Accounting Policies of Xpro India Ltd. Company
Mar 31, 2022
1. Company Information:
Xpro India Limited (the âCompanyâ) is a public limited company domiciled in India with its registered office located at Barjora-Mejia Road, P.O. Ghutgoria, Tehsil: Barjora, Dist.: Bankura 722 202, West Bengal. Incorporated on November 26, 1997 as âBiax Films Limitedâ under the Companies Act, 1956, the present name was adopted w.e.f. September 22, 1998. Equity shares of the Company are listed on the National Stock Exchange (NSE) and are admitted for trading on the Bombay Stock Exchange (BSE). Organised into operating divisions for operational convenience, the Company is engaged mainly in the business of Polymers Processing at multiple locations and is the leading manufacturer in India of Coextruded Plastic Sheets, Thermoformed Liners and Speciality Films (including Dielectric Films and special purpose BOPP Films).
2. Recent accounting pronouncements issued but not made effective
a. Amendment to Ind AS 16, Property, Plant and Equipment
The Ministry of Corporate Affairs ("MCA") vide notification dated 23 March 2022, has issued an amendment to Ind AS 16 which specifies that an entity shall deduct from the cost of an item of property, plant and equipment any proceeds received from selling items produced while the entity is preparing the asset for its intended use (for example, the proceeds from selling samples produced when testing a machine to see if it is functioning properly).
b. Amendment to Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets
The Ministry of Corporate Affairs ("MCA") vide notification dated 23 March 2022, has issued an amendment to Ind AS 3 7 which specifies that the cost of fulfilling a contract comprises: the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contracts.
c. Amendment to Ind AS 103, Business Combinations
The Ministry of Corporate Affairs ("MCA") vide notification dated 23 March 2022, has issued an amendment to Ind AS 103 and has added a new exception in the standard for liabilities and contingent liabilities.
d. Amendment to Ind AS 109, Financial Instruments
The Ministry of Corporate Affairs ("MCA") vide notification dated 23 March 2022, has issued an amendment to Ind AS 109 which clarifies that which fees an entity should include when it applies the â10%â test in assessing whether to derecognise a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the otherâs behalf.
a. Statement of compliance with Indian Accounting Standards (Ind AS)
These financial statements have been prepared in accordance with the Indian Accounting Standards (âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 read with Section 133 of the Companies Act, 2013.
These financial statements of the Company for the year ended March 31, 2022 were approved and authorized for issue by Board of Directors on May 25, 2022.
These financial statements have been prepared on a historical cost basis except for (a) certain financial instruments that are measured at fair values at the end of each reporting period and (b) net defined benefit assets/liability measured at fair value of planned assets less present value of defined benefit obligations. The methods used to measure fair values are discussed further in notes to financial statements.
c. Functional and presentation currency
The financial statements of the Company are presented in Indian Rupees (Rs.), which is also its functional currency. All financial amounts disclosed in the financial statements and notes have been rounded to the nearest lakh (upto two decimals), unless stated otherwise.
d. Current and non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is:
i) Expected to be realised or intended to be sold or consumed in normal operating cycle;
ii) Held primarily for the purpose of trading;
iii) Expected to be realised within twelve months after the reporting period; or
iv) Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
Current assets include current portion of non-current financial assets.
All other assets are classified as non-current.
A liability is current when:
i) It is expected to be settled in normal operating cycle;
ii) It is held primarily for the purpose of trading;
iii) It is due to be settled within twelve months after the reporting period;
iv) There is no unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Current liabilities include current portion of non-current financial liabilities.
All other liabilities are classified as non-current.
Deferred tax assets/liabilities are classified as non-current.
Operating Cycle
Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of classification of assets and liabilities as current and non-current.
The Company measures financial instruments at fair value which is the price that would be received to sell an asset or 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 takes place either in the principal market for the asset or liability or in the absence of a principal market in the most advantageous market for the asset or liability.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy based on the lowest level input that is significant to the fair value measurement as follows:
- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2: Inputs other than quoted prices, included in Level 1 that are directly or indirectly observable for the asset or liability;
- Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. For assets and liabilities that are recognised in the balance sheet on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. The Company recognises transfer between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included in Note 4(r) - Financial Instruments.
The financial statements have been prepared on going concern basis using the significant accounting policies and measurement basis summarized below.
These accounting policies have been used throughout all periods presented in the financial statements, except where the Company has applied certain accounting policies and exemptions upon transition to Ind AS.
4. Significant accounting policies:
A summary of the significant accounting policies applied in the preparation of the financial statements are as given below. These accounting policies have been applied consistently to all periods presented in the standalone financial statements.
a. Property, plant and equipment
Property, plant and equipment and capital work-in-progress are stated at cost net of accumulated depreciation and accumulated impairment losses, if any.
Cost comprises the purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, borrowing costs if capitalization criteria are met and any directly attributable cost of bringing the asset to its working condition for the intended use. The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if a) it is probable that future economic benefits associated with the item will flow to the entity; and b) the cost of the item can be measured reliably.
Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably. The cost
of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other expenses on existing 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. Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction period is capitalized as a part of indirect construction cost to the extent the expenditure is related to construction or is incidental thereto. Other indirect costs incurred during-the construction periods which are not related to construction activity nor are incidental thereto are charged to the Statement of Profit and Loss.
Value for individual assets acquired for a consolidated price, the consideration is apportioned to the various assets on a fair value basis as determined by competent valuers.
The Company has technically evaluated all the property, plant and equipment for determining the separate identifiable assets having different useful lives under the component approach. If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
The present value of the expected cost for the decommissioning of the asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
Depreciation on property, plant and equipment is provided on a straight line method computed on the basis of Companies Act, 2013, on pro-rata basis from the date the asset is ready to put to use.
Leasehold improvements are amortised over the lease period.
Depreciation on property, plant and equipment which are added/disposed off during the year is provided on pro-rata basis with reference to the date of addition/deletion. An item of property, plant and equipment and any significant part initially recognised is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is de-recognised.
Property, plant and equipment is derecognised when no future economic benefits are expected from their use or upon their disposal. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised in the statement of profit and loss.
b. Other intangible assets
Intangible assets that are acquired by the Company, having finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses, if any. Cost includes any directly attributable incidental expenses necessary to make the assets ready for its intended use.
Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably.
An intangible asset is derecognised when no future economic benefits are expected from their use or upon their disposal. Gains and losses on disposal of an item of intangible assets are determined by comparing the proceeds from disposal with the carrying amount of intangible assets and are recognised in the statement of profit and loss.
Intangible assets with finite useful life are assessed for impairment whenever there is an indication that the intangible assets may be impaired. Amortisation of intangible assets such as software is computed on a straight-line basis, at rates representing estimated useful life of 5 years. Technical know-how fees are amortised over the life of the plant from the date of commencement of commercial production using such know-how. Amortisation method, useful lives and residual values are reviewed at the end of each financial year and adjusted, if appropriate.
c. Borrowing Costs
Borrowing costs include interest, amortisation of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs, if any, directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized, if any. Capitalisation of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Income earned on temporary investment of the borrowings pending their expenditure on the qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised as an expense in the year in which they are incurred.
d. Impairment of non-financial assets
The carrying amounts of the Companyâs non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 âImpairment of Assetsâ. If any such indication exists, then the assetâs recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generate cash inflows that are largely independent of the cash inflows of the other assets or CGUs. The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs of disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the âcash-generating unitâ, or âCGUâ). To determine impairment of the Companyâs corporate assets which do not generate independent cash inflows, recoverable amount is determined for the CGUs to which the corporate assets belongs.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit or loss. Impairment loss recognised in respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to CGU, and then to reduce the carrying amounts of any other assets of the CGUs or group of CGUs on a pro-rata basis.
The Company classifies asset as held for sale if their carrying amount will be recovered principally through a sale rather than through continuing use of the assets and actions required to complete such sale indicate that it is unlikely that significant changes to the plan to sell will be made or that the decision to sell will be withdrawn. Also, such assets are classified as held for sale, if the Management expects to complete the sale within one year from the date of classification.
Assets classified as held for sale are measured at the lower of their carrying amount and the fair value less cost to sell.
Inventories are valued at the lower of cost and net realisable value after providing for obsolescence and other losses wherever considered necessary. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition and is determined on a weighted average basis. Work-in-progress includes raw material cost, plus conversion cost depending upon stage of completion. The cost of purchase consists of the purchase price including duties & taxes other than those subsequently recoverable by the enterprise from the taxing authorities, freight inwards and other expenditure directly attributable for its acquisition. Stock in Transit is valued at lower of cost and net realisable value. Scrap is valued at estimated net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. The comparison of cost and net realisable value is made on an item-by-item basis.
g. Provisions, Contingent Liabilities, Contingent assets and Commitments
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
Contingent Assets are neither recognised nor disclosed in the financial statements.
h. Government grants
Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and ultimate collection of the grant/subsidy is reasonably certain. Grants that compensate the Company for expenses incurred are recognised in profit or loss as other operating revenues on a systematic basis in the periods in which such expenses are recognised.
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
j. Foreign currency transactions and translation
Transactions in foreign currencies are initially recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date the transaction first qualifies for recognition. Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
Exchange differences arising on the settlement of short-term monetary items or on restatement of the Companyâs 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 expenses in the year in which they arise. Exchange differences pertaining to long-term foreign currency monetary items used for acquisition of depreciable fixed assets are added to the cost of fixed assets and depreciated over the remaining life of the respective fixed asset.
The Company uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency risks in respect of its imports and exports. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken to statement of profit and loss.
k. Revenue recognition
Sale of Goods: Revenue from sale of products are recognised at a point of time when control of products is transferred i.e. on dispatch of goods and are accounted for net of returns, trade discounts and volume rebates.
Sales value is net of discounts, rebates and freight outward (on external sales) and are exclusive of value added tax and goods and service tax.
The Company considers the terms of the contract and its customary business practices to determine the transaction price. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods to a customer, excluding amounts collected on behalf of third parties (for example, indirect taxes). No element of financing is deemed present as the sales are largely made with credit term of not more one year.
The transaction price is allocated by the Company to each performance obligation (or distinct good or service) in an amount that depicts the amount of consideration to which it expects to be entitled in exchange for transferring the promised goods or services to the customer.
For each performance obligation identified, the Company determines at contract inception whether it satisfies the performance obligation over time or satisfies the performance obligation at a point in time. If an entity does not satisfy a performance obligation over time, the performance obligation is satisfied at a point in time. A receivable is recognised when the goods are delivered as this is the case of point in time recognition where consideration is unconditional because only the passage of time is required.
When either party to a contract has performed, an entity shall present the contract in the balance sheet as a contract asset or a contract liability, depending on the relationship between the entityâs performance and the customerâs payment.
Sale of Services: Revenue from job work services and management consultancy services are recognized based on the services rendered in accordance with the terms of contracts.
Dividend Income: Dividend Income is recognized when the Companyâs right to receive is established which generally occurs when the shareholders approve the dividend.
Interest Income: Interest income from a financial asset is recognized when it is probable that the economic benefit will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
Other Income: Interest income is recognised, when no significant uncertainty as to measurability or collectability exists, on a time proportion basis taking into account the amount outstanding and the applicable interest rate, using the effective interest rate method (EIR). Income from export incentives is recognised on accrual basis.
l. Employee Benefits
Employee benefits include provident fund, Superannuation Fund, employee state insurance scheme, gratuity fund and compensated absences.
Defined contribution plans: The Companyâs contribution to Provident Fund, Superannuation Fund and employees state insurance scheme are considered as defined contribution plans and are charged as an expense based on the pre-determined amount of contribution required to be made and when services are rendered by the employees.
Defined benefit plans: For defined benefit plans in the form, of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur.
Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.
The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of profit and loss: (i) Service costs comprising current service costs, gains and losses on curtailments and settlements; and (ii) Net interest expense or income.
The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.
Compensated absences: Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognised on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of compensated absences becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method. Remeasurements as a result of experience adjustments and changes in the actuarial assumption are recognised in the statement of profit and loss.
Short-term employee benefits: The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service.
m. Leases
The Company as a lessee: Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Company. Contracts may contain both lease and non-lease components. The Company allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: (a) fixed payments (including in-substance fixed payments), less any lease incentives receivable; (b) variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date; (c) amounts expected to be payable under residual value guarantees, if any; (d) the exercise price of a purchase option if any, if the Company is reasonably certain to exercise that option; (e) payment for penalties for terminating the lease, if the lease term reflects the Company exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If the rate cannot be readily determined, which is generally the case for leases in the Company, the lesseeâs incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
Lease payments are allocated between principal and finance cost. The finance cost is charged to the statement of profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Variable lease payments that depends on sales are recognised in the statement of profit and loss in the period in which the condition that triggers those payments occurs.
Right-of-use assets are measured at cost comprising (a) the amount of the initial measurement of lease liability; (b) any lease payments made at or before the commencement date less any lease incentives received; (c) any initial direct costs; and (d) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located.
Right-of-use assets are generally depreciated over the shorter of the asset''s useful life and the lease term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying assets useful life.
Payments associated with short-term leases are recognised on a straight-line basis as an expense in the statement of profit and loss. Short term leases are the leases with a lease term of 12 months or less.
n. Income tax
Income tax expense comprises current and deferred tax.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted and as applicable at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax expense is recognised
in profit or loss except to the extent that it relates to items recognised directly in other comprehensive income or equity, in which case it is recognised in other comprehensive income or equity.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority.
Deferred tax is recognised in profit or loss except to the extent that it relates to items recognised directly in other comprehensive income or equity, in which case it is recognised in other comprehensive income or equity.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
o. Earnings per share
Basic earnings per share is computed by dividing the net profit or loss for the year attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the financial year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders of the Company and the weighted average number of equity shares outstanding the year is adjusted for the effects of all dilutive potential equity shares.
In accordance with Ind AS 108, operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments. The business activities of the Company predominantly fall within a single reportable operating segment, i.e., Polymer Processing. The Board of Directors is the Companyâs âChief Operating Decision Makerâ or âCODMâ within the meaning of Ind AS 108.
Equity investments in subsidiaries are measured at cost. The investments are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 âImpairment of Assetsâ. If any such indication exists, policy for impairment of financial assets is followed.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition or issue of the financial asset.
Subsequent measurement:
Debt instruments at amortised cost
A âdebt instrumentâ is measured at the amortised cost if the asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade and other receivables.
Derecognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset.
On derecognition of financial asset in its entirety, the difference between the assetâs carrying amount and the sum of the consideration received and receivable is recognized in the profit or loss on disposal of that financial asset.
Investments carried at fair value through other comprehensive income (FVTOCI)
An investment in bonds is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding and selling the financial asset.
After initial measurement, fair value movements are recognised in the other comprehensive income (OCI). However, the Company recognises interest income, impairment losses and reversals in the statement of profit and loss.
Derecognition
On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from equity to the statement of profit and loss.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
(a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance.
(b) Financial assets that are measured at FVTOCI e.g. investment in bonds.
(c) Trade receivables under Ind AS 115.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves and there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs. The Companyâs financial liabilities include trade and other payables, borrowings and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at amortised cost
After initial measurement, such financial liabilities are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the profit or loss. This category generally applies to borrowings, trade payables and other contractual liabilities.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
s. Use of estimates and management judgements
The preparation of the Companyâs financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the financial statements. Estimates and assumptions are continuously evaluated and are based on managementâs experience and other factors, including expectations of future events that are considered to be reasonable and prudent under the circumstances.
The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market change or circumstances arising beyond the control of the Company and uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. Such changes are reflected in the assumptions when they occur.
The following areas have been identified where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the financial statements. Changes in estimates are accounted for prospectively.
In order to enhance understanding of the financial statements, information about areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the standalone financial statements have been identified as under:
Significant management judgements:
1. Recoverable amount of property, plant and equipment
In assessing impairment, Company estimates the recoverable amount of each asset or cash-generating units based on expected market outlook and future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.
2. Provisions and contingencies
Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company. The assessments undertaken in recognising provisions and contingencies have been made in accordance with Ind AS 37, âProvisions, Contingent Liabilities and Contingent Assetsâ. The evaluation of the likelihood of the contingent events has required best judgment by management regarding the probability of exposure to potential loss. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgments and the use of estimates regarding the outcome of future events.
3. Recognition of deferred tax assets
The extent to which deferred tax assets can be recognised is based on an assessment of the probability of the Companyâs future taxable income against which the deferred tax assets can be utilised.
Significant management estimates:1. Useful life of property, plant and equipment
The estimated useful life of property, plant and equipment is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. The Company reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets.
Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, the rate of salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate and documented. However, any changes in these assumptions may have a material impact on the resulting calculations.
Mar 31, 2019
1. Significant accounting policies:
A summary of the significant accounting policies applied in the preparation of the financial statements are as given below. These accounting policies have been applied consistently to all periods presented in the standalone financial statements.
a. Property, plant and equipment
Property, plant and equipment and capital work-in-progress are stated at cost net of accumulated depreciation and accumulated impairment losses, if any.
Cost comprises the purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, borrowing costs if capitalization criteria are met and any directly attributable cost of bringing the asset to its working condition for the intended use. The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if a) it is probable that future economic benefits associated with the item will flow to the entity; and
b) the cost of the item can be measured reliably.
Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably. The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other expenses on existing 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. Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction period is capitalized as a part of indirect construction cost to the extent the expenditure is related to construction or is incidental thereto. Other indirect costs incurred during-the construction periods which are not related to construction activity nor are incidental thereto are charged to the Statement of Profit and Loss.
Value for individual assets acquired for a consolidated price, the consideration is apportioned to the various assets on a fair value basis as determined by competent valuers.
The Company has technically evaluated all the property, plant and equipment for determining the separate identifiable assets having different useful lives under the component approach. If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
The present value of the expected cost for the decommissioning of the asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
Depreciation on property, plant and equipment is provided over the useful lives of assets as specified in Schedule II to the Act except where the management, based on independent technical assessment, depreciates certain assets over estimated useful lives which are different from the useful lives prescribed in the Schedule to the Act. The Company has used the remaining useful lives to compute depreciation on its property, plant and equipment, acquired under the business transfer agreement based on external technical evaluation.
Leasehold improvements are amortised over the lease period.
Depreciation on property, plant and equipment which are added/disposed off during the year is provided on pro-rata basis with reference to the date of addition/deletion. An item of property, plant and equipment and any significant part initially recognised is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is de-recognised.
Property, plant and equipment is derecognised when no future economic benefits are expected from their use or upon their disposal. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised in the statement of profit and loss.
b. Other intangible assets
Intangible assets that are acquired by the Company, having finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses, if any. Cost includes any directly attributable incidental expenses necessary to make the assets ready for its intended use.
Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably.
An intangible asset is derecognised when no future economic benefits are expected from their use or upon their disposal. Gains and losses on disposal of an item of intangible assets are determined by comparing the proceeds from disposal with the carrying amount of intangible assets and are recognised in the statement of profit and loss.
Intangible assets with finite useful life are assessed for impairment whenever there is an indication that the intangible assets may be impaired. Amortization of intangible assets such as software is computed on a straight-line basis, at rates representing estimated useful life of 5 years. Amortization method, useful lives and residual values are reviewed at the end of each financial year and adjusted, if appropriate.
c. Borrowing Costs
Borrowing costs include interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs, if any, directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized, if any. Capitalisation of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Income earned on temporary investment of the borrowings pending their expenditure on the qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised as an expense in the year in which they are incurred.
d. Impairment of non-financial assets
The carrying amounts of the Company''s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 ''Impairment of Assets''. If any such indication exists, then the asset''s recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generate cash inflows that are largely independent of the cash inflows of the other assets or CGUs. The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs of disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit", or "CGU"). To determine impairment of the Company''s corporate assets which do not generate independent cash inflows, recoverable amount is determined for the CGUs to which the corporate assets belongs.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit or loss. Impairment loss recognised in respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to CGU, and then to reduce the carrying amounts of any other assets of the CGUs or group of CGUs on a pro-rata basis.
e. Inventories
Inventories are valued at the lower of cost and net realisable value after providing for obsolescence and other losses wherever considered necessary. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition and is determined on a weighted average basis. Work-in-progress includes raw material cost, plus conversion cost depending upon stage of completion. The cost of purchase consists of the purchase price including duties & taxes other than those subsequently recoverable by the enterprise from the taxing authorities, freight inwards and other expenditure directly attributable for its acquisition. Stock in Transit is valued at lower of cost and net realisable value. Scrap is valued at estimated net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion an d the estimated costs necessary to make the sale. The comparison of cost and net realisable value is made on an item-by-item basis.
f. Provisions, Contingent Liabilities, Contingent assets and Commitments
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
Contingent Assets are neither recognised nor disclosed in the financial statements.
g. Government grants
Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and ultimate collection of the grant/subsidy is reasonably certain. Grants that compensate the Company for expenses incurred are recognised in profit or loss as other operating revenues on a systematic basis in the periods in which such expenses are recognised.
h. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
i. Foreign currency transactions and translation
Transactions in foreign currencies are initially recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date the transaction first qualifies for recognition. Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
Exchange differences arising on the settlement of short-term monetary items or on restatement of the Company''s 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 expenses in the year in which they arise. Exchange differences pertaining to long-term foreign currency monetary items used for acquisition of depreciable fixed assets are added to the cost of fixed assets and depreciated over the remaining life of the respective fixed asset.
The Company uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency risks in respect of its imports and exports. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken to statement of profit and loss.
j. Revenue recognition
Sale of Goods: Revenue from sale of products are recognised when control of products is transferred i.e. on dispatch of goods and are accounted for net of returns, trade discounts and volume rebates.
Sales value is net of discounts, rebates and freight outward (on external sales) and are exclusive of value added tax and goods and service tax.
The Company considers the terms of the contract and its customary business practices to determine the transaction price. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods to a customer, excluding amounts collected on behalf of third parties (for example, indirect taxes). No element of financing is deemed present as the sales are largely made with credit term of not more one year.
The transaction price is allocated by the Company to each performance obligation (or distinct good or service) in an amount that depicts the amount of consideration to which it expects to be entitled in exchange for transferring the promised goods or services to the customer.
For each performance obligation identified, the Company determines at contract inception whether it satisfies the performance obligation over time or satisfies the performance obligation at a point in time. If an entity does not satisfy a performance obligation over time, the performance obligation is satisfied at a point in time. A receivable is recognised when the goods are delivered as this is the case of point in time recognition where consideration is unconditional because only the passage of time is required.
When either party to a contract has performed, an entity shall present the contract in the balance sheet as a contract asset or a contract liability, depending on the relationship between the entity''s performance and the customer''s payment.
Effective 1 April 2018, the Company adopted Ind AS 115 "Revenue from Contracts with Customers'''' using the cumulative catch-up transition method which is applied to contracts that were not completed as on 1 April 2018. Accordingly, the comparatives have not been retrospectively adjusted. The management assessed that the effect of adoption of Ind AS 115 was not material to financial statements.
Sale of Services: Revenue from job work services and management consultancy services are recognized based on the services rendered in accordance with the terms of contracts.
Dividend Income: Dividend Income is recognized when the Company''s right to receive is established which generally occurs when the shareholders approve the dividend.
Interest Income: Interest income from a financial asset is recognized when it is probable that the economic benefit will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognit ion.
Other Income: Interest income is recognised, when no significant uncertainty as to measurability or collectability exists, on a time proportion basis taking into account the amount outstanding and the applicable interest rate, using the effective interest rate method (EIR). Income from export incentives is recognised on accrual basis.
k. Employee Benefits
Employee benefits include provident fund, Superannuation Fund, employee state insurance scheme, gratuity fund and compensated absences.
Defined contribution plans: The Company''s contribution to Provident Fund, Superannuation Fund and employees state insurance scheme are considered as defined contribution plans and are charged as an expense based on the pre-determined amount of contribution required to be made and when services are rendered by the employees.
Defined benefit plans: For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur.
Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.
The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of profit and loss: (i) Service costs comprising current service costs, gains and losses on curtailments and settlements; and
(ii) Net interest expense or income.
The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.
Compensated absences: Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognised on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of compensated absences becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method. Remeasurements as a result of experience adjustments and changes in the actuarial assumption are recognised in the statement of profit and loss.
Short-term employee benefits: The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service.
l. Leases
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating lease. Rental expense from operating lease is generally recognized on a straight line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessors expected inflationary cost increase, such increases are recognized in the year in which such benefits accrue. Initial direct costs incurred specifically for an operating lease are deferred and charged to the Statement of Profit and Loss over the lease term.
m. Income tax
Income tax expense comprises current and deferred tax.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted and as applicable at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in other comprehensive in come or equity, in which case it is recognised in other comprehensive income or equity.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority.
Deferred tax is recognised in profit or loss except to the extent that it relates to items recognised directly in other comprehensive income or equity, in which case it is recognised in other comprehensive income or equity.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against wh ich the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
n. Earnings per share
Basic earnings per share is computed by dividing the net profit or loss for the year attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the financial year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders of the Company and the weighted average number of equity shares outstanding the year is adjusted for the effects of all dilutive potential equity shares.
o. Operating segment
In accordance with Ind AS 108, operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments. The business activities of the Company predominantly fall within a single reportable operating segment, i.e., Polymer Processing. The Board of Directors is the Company''s ''Chief Operating Decision Maker'' or ''CODM'' within the meaning of Ind AS 108.
p. Equity investment
Equity investments in subsidiaries are measured at cost. The investments are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 ''Impairment of Assets''. If any such indication exists, policy for impairment of financial assets is followed.
q. 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
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition or issue of the financial asset.
Subsequent measurement:
Debt instruments at amortised cost
A ''debt instrument'' is measured at the amortised cost if the asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade and other receivables.
Derecognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset.
On derecognition of financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable is recognized in the profit or loss on disposal of that financial asset.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
(a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance.
(b) Trade receivables under Ind AS 115.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves and there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
2. Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, borrowings and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at amortised cost
After initial measurement, such financial liabilities are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortization process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance costs in the profit or loss. This category generally applies to borrowings, trade payables and other contractual liabilities.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
3. Offsetting
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
r. Assets held for sale
The Company classifies asset as held for sale if their carrying amount will be recovered principally through a sale rather than through continuing use of the assets and actions required to complete such sale indicate that it is unlikely that significant changes to the plan to sell will be made or that the decision to sell will be withdrawn. Also, such assets are classified as held for sale, if the Management expects to complete the sale within one year from the date of classification.
Assets classified as held for sale are measured at the lower of their carrying amount and the fair value less cost to sell.
s. Investments in subsidiaries
The Company has accounted for its investment in subsidiaries at cost in its financial statements in accordance with Ind AS -27, Separate Financial Statements. Profit/Loss on sale of investments is recognized on the date of sale and is computed with reference to the original cost of the investment sold.
t. Use of estimates and management judgements
The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the financial statements. Estimates and assumptions are continuously evaluated and are based on management''s experience and other factors, including expectations of future events that are considered to be reasonable and prudent under the circumstances.
The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market change or circumstances arising beyond the control of the Company and uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. Such changes are reflected in the assumptions when they occur.
The following areas have been identified where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the financial statements. Changes in estimates are accounted for prospectively.
In order to enhance understanding of the financial statements, information about areas of estimatio n, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the standalone financial statements have been identified as under:
1. Useful life of property, plant and equipment
The estimated useful life of property, plant and equipment is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. The Company reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets.
2. Recoverable amount of property, plant and equipment
In assessing impairment, Company estimates the recoverable amount of each asset or cash-generating units based on expected market outlook and future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.
3. Employee benefit plans
Employee benefit obligations are measured on the basis of actuarial assumptions which include morta lity and withdrawal rates as well as assumptions concerning future developments in discount rates, the rate of salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate and documented. However, any changes in these assumptions may have a material impact on the resulting calculations.
4. Leases not in legal form of lease
Significant judgment is required to apply lease accounting rules under Appendix C to Ind AS 17 ''Determining whether an arrangement contains a lease''. In assessing the applicability to arrangements entered into by the Company, management has exercised judgment to evaluate the right to use the underlying asset, substance of the transactions including legally enforceable agreements and other significant terms and conditions of the arrangements to conclude whether the arrangement needs the criteria under Appendix C to Ind AS 17.
5. Provisions and contingencies
Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company. The assessments undertaken in recognising provisions and contingencies have been made in accordance with Ind AS 37, ''Provisions, Contingent Liabilities and Contingent Assets''. The evaluation of the likelihood of the contingent events has required best judgment by management regarding the probability of exposure to potential loss. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgments and the use of estimates regarding the outcome of future events.
6. Liability for de-commissioning of asset
The liability for de-commissioning is measured on the basis of present estimated cost to decommission the asset, current inflation rate and discount rate. The Company considers that the assumptions used to measure its obligations are appropriate and documented. However, any changes in these assumptions may have a material impact on the resulting calculations.
Mar 31, 2018
1. Significant accounting policies:
A summary of the significant accounting policies applied in the preparation of the financial statements are as given below. These accounting policies have been applied consistently to all periods presented in the standalone financial statements.
a. Property, plant and equipment
Property, plant and equipment and capital work-in-progress are stated at cost net of accumulated depreciation and accumulated impairment losses, if any.
Cost comprises the purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, borrowing costs if capitalization criteria are met and any directly attributable cost of bringing the asset to its working condition for the intended use. The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if a) it is probable that future economic benefits associated with the item will flow to the entity; and
b) the cost of the item can be measured reliably.
Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably. The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other expenses on existing 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. Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction period is capitalized as a part of indirect construction cost to the extent the expenditure is related to construction or is incidental thereto. Other indirect costs incurred during-the construction periods which are not related to construction activity nor are incidental thereto are charged to the Statement of Profit and Loss. For individual assets acquired for a consolidated price, the consideration is apportioned to the various assets on a fair value basis as determined by competent valuers.
The Company has technically evaluated all the property, plant and equipment for determining the separate identifiable assets having different useful lives under the component approach. If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.
The present value of the expected cost for the decommissioning of the asset after its use is included in the cost of the respective asset if the recognition criteria for a provision are met.
Depreciation on property, plant and equipment is provided over the useful lives of assets as specified in Schedule II to the Act except where the management, based on independent technical assessment, depreciates certain assets over estimated useful lives which are different from the useful lives prescribed in the Schedule to the Act. The Company has used the remaining useful lives to compute depreciation on its property, plant and equipment, acquired under the business transfer agreement based on external technical evaluation.
Leasehold improvements are amortised over the lease period.
Depreciation on property, plant and equipment which are added/disposed off during the year is provided on pro-rata basis with reference to the date of addition/deletion. An item of property, plant and equipment and any significant part initially recognised is de-recognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Statement of Profit and Loss when the asset is de-recognised.
Property, plant and equipment is derecognised when no future economic benefits are expected from their use or upon their disposal. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised in the statement of profit and loss.
Transition to Ind AS
The Company has elected to avail the option under Ind AS 101 by not applying the provisions of Ind AS 16 retrospectively and continuing to use the previous GAAP carrying amount as a deemed cost under Ind AS at the date of transition to Ind AS. Accordingly, the carrying amount of property, plant and equipment as per the previous GAAP as at 1 April 2016, i.e. the Company''s date of transition to Ind AS, was maintained on transition to Ind AS.
b. Intangible assets
Intangible assets that are acquired by the Company, having finite useful lives, are measured at cost less accumulated amortisation and accumulated impairment losses, if any. Cost includes any directly attributable incidental expenses necessary to make the assets ready for its intended use.
Subsequent expenditure is recognised as an increase in the carrying amount of the asset when it is probable that future economic benefits deriving from the cost incurred will flow to the enterprise and the cost of the item can be measured reliably.
An intangible asset is derecognised when no future economic benefits are expected from their use or upon their disposal. Gains and losses on disposal of an item of intangible assets are determined by comparing the proceeds from disposal with the carrying amount of intangible assets and are recognised in the statement of profit and loss.
Intangible assets with finite useful life are assessed for impairment whenever there is an indication that the intangible assets may be impaired. Amortisation of intangible assets such as software is computed on a straight-line basis, at rates representing estimated useful life of 5 years. Amortisation method, useful lives and residual values are reviewed at the end of each financial year and adjusted, if appropriate.
Transition to Ind AS
The Company has elected to avail the option under Ind AS 101 by not applying the provisions of Ind AS 16 retrospectively and continuing to use the previous GAAP carrying amount as a deemed cost under Ind AS at the date of transition to Ind AS. Accordingly, the carrying amount of property, plant and equipment as per the previous GAAP as at 1 April 2016, i.e. the Company''s date of transition to Ind AS, was maintained on transition to Ind AS.
c. Borrowing Costs
Borrowing costs include interest, amortisation of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs, if any, directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized, if any. Capitalisation of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying assets for their intended uses are complete. Income earned on temporary investment of the borrowings pending their expenditure on the qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised as an expense in the year in which they are incurred.
d. Impairment of non-financial assets
The carrying amounts of the Company''s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 ''Impairment of Assets''. If any such indication exists, then the asset''s recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each CGU represents the smallest group of assets that generate cash inflows that are largely independent of the cash inflows of the other assets or CGUs. The recoverable amount of an asset or cash-generating unit is the higher of its fair value less costs of disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit", or "CGU"). To determine impairment of the Company''s corporate assets which do not generate independent cash inflows, recoverable amount is determined for the CGUs to which the corporate assets belongs.
An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of profit or loss. Impairment loss recognised in respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to CGU, and then to reduce the carrying amounts of any other assets of the CGUs or group of CGUs on a pro-rata basis.
e. Inventories
Inventories are valued at the lower of cost and net realisable value after providing for obsolescence and other losses wherever considered necessary. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition and is determined on a FIFO basis. The cost of purchase consists of the purchase price including duties & taxes other than those subsequently recoverable by the enterprise from the taxing authorities, freight inwards and other expenditure directly attributable for its acquisition. Stock in Transit is valued at lower of cost and net realisable value. Scrap is valued at estimated net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. The comparison of cost and net realisable value is made on an item-by-item basis.
f. Provisions, Contingent Liabilities, Contingent assets and Commitments
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
Contingent liabilities are possible obligations that arise from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly within the control of the Company. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Contingent liabilities are disclosed on the basis of judgment of the management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.
Contingent Assets are neither recognised nor disclosed in the financial statements.
g. Government grants
Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and ultimate collection of the grant/subsidy is reasonably certain. Grants that compensate the Company for expenses incurred are recognised in profit or loss as other operating revenues on a systematic basis in the periods in which such expenses are recognised.
h. Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
i. Foreign currency transactions and translation
Transactions in foreign currencies are initially recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date the transaction first qualifies for recognition. Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction.
Exchange differences arising on the settlement of short-term monetary items or on restatement of the Company''s 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 expenses in the year in which they arise. Exchange differences pertaining to long-term foreign currency monetary items used for acquisition of depreciable fixed assets are added to the cost of fixed assets and depreciated over the remaining life of the respective fixed asset.
The Company uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency risks in respect of its imports and exports. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken to statement of profit and loss.
j. Revenue recognition
Sale of Goods: Revenue from sale of goods is recognised when the significant risks and rewards of ownership of the goods have been transferred to the customer, and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods. Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, related discounts and claims. It excludes Goods and Services Tax, and value added tax/sales tax but is inclusive of Excise Duty. The above mentioned factors coincides with dispatch of goods from the factory/ storage area and port (in case of exports).
Sale of Services: Revenue from job work services and management consultancy services are recognized based on the services rendered in accordance with the terms of contracts.
Dividend Income: Dividend Income is recognized when the Company''s right to receive is established which generally occurs when the shareholders approve the dividend.
Interest Income: Interest income from a financial asset is recognized when it is probable that the economic benefit will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and the interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
Other Income: Interest income is recognised, when no significant uncertainty as to measurability or collectability exists, on a time proportion basis taking into account the amount outstanding and the applicable interest rate, using the effective interest rate method (EIR). Income from export incentives is recognised on accrual basis.
k. Employee Benefits
Employee benefits include provident fund, Superannuation Fund, employee state insurance scheme, gratuity fund and compensated absences.
Defined contribution plans: The Company''s contribution to Provident Fund, Superannuation Fund and employees state insurance scheme are considered as defined contribution plans and are charged as an expense based on the pre-determined amount of contribution required to be made and when services are rendered by the employees.
Defined benefit plans: For defined benefit plans in the form of gratuity fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income in the period in which they occur.
Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.
The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of profit and loss: (i) Service costs comprising current service costs, gains and losses on curtailments and settlements; and (ii) Net interest expense or income.
The retirement benefit obligation recognized in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognized past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.
Compensated absences: Liability in respect of compensated absences becoming due or expected to be availed within one year from the balance sheet date is recognised on the basis of undiscounted value of estimated amount required to be paid or estimated value of benefit expected to be availed by the employees. Liability in respect of compensated absences becoming due or expected to be availed more than one year after the balance sheet date is estimated on the basis of an actuarial valuation performed by an independent actuary using the projected unit credit method. Remeasurements as a result of experience adjustments and changes in the actuarial assumption are recognised in the statement of profit and loss.
Short-term employee benefits: The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized during the year when the employees render the service.
l. Leases
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Company as lessee are classified as operating lease. Rental expense from operating lease is generally recognized on a straight line basis over the term of the relevant lease. Where the rentals are structured solely to increase in line with expected general inflation to compensate for the lessors expected inflationary cost increase, such increases are recognized in the year in which such benefits accrue. Initial direct costs incurred specifically for an operating lease are deferred and charged to the Statement of Profit and Loss over the lease term.
m. Income tax
Income tax expense comprises current and deferred tax.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted and as applicable at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in other comprehensive income or equity, in which case it is recognised in other comprehensive income or equity.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority.
Deferred tax is recognised in profit or loss except to the extent that it relates to items recognised directly in other comprehensive income or equity, in which case it is recognised in other comprehensive income or equity.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
n. Earnings per share
Basic earnings per share is computed by dividing the net profit or loss for the year attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the financial year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders of the Company and the weighted average number of equity shares outstanding the year is adjusted for the effects of all dilutive potential equity shares.
o. Operating segment
In accordance with Ind AS 108, operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments. The business activities of the Company predominantly fall within a single reportable operating segment, i.e., Polymer Processing. The Board of Directors is the Company''s ''Chief Operating Decision Maker'' or ''CODM'' within the meaning of Ind AS 108.
p. Equity investment
Equity investments in joint ventures and subsidiaries are measured at cost. The investments are reviewed at each reporting date to determine whether there is any indication of impairment considering the provisions of Ind AS 36 ''Impairment of Assets''. If any such indication exists, policy for impairment of financial assets is followed.
q. 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
Initial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition or issue of the financial asset.
Subsequent measurement:
Debt instruments at amortised cost
A ''debt instrument'' is measured at the amortised cost if the asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.
After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit and loss. The losses arising from impairment are recognised in the statement of profit and loss. This category generally applies to trade and other receivables.
Derecognition
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognizes its retained interest in the asset.
On derecognition of financial asset in its entirety, the difference between the asset''s carrying amount and the sum of the consideration received and receivable is recognized in the profit or loss on disposal of that financial asset.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
(a) Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities, deposits, trade receivables and bank balance.
(b) Trade receivables under Ind AS 18.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves and there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment loss allowance based on 12-month ECL.
2. Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of borrowings and payables, net of directly attributable transaction costs. The Company''s financial liabilities include trade and other payables, borrowings and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at amortised cost
After initial measurement, such financial liabilities are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the profit or loss. This category generally applies to borrowings, trade payables and other contractual liabilities.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.
3. Offsetting
Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
r. Use of estimates and management judgements
The preparation of the Company''s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities at the date of the financial statements. Estimates and assumptions are continuously evaluated and are based on management''s experience and other factors, including expectations of future events that are considered to be reasonable and prudent under the circumstances.
The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market change or circumstances arising beyond the control of the Company and uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. Such changes are reflected in the assumptions when they occur.
The following areas have been identified where significant judgements, estimates and assumptions are required. Further information on each of these areas and how they impact the various accounting policies are described below and also in the relevant notes to the financial statements. Changes in estimates are accounted for prospectively.
In order to enhance understanding of the financial statements, information about areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the standalone financial statements have been identified as under:
1. Useful life of property, plant and equipment
The estimated useful life of property, plant and equipment is based on a number of factors including the effects of obsolescence, demand, competition and other economic factors (such as the stability of the industry and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the asset. The Company reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets.
2. Recoverable amount of property, plant and equipment
In assessing impairment, Company estimates the recoverable amount of each asset or cash-generating units based on expected market outlook and future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.
3. Employee benefit plans
Employee benefit obligations are measured on the basis of actuarial assumptions which include mortality and withdrawal rates as well as assumptions concerning future developments in discount rates, the rate of salary increases and the inflation rate. The Company considers that the assumptions used to measure its obligations are appropriate and documented. However, any changes in these assumptions may have a material impact on the resulting calculations.
4. Provisions and contingencies
Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company. The assessments undertaken in recognising provisions and contingencies have been made in accordance with Ind AS 37, ''Provisions, Contingent Liabilities and Contingent Assets''. The evaluation of the likelihood of the contingent events has required best judgment by management regarding the probability of exposure to potential loss. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgments and the use of estimates regarding the outcome of future events.
Mar 31, 2016
Notes to the Financial Statements
1. Company Overview:
Xpro India Limited ("the Company") is a public company incorporated as "Biax Films Limited" on November 26, 1997 under the Companies Act, 1956; the present name was adopted w.e.f. September 22, 1998. Equity shares of the Company are listed on National Stock Exchange and are admitted for trading on Bombay Stock Exchange. Organized into operating divisions for operational convenience, the Company is engaged mainly in the business of Polymers Processing at multiple locations and is the leading manufacturer in India of Coextruded Plastic Sheets, Thermoformed Liners and Specialty Films (including Dielectric Films and special purpose BOPP Films).
2. Significant Accounting Policies
2.1 Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 ("the Act").
The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of then financial statements are consistent with those followed in the previous year.
2.2 Use of Estimates
The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates as are recognized in the periods in which the results are known / materialize.
2.3 Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation/amortization and impairment losses, if any. Cost comprises of freight, duties, taxes, interest and other incidental expenses related to acquisition and installation.
Fixed assets acquired and put to use for project purposes are capitalized when the project is ready for intended use and all costs and revenues till then are capitalized with the project cost. Projects under which tangible fixed assets are not yet ready for their intended use are carried as capital-work-in-progress at cost comprising direct cost, related incidental expenses and attributable interest.
The Company has opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules 2009 relating to Accounting Standard 11 (AS-11) notified by Government of India on 31st March, 2009. Accordingly the effect of exchange differences on foreign currency loans of the Company is accounted by addition or deduction to the cost of the assets so far it relates to depreciable capital assets and in other cases accumulated in a "Foreign Currency Monetary Item Translation Difference Account" in the enterprise''s financial statements and amortized over the balance period of such long term asset or liability, by the recognition as income or expense in each of such periods.
2.4 Depreciation/Amortization
Depreciation on tangible fixed assets has been provided on the Straight Line Method as per the useful life prescribed in Schedule II to the Companies Act, 2013. Certain Plant & Machinery are considered as continuous process plants based on technical evaluation. Depreciation on addition/disposal is provided pro-rata with reference to date of addition/disposal. Leasehold lands and development expenses thereof are amortized over the period of lease. Software is amortized over a period of six years. Technical know-how fees are amortized over the life of the plant from the date of commencement of commercial production using such know-how.
2.5 Impairment
The carrying amounts of assets are reviewed at each balance sheet date for any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset/cash generating unit exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selli ng price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discounting factor.
2.6 Investments
Long term Investments are stated at cost less provision for diminution in value other than temporary, if any.
2.7 Inventories
Inventories include stock-in-transit/bonded warehouses and with others for manufacturing / processing / replacement. Inventories are valued at lower of cost and net realizable value. Cost is determined on the weighted average method. Finished goods and process stock include cost of conversion and other costs incurred in bringing the inventories to their present location and condition, and excise duty, as applicable.
2.8 Revenue Recognition
i. 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.
ii. Sale of goods: Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the customer (on dispatch to the customer). Excise Duty deducted from turnover (gross) is the amount that is included in the amount of turnover (gross) and not the entire amount of liability that arose during the year. Sales are recognized net of sales tax.
iii. Income from Services: Revenue (including sales commission) is recognized on accrual basis (proportionate completion method).
iv. Interest: Time pro-rated revenue is recognized taking into account the amount outstanding and rate applicable.
v. Others: Wherever it is not possible to determine the quantum of accrual with reasonable certainty, e.g. Insurance & other claims, refund of Customs Duty and export incentives these continue to be accounted for on cash basis.
2.9 Borrowing Cost
Borrowing costs include interest, amortization of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilized for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalization of such asset are is added to the cost of the assets. Capitalization of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.
2.10 Foreign Currency Transactions
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate prevailing at time of transaction. Monetary items denominated in foreign currencies and outstanding at the year-end are translated at year-end rates. Exchange differences arising on settlement of short-term monetary items at rates different from those at which they were initially recorded are recognized as income or as expenses in the year in which they arise.
The Company has opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment Rules 2009 relating to Accounting Standard 11 (AS-11) notified by Government of India on 31st March, 2009. Accordingly the effect of exchange differences on foreign currency loans of the Company is accounted by addition or deduction to the cost of the assets so far it relates to depreciable capital assets and in other cases accumulated in a "Foreign Currency Monetary Item Translation Difference Account" in the enterprise''s financial statements and amortized over the balance period of such long term asset or liability, by the recognition as income or expense in each of such periods.
2.11 Research & Development (''R&D'')
Revenue expenditure on R&D is charged to Statement of Profit and Loss account under respective heads of account and fixed assets utilized for R&D are capitalized and depreciated in accordance with the policy.
2.12 Government Grants, Subsidies and Export Incentives
Government grants and subsidies are recognized when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants/subsidies will be received. Grants relating to Fixed Assets are deducted from the gross value of the Fixed Assets and those of the nature of Project Capital Subsidy are credited to Capital Subsidy Reserves & other Government grants including export incentives are credited to Statement of Profit & Loss or deducted from the related expenses. Other Government grants/subsidies are recognized as income over the period necessary to match them with the cost for which they are intended to compensate, on a systematic basis.
2.13 Employee benefits
Contributions to Provident Fund and Superannuation Fund, which are defined contribution schemes, are made to government administered/approved Provident Fund(s) and an LIC administered fund respectively, and are charged to the Statement of Profit and Loss as incurred. The Company has no further obligations beyond its monthly contributions to these funds. Provision for gratuity and compensated absence, under LIC administered fund(s), which are in the nature of defined benefit plans, are provided based on valuations, as at the balance sheet date, carried out by an independent actuary. Termination benefits are recognized as expense as and when incurred.
2.14 Taxation
Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognized as an asset in the Balance Sheet when it is highly probable that future economic benefit associated with it will flow to the Company.
Deferred tax is recognized on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognized for all timing differences. Deferred tax assets are recognized for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realized. However, if there are unabsorbed depreciation and carry forward of losses and items relating to capital losses, deferred tax assets are recognized only if there is virtual certainty that there will be sufficient future taxable income available to realize the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their reliability.
Current and deferred tax relating to items directly recognized in reserves are recognized in reserves and not in the Statement of Profit and Loss.
2.15 Employees Stock Option Plan
The accounting value of stock options representing the excess of the market price on the date of grant over the exercise price of the shares granted under "Employees'' Stock Option Scheme" of the Company, is amortized as "Deferred employees compensation" on a straight-line basis over the vesting period in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
2.16 Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources to settle the obligation in respect of which a reliable estimate can be made. Contingent liabilities, if any, are not recognized in the accounts but are disclosed by way of notes. Contingent assets are neither recognized nor disclosed in the financial statements.
2.17 Cash flow statement
Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.
2.18 Service tax input credit
Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is reasonable certainty in availing / utilizing the credits.
2.19 Operating Cycle
Based on the nature of products/activities of the Company and the normal time between acquisition of assets and their realization in cash or cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of classification of assets and liabilities as current and non-current.
Mar 31, 2015
1.1 Basis of Preparation of Financial Statements
The financial statements of the Company have been prepared under the
historical cost convention in accordance with the Generally Accepted
Accounting Principles in India (Indian GAAP) to comply with the
Accounting Standards specified under Section 133 of the Companies Act,
2013 ("the Act") read with Rule 7 of the Companies (Accounts) Rules,
2014.
The financial statements have been prepared on accrual basis under the
historical cost convention. The accounting policies adopted in the
preparation of then financial statements are consistent with those
followed in the previous year.
2.2 Use of Estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates as are recognised in the periods in
which the results are known / materialise.
2.3 Fixed Assets
Fixed Assets are stated at cost less accumulated
depreciation/amortization and impairment losses, if any. Cost comprises
of freight, duties, taxes, interest and other incidental expenses
related to acquisition and installation.
Fixed assets acquired and put to use for project purposes are
capitalized when the project is ready for intended use and all costs
and revenues till then are capitalized with the project cost. Projects
under which tangible fixed assets are not yet ready for their intended
use are carried as capital-work-in-progress at cost comprising direct
cost, related incidental expenses and attributable interest.
The Company has opted for accounting the exchange differences arising
on reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules 2009 relating to
Accounting Standard 11 (AS-11) notified by Government of India on 31st
March, 2009. Accordingly the effect of exchange differences on foreign
currency loans of the Company is accounted by addition or deduction to
the cost of the assets so far it relates to depreciable capital assets
and in other cases accumulated in a "Foreign Currency Monetary Item
Translation Difference Account" in the enterprise''s financial
statements and amortised over the balance period of such long term
asset or liability, by the recognition as income or expense in each of
such periods.
2.4 Depreciation/Amortization
Depreciation on tangible fixed assets has been provided on the Straight
Line Method as per the useful life prescribed in Schedule II to the
Companies Act, 2013. Certain Plant & Machinery are considered as
continuous process plants based on technical evaluation. Depreciation
on addition/disposal is provided pro-rata with reference to date of
addition/disposal. Leasehold lands and development expenses thereof
are amortized over the period of lease. Software is amortized over a
period of six years. Technical know-how fees are amortized over the
life of the plant from the date of commencement of commercial
production using such know-how.
2.5 Impairment
The carrying amounts of assets are reviewed at each balance sheet date
for any indication of impairment based on internal/external factors. An
impairment loss is recognized wherever the carrying amount of an
asset/cash generating unit exceeds its recoverable amount. The
recoverable amount is the greater of the asset''s net selling price and
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value based on an appropriate
discounting factor.
2.6 Investments
Long term Investments are stated at cost less provision for diminution
in value other than temporary, if any.
2.7 Inventories
Inventories include stock-in-transit/bonded warehouses and with others
for manufacturing / processing / replacement. Inventories are valued
at lower of cost and net realizable value. Cost is determined on the
weighted average method. Finished goods and process stock include cost
of conversion and other costs incurred in bringing the inventories to
their present location and condition, and excise duty, as applicable.
2.8 Revenue Recognition
i. 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.
ii. Sale of goods: Revenue is recognized when the significant risks and
rewards of ownership of the goods have passed to the customer (on
despatch to the customer). Excise Duty deducted from turnover (gross)
is the amount that is included in the amount of turnover (gross) and
not the entire amount of liability that arose during the year. Sales
are recognised net of sales tax.
iii. Income from Services: Revenue (including sales commission) is
recognized on accrual basis (proportionate completion method).
iv. Interest: Time pro-rated revenue is recognized taking into account
the amount outstanding and rate applicable.
v. Others: Wherever it is not possible to determine the quantum of
accrual with reasonable certainty, e.g. Insurance & other claims,
refund of Customs Duty and export incentives these continue to be
accounted for on cash basis.
2.9 Borrowing Cost
Borrowing costs include interest, amortization of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilized for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalization of such asset are is added to the cost of the assets.
Capitalization of borrowing costs is suspended and charged to the
Statement of Profit and Loss during extended periods when active
development activity on the qualifying assets is interrupted.
2.10 Foreign Currency Transactions
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate prevailing
at time of transaction. Monetary items denominated in foreign
currencies and outstanding at the year-end are translated at year-end
rates. Exchange differences arising on settlement of short-term
monetary items at rates different from those at which they were
initially recorded are recognized as income or as expenses in the year
in which they arise.
The Company has opted for accounting the exchange differences arising
on reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules 2009 relating to
Accounting Standard 11 (AS-11) notified by Government of India on 31st
March, 2009. Accordingly the effect of exchange differences on foreign
currency loans of the Company is accounted by addition or deduction to
the cost of the assets so far it relates to depreciable capital assets
and in other cases accumulated in a "Foreign Currency Monetary Item
Translation Difference Account" in the enterprise''s financial
statements and amortised over the balance period of such long term
asset or liability, by the recognition as income or expense in each of
such periods.
2.11 Research & Development (''R&D'')
Revenue expenditure on R&D is charged to Statement of Profit and Loss
account under respective heads of account and fixed assets utilized for
R&D are capitalised and depreciated in accordance with the policy.
2.12 Government Grants, Subsidies and Export Incentives
Government grants and subsidies are recognised when there is reasonable
assurance that the Company will comply with the conditions attached to
them and the grants/subsidies will be received. Grants relating to
Fixed Assets are deducted from the gross value of the Fixed Assets and
those of the nature of Project Capital Subsidy are credited to Capital
Subsidy Reserves & other Government grants including export incentives
are credited to Statement of Profit & Loss or deducted from the related
expenses. Other Government grants/subsidies are recognised as income
over the period necessary to match them with the cost for which they
are intended to compensate, on a systematic basis.
2.13 Employee benefits
Contributions to Provident Fund and Superannuation Fund, which are
defined contribution schemes, are made to government
administered/approved Provident Fund(s) and an LIC administered fund
respectively, and are charged to the Statement of Profit and Loss as
incurred. The Company has no further obligations beyond its monthly
contributions to these funds. Provision for gratuity and compensated
absence, under LIC administered fund(s), which are in the nature of
defined benefit plans, are provided based on valuations, as at the
balance sheet date, made by the administrators (LIC). Termination
benefits are recognized as expense as and when incurred.
2.14 Taxation
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the applicable tax rates and the
provisions of the Income Tax Act, 1961 and other applicable tax laws.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is highly
probable that future economic benefit associated with it will flow to
the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantively enacted as at the reporting date. Deferred tax
liabilities are recognised for all timing differences. Deferred tax
assets are recognised for timing differences of items other than
unabsorbed depreciation and carry forward losses only to the extent
that reasonable certainty exists that sufficient future taxable income
will be available against which these can be realised. However, if
there are unabsorbed depreciation and carry forward of losses and items
relating to capital losses, deferred tax assets are recognised only if
there is virtual certainty that there will be sufficient future taxable
income available to realise the assets. Deferred tax assets and
liabilities are offset if such items relate to taxes on income levied
by the same governing tax laws and the Company has a legally
enforceable right for such set off. Deferred tax assets are reviewed at
each balance sheet date for their realisability.
Current and deferred tax relating to items directly recognised in
reserves are recognised in reserves and not in the Statement of Profit
and Loss.
2.15 Employees Stock Option Plan
The accounting value of stock options representing the excess of the
market price on the date of grant over the exercise price of the shares
granted under "Employees'' Stock Option Scheme" of the Company, is
amortized as "Deferred employees compensation" on a straight-line basis
over the vesting period in accordance with the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
2.16 Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized when there is a present obligation as a
result of past events and it is probable that there will be an outflow
of resources to settle the obligation in respect of which a reliable
estimate can be made. Contingent liabilities, if any, are not
recognized in the accounts but are disclosed by way of notes.
Contingent assets are neither recognized nor disclosed in the financial
statements.
2.17 Operating Cycle
Based on the nature of products/activities of the Company and the
normal time between acquisition of assets and their realization in cash
or cash equivalents, the Company has determined its operating cycle as
twelve months for the purpose of classification of assets and
liabilities as current and non-current.
Mar 31, 2013
1.1 Basis of Preparation of Financial Statements
The financial statements have been prepared under historical cost
convention in accordance with the generally accepted accounting
principles, applicable Accounting Standards as prescribed under the
Companies (Accounting Standards) Rules, 2006 and provisions of the
Companies Act, 1956.
The Company follows the mercantile system of accounting and recognizes
significant items of income and expenditure on accrual basis. Wherever
it is not possible to determine the quantum of accrual with reasonable
certainty, e.g. Insurance & other claims, refund of Customs Duty and
export incentives these continue to be accounted for on settlement
basis.
1.2 Use of Estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates as are recognised in the periods in
which the results are known / materialise.
1.3 Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation. Cost
comprises of freight, duties, taxes, interest and other incidental
expenses related to acquisition and installation.
1.4 Depreciation/Amortization
Depreciation is charged under Straight Line Method in accordance with
the rates and manner specified in Schedule XIV to the Companies Act,
1956. Certain Plant & Machinery are considered as continuous process
plants based on technical evaluation. Depreciation on addition/disposal
is provided pro-rata with reference to days of addition/disposal.
Leasehold lands and development expenses thereof are amortized over the
period of lease. Software is amortized over a period of six years.
Technical know-how fees are amortized over the life of the plant from
the date of commencement of commercial production using such know-how.
1.5 Impairment
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 asset''s 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.
1.6 Investments
Long term Investments are stated at cost less provision for diminution
in value other than temporary, if any.
1.7 Inventories
Inventories include stock-in-transit/bonded warehouses and with others
for manufacturing / processing / replacement. Inventories are valued
"at lower of cost and net realizable valueÂ. Cost is determined on the
weighted average method. Finished goods and process stock include cost
of conversion and other costs incurred in bringing the inventories to
their present location and condition.
1.8 Revenue Recognition
i. 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. ii. Sale of goods: Revenue is recognized when the
significant risks and rewards of ownership of the goods have passed to
the customer (on despatch to the customer). Excise Duty deducted from
turnover (gross) is the amount that is included in the amount of
turnover (gross) and not the entire amount of liability that arose
during the year. Sales are reported net of sales tax. iii. Income
from Services: Revenue (including sales commission) is recognized on
accrual basis. iv. Interest: Time pro-rated revenue is recognized
taking into account the amount outstanding and rate applicable.
1.9 Borrowing Cost
Borrowing cost relating to (i) funds borrowed for acquisition of
qualifying fixed assets are capitalized till the date of commissioning
and thereafter charged to Profit and Loss Account and (ii) funds
borrowed for other purposes are charged to Profit and Loss Account.
1.10 Foreign Currency Transactions
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate prevailing
at time of transaction. Monetary items denominated in foreign
currencies and outstanding at the year-end are translated at year-end
rates. Exchange differences arising on settlement of short-term
monetary items at rates different from those at which they were
initially recorded are recognized as income or as expenses in the year
in which they arise.
The Company has opted for accounting the exchange differences arising
on reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules 2009 relating to
Accounting Standard 11 (AS-11) notified by Government of India on 31st
March, 2009. Accordingly the effect of exchange differences on foreign
currency loans of the Company is accounted by addition or deduction to
the cost of the assets so far it relates to depreciable capital assets
and in other cases accumulated in a "Foreign Currency Monetary Item
Translation Difference Account in the enterprise''s financial
statements and amortised over the balance period of such long term
asset or liability, by the recognition as income or expense in each of
such periods.
1.11 Research & Development
Revenue expenditure charged to Profit and Loss Account under respective
heads of account and capital expenditure added to the cost of Fixed
Assets in the year in which it is incurred.
1.12 Government Grants
Grants relating to Fixed Assets are shown as deduction from the gross
value of the Fixed Assets and those of the nature of Project Capital
Subsidy are credited to Capital Subsidy Reserves & other Government
grants including export incentives are credited to Profit & Loss
Account or deducted from the related expenses.
1.13 Employee benefits
Contributions to Provident Fund and Superannuation Fund, which are
defined contribution schemes, are made to a government
administered/approved Provident Fund(s) and an LIC administered fund
respectively, and are charged to the Profit and Loss account as
incurred. The Company has no further obligations beyond its monthly
contributions to these funds. Provision for gratuity and compensated
absence, under LIC administered fund(s), which are in the nature of
defined benefit plans, are provided based on valuations, as at the
balance sheet date, made by the administrators (LIC). Termination
benefits are recognized as expense as and when incurred.
1.14 Taxation
Tax liability is estimated considering the provisions of the Income Tax
Act, 1961. Deferred Tax is recognized subject to the consideration of
prudence, on timing differences, being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods.
1.15 Employees Stock Option Plan
The accounting value of stock options representing the excess of the
market price on the date of grant over the exercise price of the shares
granted under "Employees'' Stock Option Scheme of the Company, is
amortized as "Deferred employees compensation on a straight-line basis
over the vesting period in accordance with the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
1.16 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 an outflow of resources.
Contingent liabilities, if any, are not recognized in the accounts but
are disclosed by way of notes. Contingent assets are neither recognized
nor disclosed in the financial statements.
Mar 31, 2012
1. Company Overview:
Xpro India Limited ("the Company") is a public company incorporated as
"Biax Films Limited" on November 26, 1997 under the Companies Act,
1956; the present name was adopted w.e.f. September 22, 1998. Equity
shares of the Company are listed on Calcutta Stock Exchange and
National Stock Exchange and are admitted for trading on Bombay Stock
Exchange. Organized into operating divisions for operational
convenience, the Company is engaged mainly in the business of Polymers
Processing at multiple locations and is the leading manufacturer in
India of Coextruded Plastic Sheets, Thermoformed Liners and Speciality
Films (including Dielectric Films and special purpose BOPP Films).
2. Significant Accounting Policies
2.1 Basis of Preparation of Financial Statements
The financial statements have been prepared under historical cost
convention in accordance with the generally accepted accounting
principles, applicable Accounting Standards as prescribed under the
Companies (Accounting Standards) Rules, 2006 and provisions of the
Companies Act, 1956.
The Company follows the mercantile system of accounting and recognizes
significant items of income and expenditure on accrual basis. Wherever
it is not possible to determine the quantum of accrual with reasonable
certainty, e.g. Insurance & other claims, refund of Customs Duty and
export incentives these continue to be accounted for on settlement
basis.
2.2 Use of Estimates
The preparation of the financial statements in conformity with Indian
GAAP requires the Management to make estimates and assumptions
considered in the reported amounts of assets and liabilities (including
contingent liabilities) and the reported income and expenses during the
year. The Management believes that the estimates used in preparation of
the financial statements are prudent and reasonable. Future results
could differ due to these estimates and the differences between the
actual results and the estimates as are recognised in the periods in
which the results are known / materialise.
2.3 Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation. Cost
comprises of freight, duties, taxes, interest and other incidental
expenses related to acquisition and installation.
2.4 Depreciation/Amortization
Depreciation is charged under Straight Line Method in accordance with
the rates and manner specified in Schedule XIV to the Companies Act,
1956. Certain Plant & Machinery are considered as continuous process
plants based on technical evaluation. Depreciation on addition/disposal
is provided pro-rata with reference to days of addition/disposal.
Leasehold lands and development expenses thereof are amortized over the
period of lease. Software is amortized over a period of six years.
Technical know-how fees are amortized over the life of the plant from
the date of commencement of commercial production using such know-how.
2.5 Impairment
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 asset's 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.
2.6 Investments
Long term Investments are stated at cost less provision for diminution
in value other than temporary, if any.
2.7 Inventories
Inventories include stock-in-transit/bonded warehouses and with others
for manufacturing / processing / replacement. Inventories are valued
"at lower of cost and net realizable value". Cost is determined on the
weighted average method. Finished goods and process stock include cost
of conversion and other costs incurred in bringing the inventories to
their present location and condition.
2.8 Revenue Recognition
i. 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.
ii. Sale of goods: Revenue is recognized when the significant risks
and rewards of ownership of the goods have passed to the customer (on
despatch to the customer). Excise Duty deducted from turnover (gross)
is the amount that is included in the amount of turnover (gross) and
not the entire amount of liability that arose during the year. Sales
are reported net of sales tax.
iii. Income from Services: Revenue (including sales commission) is
recognized on accrual basis.
iv. Interest: Time pro-rated revenue is recognized taking into account
the amount outstanding and rate applicable.
2.9 Borrowing Cost
Borrowing cost relating to (i) funds borrowed for acquisition of
qualifying fixed assets are capitalized till the date of commissioning
and thereafter charged to Profit and Loss Account and (ii) funds
borrowed for other purposes are charged to Profit and Loss Account.
2.10 Foreign Currency Transactions
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate prevailing
at time of transaction. Monetary items denominated in foreign
currencies and outstanding at the year-end are translated at year-end
rates. Exchange differences arising on settlement of short-term
monetary items at rates different from those at which they were
initially recorded are recognized as income or as expenses in the year
in which they arise.
The Company has opted for accounting the exchange differences arising
on reporting of long term foreign currency monetary items in line with
Companies (Accounting Standards) Amendment Rules 2009 relating to
Accounting Standard 11 (AS-11) notified by Government of India on 31st
March, 2009. Accordingly the effect of exchange differences on foreign
currency loans of the Company is accounted by addition or deduction to
the cost of the assets so far it relates to depreciable capital assets
and in other cases accumulated in a "Foreign Currency Monetary Item
Translation Difference Account" in the enterprise's financial
statements and amortised over the balance period of such long term
asset or liability, by the recognition as income or expense in each of
such periods.
2.11 Research & Development
Revenue expenditure charged to Profit and Loss Account under respective
heads of account and capital expenditure added to the cost of Fixed
Assets in the year in which it is incurred.
2.12 Government Grants
Grants relating to Fixed Assets are shown as deduction from the gross
value of the Fixed Assets and those of the nature of Project Capital
Subsidy are credited to Capital Subsidy Reserves & other Government
grants including export incentives are credited to Profit & Loss
Account or deducted from the related expenses.
2.13 Employee benefits
Contributions to Provident Fund and Superannuation Fund, which are
defined contribution schemes, are made to a government
administered/approved Provident Fund(s) and an LIC administered fund
respectively, and are charged to the Profit and Loss account as
incurred. The Company has no further obligations beyond its monthly
contributions to these funds. Provision for gratuity and compensated
absence, under LIC administered fund(s), which are in the nature of
defined benefit plans, are provided based on valuations, as at the
balance sheet date, made by the administrators (LIC). Termination
benefits are recognized as expense as and when incurred.
2.14 Taxation
Tax liability is estimated considering the provisions of the Income Tax
Act, 1961. Deferred Tax is recognized subject to the consideration of
prudence, on timing differences, being the difference between taxable
income and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods.
2.15 Employees Stock Option Plan
The accounting value of stock options representing the excess of the
market price on the date of grant over the exercise price of the shares
granted under "Employees' Stock Option Scheme" of the Company, is
amortized as "Deferred employees compensation" on a straight-line basis
over the vesting period in accordance with the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
2.16 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 an outflow of resources.
Contingent liabilities, if any, are not recognized in the accounts but
are disclosed by way of notes. Contingent assets are neither recognized
nor disclosed in the financial statements.
3.1 Share Capital Suspense comprises of 12 equity shares pending to be
allotted as fully paid up to some non-resident equity shareholders
without payment being received in cash in terms of Regulation 7 of
Notification No. FEMA 20/2000 RB of May 3, 2000 and 1 equity share of
Rs.10 pending to be allotted as fully paid to a non-resident share
holder by way of bonus share in terms of RBI regulations.
3.2 The Company has issued only one class of shares referred to as
equity shares having a par value of Rs.10. All equity shares carry one
vote per share without restrictions and are entitled to dividend, as
and when declared. All shares rank equally with regard to the Company's
residual assets.
3.3 The amount of per share dividend recognised as distributions to
equity shareholders for the year ended March 31, 2012 is Rs.2.50
(previous year: Rs.2.00), subject to approval by shareholders in the
ensuing annual general meeting.
3.4 Shareholder(s) holding more than 5% shares in the Company as on
March 31, 2012 are:
i) IntelliPro Finance Private Limited : 20,00,000 shares; 17.59%
(previous year: 20,00,000 shares; 18.00%) and
ii) iPro Capital Limited: 28,05,000 shares; 24.67% (previous year:
27,00,000; 24.29%).
3.6 Employees' Stock Option Scheme(s)
The Company has two stock option schemes.
a) Employees' Stock Option Scheme - 2008 ("ESOP 2008")
ESOP 2008 was approved by the Shareholders of the Company in their
meeting held on July 29, 2008 and provides for 437500 stock options
representing one equity share each. The grant date of the scheme is
April 29, 2009. All options were granted at Rs.11 per share (market
price at the time of grant was Rs.17.50). The difference between grant
price and fair market value of Rs.6.50 per option has been recognised
as employee compensation expenses in the financial statements. A
compensation committee comprising independent members of the Board of
Directors administers the Scheme.
b) Employees' Stock Option Scheme - 2009 ("ESOP 2009")
ESOP 2009, approved by the Shareholders of the Company in their meeting
held on July 23, 2009, provides for 457500 stock options representing
one equity share each. The grant date of the scheme is April 1, 2010.
All options were granted at Rs.30.85 per share (market price at the
time of grant). A compensation committee comprising independent members
of the Board of Directors administers the Scheme.
Mar 31, 2011
1. Biax Speciality Films Private Limited ("BSFPL") ("the amalgamating
company"), wholly owned subsidiary of the Company, engaged in the
manufacture of Biaxially Oriented Polypropylene Films (including for
speciality applications) has been amalgamated with the Company with
effect from April 1, 2010 ("appointed date") following sanction u/s 394
of the Companies Act, 1956 of the Scheme of Amalgamation ("the Scheme")
by the Hon. High Court of Delhi at New Delhi vide its order dated 23rd
May 2011. In accordance with the said Scheme as approved:
a) All assets, property, rights and powers, as well as all the
liabilities and duties of the amalgamating company have been
transferred to and vested in the company with effect from April 1, 2010
on a going concern basis;
b) The Amalgamation has been accounted for in the books of accounts of
the Company in accordance with the "pooling of interests" method
specified under Accounting Standard (AS) 14 dealing with Accounting for
Amalgamations, issued by the Institute of Chartered Accountants of
India;
c) 3,41,00,000 equity shares of Rs.10 each fully paid up (i.e. the
entire share capital) of the erstwhile BSFPL have been cancelled and no
allotment of any new shares or any payment made in lieu thereof;
d) Difference in value of investment by the Company in BSFPL and the
value of assets less liabilities taken over amounting to Rs.5,89,526
has been adjusted to General Reserve;
Accordingly, opening balances in the accounts of the Company for the
year 2010-11 include the opening balances of the erstwhile BSFPL.
2. Sales are reported net of returns/adjustments and include:
- Excise duty charged to customers.
- Export Benefits: Nil (Previous year: Rs.1,64,135).
- Processing charges: Rs.42,71,055 (Previous year: Rs.2,48,44,086).
3. Profit/Loss on sale of Raw Materials and Stores are adjusted in
respective consumption accounts.
4. a. Term Loan from State Bank of India, outstanding Rs.5,48,85,606
(previous year: Rs.6,61,19,558) is secured by pari-passu
hypothecation/mortgage of all the movable and immovable assets, present
and future, of the Company situated at Ranjangaon and second charge on
all the current assets of the Company ranking pari-passu with other
term lenders;
b. Term Loan from State Bank of Patiala, outstanding Rs.4,54,68,185
(previous year: Rs.8,97,93,685), is secured by pari-passu
hypothecation/mortgage of all the movable and immovable assets, present
and future, of the Company situated at Ranjangaon and second charge on
all the current assets of the Company ranking pari-passu with other
term lenders;
c. Term Loan from State Bank of Hyderabad, outstanding Rs.14,22,77,825
(previous year: Rs.7,57,04,957), is secured by pari-passu
hypothecation/mortgage of all the movable and immovable assets, present
and future, of the Company's unit situated at Ranjangaon, first charge
on specified sheet line to be installed at Greater Noida, and second
charge on all the current assets of the Company ranking pari-passu with
other term lenders;
d. Term Loan(s) from Allahabad Bank, outstanding Rs.18,70,07,767
(previous year: Rs.17,57,78,114), is secured by first hypothecation/
mortgage of all the movable and immovable assets, present and future,
of the Coex Division of the Company situated at Faridabad and second
charge on all the current assets of the Company ranking pari- passu
with other term lenders.
e. Term Loan(s) from Allahabad Bank, outstanding Rs.10,11,70,176
(previous year: Nil), is secured by first hypothecation/ mortgage of
all the movable and immovable assets, present and future, of the
Company situated at Pithampur and second charge on all the current
assets of the Company ranking pari-passu with other term lenders.
f. Working Capital Loans are secured/to be secured by first charge,
ranking pari-passu, in favor of members of the consortium of bankers,
on all current assets of the company both present and future and second
charge, ranking pari-passu, on the entire fixed assets of the company
wherever situated both present and future;
g. Over-draft against term deposits outstanding Rs.1,48,96,035
(previous year: Rs. 3,23,24,026) is secured by way of pledge of Term
Deposit Receipts with the Bank;
h. Term loan from others outstanding Nil (previous year: Rs.27,58,573)
is secured by hypothecation of vehicles purchased there under.
5. The Company has not received intimation from vendors regarding
their status under the Micro, Small and Medium Enterprises Development
Act, 2006, and hence disclosures relating to their outstanding amount
and interest have not been given.
6. Interest to others is net of interest income of Rs.1,93,96,435 (of
which Rs.1,61,34,029 from banks and Rs.32,62,406 from others) (previous
year: Rs.3,78,08,938). TDS: Rs.30,16,195 (previous year: Rs.38,14,080).
7. Exceptional items includes Rs. Nil income on account of salvage of
structures at discontinued location and Rs.Nil cost of voluntary
separation (Previous year: Rs.1,22,70,081 and Rs.32,30,470
respectively)
- Minimum remuneration paid in terms of Schedule XIII to the Companies
Act, 1956
- In determination of Managerial Remuneration certain perquisites have
been valued in accordance with the Income Tax Rules, 1962.
c. Commission to other than Whole time Directors
- No commission is payable due to inadequate profits.
11. a. Advances recoverable in cash or in kind or for value to be
received include taxes (net of provisions) Rs.Nil (previous year:
Rs.1,84,91,659);
b. Advances recoverable in cash or in kind or for value to be received
include Credit for MAT entitlement Rs.1,76,00,000 (previous year: Nil);
c. Loans and advances in the Previous year included Rs.14,70,19,442
(maximum amount due during the previous year: Rs.16,31,00,000) due from
erstwhile wholly owned subsidiary Biax Speciality Films Private Limited
amalgamated with the Company w.e.f. April 1, 2010;
d. Loans and advances include Rs.60,39,499 (previous year:
Rs.72,10,169) in the nature of interest free loans provided to
employees as per the rules of the company. Maximum amount due at any
time during the year Rs.95,53,560 (previous year: Rs.94,49,099).
8. Capital work-in-progress includes machinery under installation,
buildings under construction, advances for purchase of machinery,
construction and erection.
9. Some assets of which the Company is the beneficial owner are
pending for transfer in the name of the Company and for which necessary
steps are being taken.
10. As stipulated in AS-28 on Impairment of Assets, the Company
assessed potential generation of economic benefits from its business
units and is of the view that assets employed in continuing businesses
are capable of generating adequate returns over their useful lives in
the usual course of business, there is no indication to the contrary
and accordingly the management is of the view that no impairment
provision is called for in these accounts.
11. Lease rentals are consistently charged to Profit & Loss Account
with reference to the term(s) of the lease(s).
12. Disclosures in respect of Employees' Stock Option Scheme(s) - 2008
and 2009 are provided in the Annexure to the Report of the Directors.
13. Related Party Disclosures:
A) List of Related Parties
i) Parties where control exists:
Wholly owned subsidiaries:
a) Xpro Global Limited;
b) Xpro Global Pvt. Ltd., Singapore;
ii) Promoters:
Sri Sidharth Birla, Chairman; Smt. Madhushree Birla, Director;
IntelliPro Finance Private Limited & iPro Capital Limited;
iii) Key Management Personnel & their relatives:
Sri C. Bhaskar, Managing Director & Chief Executive Officer & Smt.
Rajalakshmi Bhaskar (wife)
B) Transactions with Related Parties: (Previous year figures in
italics)
i) No transactions with related party referred to in A(i)(a) above;
ii) With related party referred to in A(i)(b) above: Investment in
equity capital: Rs.18,38,500 (Nil);
iii) With related party referred to in A(ii) above: Dividend paid:
Rs.85,25,781 (Rs.43,21,875); Interest paid: Nil (Rs.6,97,069); Loans
taken & repaid: Rs.Nil (Rs.1,00,00,000); Remuneration: Rs. 61,42,667
(Rs.54,76,000);
iv) With related party referred to in a(iii) above: Dividend paid:
Rs.19,917 (Rs.1,381); Remuneration: Rs.54,23,155 (Rs.43,02,303);
C) The above include following individual transactions in excess of 10%
of the respective totals:
(i) Dividend paid to Promoters, Intellipro Finance Private Limited:
Rs.35,00,000 (Rs.20,00,000), and iPro Capital Limited: Rs.45,85,000
(Rs.20,70,000) and
(ii) Remuneration paid to Shri Sidharth Birla and Shri C. Bhaskar:
Rs.61,42,667/- (Rs.54,76,000) and Rs.54,23,155/- (Rs.43,02,303)
respectively;
D) No Balances were outstanding at the end of the current or previous
year from/to any of the Related parties;
14. The erstwhile Biax Speciality Films Private Limited (amalgamated
with the Company w.e.f. April 1, 2010) had during earlier years,
imported certain capital goods under EPCG Scheme at concessional rate
of custom duty by executing legal undertaking in favor of the
Government of India, thereby saving Custom duty amount of Rs.50,37,261
against which the said company had an obligation under the EPCG Scheme
to export goods amounting to Rs.4,02,98,092 within a period of eight
years. The Company has furnished bank guarantee of Rs.13,88,000 to the
customs department. Following amalgamation, the Company assumed a
remnant obligation of Rs.3,56,92,685 as of April 1, 2010. During the
year, exports amounting to Rs.1,10,37,547 (aggregating to
Rs.1,56,42,954 till March 31, 2011) have been executed against the
aforesaid obligation. Based on the current export trends and future
plans, the management is confident of meeting this obligation by
executing the required volume of exports and hence does not consider
necessary to provide for any liability on this account.
15. The Company periodically avails Foreign Exchange Contracts to hedge
its exposures in foreign currency related to firm commitments and
highly probable forecasted transactions. Forward contract outstanding
at year-end: Nil (Previous year: Nil). Foreign exchange currency
exposures that have not been hedged by a derivative instrument or
otherwise at year-end: Purchases: US$ 540,508 & Ã 569,234; Sales: US$
5,753 & Ã Nil; (Previous year: US$ 853,228; Ã 8,725; US$ 5,276 & Ã
75,770 respectively).
16. Contingent Liabilities not provided for
March 31, 2011 March 31, 2010
Rs. Rs.
Claims against the Company,
not acknowledged as debts 3,86,757 8,26,469
Sales Tax, Excise & Customs
matters under appeal 3,56,50,342 3,95,60,733
Income tax matters under appeal Nil 3,35,11,106
Outstanding guarantee to bank
for Subsidiary Company Nil 15,00,00,000
(In the opinion of the Company,
the possibility relating to net
outflow on the above accounts are
remote)
Estimated amount of contracts
remaining to be executed on
Capital 3,49,77,906 1,84,11,207
Account (Net of Advances)
Unpaid portion of subscribed
Equity Capital in subsidiary 47,50,000 47,50,000
17. Previous year's figures have been regrouped/rearranged wherever
considered necessary, and are not comparable due to amalgamation with
the Company of erstwhile wholly owned subsidiary, Biax Speciality Films
Pvt. Ltd., during the year.
Mar 31, 2010
A. BASIS OF PREPARATION OF FINANCIAL STATEMENTS :
The financial statements have been prepared under the historical cost
convention in accordance with the generally accepted accounting
principles and the provisions of the Companies Act, 1956. The company
follows mercantile system of accounting and recognises significant
items of income and expenditure on accrual basis. Wherever it is not
possible to determine the quantum of accrual with reasonable certainty,
e.g. Insurance & other claims, refund of Customs Duty and export
incentives these continue to be accounted for on settlement basis.
b. FIXED ASSETS:
Fixed Assets are stated at cost less accumulated depreciation. Cost
comprises of freight, duties, taxes, interest and other incidental
expenses related to acquisition and installation.
c. DEPRECIATION /AMORTISATION :
Depreciation is charged under Straight Line Method in accordance with
the rates and manner specified in Schedule XIV to the Companies Act,
1956. Certain Plant & Machinery considered as continuous process plant
based on technical evaluation. Depreciation on addition/disposal is
provided pro-rata with reference to the days of addition/disposal.
Leasehold lands and development expenses thereof are amortised over the
period of lease. Software are amortised over a period of six years.
d. IMPAIRMENT:
The carrying amounts of assets are reviewed at eacii balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognized wneravei the carrying amount
of an asset exceeds its recoverable amount. The recoverable amount is
the gieater 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.
e. INVESTMENTS:
Long term Investments are stated at cost less provision for diminution
in value other than temporary, if any.
f. INVENTORIES :
Inventories include stock-in-transit/bonded warehouses and with others
for manufacturing/processing/replacement. Inventories are valued "at
lower of cost and net realisable value". Cost is determined on the
weighted average method. Finished goods and process stock include cost
of conversion and other costs incurred in bringing the inventories to
their present location and condition.
g. REVENUE RECOGNITION:
Revenue is recognised to the extent that it is probable that thp
economic benefits will flow to the Company and the revenue can be
reliably measured. Sale of goods: Revenue is recognised when the
significant risks and rewards of ownership of the goods have passed to
the customer (on despatch to the customer). Excise Duty deducted from
turnover (gross) is the amount that is included in the amount of
turnover (gross) and not the entire amount of liability that arose
during the year. Sales are reported net of sales tax. Income from
Services: Revenue from services (including sales commission) is
recognised on accrual basis. Interest: Revenue is recognised on a time
proportion basis taking into account the amount outstanding and rate
applicable.
h. BORROWING COST:
Borrowing cost relating to (i) funds borrowed for acquisition of
qualifying fixed assets are capitalised till the date of commissioning
and thereafter charged to Profit and Loss Account and (ii) funds
borrowed for other purposes are charged to Profit and Loss Account.
i. FOREIGN CURRENCY TRANSACTIONS:
Foreign currency transactions are recorded in the reporting currency,
by applying to the foreign currency amount the exchange rate prevailing
at time of transaction. Monetary items denominated in foreign
currencies and outstanding at the year end are translated at year end
rates. Exchange differences arising on settlement of monetary items at
rates different from those at which they were initially receded are
recognised as income or as expenses in the year in which they arise.
j. RESEARCH AND DEVELOPMENT :
Revenue expenditure charged to Profit and Loss Account under respective
heads of account and capita! expenditure added to the cost of Fixed
Assets in the year in which it is incurred.
k. GOVERNMENT GRANTS :
Grants relating to Fixed Assets are shown as deduction from the gross
value of the Fixed Assets and those of the nature of Project Capital
Subsidy are credited to Capital Subsidy Reserves & other Government
grants including export incentives are credited to Profit & Loss
Account or deducted from the related expenses.
I. EMPLOYEE BENEFITS :
Contributions to Provident Fund and Superannuation Fund, which are
defined contribution schemes, are made to a government
administered/approved Provident Fund(s) and an LIC administered fund
respectively, and are charged to the Profit and Loss account as
incurred. The Company has no further obligations beyond its monthly
contributions to these funds. Provision for gratuity and compensated
absence, under LIC administered fund(s), which are in the nature of
defined benefit plans, are provided based on valuations, as at the
balance sheet date, made by the administrators (LIC). Termination
benefits are recognised as expense as and when incurred.
m. TAXATION:
Tax liability of the company is estimated considering the provisions of
the Income Tax Act,1961. Deferred Tax is recognised subject to the
consideration of prudence, on timing differences, being the difference
between taxable income and accounting income that originate in one
period and are capable of reversal in one or more subsequent periods.
n. EMPLOYEES STOCK OPTION PLAN :
The accounting value of stock options representing the excess of the
market price on the date of grant over the exercise price of the shares
granted under "Employees Stock Option Scheme" of the Company, is
amortized as "Deferred employees compensation" on a straight-line basis
over the vesting period in accordance with the SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
o. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS :
Provisions involving substantial degree of estimation in measurement
are recognised when there is a present obligation as a result of past
events and it is probable that there will be an outflow of resources.
Contingent liabilities, if any, are not recognised but disclosed by way
of notes. Contingent assets are neither recognised nor disclosed in the
financial statements.
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