.
- Expenses that are directly identifiable with/allocable to segments
are considered for determining the segment result. Expenses which
relate to the company as a whole and not allocable to segments are
included under "Unallocable expenditure".
- Income which relates to the company as a whole and not allocable to
segment is included in "Unallocable income"
- Segment assets and liabilities include those directly identifiable
with the respective segments.
1.12. Leases
Assets leased by the Company in its capacity as lessee, where the
Company has substantially all the risks and rewards of ownership are
classified as finance lease. Such lease are capitalised at the
inception of the lease at lower of the fair value or the present value
of the minimum lease payments and a liability is created for an
equivalent amount. Each lease rental paid is allocated between the
liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incident to ownership of
an asset substantially vest with the lessor, are recognized as
operating lease. Lease payments under operating leases are recognized
in the statement of profit and loss on a straight line basis.
1.13. Earnings per share
Basic earnings per share are computed using the weighted average number
of equity shares outstanding during the year. Diluted earnings per
share are computed using the weighted average number of equity and
dilutive equity equivalent shares outstanding during the year, except
where results would be anti-dilutive.
1.14. Taxation
Income tax expense comprises current tax, (that is amount of tax for
the period determined in accordance with the Income tax laws) and
deferred tax charge or credit (reflecting the tax effects of timing
difference between accounting income and taxable income for the
period).
The deferred tax charge or credit and the corresponding deferred tax
liability and/ or deferred tax assets is recognised using the tax rates
that have been enacted or substantively enacted by the Balance Sheet
date. Deferred tax assets are recognised only to the extent that there
is reasonable certainty that the assets can be realised in future.
However, where there is unabsorbed depreciation or carried forward loss
under taxation laws, deferred tax assets are recognised only if there
is virtual certainty of realisation of such assets. Deferred tax assets
are reviewed as at each balance sheet date and are written down or
written up to reflect the amount that is reasonably/ virtually certain
(as the case may be) to be realised.
In accordance with the provisions of Section 115JAA of the Income-tax
Act, 1961, the Company is allowed to avail credit equal to the excess
of Minimum Alternate Tax (MAT) over normal income tax for the
assessment year for which MAT is paid. MAT credit so determined can be
carried forward for set-off for ten succeeding assessment years from
the year in which such credit becomes allowable. MAT credit can be
set-off only in the year in which the Company is liable to pay tax as
per the normal provisions of the Income-tax Act, 1961 and such tax is
in excess of MAT for that year. Accordingly, MAT credit entitlement is
recognised only to the extent there is convincing evidence that the
Company will pay normal tax during the specified period.
1.15. Impairment of assets
Management reviews the carrying amount of all assets at each Balance
Sheet date using internal and external sources of information to
determine whether there is any indication of impairment. If any such
indication exists, the recoverable amount of the assets or its cash
generating unit is estimated. Impairment occurs where the carrying
value of the assets or its cash generating unit exceeds the present
value of future cash flows expected to arise from the continuing use of
the asset or its cash generating unit and its eventual disposal. An
impairment loss is recognized in the statement of profit and loss
whenever the carrying amount of an asset or its cash generating unit
exceeds its recoverable amount and is determined as the excess of the
carrying amount over the higher of the asset''s net sales price or
present value as determined above. An impairment loss is reversed if
there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the extent
that the assets carrying amount does not exceed the carrying amount
that would have been determined net of depreciation or amortisation, if
no impairment loss had been recognised.
1.16. Contingencies
A provision is created when there is a present obligation as a result
of a past event that probably requires an outflow of resources and a
reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Mar 31, 2012
1a. Terms/rights attached to equity shares
The Company has one class of equity shares having a par value of Re. 1
per share. Each holder of equity shares is entitled to one vote per
share. The dividend proposed by the Board of Directors is subject to
the approval of the shareholders in the ensuing Annual General Meeting,
except in case of Interim dividend.
In the event of liquidation of the Company, the equity shareholders are
eligible to receive the remaining assets of the Company after
distribution of all preferential amounts.. The distribution will be in
proportion to the number of equity shares held by the shareholders.
2a. Nature of security, terms of repayment and defaults made for
secured borrowings
Nature of Security
The Company had obtained secured loan for general corporate purposes
including capital expenditure for expansion projects and augmentation
of long term working capital of Rs. 8,000 (sanctioned amount) from IFCI
Limited secured by exclusive charge and mortgage on all moveable and
immoveable fixed assets of the Company situated at Plot no. E-255 to
257 in RIICO Industrial Area and Plot no. F-92 in Udyog Vihar, Sri
Ganganagar. Mr. B. D. Agarwal, Mrs. Bimla Devi Jindal and Mr. Megh Raj
Jindal, the promoters anddirectors of the Company have pledged their
shareholding aggregating to 17,859,018 (previous year 20,346,000)
equity shares of Re 1 each and have also provided their personal
guarantees. All the promoters and their associates have pledged their
entire shareholding in Vikas Granaries Limited (Companies under the
same management) aggregating 12,340,000 equity shares of Rs. 10 each.
(previous year 12,340,000 equity shares of Rs. 10 each).
Terms of repayment
The loan is repayable in installments of Rs. 400 lakhs per quarter.
Defaults made during the year
The lender issued a letter dated 7 April 2011 to Recall the loans in
view of the continuous defaults committed by the Company in payment of
principal, interest and other moneys along with terms and conditions to
comply with. Accordingly, the lender classified the Company's account
as a non-performing asset on 7 April 2011. Further, the lender took
symbolic possession of the assets of the Company under section 13(2) of
Chapter III of The Securitisation and Reconstruction of Financial
Assets and Enforcements of Security Interest Act, 2002 on 27 June 2011.
As part of the recovery proceedings, the lender officials sought
possession of the fixed assets of the Company situated at E 255-257 and
F 92 in the RIICO Industrial Area in Sri Ganganagar, which were pledged
against the loan, vide a possession notice dated 27 June 2011.
Additionally, the lender published a sale notice, dated 7 July 2011 in
a local newspaper, in respect of the fixed assets of the Company
situated at E 255-257 and F 92 in the RIICO Industrial Area in Sri
Ganganagar, which were pledged against the loan.
In response to the actions of the lender, the Company filed an
application against the lender in the Debt Recovery Tribunal - II,
Delhi (DRT) on 6 July 2011 stating that the Company will clear all dues
with interest by 30 September 2011 and requested to reclassify the
account as Ãstandard'. DRT vide its order dated 8 August 2011, set
aside the proceedings initiated by the lender and directed the
management to clear the overdues along with interest, as per the
original repayment schedule by 30 September 2011. Management has
repaid all overdue installments along with interest by 30 September
2011 in accordance with the directives of the DRT and accordingly, the
lender has reclassified the Company's account as a Ãstandard account'.
3a. Nature of security and terms of repayment for secured borrowings
(i) The Company has obtained a packing credit limit and foreign
documentary bill purchase/discounting facility of Rs. 1,500 each from
Punjab National Bank secured by hypothecation of inventory, demand bill
accompanied by invoice and bill of lading evidencing shipment of goods
and mortgage of immoveable assets of the Company at B-86/87 Udyog
Vihar, RIICO Industrial Area, Sri Ganga Nagar and lien on fixed
deposits of Rs. 1,571.38 (previous year Nil)
Mr. Meghraj Jindal, Mrs. Bimla Devi Jindal and Mr. B.D. Agarwal, the
promoters and directors of the Company have also provided their
personal guarantees.
The Company has obtained additional packing credit limit and foreign
documentary bill purchase/ discounting facility of Rs. 3,000 which is
interchangeable from Bank of India secured by hypothecation of
inventory, demand bill accompanied by invoice and bill of lading
evidencing shipment of goods and frst charge over land, building, plant
and machinery situated at SP-241 and second charge over land, building,
plant and machinery situated at B-86/87, Udyog Vihar, RIICO Industrial
Area, Sri Ganga Nagar. Mr. Meghraj Jindal, Mrs. Bimla Devi Jindal and
Mr. B.D. Agarwal, the promoters and directors of the Company have also
provided their personal guarantees.
(ii) The demand loan of Rs. Nil (previous year Rs. 34) obtained from
Union Bank of India is secured against the fixed deposits (pledged)
with the bank.
(iii) The Company has obtained funds by pledging its stock with third
party.
Mar 31, 2010
1) Basis of preparation of financial statements
The financial statements have been prepared under the historical cost
convention, on the accrual basis of accounting i accordance with the
Generally Accepted Accounting Principles (GAAP) in India and comply
with the mandator accounting standards as specified in Rule 3 of the
Companies (Accounting Standards) Rules, 2006, and in accordanc with the
provisions of the Companies Act, 1956, to the extent applicable.
2) Use of estimates
The preparation of financial statements in conformity with the
generally accepted accounting principles require management to make
estimates and assumptions that affect the reported amount of assets and
liabilities, the disclosur of contingent liabilities as at the date of
the financial statements and the reported amount of revenue and expense
Examples of such estimates include provisions of future obligation
under employee retirement benefit plans, the usefu lives of fixed
assets.
Actual results could differ from those estimates. Any revisions to
accounting estimates are recognised prospectively i current and future
periods. Contingencies are recorded when it is probable that a
liability will be incurred and th amount can be reasonably estimated.
3) Fixed Assets
Fixed assets are stated at acquisition cost less accumulated
depreciation. Cost includes inward freight, duties, taxes an incidental
expenses related to acquisition and installation incurred up to the
date of commissioning of the assets.
4) Depreciation
Depreciation is provided under the straight-line method based on the
estimated useful lives of the assets which ar equal to the rates
specified in Schedule XIV of the Act. Assets costing below Rs. 5,000
are depreciated fully in the year o purchase.
5) Inventories Inventories are valued as follows:
Raw materials, stores and spares and packaging materials
Lower of cost and net realizable value. However, materials and other
items 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. Cost is
determined on a weighted average basis.
Work in progress and finished goods
Lower of cost and net realizable value. Cost includes direct materials
and labour and a proportion of manufacturing overheads.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and to make the
sale.
6) Revenue recognition
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured.
Sale of goods
Revenue from sale of goods is recognised when the significant risks and
rewards of ownership of the goods are transferred to the customer. In
case of export sales this coincides with shipment of goods.
Revenue in case of sale of domestic products is recognised at the point
of despatch which coincides with the transfer of risks and rewards of
ownership.
7) Employee benefits
Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering
the service are classified as short-term employee benefits. Benefits
such as salaries, wages, and bonus etc. are recognised in the Profit
and Loss Account in the period in which the employee renders the
related service.
Defined contribution plans
The employees provident fund scheme is a defined contribution plan.
The Companys contribution paid / payable under the scheme is
recognised as an expense in the profit and loss account during the
period in which the employee renders the related service.
Defined benefit plans
The Companys gratuity plan is a defined benefit plan. The present
value of the obligation under such defined benefit plan is determined
based on an actuarial valuation carried out by an independent actuary
using the Projected Unit Credit Method, which recognises each period of
service as giving rise to additional unit of employee benefit
entitlement and measures each unit separately to build up the final
obligation. The obligation is measured at the present value of the
estimated future cash flows. The discount rate used for determining the
present value of the obligation under defined benefit plans, is based
on the market yields on Government securities as at the balance sheet
date. Actuarial gains and losses are recognised immediately in the
Profit and Loss Account.
8) Foreign exchange transactions
Foreign exchange transactions are recorded at the exchange rates
prevailing at the date of transaction. Foreign currency assets and
liabilities remaining unsettled at the balance sheet date are
translated at the rates of exchange prevailing on that date. Gains /
losses arising on account of realisation/ settlement of foreign
exchange transactions and on translation of foreign currency assets and
liabilities are recognised in the Profit and Loss Account.
9) Taxation
Income tax expense comprises current tax, (that is amount of tax for
the period determined in accordance with the Income tax laws) and
deferred tax charge or credit (reflecting the tax effects of timing
difference between accounting income and taxable income for the
period).
The deferred tax charge or credit and the corresponding deferred tax
liability and / or deferred tax assets is recognised using the tax
rates that have been enacted or substantively enacted by the Balance
Sheet date. Deferred tax assets are recognised only to the extent that
there is reasonable certainty that the assets can be realised in
future. However, where there is unabsorbed depreciation or carried
forward loss under taxation laws, deferred tax assets are recognised
only if there is virtual certainty of realisation of such assets.
Deferred tax assets are reviewed as at each balance sheet date and are
written down or written up to reflect the amount that is reasonably /
virtually certain (as the case may be) to be realised.
The Finance Act, 2009 has abolished the Fringe Benefit Tax with effect
from 1 April 2009. In accordance with the circular number
F.No.385/05/2010-IT (B) dated 29 January 2010 issued by Central Board
of Direct Taxes, the advance fringe benefit tax paid by the Company
subsequent to 31 March 2009 has been treated as advance income-tax for
the Assessment Year 2010-11.
In accordance with the provisions of Section 115JAA of the Income-tax
Act, 1961, the Company is allowed to avail credit equal to the excess
of Minimum Alternate Tax (MAT) over normal income tax for the
assessment year for which MAT is paid. MAT credit so determined can be
carried forward for set-off for ten succeeding assessment years from
the year in which such credit becomes allowable. MAT credit can be
set-off only in the year in which the Company is liable to pay tax as
per the normal provisions of the Income-tax Act, 1961 and such tax is
in excess of MAT for that year. Accordingly, MAT credit entitlement is
recognised only to the extent there is convincing evidence that the
Company will pay normal tax during the specified period.
10) Contingencies
A provision is created when there is a present obligation as a result
of a past event that probably requires an outflow of resources and a
reliable estimate can be made of the amount of the obligation. A
disclosure for a contingent liability is made when there is a possible
obligation or a present obligation that may, but probably will not,
require an outflow of resources. When there is a possible obligation or
a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
11) Impairment of assets
Management reviews the carrying amount of all assets at each Balance
Sheet date using internal and external sources of information to
determine whether there is any indication of impairment. If any such
indication exists, the recoverable amount of the assets or its cash
generating unit is estimated. Impairment occurs where the carrying
value of the assets or its cash generating unit exceeds the present
value of future cash flows expected to arise from the continuing use of
the asset or its cash generating unit and its eventual disposal. An
impairment loss is recognized in the Profit and Loss Account whenever
the carrying amount of an asset or its cash generating unit exceeds its
recoverable amount and is determined as the excess of the carrying
amount over the higher of the assets net sales price or present value
as determined above. An impairment loss is reversed if there has been a
change in the estimates used to determine the recoverable amount. An
impairment loss is reversed only to the extent that the assets carrying
amount does not exceed the carrying amount that would have been
determined net of depreciation or amortisation, if no impairment loss
had been recognised.
12) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction
or productions of qualifying assets is capitalised as part of assets.
Other borrowing costs are recognized as an expense in the period in
which they are incurred.
13) Research cost
Revenue expenditure incurred on research is charged to profit and loss
account in the year it is incurred.
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