Mar 31, 2018
1. NOTES TO STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2018
1.1 Company Overview
Vindhya Telelinks Limited (VTL) (âthe Companyâ) is a public limited listed company incorporated under the Companies Act, 1956 (now replaced by the Companies Act, 2013). The Company is engaged in manufacturing and sale of Cables (comprising of telecommunications cables, other types of wires & cables, FRP rods/glass rovings etc.) and Turnkey Contracts & Services business. The registered office of the Company is located at Udyog Vihar, P.O. Chorhata, Rewa- 486006 (M.P.), India and its CIN No. is L31300MP1983PLC002134.
1.2 Basis of Preparation and Presentation
The financial statements of the Company have been prepared in accordance with and to comply in all material aspects with Indian Accounting Standards (Ind AS) as notified under the relevant provisions of the Companies Act, 2013 (âthe Actâ), Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act, as applicable.
These financial statements for the year ended 31st March, 2018 are the first financial statements of the Company prepared under Ind AS. The financial statements up to the year ended 31st March, 2017, were prepared in accordance with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 (âPrevious GAAPâ) and other relevant provisions of the Act. The figures of the year ended 31st March, 2017 have been restated as per Ind AS to provide comparability. All accounting policies and applicable Ind AS have been applied consistently and retrospectively to the financial statements of all periods presented which include the previous financial year and opening Balance Sheet as at 1st April, 2016 (Transition Date) after availing certain exemptions and exceptions to the retrospective application of certain requirements under Ind AS 101 as stated in Note No.51. The resulting difference between the carrying amounts under Ind AS and Previous GAAP as on the Transition Date has been recognized directly in Retained Earnings. An explanation of the effect of the transition from Previous GAAP to Ind AS on the Companyâs Assets, Liabilities, Equity and Profit is provided in Note No.52.
The financial statements have been prepared on accrual and going concern basis under historical cost convention, except for the items that have been measured at fair value as required by relevant Ind AS.
Companyâs financial statements are presented in Indian Rupees, which is also its functional currency. All amounts in the financial statements and accompanying notes are presented in lakhs (Indian Rupees) and have been rounded-off to two decimal place in accordance with the provisions of Schedule III, of the Companies Act, 2013, unless stated otherwise.
1.3 Basis of classification of Current and Non-Current
Assets and Liabilities are classified as either current or non-current as per the Companyâs normal operating cycle, and other criteria set out in Schedule III to the Companies Act, 2013. Operating cycle for the business activities of the Company covers the duration of the specific project/contract/product line/service including the defect liability period, wherever applicable, and extends up to the realization of receivables (including retention monies) within the agreed credit period normally applicable to the respective business verticals/segments.
1.4 Use of Estimates & Critical Judgments
The preparation of financial statements in conformity with generally accepted accounting principles in India requires management to make judgments, estimates and assumptions that affect the reported amount of revenue, expenses, assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the results of operations during the reporting year end. Although these estimates and associated assumptions are based upon historical experiences and various other factors besides managementâs best knowledge of current events and actions, actual results could differ from these estimates. The estimates and underlying assumptions are reviewed on a periodic basis. Any revision in the accounting estimates is recognized in the period in which the results are known/materialize.
Significant judgments and key sources of estimation in applying accounting policies are as follows:
(a) Lease arrangements:
The Company as a less or enters into certain non-cancellable long term arrangements for passive optical fibre cable networks on Indivisible Right to Use (IRU) basis. Considering the nature of arrangements/ agreements and upon assessment of other relevant attributes to such transactions, such IRUâs have been disclosed as a finance lease under the applicable Indian Accounting Standard Ind AS-17. Cost of sale under finance lease (IRU Network) is arrived based upon managementâs best estimation/allocation of material, subcontracting cost and other cost including cost of mitigating risk associated with such networks.
(b) Estimation of costs for Revenue recognition:
For the purpose of revenue recognition on fixed price projects based on percentage of completion method, the Company determines the stage of completion of the project as proportion of actual cost incurred to total estimated cost of project. The Company estimates the total cost of project at each reporting date (including the estimates of liquidated damages). The estimation of costs for fixed price contract is based upon the rates agreed with vendors/ sub contractors and managementâs best estimates of the costs that is allocated and / or would be incurred based upon the past experience and /or industry risk. These estimates are re-assessed at the end of each period.
1.5 Summary of Significant Accounting policies
(a) Property, Plant and Equipment (PPE)
PPE are stated at cost, net of recoverable taxes, discount and rebates, etc. less accumulated depreciation and impairment loss, if any. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use.
Subsequent costs are included in the assetâs 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.
Spare parts in the nature of PPE are capitalized and depreciated over their remaining useful lives.
Gains or losses arising from de-recognition of PPE is measured as the difference between the net disposable proceeds and the carrying amount of the asset and are recognized in the statement of Profit and Loss when the asset is derecognized.
(b) Investment Property
The Company has certain investments in Buildings which are classified as Investment Property as per the requirement of Ind AS 40. The same is held generally to earn rental income or for capital appreciation or both. The Investment Property has been recognized at cost less accumulated depreciation and impairment, if any. The same has been disclosed separately in the financial statements along with requisite disclosure about fair valuation of such Investment Property at the year end.
(c) Intangible Assets
Intangible assets (mainly comprise of license fees and associated implementation costs incurred for Computer Software) are measured initially at cost only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. After initial recognition, an intangible asset is carried at its cost, less accumulated amortisation and accumulated impairment losses, if any.
Depreciation on fixed assets added/disposed-off/discarded during the year is provided on pro-rata basis with respect to the month of addition/disposal/discarding.
Leasehold land and related improvements are amortized on a straight line basis over the period of the lease (30 to 99 years).
Intangible Asset is measured at cost and amortized so as to reflect the pattern in which the assets economic benefits are consumed. The useful life of Intangible Asset has been estimated as five years.
Depreciation method, useful lives and residual values are reviewed at each financial year end and adjusted, if considered appropriate.
(e) Impairment of Non-Financial Assets
Assessment is done at each balance sheet date as to whether there is any indication that an asset (PPE and Intangible) may be impaired. If any such indication exists, an estimate of the recoverable amount of the asset/cash generating unit (CGU) is made. Recoverable amount is higher of an assetâs or cash generating unitâs net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. For the purpose of assessing impairment, 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. The smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets, is considered as a cash generating unit (CGU). An asset or CGU whose carrying value exceeds its recoverable amount is considered impaired and is written down to its recoverable amount. Assessment is also done at each reporting date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased.
(f) Government Grants and Subsidies
Grants and subsidies (including industrial investment promotion incentives linked to fixed capital investment in Plant and Equipment, etc.) from the Government(s) are recognized when there is reasonable assurance that the conditions attached to them will be complied and grants/subsidy will be received. Government subsidies/incentives inextricably based upon and linked to fixed capital investments in Plant and Equipment for setting up a new industrial undertaking or for substantial expansion/technological up gradation/ diversification of an existing industrial undertaking where no repayment is stipulated are recognized in the Balance Sheet as deferred subsidy and credited in the Statement of Profit and Loss on a systematic basis over the remaining useful life of the related Plant and Equipment.
Export benefits availed as per prevalent schemes are accrued each year in which the goods are exported and when no significant uncertainty exists regarding their ultimate collection.
Cost comprise all cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less estimated cost of completion and estimated cost necessary to make the sale.
(h) Fair Value Measurement
The Company measures financial instruments such as investments (other than equity investments in subsidiaries, joint venture and associates) and derivatives at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
(i) In the principal market for the asset or liability, or
(ii) In the absence of a principal market, in the most advantageous market for the asset or liability to which the Company has access at that date.
All assets and liabilities for which fair value is measured or disclosed in the standalone financial statements are categorized 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 the purpose of Fair value disclosure, the Company has determined classes of assets and liabilities on the basis of nature, characteristics and risks of the assets or liabilities and the level of the fair value hierarchy as explained above.
Management determines the policies and procedures for both recurring fair value measurement, such as derivative instruments and unquoted financial assets and for non-recurring measurement, such as assets held for disposal.
(i) 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.
(1) Financial assets
(a) Initial recognition and measurement
All financial assets are initially recognized at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and liabilities, which are not fair value through profit and loss, are adjusted to the fair value on initial recognition.
(b) Subsequent measurement
Financial Assets other than Equity Instruments
- 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 principal outstanding. Interest income from such financial asset is included in other income using the effective interest rate (âEIRâ) method.
- Financial assets at Fair value through other comprehensive income (FVTOCI):
A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets 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 principal outstanding. They are subsequently measured at each reporting date at fair value, with all fair value movements recognized in Other Comprehensive Income (OCI). On Derecognition of the asset, cumulative gain or loss previously recognized in Other Comprehensive Income is reclassified from the OCI to Statement of Profit and Loss.
- Financial asset at Fair value through profit or loss (FVTPL):
A financial asset which is not classified in any of the above categories is subsequently fair valued through profit and loss.
Equity Instruments
- Investment in subsidiaries, Joint Ventures and Associates
The Company has accounted for its Investments in Subsidiaries, Joint venture and Associates at cost/ deemed cost.
- Other Equity Investments
All other equity investments are measured at fair value. Equity Investments, which are held for trading are classified as Fair value through the Statement of Profit and Loss. For equity investments other than held for trading, the Company has exercised irrevocable option to recognize in âOther Comprehensive Incomeâ (âOCIâ). The Company makes such election on an instrument-by-instrument basis for those investments which are strategic and are not intended for sale. 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. On disposal, accumulated gain/ losses on such investments are transferred from OCI to Retained Earnings.
Derecognition of Financial Instruments
The Company derecognises financial assets when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under IndAS 109.
Impairment of Financial Assets
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company determines expected credit losses after taking into account the past history of recovery, risk of default of the counterparty, existing market conditions, etc. The impairment methodology is applied on individual customer basis and depends on whether there has been a significant increase in the credit risk since initial recognition.
(2) Financial Liabilities
Recognition and Initial Measurement:
Financial liabilities are classified, at initial recognition, as at fair value through profit or loss, loans and borrowings, payables or as derivatives, as appropriate. 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.
Subsequent Measurement:
Financial liabilities are measured subsequently at amortized cost or FVTPL. A financial liability is classified as FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in the Statement of Profit and Loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in the Statement of Profit and Loss.
Derecognition:
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
(3) Offsetting Financial Instruments:
Financial assets and liabilities are offset and the net amount reported in the balance sheet when 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.
(4) Derivative Financial Instruments:
The Company enters into derivative financial instruments viz. foreign exchange forward contracts, interest rate swaps and cross currency swaps to manage its exposure to interest rate and foreign exchange rate risks. Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently premeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in the Statement of Profit and Loss immediately.
(j) Income taxes
Tax expense comprises current income tax and deferred tax. Current income tax expense is measured at the amount expected to be paid to the taxation authorities in accordance with the governing 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 provided using the balance sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.
Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, the carry forward of unused tax credits and unused tax losses can be utilized.
Income tax (Current and Deferred) is recognized in the Statement of Profit and Loss except to the extent it relates to the items recognized directly in equity or other comprehensive income.
Current tax assets and Current tax liabilities are offset, if a legally enforceable right exists to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
(k) Revenue recognition
Revenue from Sale of Goods
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the price charged (consideration received or receivable) to the customer and are recorded net of returns, claims, rebates and other pricing allowances, trade discounts, volume discounts and taxes and duties collected on behalf of the Government except as provided in Note No.37(a). Revenue is recognized on transfer of significant risks and rewards incidental to ownership to the customer which generally coincides with dispatch of goods to customer. Revenue to the extent of Price Variation disputes, if any, which are subjected to resolution through arbitration is recognized based on interim relief granted by a court or arbitral tribunal and/or after its receipt upon execution of the final award in favour of the Company, as the case may be.
Contract Revenue
Revenue from Engineering, Procurement and Construction (EPC) Contracts and Services is recognized based on the stage of completion of the individual contract using the percentage completion method, provided the order outcome as well as expected total costs can be reliably estimated. The stage of completion of the EPC Contracts and Services is determined by the proportion of the contract costs incurred for work performed upto the reporting date to the estimated total construction contract costs.
The estimates of contract costs and the revenue thereon are reviewed periodically by the management and the cumulative effect of any changes in the estimates is recognized in the period in which such changes are determined. Where it is probable that contract expenses will exceed total revenue from a contract, the expected loss is recognized immediately as an expense in the Statement of Profit and Loss.
Prepayments from customers are recognized as liabilities. Contracts in progress for which the selling price of the work performed exceeds interim billings is recognized as an asset. Contracts in progress for which interim billings exceed the selling price are recognized as a liability.
Interest income is recognized on time proportion basis. Dividend income is recognized when the right to receive payment is established.
(l) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction, production or development of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time the assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in Statement of Profit and Loss in the period in which they are incurred. Transaction cost in respect of long term borrowing are amortized over the tenure of respective loans using Effective Interest Rate (EIR) method.
(m) Provisions, Contingent Liabilities and Contingent Assets
The Company recognizes a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and reliable estimates can be made of the amount of obligation. A disclosure of contingent liability is made when there is possible obligation or a present obligation that will probably not require outflow of resources or where a reliable estimate of the obligation cannot be made. Where there is a possible obligation or a present obligation and likelihood of outflow of resources is remote, no provision or disclosure is made.
Provision for warranty related costs are recognized when the terms and conditions attached to and forming part of the executed portion of the contract of sale of products and/ or providing of services or both are assessed to have underlying obligations to be met during the warranty period. The estimate of such warranty costs is revised annually.
Contingent assets are not recognized but disclosed in the financial statements, where economic inflow is probable.
(n) Operating Segment
The identification of operating segment is consistent with performance assessment and resource allocation by the chief operating decision maker. An operating segment is a component of the Company that engage in business activities from which it may earn revenues and incur expenses (including transactions with any other components of the Company) and for which discrete financial information is available. Operating segments of the Company comprises two segments i.e. Cables and Engineering, Procurement & Construction (EPC). All operating segments are reviewed regularly by the chief operating decision maker to make decisions about resources to be allocated to the segments and assesses their performance.
(o) Employee Benefits
Defined Contribution Plan
Contribution to approved Superannuation Fund as per Companyâs scheme and Employeeâs Regional Provident Fund is recognized as an expense in the Statement of Profit and Loss for the year when the employee renders the related service.
Defined Benefit Plan
Gratuity, Pension and Compensated Absences benefits, payable as per Companyâs schemes are considered as defined benefit schemes and are charged to Statement of Profit and Loss on the basis of actuarial valuation carried out at the end of each financial year by independent actuaries using Projected Unit Credit Method. For the purpose of presentation of defined benefit plans, the allocation between short term and long term provisions is made as determined by the independent actuaries. Actuarial gains and losses are recognized in the Other Comprehensive Income.
The Provident fund Contribution, other than Contribution to Employeeâs Regional Provident Fund is made to an approved trust administered by the trustees. The Company has its representation on the board of trust. The Company is liable for any shortfall, if any, in the fund asset based on the government specified minimum rates of return and the same is recognized as an expense in the Statement of Profit and Loss.
Ex-gratia or other amount disbursed on account of selective employees separation scheme or otherwise are charged to Statement of Profit and Loss as and when incurred/determined.
(p) Operating Leases
Where the Company is the Lessee:
Leases, where the less or effectively retains substantially all the risks and benefits of ownership over the leased term, are classified as operating leases. The total lease rentals (including rental increases, if any) in respect of an asset taken on operating lease/sub-lease are recognized as an expense in the Statement of Profit and Loss on a straight line basis over the lease term except where the lease payments are structured to increase in line with expected general inflation.
Where the Company is the Lesser:
Lease under which the Company does not transfer substantially all the risks and benefits of ownership of the asset is classified as operating lease. Assets subject to operating lease are included in Investment Property. Lease income from operating lease is recognized in the Statement of Profit and Loss on a straight line basis over the lease term except where the lease payments are structured to increase in line with expected general inflation. Costs including depreciation are recognized as an expense in the Statement of Profit and Loss.
(q) Finance Lease
Finance lease transactions (including Indefeasible Right to Use (IRU) Networks) where significant risks and rewards incidental to ownership are effectively transferred / term of the lease covers the estimated economic useful life of the cocerned IRU networks, are recognized as outright sales. Profit or Loss resulting from outright sales of IRU networks is recognized in the Statement of Profit and Loss immediately. Finance income, if any, is recognized over the lease term. Initial direct cost such as legal costs, brokerage costs etc are recognized in the statement of Profit and Loss at the commencement of lease term.
(r) Foreign Currency Translations
Transactions in foreign currencies are initially recorded in the functional currency, by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction. Foreign currency monetary items are translated using the exchange rate prevailing at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in the Statement of Profit and Loss.
(s) Earnings Per Share
Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders of the Company by the weighted average number of the equity shares outstanding during the year.
(t) Cash and Cash Equivalents
Cash and Cash equivalent in the cash flow statement comprises cash on hand, demand deposits with banks and short-term investments with an original maturity of three months or less from the date of acquisition.
1.6 Recent Accounting Pronouncements
(a) Ind AS 115-Revenue from Customers
On March 28,2018 Ministry of Corporate Affairs (âMCAâ) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue when the control of goods or services underlying the particular performance obligation is transferred to customers. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainties of revenue and cash flows arising from the underlying terms and conditions of the contract between the entity and customer. An entity may choose to apply the new standard to its historical transactions and retrospectively adjust each comparative period. Alternatively, an entity can recognize the cumulative effect of applying the new standard at the date of initial application and make no adjustments to its comparative information (Catch up transition Method). The chosen transition option can have a significant effect on revenue trends in the financial statements. A change in the timing of revenue recognition may require a corresponding change in the timing of recognition of related costs. The standard is effective for annual periods beginning on or after 1st April, 2018. The Company is currently evaluating the requirements of Ind AS 115, and has not yet determined the impact on the financial statements.
(b) Appendix B to Ind AS 21, Foreign currency transactions and advance consideration
On March 28, 2018 MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transaction and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, liability, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from 1st April, 2018. The Company has evaluated the effect of this on the financial statements and impact is not material.
(a) Rupee Term Loan and Foreign Currency Term Loans from a bank are secured by way of hypothecation of moveable fixed assets, both present and future and first charge created by way of joint mortgage by deposit of title deeds of certain immoveable properties of the Company, ranking pari-passu inter se amongst consortium lenders. The said term loans are further secured by second charge by way of hypothecation of entire Current Assets, both present and future, of the Company viz inventories, bills receivables, book debts, claims, etc. Rupee Term Loan of Rs, 416.67 lakhs carries rate of interest of 9.15% p.a. and is repayable in 12 quarterly installments commencing from December, 2017 and ending on September, 2020. Another Rupee Term Loan of Rs, 497.69 lakhs and Foreign Currency Term Loan are repayable in 16 quarterly installments commencing from April, 2016 and ending on January, 2020. Rupee Term Loan carries Interest rate of 9.45% p.a. Foreign Currency Term Loan carries interest rate of 4.65% p.a. and 10.25% p. a. (fully hedged) on the reporting date.
* Warranty provision represents the expected cost of meeting obligations of rectification/replacement of certain products manufactured/ outsourced and supplied by the Company and forming a part of the composite turnkey contracts and services being executed by the Company having stipulation of warranty and also in respect of a contract of supply of manufactured and outsourced products executed by the Company.
(a) Working capital loans/borrowings from banks are generally renewable within twelve months from the date of sanction or immediately previous renewal, unless otherwise stated. The lender banks have a right to cancel the credit limits (either fully or partially) and, interalia, demand repayment in case of non-compliance of terms and conditions of sanctions or deterioration in the sanctioned loan accounts in any manner.
(b) Working capital loans/borrowings (both fund and non-fund based) from banks including certain buyerâs credit are secured by way of hypothecation of entire Current Assets, both present and future, of the Company viz Inventories, bills receivables, book debts (trade receivables), claims, etc. and are further secured by way of hypothecation of moveable fixed assets, both present and future, and first charge created by way of joint mortgage by deposit of title deeds of certain immovable properties of the Company ranking Pari-passu interse amongst consortium lenders. As a collateral security, the working capital loans/borrowings from banks are additionally secured by way of pledge of 12,50,000 equity shares held by the Company in Birla Cable Limited and cross corporate guarantee of Birla Cable Limited.
(c) In respect of certain buyerâs Credit of '' 800.42 lakhs from a bank is secured by way of hypothecation of moveable Fixed Assets, both present and future and first charge created by way of joint mortgage by deposit of title deeds of certain immoveable properties of the Company, ranking pari-passu inter se amongst consortium lenders. The said Buyerâs Credit is further secured by second charge by way of hypothecation of entire Current Assets, both present and future, of the Company viz inventories, bills receivables, book debts, claims, etc. Buyerâs Credit (In Foreign Currency) are due for repayment between April, 2018 and May, 2018 and carry rate of interest of 0.22% to 2.12% p.a.
Mar 31, 2017
1. NATURE OF OPERATIONS
VINDHYA TELELINKS LIMITED is engaged in the business of manufacturing and sale of Cables (comprising of telecommunications cables, other types of wires & cables, FRP rods/glass ravings, etc.) and Engineering, Procurement and Construction (EPC) business segments.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Accounting:
The financial statements of the Company have been prepared and presented as a going concern basis under the historical cost convention and comply in all material respects with generally accepted accounting principles (GAAP) in India, the applicable Accounting Standards as notified under the relevant provisions of the Companies Act, 2013, as amended/ changed from time to time. All revenue and expenses are accounted for on accrual basis except certain insurance claims and government subsidy/ incentives, which are recognized on acceptance basis, as and when the amount whereof can be ascertained with reasonable certainty. The accounting policies adopted in the preparation of financial statements have been consistently applied by the Company, unless otherwise stated.
(b) Use of Estimates:
The preparation of financial statements in conformity with generally accepted accounting principles in India requires management to make judgment, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of contingent liabilities, at the end of the reporting period. Although these estimates and associated assumptions are based upon historical experiences and various other factors besides managementâs best knowledge of current events and actions, uncertainty about these assumptions could result in outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. The estimates and underlying assumptions are reviewed on a periodic basis. Any revision in the accounting estimates is recognized in the period in which the results are known/materialize.
(c) Fixed Assets including Intangible Assets:
Property, Plant & Equipment are stated at cost (net of recoverable taxes (cenvat), trade discounts and rebates, claims, etc.) less accumulated depreciation and accumulated impairment losses, if any. The cost of fixed assets comprises its purchase price and any directly attributable costs of bringing the asset to its working condition for the intended use. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. Insurance spares (determined on the basis of irregular use) are capitalized and all other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the Statement of Profit and Loss for the period during which such expenses are incurred. Fixed assets retired from active use and held for disposal are stated at the lower of their net book value and net realizable value and are disclosed separately. When assets are sold, disposed or discarded, their cost and accumulated depreciation are removed from the accounts. Losses arising from the retirement of, and gains or losses arising from sale, disposal and discard of fixed assets are included in the Statement of Profit and Loss. Fixed assets which are not ready for their intended use on the date of Balance Sheet are shown as Capital Work-in-Progress.
Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization/depletion and impairment loss, if any.
(d) Depreciation and amortization:
Depreciation on fixed assets is provided on Straight Line Method based on the life of the asset specified in Schedule II of the Companies Act, 2013, and/or useful life reviewed and assessed by the Company based on technical evaluation of relevant class of assets, on pro-rata basis from the month the assets are ready to use, as detailed below:
Depreciation on sale/disposal/discard of assets is provided pro-rata up to the month of sale/disposal/discard.
An intangible asset is measured at cost and amortized so as to reflect the pattern in which the assets economic benefits are consumed. The useful life has been estimated as five years.
(e) Impairment:
An asset is treated as impaired when the carrying cost of an asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
(f) Government Grants and Subsidies:
Grants and subsidies (including industrial investment promotion incentives linked to fixed capital investment in Plant & Equipments) from the Government are recognized when there is reasonable assurance that the conditions attached to them will be complied and grants/subsidy will be received. Government subsidy/incentives inextricably based upon and linked to fixed capital investments in Plant & Equipments for setting up a new industrial undertaking or for substantial expansion/technological up gradation/diversification of an existing industrial undertaking where no repayment is stipulated, are credited to Capital Reserve.
(g) Leases:
Where the Company is the Lessor:
(i) Operating Lease:
Lease under which the Company does not transfer substantially all the risks and benefits of ownership of the asset is classified as operating lease. Assets subject to operating lease/sub-lease are included in fixed assets. Lease income is recognized in the Statement of Profit and Loss on a straight line basis over the lease/sub-lease term. Costs, including depreciation are recognized as an expense in the Statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc are recognized immediately in the Statement of Profit and Loss.
(ii) Finance Lease:
Finance lease transactions where significant risks and rewards of ownership are effectively transferred, are recognized as outright sales. Profit or Loss resulting from outright sale of the asset being leased, is recognized in statement of profit and loss immediately. Finance income, if any, is recognized over the lease term. Initial direct costs such as legal costs, brokerage costs, etc are recognized immediately in the Statement of Profit and Loss.
Where the Company is the Lessee:
Operating Lease:
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the assets during the lease/sublease term are classified as operating leases. Operating lease payments, are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease/sub-lease term.
(h) Investments:
Investments which are readily realizable and intended to be held for not more than a year from the date on which such investments are made, are classified as Current Investments. All other investments are classified as Non-Current investments. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Current Investments are carried in the financial statements at lower of cost and quoted/fair value determined on an individual investment basis. Noncurrent Investments are stated/carried at cost. However, provision for diminution in the value of Non-Current Investments is made only if such decline is other than temporary. On sale of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.
Investment property is stated at cost less accumulated depreciation.
(j) Revenue Recognition:
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and that the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized
(i) Sale of Goods:
Revenue from the sale of Goods is recognized on transfer of significant risks and rewards incidental to ownership in the Goods to the customer which generally coincides with dispatch of Goods to customers. Sales are recorded inclusive of excise duty but net of return, if any, trade discounts, rebate, other pricing discounts, sales tax/VAT, freight and insurance. Revenue to the extent of price variation disputes, if any, which are subjected to resolution through arbitration is recognized based on interim relief granted by a court and/or after its receipt upon execution of the final award in favour of the Company, as the case may be.
(ii) Contract Revenue:
Revenue from Engineering, Procurement and Construction (EPC) contracts is recognized (net of service tax and sales tax/ VAT) based on the stage of completion of the individual contract using the percentage completion method, provided the order outcome as well as expected total costs can be reliably estimated. The stage of completion of the EPC contracts is determined by the proportion of the contract cost incurred for work performed up to the Balance Sheet date bear to the estimated total construction contract cost.
Contracts Revenue is accounted for on the basis of bills submitted to customers/bills certified by the customers or on technical evaluation of work executed based on joint inspection with customers and does not include material supplied by customers/clients free of cost. The income on account of claims/rewards or extra item works are recognized to the extent Company expects reasonable certainty about receipt or acceptance from the clients/customers. The estimates of contract costs and the revenue thereon are reviewed periodically by the management and the cumulative effect of any changes in the estimates is recognized in the period in which such changes are determined. Where it is probable that contract expenses will exceed total revenue from a contract, the expected loss is recognized immediately as an expense in the Statement of Profit and Loss
Prepayments from customers are recognized as liabilities. A contract in progress for which the selling price of the work performed exceeds interim billings and expected losses is recognized as an asset. Contracts in progress for which interim billings and expected losses exceed the selling price are recognized as a liability.
(iii) Interest:
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.
(iv) Dividends:
Dividend income is recognized when the Companyâs right to receive dividend is established by the reporting date.
(v) Export incentives:
Export incentives are recognized in the year of export on the basis of receipt of proof of export.
(k) Foreign Currency Transactions:
(i) Initial Recognition:
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the prevailing exchange rate between the reporting currency and the foreign currency at the date of the transaction or that approximates the actual rate at the date of transaction.
(ii) Conversion:
Monetary items denominated in foreign currencies at the year end are restated at year end rates.
(iii) Exchange Differences:
Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expense in the year in which they arise
Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.
(iv) Forward Exchange Contracts not intended for trading or speculation purposes:
The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the Statement of Profit and Loss in the year in which the exchange rate(s) change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or expense for that year.
(v) Translation of Integral foreign operations:
In respect of a Branch, which is having integral foreign operations, all transactions are translated at rates prevailing on the date of transaction or that approximates the actual rate at the date of transaction. Branch monetary assets and liabilities are restated at the year and exchange rate(s).
(l) Derivative Instruments:
In accordance with the guidance note on Accounting of Derivative contracts issued by ICAI, derivative contracts, other than foreign currency forward contracts covered under Accounting Standard (AS) - 11 âThe effect of changes in foreign exchange ratesâ, are marked to market (MTM) on a portfolio basis, and the net gain/loss, if any, after considering the offsetting effect of gain/loss on the underlying hedged item , is charged to Statement of Profit and Loss.
(m) Employee Benefits:
The Company makes regular contributions to recognized Provident Fund (managed by an approved trust) /Family Pension Fund and approved Superannuation Fund as per Companyâs schemes, which are recognized as an expense in the Statement of Profit and Loss for the year when the employee renders the related service. Gratuity, Pension and Compensated Absences benefits payable as per Companyâs schemes are considered defined benefit schemes and are charged to Statement of Profit and Loss on the basis of actuarial valuation carried out at the end of each financial year by independent actuaries using Projected Unit Credit Method. For the purpose of presentation of defined benefit plans, the allocation between short term and long term provisions is made as determined by the independent actuaries. Actuarial gains and losses comprise experience adjustments and effects of changes in actuarial assumptions are recognized in the Statement of Profit and Loss in the year in which they arise.
Ex-gratia or other amount disbursed on account of selective employees separation scheme or otherwise are charged to Statement of Profit and Loss as and when incurred/determined.
(n) Income Taxes:
Tax expense comprises current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961, enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the Statement of Profit and Loss. Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of MAT under the Income Tax Act, 1961, the said asset is created by way of credit to the Statement of Profit and Loss and shown as âMAT Credit Entitlementâ. The Company reviews the âMAT Credit Entitlementâ asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
(o) Segment Reporting Policies:
(i) Identification of segments:
The Companyâs operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and services and serves different markets. The analysis of geographical segments is based on the geographical location of the customers.
(ii) Allocation of common costs:
Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.
(iii) Unallocated items:
The general corporate income and expense items which are not allocated to any business segment are considered unallocated items.
(iv) Segment Policies:
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the Financial Statements of the Company as a whole.
(p) Borrowing Cost:
Borrowing costs include interest and ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs, if any, attributable to the acquisition, construction or production of qualifying assets that necessarily take a substantial period of time to get ready for its intended use or sale are added to the cost up to the date when such assets are ready for their intended use. All other borrowing costs are recognized as an expense in the period in which these are incurred, in accordance with the governing terms and conditions of the underlying borrowing.
(q) Provisions, Contingent Liabilities and Contingent Assets:
A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. The expense relating to any provision is presented in the Statement of Profit and Loss, net of any reimbursement.
Provision for warranty related costs are recognized when the terms and conditions attached to and forming part of the executed portion of the contract of sale of products and/or providing of services or both are assessed to have underlying obligations to be met during the warranty period. The estimate of such warranty costs is revised annually.
(r) Cash and Cash equivalents:
Cash and Cash equivalent for the purposes of cash flow statement comprise cash at bank and on hand and short-term investments with an original maturity of three months or less.
Mar 31, 2016
1. NATURE OF OPERATIONS
VINDHYA TELELINKS LIMITED is engaged in the business of manufacturing and sale of telecommunication cables, other types of wires & cables, FRP rods/glass roving, etc. and Engineering, Procurement and Construction (EPC) business.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Accounting
The financial statements of the Company have been prepared and presented as a going concern basis under the historical cost convention modified to the extent of the revaluation of fixed assets and comply in all material respects with generally accepted accounting principles (GAAP) in India, the applicable Accounting Standards as notified under the relevant provisions of the Companies Act, 2013 as amended/changed from time to time. All revenue and expenses are accounted for on accrual basis except certain insurance claims and government subsidy/incentives, which are recognized on acceptance basis, as and when the amount whereof can be ascertained with reasonable certainty. The accounting policies adopted in the preparation of financial statements have been consistently applied by the Company, unless otherwise stated.
(b) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in India requires management to make judgment, estimates and assumptions that affect the reported amounts of revenue, expenses assets and liabilities and disclosure of contingent liabilities, at the end of the reporting period. Although these estimates and associated assumptions are based upon historical experiences and various other factors besides managementâs best knowledge of current events and actions, uncertainty about these assumptions could result in outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. The estimates and underlying assumptions are reviewed on a periodic basis. Any revision in the accounting estimates is recognized in the period in which the results are known/materialize.
(c) Fixed Assets including Intangible Assets
Tangible Assets are stated at cost (net of recoverable taxes (convert), trade discounts and rebates, claims, etc.) less accumulated depreciation and accumulated impairment losses, if any. The cost of a tangible asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition for the intended use. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. Insurance spares (determined on the basis of irregular use) are capitalized and all other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the Statement of Profit and Loss for the period during which such expenses are incurred. Tangible assets retired from active use and held for disposal are stated at the lower of their net book value and net realizable value and are disclosed separately. When assets are sold, disposed or discarded, their cost and accumulated depreciation are removed from the accounts. Losses arising from the retirement of, and gains or losses arising from sale, disposal and discard of tangible assets are included in the Statement of Profit and Loss. In case of revaluation of fixed assets, the revalued amount as determined by the valued is considered in the books of account and the differential amount is transferred to Revaluation Reserve. Deprecation on excess of revalued amount over cost is transferred from Revaluation Reserve to the Statement of Profit and Loss. Tangible assets which are not ready for their intended use on the date of Balance Sheet are shown as Capital Work-in-Progress.
Intangible Assets are stated at cost of acquisition net of recoverable taxes less accumulated amortization/depletion and impairment loss, if any.
(d) Depreciation and Amortization
Depreciation on tangible assets is provided on Straight Line Method based on the life of the asset specified in Schedule II of the Companies Act, 2013, and/or useful life reviewed and assessed by the Company based on technical evaluation of relevant class of assets, on pro-rata basis from the month the assets are ready to use, as detailed below:
An intangible asset is measured at cost and amortized so as to reflect the pattern in which the assets economic benefits are consumed. The useful life has been estimated as five years.
(e) Impairment
An asset is treated as impaired when the carrying cost of an asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
(f) Government Grants and Subsidies
Grants and subsidies (including industrial investment promotion incentives linked to fixed capital investment in plant and machinery) from the Government are recognized when there is reasonable assurance that the conditions attached to them will be complied and grants/subsidy will be received. Government subsidy/incentives inextricably based upon and linked to fixed capital investments in plant and machinery for setting up a new industrial undertaking or for substantial expansion/technological up gradation/diversification of an existing industrial undertaking where no repayment is stipulated, are credited to Capital Reserve.
(g) Leases
Where the Company is the Lesser
(i) Operating Lease
Lease under which the Company does not transfer substantially all the risks and benefits of ownership of the asset is classified as operating lease. Assets subject to operating lease/sub-lease are included in fixed assets. Lease income is recognized in the Statement of Profit and Loss on a straight line basis over the lease/sub-lease term. Costs, including depreciation are recognized as an expense in the Statement of Profit and Loss. Initial direct costs such as legal costs, brokerage costs, etc are recognized immediately in the Statement of Profit and Loss.
(ii) Finance Lease
Finance lease transactions where significant risk & rewards of ownership are effectively transferred, are recognized as outright sales. Profit or Loss resulting from outright sale of the asset being leased, is recognized in the Statement of Profit and Loss immediately. Finance income, if any, is recognized over the lease term. Initial direct costs such as legal costs, brokerage costs, etc are recognized immediately in the Statement of Profit and Loss.
Where the Company is the Lessee Operating Lease
Leases where the lesser effectively retains substantially all the risks and benefits of ownership of the assets during the lease/sub-lease term are classified as operating leases. Operating lease payments, are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease/sub-lease term.
(h) Investments
Investments which are readily realizable and intended to be held for not more than a year from the date on which such investments are made, are classified as current investments. All other investments are classified as non-current (long-term) investments. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties. Current investments are carried in the financial statements at lower of cost and quoted/fair value determined on an individual investment basis. Non-current investments are stated/carried at cost. However, provision for diminution in the value of Non-current (long term) investments is made only if such decline is other than temporary. On sale of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.
(j) Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and that the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized
(i) Sale of Goods
Revenue from the sale of goods is recognized on transfer of significant risks and rewards incidental to ownership in the goods to the customer which generally coincides with dispatch of goods to customers. Sales are recorded inclusive of excise duty but net of return, if any, trade discounts, rebate, other pricing discounts, sales tax/VAT, freight and insurance. Revenue to the extent of price variation disputes, if any, which are subjected to resolution through arbitration is recognized based on interim relief granted by a court and/or after receipt of revenue in execution of the final award in favor of the Company, as the case may be.
(ii) Contract Revenue
Revenue from Engineering, Procurement and Construction (EPC) contracts is recognized based on the stage of completion of the individual contract using the percentage completion method, provided the order outcome as well as expected total costs can be reliably estimated. The stage of completion of the EPC contract is determined by the proportion of the contract cost incurred for work performed up to the Balance Sheet date bear to the estimated total construction contract cost.
Contract Revenue is accounted for on the basis of bills submitted to customers/bills certified by the customers or on technical evaluation of work executed based on joint inspection with customers and do not include material supplied by customers/clients free of cost. The income on account of claims/rewards or extra item works are recognized to the extent Company expects reasonable certainty about receipt or acceptance from the clients/ customers. The estimates of contract costs and the revenue thereon are reviewed periodically by the management and the cumulative effect of any changes in the estimates is recognized in the period in which such changes are determined. Where it is probable that contract expenses will exceed total revenue from a contract, the expected loss is recognized immediately as an expense in the Statement of Profit and Loss.
Prepayments from customers are recognized as liabilities. A contract in progress for which the selling price of the work performed exceeds interim billings and expected losses is recognized as an asset. Contracts in progress for which interim billings and expected losses exceed the selling price are recognized as a liability.
(iii) Interest
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.
(iv) Dividends
Dividend income is recognized when the Companyâs right to receive dividend is established by the reporting date.
(v) Export Incentives
Export incentives are recognized in the year of export on the basis of receipt of proof of export.
(k) Foreign Currency Transactions
(i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the prevailing exchange rate between the reporting currency and the foreign currency at the date of the transaction or that approximates the actual rate at the date of transaction.
(ii) Conversion
Monetary items denominated in foreign currencies at the yearend are restated at year end rates.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expense in the year in which they arise.
Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.
(iv) Forward Exchange Contracts not Intended for Trading or Speculation Purposes
The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the Statement of Profit and Loss in the year in which the exchange rate(s) change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or expense for that year.
(v) Translation of Integral Foreign Operations
In respect of a branch, which is having integral foreign operations, all transactions are translated at rates prevailing on the date of transaction or that approximates the actual rate at the date of transaction. Branch monetary assets and liabilities are restated at the yearend exchange rate(s).
(l) Derivative Instruments
In accordance with the ICAI announcement, derivative contracts, other than foreign currency forward contracts covered under Accounting Standard (AS) - 11 âThe effect of changes in foreign exchange ratesâ, are marked to market (MTM) on a portfolio basis, and the net loss, if any after considering the offsetting effect of gain on the underlying hedged item, is charged to the Statement of Profit and Loss. Net gain, if any, after considering the offsetting effect of loss on the underlying hedged item, is ignored.
(m) Employee Benefits
The Company makes regular contributions to recognized Provident Fund (managed by an approved trust) /Family Pension Fund and approved Superannuation Fund as per Companyâs schemes, which are recognized as an expense in the Statement of Profit and Loss for the year when the employee renders the related service. Gratuity, Pension and Compensated Absences benefits payable as per Companyâs schemes are considered defined benefit schemes and are charged to the Statement of Profit and Loss on the basis of actuarial valuation carried out at the end of each financial year by independent actuaries using Projected Unit Credit Method. For the purpose of presentation of defined benefit plans, the allocation between short term and long term provisions is made as determined by the independent actuaries. Actuarial gains and losses comprise experience adjustments and effects of changes in actuarial assumptions are recognized in the Statement of Profit and Loss in the year in which they arise.
Ex-gratia or other amount disbursed on account of selective employees separation scheme or otherwise are charged to Statement of the Profit and Loss as and when incurred/determined.
(n) Income Taxes
Tax expense comprises current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961, enacted in India. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the Statement of Profit and Loss. Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.
The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.
Minimum Alternate Tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period i.e. the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of MAT under the Income Tax Act, 1961, the said asset is created by way of credit to the Statement of Profit and Loss and shown as âMAT Credit Entitlementâ. The Company reviews the âMAT Credit Entitlementâ asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.
(o) Segment Reporting Policies
(i) Identification of Segments
The Companyâs operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and services and serves different markets. The analysis of geographical segments is based on the geographical location of the customers.
(ii) Allocation of Common Costs
Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.
(iii) Unallocated items
The general corporate income and expense items which are not allocated to any business segment are considered unallocated items.
(iv) Segment Policies
The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the Financial Statements of the Company as a whole.
(p) Borrowing Cost
Borrowing costs include interest and ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs, if any, attributable to the acquisition, construction or production of qualifying assets that necessarily take a substantial period of time to get ready for its intended use or sale are added to the cost up to the date when such assets are ready for their intended use. All other borrowing costs are recognized as expense in the period in which these are incurred, in accordance with the governing terms and conditions of the underlying borrowing.
(q) Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates. The expense relating to any provision is presented in the Statement of Profit and Loss, net of any reimbursement.
Provision for warranty related costs are recognized when the terms and conditions attached to and forming part of the executed portion of the contract of sale of products and/or providing of services or both are assessed to have underlying obligations to be met during the warranty period. The estimate of such warranty costs is revised annually.
(r) Cash and Cash Equivalents
Cash and cash equivalent for the purposes of cash flow statement comprise cash at bank and on hand and short-term investments with an original maturity of three months or less.
by Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting. For the year ended 31st March 2016, the amount of per share dividend recognized for distribution to equity shareholders was Rs. 6/- per share, subject to approval of shareholders.
(d) Details of Shareholders holding more than 5% shares based on legal ownership in the subscribed share capital of the Company :
(a) Supplierâs Credit from a bank are secured by way of hypothecation of entire current assets of the Company namely stocks of raw materials, stocks-in-process, stores & spares, semi finished and finished goods, bills receivables, book debts, etc. both present and future, and are further secured by way of hypothecation of moveable fixed assets, both present and future, ranking pari-passu inter se and first charge created by way of joint mortgage by deposit of title deeds of certain immovable properties of the Company. As a collateral security, Supplierâs Credit(s) are additionally secured by way of pledge of 12,50,000 equity shares and cross corporate guarantee of Birla Ericsson Optical Limited, a joint venture. Supplierâs Credit(s) are repayable in the financial year 2016-17 and carries interest rate of 1.55% per annum to 2.10% per annum.
(b) Rupee Term Loan and Foreign Currency Term Loan from a bank are secured by second charge by way of hypothecation of entire current assets of the Company namely stocks of raw materials, stocks-in-process, stores & spares, semi finished and finished goods, bills receivables, book debts, etc. both present and future. These Loans are further secured by way of hypothecation of moveable fixed assets, both present and future, ranking pari-passu inter se and first charge created by way of joint mortgage by deposit of title deeds of certain immovable properties of the Company. Rupee Term Loan and Foreign Currency Term Loan are repayable in sixteen quarterly installments from April, 2016. Rupee Term Loan carries interest rate of 10.65% per annum and Foreign Currency Term Loan carries interest rate of 4.65% per annum and 10.25% per annum (fully hedged) on the reporting date.
(c) Loans from Bodies Corporate amounting to Rs. 700.00 lacs and Rs. 5800.00 lacs are repayable in full in the year 2016-17 and 2017-18 respectively. These loans carry interest rate of 10.50% per annum on the reporting date.
(a) Working capital loans/borrowings from banks being working capital credit facilities, sanctioned by banks are generally renewable within twelve months from the date of sanction or immediately previous renewal, unless otherwise stated. The lender banks have a right to cancel the credit limits (either fully or partially) and, interlaid, demand repayment in case of non-compliance of terms and conditions of sanctions or deterioration in the sanctioned loan accounts in any manner.
(b) Working capital loans/borrowings (both fund and non-fund based) from concerned lender banks viz. State Bank of India (SBI), State Bank of Patiala (SBP), IDBI Bank Limited, HDFC Bank Limited and RBL Bank Limited are secured by way of hypothecation of entire current assets of the Company namely stocks of raw materials, stocks-in-progress, stores & spares, semi finished and finished goods, bills receivables, book debts (trade receivables), etc. both present and future, and are further secured by way of hypothecation of moveable fixed assets, both present and future, ranking pari-passu inter se and first charge created by way of joint mortgage by deposit of title deeds of certain immovable properties of the Company. As a collateral security, the working capital loans/borrowings are additionally secured by way of pledge of 12,50,000 equity shares held by the Company in Birla Ericsson Optical Limited and cross corporate guarantee of Birla Ericsson Optical Limited, a joint venture.
Mar 31, 2015
(a) Basis of Preparation
The financial statements of the Company are prepared and presented
under the historical cost convention and comply in all material
respects with accounting principles generally accepted in India, the
applicable Accounting Standards as notified under the relevant
provisions of the Companies Act, 2013 as amended/ changed from time to
time. All income & expenditure are accounted for on accrual basis
except certain insurance claims and government subsidy/incentives,
which are recognised on acceptance basis, as and when the amount
whereof can be ascertained with reasonable certainty.
(b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in India requires management to make
judgement, estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent liabilities at the
date of the financial statements and the results of operations during
the reporting year end. Although these estimates are based upon
management''s best knowledge of current events and actions, actual
results could differ from these estimates. Difference between the
actual results and estimates are recognised in the period in which the
results are known/materialised.
(c) Fixed Assets including Intangible Assets
Tangible assets are stated at cost (net of recoverable taxes, trade
discounts and rebates, claims, etc.) less accumulated depreciation,
amortization and impairment loss, if any. The cost of a tangible asset
comprises its purchase price and any directly attributable costs of
bringing the asset to working condition for its intended use and
adjustments arising from exchange rate variations attributable to the
assets. Expenditure for additions, improvements, renewals and insurance
spares (determined on the basis of irregular use) are capitalised and
expenditure for repairs and maintenance are charged to the Statement of
Profit and Loss. Tangible assets retired from active use and held for
disposal are stated at the lower of their net book value and net
realisable value and are disclosed separately. When assets are sold or
discarded their cost and accumulated depreciation are removed from the
accounts. Losses arising from the retirement of, and gains or losses
arising from disposal of tangible assets are included in the Statement
of Profit and Loss. Tangible assets which are not ready for their
intended use on the date of Balance Sheet are shown as capital
work-in-progress.
Intangible assets are stated at cost of acquisition net of recoverable
taxes less accumulated amortization/depletion and impairment loss, if
any.
(d) Depreciation and Amortisation
Depreciation on tangible assets is provided to the extent of
depreciable amount on Straight Line Method on useful life of the assets
as prescribed in Schedule II to the Companies Act, 2013 on pro-rata
basis from the month the assets are put to use except in case of new
project where it is provided for the period of use. Depreciation on
sale of tangible assets is provided upto the month prior to the month
in which the assets are sold or disposed off. Depreciation on
incremental cost arising on account of capitalised insurance spares is
amortised over the residual life of the respective assets. Premium on
leasehold land is amortised on straight line basis over the period of
lease.
An intangible asset is measured at cost and amortised so as to reflect
the pattern in which the assets economic benefits are consumed. The
useful life has been estimated as five years.
(e) Impairment
An asset is treated as impaired when the carrying cost of an asset
exceeds its recoverable value. An impairment loss is charged to the
Statement of Profit and Loss in the year in which an asset is
identified as impaired. The impairment loss recognised in prior
accounting period is reversed if there has been a change in the
estimate of recoverable amount.
(f) Government Grants and Subsidies
Government grants and subsidies (including incentives) are recognised
when there is reasonable assurance that the conditions attached to them
will be complied and grant/subsidy will be received.
(g) Leases
Where the Company is the Lessor
(i) Operating Lease
Assets subject to operating leases are included in fixed assets. Lease
income is recognised in the Statement of Profit and Loss on a straight
line basis over the lease term. Costs, including depreciation are
recognised as an expense in the Statement of Profit and Loss. Initial
direct costs such as legal costs, brokerage costs, etc. are recognised
immediately in the Statement of Profit and Loss.
(ii) Finance Lease
Finance lease transactions where significant risk & rewards of
ownership are effectively transferred, are recognised as outright
sales. Profit or Loss resulting from outright sale of the asset being
leased, is recognised in the statement of profit and loss immediately.
Finance income, if any, is recognised over the lease term. Initial
direct costs such as legal costs, brokerage costs, etc. are recognised
immediately in the Statement of Profit and Loss.
Where the Company is the Lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognised as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term.
(h) Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as non-current investments. Current
investments are carried at lower of cost and quoted/fair value
determined on an individual investment basis. Non-current investments
are stated/carried at cost. However, provision for diminution in the
value of Non-current (long term) investments is made only if such
decline is other than temporary.
(j) Revenue Recognition
(i) Sale of Products
Revenue from the sale of products is recognised on transfer of
significant risks and rewards incidental to ownership to the customer
which generally coincides with despatch of products to customers. Sale
of products includes excise duty. Revenue to the extent of price
variation disputes, if any, which are subjected to resolution through
arbitration is recognised based on interim relief granted by a court
and/or after receipt of revenue in execution of the final award in
favour of the Company, as the case may be.
(ii) Contract Revenue
The Company follows the percentage of completion method as per
Accounting Standard (AS-7) to recognise revenue in respect of contracts
executed. The stage of completion of the project is determined by the
proportion to the contract cost incurred for work performed upto the
Balance Sheet date bear to the estimated total contract cost.
Contract Revenue is accounted for on the basis of bills submitted to
clients/bills certified by clients or on technical evaluation of work
executed based on joint inspection with customers and do not include
material supplied by customers/clients free of cost. The income on
account of claims/rewards or extra item works are recognised to the
extent company expects reasonable certainty about receipt or acceptance
from the clients/customers. In case the total cost of a contract, based
on technical and other estimates, is expected to exceed the
corresponding contract value, such expected loss is fully provided for.
(iii) Interest
Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the interest rate applicable.
(iv) Dividend
Dividend income is recognised when the Company''s right to receive
dividend payment is established.
(v) Export incentives
Export incentives are accounted for in the year of export.
(k) Foreign Currency Transactions
(i) Initial Recognition
Foreign Currency Transactions are recorded in the reporting currency,
by applying to the foreign currency amount the prevailing exchange rate
between the reporting currency and foreign currency at the date of the
transaction or that approximates the actual rate at the date of
transaction.
(ii) Conversion
Monetary items denominated in foreign currencies at the year end are
restated at year end rates.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items at
rates different from those at which they were initially recorded during
the year, or reported in previous financial statements, are recognised
as income or as expense in the year in which they arise.
Any income or expense on account of exchange difference either on
settlement or on translation is recognised in the Statement of Profit
and Loss, except in case of long term liabilities, where they relate to
acquisition of fixed assets, in which case they are adjusted to the
carrying cost of such assets.
(iv) Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the
contract. Exchange differences on such contracts are recognised in the
Statement of Profit and Loss in the year in which the exchange rate(s)
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognised as income or expense for that
year.
(v) Translation of Integral foreign operations
In respect of a Branch, which is having integral foreign operations,
all transactions are translated at rates prevailing on the date of
transaction or that approximates the actual rate at the date of
transaction. Branch monetary assets and liabilities are restated at the
year end rate(s).
(l) Employee Benefits
The Company makes regular contributions to Recognised Provident Fund
(managed by trust) /Family Pension Fund, Approved Superannuation Fund
and Employees State Insurance Scheme (to the extent applies and extend
to the Company) as per Company''s schemes, which are recognised as an
expense in the Statement of Profit and Loss during the period in which
the employee renders the related service. Gratuity, Pension and
Compensated absences benefits payable as per Company''s schemes are
considered defined benefit and are charged to the Statement of Profit
and Loss on the basis of actuarial valuation made at the end of each
financial year by independent actuaries using Projected Unit Credit
Method. For the purpose of presentation of defined benefit plans, the
allocation between short term and long term provisions is made as
determined by the independent actuaries. Actuarial gains and losses
comprise experience adjustments and effects of changes in actuarial
assumptions are recognised in the Statement of Profit and Loss in the
year in which they arise.
Ex-gratia or other amount disbursed on account of selective employees
separation scheme are charged to the Statement of Profit and Loss as
and when incurred.
(m) Income Taxes
Tax expense comprises current and deferred tax. Provision for current
tax is made after taking into consideration benefits admissible under
the provisions of the Income Tax Act, 1961. Deferred tax resulting from
timing difference between taxable and accounting income is accounted
for using the tax rules and laws that are enacted or substantively
enacted as on the Balance Sheet date. Deferred tax assets are
recognised only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which
deferred tax assets can be realised. However, Deferred tax assets
arising on account of brought forward losses and unabsorbed
depreciation are recognised only when there is virtual certainty of
realisation of such assets backed by convincing evidence. Deferred tax
assets are reviewed and assessed at the Balance Sheet date to reflect
the amount that is reasonably/virtually certain (as the case may be) to
be realised.
Minimum Alternate Tax (MAT) credit is recognised as an asset only when
and to the extent there is convincing evidence that the Company will
pay normal income tax during specified period. In the year in which the
MAT credit becomes eligible to be recognised as an asset in accordance
with the recommendations contained in the Guidance Note issued by the
Institute of Chartered Accountants of India, the said asset is created
by way of a credit to the Statement of Profit and Loss and shown as MAT
credit entitlement. The Company reviews the same at each Balance Sheet
date and writes down the carrying amount of MAT credit entitlement to
the extent there is no longer convincing evidence to the effect that
the Company will pay normal income tax during the specific period.
(n) Segment Reporting Policies
(i) Identification of segments
The Company''s operating businesses are organised and managed
separately according to the nature of products and services provided,
with each segment representing a strategic business unit that offers
different products and services and serves different markets. The
analysis of geographical segments is based on the geographical location
of the customers.
(ii) Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
(iii) Unallocated items
Include general corporate income and expense items which are not
allocated to any business segment.
(iv) Segment Policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
(o) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised in the Accounts when there is 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 and a
reliable estimate can be made of the amount of obligation. These
estimates are reviewed at each reporting date and adjusted to reflect
the current best estimates. Contingent Liabilities are not recognised
but are disclosed in the financial statements. Contingent Assets are
neither recognised nor disclosed in the financial statements.
(b) The Company has only one class of equity shares having nominal
value of Rs.10/- each. The holders of equity shares are entitled to one
vote per share. The Company declares and pays dividend in Indian
Rupees. Dividend proposed by the Board of Directors is subject to the
approval of shareholders in the ensuing Annual General Meeting. For the
year ended 31st March, 2015, the amount of per share dividend
recognised for distribution to equity shareholders was Rs. 5/-per
share, subject to approval of shareholders.
(a) Supplier''s credit(s) from banks are secured by way of
hypothecation of stock of Inventories, cash and other current assets,
book debts, outstanding moneys, receivables, claims, etc., both present
and future, and are further secured by way of hypothecation of moveable
fixed assets, both present and future, ranking pari-passu interse and
first charge created by way of joint mortgage by deposit of title deeds
of certain immovable properties of the Company. As a collateral
security, supplier''s credit(s) are additionally secured by way of
pledge of 12,50,000 equity shares and cross corporate guarantee of
Birla Ericsson Optical Limited, a joint venture. Supplier''s credit(s)
are repayable in full between June 2016 and September 2016 and carries
interest @ 2.04% to 2.50% p.a. (rate as on the reporting date).
(b) As per renewed/revised terms and conditions loans from bodies
corporate amounting to Rs. 5900.00 lacs and Rs. 5600.00 lacs are
repayable in full in the year 2016-17 and 2017-18 respectively. These
loans carry interest @ 10.50% and 11.00% p.a. on a case to case basis
(rate as on the reporting date).
(a) Working capital loans/cash credit facilities from banks being
working capital credit facilities, sanctioned by banks are generally
renewable within twelve months from the date of sanction or immediately
previous renewal, unless otherwise stated. The lender banks have a
right to cancel the credit limits(either fully or partially) and,
interalia, demand repayment in case of non-compliance of terms and
conditions of sanctions or deterioration in the loan accounts in any
manner.
(b) Working capital loans (both fund and non-fund based) from State
Bank of India (SBI), State Bank of Patiala (SBP) and IDBI Bank Limited
are secured by hypothecation of the stock of inventories, cash and
other current assets, book debts, outstanding moneys, receivables,
claims, etc., both present and future, and are further secured by way
of hypothecation of moveable fixed assets, both present and future,
ranking pari-passu interse and first charge created by way of joint
mortgage by deposit of title deeds of certain immovable properties of
the Company. As a collateral security, the credit facilities are
additionally secured by way of pledge of 12,50,000 equity shares and
cross corporate guarantee of Birla Ericsson Optical Limited, a joint
venture.
Mar 31, 2014
(a) Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the notified Accounting standards by the Central
Government vide Companies (Accounting Standard) Rules, 2006 (as
amended) and the relevant provisions of the Companies Act, 1956 read
with the General Circular 8/2014 dated 4th April, 2014 issued by the
Ministry of Corporate Affairs. All income & expenditure are accounted
for on accrual basis except certain insurance claims, which are
recognised on acceptance basis, as and when the amount whereof can be
ascertained with reasonable certainty.
(b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
year end. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
(c) Fixed Assets including Intangible Assets
Fixed Assets are stated at cost (or revalued amounts, as the case may
be) less accumulated depreciation and amortisation. The cost of an
asset comprises its purchase price and any directly attributable costs
of bringing the asset to working condition for its intended use.
Expenditure for additions, improvements, renewals and insurance spares
(determined on the basis of irregular use) are capitalized and
expenditure for repairs and maintenance are charged to the Statement of
Profit and Loss. When assets are sold or discarded their cost and
accumulated depreciation are removed from the accounts and any gain or
loss resulting from their disposal is included in the Statement of
Profit and Loss.
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets'' net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
Intangible Assets are recorded at consideration paid for acquisition of
such assets and are carried at cost less accumulated amortisation.
(d) Depreciation and amortisation
(i) Premium on leasehold land and cost of leasehold improvements are
amortized on straight line basis over the period of lease.
(ii) Depreciation on certain second hand Plant and equipment purchased
during the financial year 2004-05, which are estimated to have lower
residual lives than envisaged as per the rates provided in Schedule XIV
to the Companies Act, 1956 has been provided based on such estimated
lower residual life, using the straight line method.
(iii) Depreciation on Fixed Assets of Unit No.1 and Computer Systems is
provided on Written Down Value Method at rates, computed based on
estimated useful life of the assets, which are equal to the
corresponding rates prescribed under Schedule XIV to the Companies Act,
1956.
(iv) Depreciation on all other Fixed Assets is provided on Straight
Line Method at rates, computed based on estimated useful life of the
assets, which are equal to the corresponding rates prescribed under
Schedule XIV to the Companies Act, 1956.
(v) Depreciation on insurance spares which can be used only in
connection with an item of fixed assets and whose use as per technical
assessment is expected to be irregular, are capitalized and depreciated
over the residual useful life of the respective assets.
(vi) An intangible asset is measured at cost and amortised so as to
reflect the pattern in which the assets economic benefits are consumed.
The useful life has been estimated as five years.
(e) Leases
Where the Company is the Lessor
(i) Operating Lease
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Statement of Profit and Loss on a straight
line basis over the lease term. Costs, including depreciation are
recognized as an expense in the Statement of Profit and Loss. Initial
direct costs such as legal costs, brokerage costs, etc are recognized
immediately in the Statement of Profit and Loss.
(ii) Finance Lease
Finance lease transactions where significant risk & rewards of
ownership are effectively transferred, are recognised as outright
sales. Profit or Loss resulting from outright sale of the asset being
leased, is recognised in statement of profit and loss immediately.
Finance income, if any, is recognised over the lease term. Initial
direct costs such as legal costs, brokerage costs, etc are recognized
immediately in the Statement of Profit and Loss.
Where the Company is the Lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term.
(f) Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as non-current investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Non-current investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the non-current
investments.
(g) Inventories
Inventories are valued as follows:
Raw materials and Stores & spares : Lower of cost and net realizable
value. However, raw 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 transaction moving
weighted average basis.
Stock-in-trade (Traded goods) : Lower of cost and net realizable value.
Cost is determined on a transaction moving weighted average cost basis.
Work-in-progress and Finished goods (Own manufactured) : Lower of cost
and net realizable value. Cost includes direct materials (determined on
a transaction moving weighted average cost basis), labour and
proportion of manufacturing overheads based on normal operating
capacity. Cost of finished goods includes excise duty.
Scrap material : Estimated net realizable value*
*Estimated net realizable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion and
estimated costs necessary to make the sale.
(h) Revenue Recognition Sale of Products
Revenue from the sale of products is recognised on transfer of all
significant risks and rewards of ownership to the buyer which coincides
with despatch of products to customers. Revenue to the extent of Price
Variation disputes, if any, which are subjected to resolution through
arbitration is recognized based on interim relief granted by a Court
and/or after receipt of revenue in execution of the final award in
favour of the Company, as the case may be.
Contract Revenue
The Company follows the percentage of completion method as per
Accounting Standard (AS-7) to recognize revenue in respect of contracts
executed. The stage of completion of the project is determined by the
proportion to the contract cost incurred for work performed upto the
Balance Sheet date bear to the estimated total contract cost.
Contract Revenue is accounted for on the basis of bills submitted to
clients/bills certified by the clients or on technical evaluation of
work executed based on joint inspection with customers and do not
include material supplied by customers/ clients free of cost. The
income on account of claims/rewards or extra item works are recognized
to the extent Company expects reasonable certainty about receipt or
acceptance from the clients/customers. In case the total cost of a
contract, based on technical and other estimates, is expected to exceed
the corresponding contract value, such expected loss is fully provided
for.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividend
Dividend income is recognized when the Company''s right to receive
dividend is established.
Export incentives
Export incentives are accounted for in the year of export.
(i) Foreign Currency Transactions
(i) Initial Recognition
Foreign Currency Transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are reported using the closing rate.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items at
rates different from those at which they were initially recorded during
the year, or reported in previous financial statements, are recognized
as income or as expense in the year in which they arise.
(iv) Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
Statement of Profit and Loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or expense for that
year.
(v) Translation of Integral foreign operations
In respect of a Branch, which is having integral foreign operations,
all transactions are translated at rates prevailing on the date of
transaction or that approximates the actual rate at the date of
transaction. Branch monetary assets and liabilities are restated at the
year end rate.
(j) Employee Benefits
The Company makes regular contributions to recognised Provident
Fund/Family Pension Fund and also to duly constituted and approved
Superannuation Fund as per Company''s scheme, which are charged to
Statement of Profit and Loss when the contributions to the respective
funds are due. Gratuity, Pension and Leave Encashment benefits payable
as per Company''s schemes are charged to Statement of Profit and Loss on
the basis of actuarial valuation made at the end of each financial year
by independent actuaries using Projected Unit Credit Method. Ex-gratia
or other amount disbursed on account of selective employees separation
scheme are charged to Statement of Profit and Loss. Actuarial gains
and losses comprise experience adjustments and effects of changes in
actuarial assumptions are recognized in the Statement of Profit and
Loss in the year in which they arise.
(k) Income Taxes
Tax expense comprises current and deferred tax. Provision for current
tax is made after taking into consideration benefits admissible under
the provisions of the Income Tax Act, 1961. Deferred tax resulting from
timing difference between taxable and accounting income is accounted
for using the tax rules and laws that are enacted or substantively
enacted as on the Balance Sheet date. Deferred tax assets are
recognized only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which
deferred tax assets can be realized.
However, Deferred tax assets arising on account of brought forward
losses and unabsorbed depreciation are recognized only when there is
virtual certainty of realization of such assets backed by convincing
evidence. Deferred tax assets are reviewed and assessed at the Balance
Sheet date to reflect the amount that is reasonably/virtually certain
(as the case may be) to be realized.
Minimum Alternate 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 specified period. In the year in which the
MAT credit becomes eligible to be recognized as an asset in accordance
with the recommendations contained in the Guidance Note issued by the
Institute of Chartered Accountants of India, the said asset is created
by way of a credit to the Statement of Profit and Loss and shown as MAT
credit entitlement.
The Parent Company, Subsidiaries and joint venture severally reviews
the same at each Balance Sheet date and writes down the carrying amount
of MAT credit entitlement to the extent there is no longer convincing
evidence to the effect that Company will pay normal Income Tax during
the specific period.
(l) Segment Reporting Policies
Identification of segments
The Group''s operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and services and serves different markets. The analysis of
geographical segments is based on the geographical location of the
customers.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
Include general corporate income and expense items which are not
allocated to any business segment.
Segment Policies
The Company prepares its segment information in conformity with the
Accounting Policies adopted for preparing and providing the Financial
Statements of the Company as a whole.
(m) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
(n) Cash and Cash equivalents
Cash and Cash equivalent in the cash flow statement comprises cash at
bank and on hand and short-term investments with an original maturity
of three months or less.
Mar 31, 2013
(a) Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the notified Accounting standards by the Central
Government vide Companies (Accounting Standard) Rules, 2006 (as
amended) and the relevant provisions of the Companies Act, 1956. The
financial statements have been prepared under the historical cost
convention except for certain fixed assets which are revalued, on an
accrual basis. The accounting policies have been consistently applied
by the Company and are consistent with those used in the previous year.
(b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
year end. Although these estimates are based upon management''s best
knowledge of current events and actions, actual results could differ
from these estimates.
(c) Fixed Assets including Intangible Assets
Fixed Assets are stated at cost (or revalued amounts, as the case may
be) less accumulated depreciation and amortisation. The cost of an
asset comprises its purchase price and any directly attributable costs
of bringing the asset to working condition for its intended use.
Expenditure for additions, improvements, renewals and insurance spares
(determined on the basis of irregular use) are capitalized and
expenditure for repairs and maintenance are charged to the Statement of
Profit and Loss. When assets are sold or discarded their cost and
accumulated depreciation are removed from the accounts and any gain or
loss resulting from their disposal is included in the Statement of
Profit and Loss.
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets'' net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
Intangible Assets are recorded at consideration paid for acquisition of
such assets and are carried at cost less accumulated amortisation.
(d) Depreciation and amortisation
(i) Premium on leasehold land and cost of leasehold improvements are
amortized on straight line basis over the period of lease.
(ii) Depreciation on certain second hand Plant and equipment purchased
during the financial year 2004-05, which are estimated to have lower
residual lives than envisaged as per the rates provided in Schedule XIV
to the Companies Act, 1956 has been provided based on such estimated
lower residual life, using the straight line method.
(iii) Depreciation on Fixed Assets of Unit No.1 and Computer Systems is
provided on Written Down Value Method at rates, computed based on
estimated useful life of the assets, which are equal to the
corresponding rates prescribed under Schedule XIV to the Companies Act,
1956.
(iv) Depreciation on all other Fixed Assets is provided on Straight
Line Method at rates, computed based on estimated useful life of the
assets, which are equal to the corresponding rates prescribed under
Schedule XIV to the Companies Act, 1956.
(v) Depreciation on insurance spares which can be used only in
connection with an item of fixed assets and whose use as per technical
assessment is expected to be irregular, are capitalized and depreciated
over the residual useful life of the respective assets.
(vi) An intangible asset is measured at cost and amortised so as to
reflect the pattern in which the assets economic benefits are consumed.
The useful life has been estimated as five years.
(e) Leases
Where the Company is the Lessor
(i) Operating Lease
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Statement of Profit and Loss on a straight
line basis over the lease term. Costs, including depreciation are
recognized as an expense in the Statement of Profit and Loss. Initial
direct costs such as legal costs, brokerage costs, etc are recognized
immediately in the Statement of Profit and Loss.
(ii) Finance Lease
Finance lease transactions where significant risk & rewards of
ownership are effectively transferred, are recognised as outright
sales. Profit or Loss resulting from outright sale of the asset being
leased, is recognised in Statement of Profit and Loss immediately.
Finance income, if any, is recognised over the lease term. Initial
direct costs such as legal costs, brokerage costs, etc are recognized
immediately in the Statement of Profit and Loss.
Where the Company is the Lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term.
(f) Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as non-current investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Non-current investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the non-current
investments.
(g) Inventories
Inventories are valued as follows:-
Raw Materials and Stores & Spares : Lower of cost and net realizable
value. However, raw 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 transaction moving
weighted average basis.
Stock-in-trade (Traded goods) : Lower of cost and net realizable value.
Cost is determined on a transaction moving weighted average cost basis.
Work-in-progress and Finished Goods (Own manufactured)
: Lower of cost and net realizable value. Cost includes direct
materials (determined on a transaction moving weighted average cost
basis), labour and proportion of manufacturing overheads based on
normal operating capacity. Cost of finished goods includes excise duty.
Scrap material : Estimated net realizable value*
''Estimated net realizable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion and
estimated costs necessary to make the sale.
(h) Revenue Recognition Sale of Products
Revenue from the sale of products is recognised on transfer of all
significant risks and rewards of ownership to the buyer which coincides
with despatch of products to customers. Revenue to the extent of Price
Variation disputes, if any, which are subjected to resolution through
arbitration is recognized based on interim relief granted by a Court
and/or after receipt of revenue in execution of the final award in
favour of the Company, as the case may be.
Contract Revenue
The Company follows the percentage of completion method as per
Accounting Standard (AS-7) to recognize revenue in respect of contracts
executed. The stage of completion of the project is determined by the
proportion to the contract cost incurred for work performed upto the
Balance Sheet date bear to the estimated total contract cost.
Contract Revenue is accounted for on the basis of bills submitted to
clients/bills certified by the clients or on technical evaluation of
work executed based on joint inspection with customers and do not
include material supplied by customers/ clients free of cost. The
income on account of claims/rewards or extra item works are recognized
to the extent Company expects reasonable certainty about receipt or
acceptance from the clients/customers. In case the total cost of a
contract, based on technical and other estimates, is expected to exceed
the corresponding contract value, such expected loss is fully provided
for.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. Dividend
Dividend income is recognized when the Company''s right to receive
dividend is established.
Export incentives
Export incentives are accounted for in the year of export.
(i) Foreign Currency Translations
(i) Initial Recognition
Foreign Currency Transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are reported using the closing rate.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items at
rates different from those at which they were initially recorded during
the year, or reported in previous financial statements, are recognized
as income or as expense in the year in which they arise.
(iv) Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
Statement of Profit and Loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or expense for that
year.
(v) Translation of Integral foreign operations
In respect of a Branch, which is having integral foreign operations,
all transactions are translated at rates prevailing on the date of
transaction or that approximates the actual rate at the date of
transaction. Branch monetary assets and liabilities are restated at the
year end rate.
(j) Employee Benefits
The Company makes regular contributions to recognised Provident
Fund/Family Pension Fund and also to duly constituted and approved
Superannuation Fund as per Company''s scheme, which are charged to
Statement of Profit and Loss when the contributions to the respective
funds are due. Gratuity, Pension and Leave Encashment benefits payable
as per Company''s schemes are charged to Statement of Profit and Loss
on the basis of actuarial valuation made at the end of each financial
year by independent actuaries using Projected Unit Credit Method.
Ex-gratia or other amount disbursed on account of selective employees
separation scheme are charged to Statement of Profit and Loss.
Actuarial gains and losses comprise experience adjustments and effects
of changes in actuarial assumptions are recognized in the Statement of
Profit and Loss in the year in which they arise.
(k) Income Taxes
Tax expense comprises current and deferred tax. Provision for current
tax is made after taking into consideration benefits admissible under
the provisions of the Income Tax Act, 1961. Deferred tax resulting from
timing difference between taxable and accounting income is accounted
for using the tax rules and laws that are enacted or substantively
enacted as on the Balance Sheet date. Deferred tax assets are
recognized only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which
deferred tax assets can be realized. However, Deferred tax assets
arising on account of brought forward losses and unabsorbed
depreciation are recognized only when there is virtual certainty of
realization of such assets backed by convincing evidence. Deferred tax
assets are reviewed and assessed at the Balance Sheet date to reflect
the amount that is reasonably/virtually certain (as the case may be) to
be realized.
Minimum Alternate 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 specified period. In the year in which the
MAT credit becomes eligible to be recognized as an asset in accordance
with the recommendations contained in the Guidance Note issued by the
Institute of Chartered Accountants of India, the said asset is created
by way of a credit to the Statement of Profit and Loss and shown as MAT
credit entitlement. The Company reviews the same at each Balance Sheet
date and writes down the carrying amount of MAT credit entitlement to
the extent there is no longer convincing evidence to the effect that
Company will pay normal Income Tax during the specific period.
(l) Segment Reporting Policies Identification of segments
The Company''s operating businesses are organized and managed
separately according to the nature of products and services provided,
with each segment representing a strategic business unit that offers
different products and services and serves different markets. The
analysis of geographical segments is based on the geographical location
of the customers.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
Include general corporate income and expense items which are not
allocated to any business segment.
Segment Policies
The Company prepares its segment information in conformity with the
Accounting Policies adopted for preparing and providing the Financial
Statements of the Company as a whole.
(m) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
(n) Cash and Cash equivalents
Cash and Cash equivalent in the cash flow statement comprises cash at
bank and on hand and short-term investments with an original maturity
of three months or less.
Mar 31, 2012
(a) Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the notified Accounting standards by the Central
Government vide Companies (Accounting Standard) Rules, 2006 (as
amended) and the relevant provisions of the Companies Act, 1956. The
financial statements have been prepared under the historical cost
convention except for certain fixed assets which are revalued, on an
accrual basis. The accounting policies have been consistently applied
by the Company and are consistent with those used in the previous year.
(b) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
year end. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ
from these estimates.
(c) Fixed Assets including Intangible Assets
Fixed Assets are stated at cost (or revalued amounts, as the case may
be) less accumulated depreciation and amortisation. The cost of an
asset comprises its purchase price and any directly attributable costs
of bringing the asset to working condition for its intended use.
Expenditure for additions, improvements, renewals and insurance spares
(determined on the basis of irregular use) are capitalized and
expenditure for repairs and maintenance are charged to the Statement of
Profit and Loss. When assets are sold or discarded their cost and
accumulated depreciation are removed from the accounts and any gain or
loss resulting from their disposal is included in the Statement of
Profit and Loss.
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets' net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
Intangible Assets are recorded at consideration paid for acquisition of
such assets and are carried at cost less accumulated amortisation.
(d) Depreciation and amortisation
(i) Premium on leasehold land and cost of leasehold improvements are
amortized on straight line basis over the period of lease.
(ii) Depreciation on certain second hand Plant and equipment purchased
during the financial year 2004-05, which are estimated to have lower
residual lives than envisaged as per the rates provided in Schedule XIV
to the Companies Act, 1956 has been provided based on such estimated
lower residual life, using the straight line method.
(iii) Depreciation on Fixed Assets of Unit No.1 and Computer Systems is
provided on Written Down Value Method at rates, computed based on
estimated useful life of the assets, which are equal to the
corresponding rates prescribed under Schedule XIV to the Companies Act,
1956.
(iv) Depreciation on all other Fixed Assets is provided on Straight
Line Method at rates, computed based on estimated useful life of the
assets, which are equal to the corresponding rates prescribed under
Schedule XIV to the Companies Act, 1956.
(v) Depreciation on insurance spares which can be used only in
connection with an item of fixed assets and whose use as per technical
assessment is expected to be irregular, are capitalized and depreciated
over the residual useful life of the respective assets.
(vi) An intangible asset is measured at cost and amortised so as to
reflect the pattern in which the assets economic benefits are consumed.
The useful life has been estimated as five years.
(e) Leases
Where the Company is the Lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Statement of Profit and Loss on a straight
line basis over the lease term. Costs, including depreciation are
recognized as an expense in the Statement of Profit and Loss. Initial
direct costs such as legal costs, brokerage costs, etc are recognized
immediately in the Statement of Profit and Loss.
Where the Company is the Lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term are classified as
operating leases. Operating lease payments are recognized as an expense
in the Statement of Profit and Loss on a straight-line basis over the
lease term.
(f) Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as non-current investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Non-current investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the non-current
investments.
*Estimated net realizable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion and
estimated costs necessary to make the sale.
(g) Revenue Recognition Sale of Products
Revenue from the sale of products is recognised on transfer of all
significant risks and rewards of ownership to the buyer which coincides
with despatch of products to customers. Revenue to the extent of Price
Variation disputes, if any, which are subjected to resolution through
arbitration is recognized based on interim relief granted by a Court
and/or after receipt of revenue in execution of the final award in
favour of the Company, as the case may be.
Contract Revenue
The Company follows the percentage of completion method as per
Accounting Standard (AS-7) to recognize revenue in respect of contracts
executed. The stage of completion of the project is determined by the
proportion to the contract cost incurred for work performed upto the
Balance Sheet date bear to the estimated total contract cost.
Contract Revenue is accounted for on the basis of bills submitted to
clients/bills certified by the clients or on technical evaluation of
work executed based on joint inspection with customers and do not
include material supplied by customers/ clients free of cost. The
income on account of claims/rewards or extra item works are recognized
to the extent Company expects reasonable certainty about receipt or
acceptance from the clients/customers. In case the total cost of a
contract, based on technical and other estimates, is expected to exceed
the corresponding contract value, such expected loss is fully provided
for.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable. Dividend
Dividend income is recognized when the Company's right to receive
dividend is established.
Export incentives
Export incentives are accounted for in the year of export.
(i) Foreign Currency Translations
(i) Initial Recognition
Foreign Currency Transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and foreign currency at the date of the
transaction.
(ii) Conversion
Foreign currency monetary items are reported using the closing rate.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items at
rates different from those at which they were initially recorded during
the year, or reported in previous financial statements, are recognized
as income or as expense in the year in which they arise.
(iv) Forward Exchange Contracts not intended for trading or speculation
purposes.
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
Statement of Profit and Loss in the year in which the exchange rates
change. Any profit or loss arising on cancellation or renewal of
forward exchange contract is recognized as income or expense for that
year.
(v) Translation of Integral foreign operations
In respect of a Branch, which is having integral foreign operations,
all transactions are translated at rates prevailing on the date of
transaction or that approximates the actual rate at the date of
transaction. Branch monetary assets and liabilities are restated at the
year end rate.
(h) Employee Benefits
The Company makes regular contributions to recognised Provident
Fund/Family Pension Fund and also to duly constituted and approved
Superannuation Fund as per Company's scheme, which are charged to
Statement of Profit and Loss when the contributions to the respective
funds are due. Gratuity, Pension and Leave Encashment benefits payable
as per Company's schemes are charged to Statement of Profit and Loss on
the basis of actuarial valuation made at the end of each financial year
by independent actuaries using Projected Unit Credit Method. Ex-gratia
or other amount disbursed on account of selective employees separation
scheme are charged to Statement of Profit and Loss. Actuarial gains and
losses comprise experience adjustments and effects of changes in
actuarial assumptions are recognized in the Statement of Profit and
Loss in the year in which they arise.
(i) Income Taxes
Tax expense comprises current and deferred tax. Provision for current
tax is made after taking into consideration benefits admissible under
the provisions of the Income Tax Act, 1961. Deferred tax resulting from
timing difference between taxable and accounting income is accounted
for using the tax rules and laws that are enacted or substantively
enacted as on the Balance Sheet date. Deferred tax assets are
recognized only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which
deferred tax assets can be realized. However, Deferred tax assets
arising on account of brought forward losses and unabsorbed
depreciation are recognized only when there is virtual certainty of
realization of such assets backed by convincing evidence. Deferred tax
assets are reviewed and assessed at the Balance Sheet date to reflect
the amount that is reasonably/virtually certain (as the case may be) to
be realized.
Minimum Alternate 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 specified period. In the year in which the
MAT credit becomes eligible to be recognized as an asset in accordance
with the recommendations contained in the Guidance Note issued by the
Institute of Chartered Accountants of India, the said asset is created
by way of a credit to the Statement of Profit and Loss and shown as MAT
credit entitlement. The Company reviews the same at each Balance Sheet
date and writes down the carrying amount of MAT credit entitlement to
the extent there is no longer convincing evidence to the effect that
Company will pay normal Income Tax during the specific period.
(j) Segment Reporting Policies Identification of segments
The Company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and services and serves different markets. The analysis of
geographical segments is based on the geographical location of the
customers.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
Include general corporate income and expense items which are not
allocated to any business segment.
Segment Policies
The Company prepares its segment information in conformity with the
Accounting Policies adopted for preparing and providing the Financial
Statements of the Company as a whole.
(k) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
(l) Cash and Cash equivalents
Cash and Cash equivalent in the cash flow statement comprises cash at
bank and on hand and short-term investments with an original maturity
of three months or less.
Mar 31, 2011
(a) Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the notified Accounting standards by the Companies
(Accounting Standard) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention except for certain
fixed assets which are revalued, on an accrual basis. The accounting
policies have been consistently applied by the Company and are
consistent with those used in the previous year.
(b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
year end. Although these estimates are based upon managementÃs best
knowledge of current events and actions, actual results could differ
from these estimates.
(c) Fixed Assets
Fixed Assets are stated at cost (or revalued amounts, as the case may
be), less accumulated depreciation, amortization and impairment losses,
if any. Cost comprises the purchase price and any attributable cost of
bringing the asset to its working condition for its intended use.
Borrowing costs relating to acquisition of fixed assets which takes
substantial period of time to get ready for its intended use are also
included to the extent they relate to the period till such assets are
ready to be put to use. When fixed assets are revalued, any surplus on
revaluation is credited to assets revaluation reserve.
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assets' net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
Software
Cost relating to purchased software/developed is capitalized and is
amortized on a straight-line basis over their estimated useful lives of
five years.
Software licenses costing Rs. 5,000 and below are fully depreciated in
the year of acquisition.
(d) Depreciation
(i) Premium on leasehold land and cost of leasehold improvements are
amortized on straight line basis over the period of lease.
(ii) Depreciation on certain second hand Plant and Machinery purchased
during the financial year 2004-05, which are estimated to have lower
residual lives than envisaged as per the rates provided in Schedule XIV
to the Companies Act, 1956 has been provided based on such estimated
lower residual life, using the straight line method.
(iii) Depreciation on Fixed Assets of Unit No.1 and Computer Systems is
provided on Written Down Value Method at rates, computed based on
estimated useful life of the assets, which are equal to the
corresponding rates prescribed under Schedule XIV to the Companies Act,
1956.
(iv) Depreciation on all other Fixed Assets is provided on Straight
Line Method at rates, computed based on estimated useful life of the
assets, which are equal to the corresponding rates prescribed under
Schedule XIV to the Companies Act, 1956.
(v) Depreciation on insurance spares which can be used only in
connection with an item of fixed assets and whose use as per technical
assessment is expected to be irregular, are capitalized and depreciated
over the residual useful life of the respective assets.
(e) Leases
Where the Company is the Lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Profit and Loss Account on a straight line
basis over the lease term. Costs, including depreciation are recognized
as an expense in the Profit and Loss Account. Initial direct costs such
as legal costs, brokerage costs, etc are recognized immediately in the
Profit and Loss Account.
Where the Company is the Lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a straight-line basis over the lease
term.
(f) Investments
Investments that are readily realisable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.
(g) Inventories Inventories are valued as follows
Raw Materials and Stores & Spares :
Lower of cost and net realizable value. However, raw 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 transaction moving weighted average basis.
Traded Goods :
Lower of cost and net realizable value. Cost is determined on a
transaction moving weighted average cost basis.
WorkÃin-progress and Finished Goods :
(Own manufactured)
Lower of cost and net realizable value. Cost includes direct materials
(determined on a transaction moving weighted average cost basis),
labour and proportion of manufacturing overheads based on normal
operating capacity. Cost of finished goods includes excise duty.
Scrap :
Net realizable value
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(h) 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 is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excise duty deducted
from gross turnover is the amount that is included in the amount of
turnover (gross) and not the entire amount of liability arose during
the year. Credits/debits arising out of finalization of provisional
prices on supplies are accounted for in the year of their acceptance
since it is not possible to ascertain the exact quantum in respect
thereof with reasonable accuracy. Revenue to the extent of price
variation disputes, which are subjected to resolution through
arbitration, is recognized based on interim relief granted by a Court
and/or after receipt of revenue in execution of the final award in
favour of the Company, as the case may be.
Contract Revenue
The Company follows the percentage of completion method as per
Accounting Standard (AS-7) to recognize revenue in respect of contracts
executed. The stage of completion of the project is determined by the
proportion to the contract cost incurred for work performed upto the
Balance Sheet date bear to the estimated total contract cost.
Contract Revenue is accounted for on the basis of bills submitted to
clients/bills certified by the clients or on technical evaluation of
work executed based on joint inspection with customers and do not
include material supplied by customers/ clients free of cost. The
income on account of claims/rewards or extra item works are recognized
to the extent Company expects reasonable certainty about receipt or
acceptance from the clients/customers. In case the total cost of a
contract, based on technical and other estimates, is expected to exceed
the corresponding contract value, such expected loss is fully provided
for.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividend
Revenue is recognized when the shareholderÃs right to receive payment
is established.
Export Benefits
Duty drawback and Duty Scrips, etc. are accounted for in the year of
export.
(i) Foreign Currency Translations
(i) Initial Recognition
Foreign Currency Transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and foreign currency at the date of the
transactions.
(ii) Conversion
Foreign currency monetary items are reported using the closing rate.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items at
rates different from those at which they were initially recorded during
the year, or reported in previous financial statements, are recognized
as income or as expense in the year in which they arise.
(iv) Forward Exchange Contracts not intended for trading or speculation
purposes.
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
Profit and Loss Account in the year in which the exchange rates change.
Any profit or loss arising on cancellation or renewal of forward
exchange contract is recognized as income or expense for that year.
(v) Translation of Integral foreign operations
In respect of a Branch, which is having integral foreign operations,
all transactions are translated at rates prevailing on the date of
transaction or that approximates the actual rate at the date of
transaction. Branch monetary assets and liabilities are restated at the
year end rate.
(j) Employee Benefits:
The Company makes regular contributions to recognised Provident
Fund/Family Pension Fund and also to duly constituted and approved
Superannuation Fund as per Company's scheme, which are charged to
Profit and Loss Account when the contributions to the respective funds
are due. Gratuity, Pension and Leave Encashment benefits payable as per
Company's schemes are charged to Profit and Loss Account on the basis
of actuarial valuation made at the end of each financial year by
independent actuaries. Ex-gratia or other amount disbursed on account
of selective employees separation scheme are charged to Profit and Loss
Account. Actuarial gains and losses comprise experience adjustments and
effects of changes in actuarial assumptions are recognized in the
Profit and Loss Account in the year in which they arise.
(k) Income Taxes
Tax expense comprises current and deferred tax. Provision for current
tax is made after taking into consideration benefits admissible under
the provisions of the Income Tax Act, 1961. Deferred tax resulting from
timing difference between taxable and accounting income is accounted
for using the tax rules and laws that are enacted or substantively
enacted as on the balance sheet date. Deferred tax assets are
recognized only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which
deferred tax assets can be realized. However,
Deferred tax assets arising on account of brought forward losses and
unabsorbed depreciation are recognized only when there is virtual
certainty of realization of such assets backed by convincing evidence.
Deferred tax assets are reviewed and assessed at the Balance Sheet date
to reflect the amount that is reasonably/virtually certain (as the case
may be) to be realized.
Minimum Alternate 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 specified period. In the year in which the
MAT credit becomes eligible to be recognized as an asset in accordance
with the recommendations contained in the Guidance Note issued by the
Institute of Chartered Accountants of India, the said asset is created
by way of a credit to the Profit and Loss Account and shown as MAT
credit entitlement. The Company reviews the same at each Balance Sheet
date and writes down the carrying amount of MAT credit entitlement to
the extent there is no longer convincing evidence to the effect that
Company will pay normal Income Tax during the specific period.
(l) Segment Reporting Policies
Identification of segments
The Company's operating businesses are organized and managed separately
according to the nature of products and services provided, with each
segment representing a strategic business unit that offers different
products and services and serves different markets. The analysis of
geographical segments is based on the geographical location of the
customers.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
Include general corporate income and expense items which are not
allocated to any business segment.
Segment Policies
The Company prepares its segment information in conformity with the
Accounting Policies adopted for preparing and providing the Financial
Statements of the Company as a whole.
(m) Provisions, Contingent Liabilities and Contingent Assets
Provisions involving substantial degree of estimation in measurement
are recognized when there is a present obligation as a result of past
events and it is probable that there will be outflow of resources.
Contingent Liabilities are not recognized but are disclosed in the
notes. Contingent Assets are neither recognized nor disclosed in the
financial statements.
(n) Cash and Cash equivalents
Cash and Cash equivalent in the cash flow statement comprises cash at
bank and in hand and short-term investments with an original maturity
of three months or less.
Mar 31, 2010
(a) Basis of Preparation
The financial statements have been prepared to comply in all material
respects with the notified Accounting standards by Companies
(Accounting Standard) Rules, 2006 (as amended) and the relevant
provisions of the Companies Act, 1956. The financial statements have
been prepared under the historical cost convention on an accrual basis.
The accounting policies have been consistently applied by the Company
and are consistent with those used in the previous year.
(b) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the results of operations during the reporting
year end. Although these estimates are based upon managementÃs best
knowledge of current events and actions, actual results could differ
from these estimates.
(c) Fixed Assets
Fixed Assets are stated at cost (or revalued amounts, as the case may
be), less accumulated depreciation, amortization and impairment losses,
if any. Cost comprises the purchase price and any attributable cost of
bringing the asset to its working condition for its intended use.
Borrowing costs relating to acquisition of fixed assets which takes
substantial period of time to get ready for its intended use are also
included to the extent they relate to the period till such assets are
ready to be put to use. When fixed assets are revalued, any surplus on
revaluation is credited to assets revaluation reserve.
The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wherever the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the greater of the assetsà net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted
to their present value at the weighted average cost of capital.
Software
Cost relating to purchased software is capitalized and is amortized on
a straight-line basis over their estimated useful lives of five years.
Software licenses costing Rs. 5,000 and below are fully depreciated in
the year of acquisition.
(d) Depreciation
(i) Premium on leasehold land is amortized over the life of the Lease.
(ii) Depreciation on certain second hand Plant and Machinery purchased
during the financial year 2004-05, which are estimated to have lower
residual lives than envisaged as per the rates provided in Schedule XIV
to the Companies Act, 1956 has been provided based on such estimated
lower residual life, using the straight line method.
(iii) Depreciation on Fixed Assets of Unit No.1 and Computer Systems is
provided on Written Down Value Method at rates, computed based on
estimated useful life of the assets, which are equal to the
corresponding rates prescribed under Schedule XIV to the Companies Act,
1956.
(iv) Depreciation on all other Fixed Assets is provided on Straight
Line Method at rates, computed based on estimated useful life of the
assets, which are equal to the corresponding rates prescribed under
Schedule XIV to the Companies Act, 1956.
(v) Depreciation on insurance spares which can be used only in
connection with an item of fixed assets and whose use as per technical
assessment is expected to be irregular, are capitalized and depreciated
over the residual useful life of the respective assets.
(e) Leases
Where the Company is the Lessor
Assets subject to operating leases are included in fixed assets. Lease
income is recognized in the Profit and Loss Account on a straight line
basis over the lease term. Costs, including depreciation are recognized
as an expense in the Profit and Loss Account. Initial direct costs such
as legal costs, brokerage costs, etc are recognized immediately in the
Profit and Loss Account.
Where the Company is the Lessee
Leases where the lessor effectively retains substantially all the risks
and benefits of ownership of the leased term are classified as
operating leases. Operating lease payments are recognized as an expense
in the Profit and Loss Account on a straight-line basis over the lease
term.
(f) Investments
Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long term investments. Current
investments are carried at lower of cost and fair value determined on
an individual investment basis. Long term investments are carried at
cost. However, provision for diminution in value is made to recognize a
decline other than temporary in the value of the investments.
(g) Inventories
Inventories are valued as follows
Raw Materials and Stores & Spares
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 transaction moving weighted average basis.
Traded Goods
Lower of cost and net realizable value. Cost is determined on a
transaction moving weighted average cost basis.
WorkÃin-progress and Finished Goods (Own manufactured)
Lower of cost and net realizable value. Cost includes direct materials
(determined on weighted average cost basis) and labour and proportion
of manufacturing overheads based on normal operating capacity. Cost of
finished goods includes excise duty.
Scrap : Net realizable value
Net realizable value is the estimated selling price in the ordinary
course of business, less estimated costs of completion and estimated
costs necessary to make the sale.
(h) 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 is recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer. Excise duty deducted
from gross turnover is the amount that is included in the amount of
turnover (gross) and not the entire amount of liability arose during
the year. Credits/debits arising out of finalization of provisional
prices on supplies are accounted for in the year of their acceptance
since it is not possible to ascertain the exact quantum in respect
thereof with reasonable accuracy. Revenue to the extent of price
variation disputes, which are subjected to resolution through
arbitration, is recognized based on interim relief granted by a Court
and/or after receipt of revenue in execution of the final award in
favour of the Company, as the case may be.
Contract Revenue
The Company follows the percentage of completion method as per
Accounting Standard (AS)-7 to recognize revenue in respect of contracts
executed. The stage of completion of the project is determined by the
proportion to the contract cost incurred for work performed upto the
balance sheet bear to the estimated total contract cost.
Contract Revenue is accounted for on the basis of bills submitted to
clients/bills certified by the clients or on technical evaluation of
work executed based on joint inspection with customers and do not
include material supplied by customers/ clients free of cost. The
income on account of claims/rewards or extra item works are recognized
to the extent Company expects reasonable certainty about receipt or
acceptance from the clients/customers. In case the total cost of a
contract, based on technical and other estimates, is expected to exceed
the corresponding contract value, such expected loss is fully provided
for.
Interest
Revenue is recognized on a time proportion basis taking into account
the amount outstanding and the rate applicable.
Dividend
Revenue is recognized when the shareholderÃs right to receive payment
is established by the Balance Sheet date.
(i) Foreign Currency Translations
(i) Initial Recognition
Foreign Currency Transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate between
the reporting currency and foreign currency at the date of the
transactions.
(ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items which are carried in terms of historical costs
denominated in a foreign currency are reported using the exchange rate
at the date of the transaction and non-monetary items which are carried
at fair value or other similar valuation denominated in a foreign
currency are reported using the exchange rates that existed when the
values were determined.
(iii) Exchange Differences
Exchange differences arising on the settlement of monetary items at
rates different from those at which they were initially recorded during
the year, or reported in previous financial statements, are recognized
as income or as expense in the year in which they arise.
(iv) Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the
contract. Exchange differences on such contracts are recognized in the
Profit and Loss Account in the year in which the exchange rates change.
Any profit or loss arising on cancellation or renewal of forward
exchange contract is recognized as income or expense for that year.
(v) Translation of Integral foreign operations
In respect of a Branch, which is having integral foreign operations,
all transactions are translated at rates prevailing on the date of
transaction or that approximates the actual rate at the date of
transaction. Branch monetary assets and liabilities are restated at the
year end rate.
(j) Retirement and other Employee Benefits
(i) Retirement benefits in the form of Provident Fund and
Superannuation Fund is a defined contribution scheme and the
contributions are charged to the profit and loss account of the year
when the contributions to the respective funds are due. The Company
accounts for the contributions under Superannuation Scheme being
made/to be made to Life Insurance Corporation of India (LIC) against an
insurance policy taken with them. There are no other obligations other
than the contributions payable to the funds.
(ii) Gratuity liability and pension liability (including past services
of employees who were employed in other group companies) are defined
benefit obligations and are provided for on the basis of an actuarial
valuation performed in accordance with Projected Unit Credit Method
made at the end of each financial year by an independent actuary.
(iii) Short term compensated absences are provided for on estimate
basis. Long term compensated absences are provided for on actuarial
valuation basis.
(iv) Actuarial gains/losses are immediately taken to profit and loss
account and are not deferred.
(v) Payments made under Voluntary Retirement Scheme are charged to the
profit and loss account in the year when the employee accepts the early
retirement.
(vi) Ex-gratia or other amount disbursed on account of selective
employees separation scheme are charged to Profit and Loss Account.
(k) Income Taxes
Tax expense comprises current and deferred tax. Current income tax are
measured at the amount expected to be paid to the tax authorities in
accordance with Income Tax Act, 1961. Deferred income taxes reflect the
impact of current year timing differences between taxable income and
accounting income for the year and reversal of timing differences of
earlier years. Deferred tax is measured based on the tax rates and the
tax laws enacted or substantively enacted at the balance sheet date.
Deferred tax assets are recognized only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realized. In
situations where the Company has unabsorbed depreciation or carry
forward tax losses, all deferred tax assets are recognized only if
there is virtual certainty supported by convincing evidence that they
can be realized against future taxable profits. The carrying amount of
deferred tax assets are reviewed at each balance sheet date. The
Company writes-down the carrying amount of deferred tax assets to the
extent that it is no longer reasonably certain or virtually certain, as
the case may be, that sufficient future taxable income will be
available against which deferred tax asset can be realized. Any such
write-down is reversed to the extent that it becomes reasonably certain
or virtually certain, as the case may be, that sufficient future
taxable income will be available.
Minimum Alternate 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. In the year in which
the MAT credit becomes eligible to be recognized as an asset in
accordance with the recommendations contained in Guidance Note issued
by the Institute of Chartered Accountants of India, the said asset is
created by way of a credit to the Profit and Loss Account and shown as
MAT Credit Entitlement. The Company reviews the same at each balance
sheet date and writes down the carrying amount of MAT Credit
Entitlement to the extent there is no longer convincing evidence to the
effect that Company will pay normal income tax during the specified
period.
(l) Segment Reporting Policies
Identification of segments
The CompanyÃs operating businesses are organized and managed separately
according to the nature of products and services provided, 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 areas in which major operating divisions of
the Company operate.
Allocation of common costs
Common allocable costs are allocated to each segment according to the
relative contribution of each segment to the total common costs.
Unallocated items
Include general corporate income and expense items which are not
allocated to any business segment.
(m) Earnings Per Share
Basic earnings per share is 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. The
weighted average number of equity shares outstanding during the year is
adjusted for events of bonus issue, bonus element in a rights issue to
existing shareholders, share splits, and reverse share split
(consolidation of shares).
For the purpose of 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.
(n) Provisions
A provision is recognized when an enterprise has a present obligation
as a result of past event; 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 its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and are adjusted to reflect the current best
estimates.
(o) Cash and Cash equivalents
Cash and Cash equivalent in the cash flow statement comprises cash at
bank and in hand and short-term investments with an original maturity
of three months or less.
(p) Derivative Instruments
The Company uses derivative instruments such as forward contract to
hedge its risks associated with fluctuations in raw material prices. As
per the ICAI Announcement, accounting for derivative contracts, other
than those covered under AS-11 are marked to market on a portfolio
basis, and the net loss after considering the offsetting effect on the
underlying hedged item is charge to the income statement. Net gains are
ignored.
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