Mar 31, 2015
A.1 Basis of accounting and 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 notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year.
A.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 are recognised in the periods in which
the results are known / materialise.
A.3 Inventories
Inventories are valued at the lower of cost (on FIFO / weighted average
basis) and the net realisable value after providing for obsolescence
and other losses, where considered necessary. Cost includes all charges
in bringing the goods to the point of sale, including octroi and other
levies, transit insurance and receiving charges. Work-in-progress and
finished goods include appropriate proportion of overheads and, where
applicable, excise duty.
A.4 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
A.5 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.
A.6 Depreciation and amortisation
Depreciation and ammortisation have been provided on written down value
at the rates specified in Schedule XIV of Companies Act, 1956.
A.7 Revenue recognition
Sale of goods
Sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers. Sales
include excise duty but exclude sales tax and value added tax.
Income from services
Revenues from contracts priced on a time and material basis are
recognised when services are rendered and related costs are incurred.
Revenues from turnkey contracts, which are generally time bound fixed
price contracts, are recognised over the life of the contract using the
proportionate completion method, with contract costs determining the
degree of completion. Foreseeable losses on such contracts are
recognised when probable. Revenues from maintenance contracts are
recognised pro-rata over the period of the contract.
A.8 Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
A.9 Tangible fixed assets
Fixed assets, are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets
up to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
adjusted to the cost of the respective assets and depreciated over the
remaining useful life of such assets. Machinery spares which can be
used only in connection with an item of fixed asset and whose use is
expected to be irregular are capitalised and depreciated over the
useful life of the principal item of the relevant assets. Subsequent
expenditure relating to fixed assets is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance. Fixed
assets acquired and put to use for project purpose are capitalised and
depreciation thereon is included in the project cost till commissioning
of the project.
Fixed assets acquired in full or part exchange for another asset are
recorded at the fair market value or the net book value of the asset
given up, adjusted for any balancing cash consideration. Fair market
value is determined either for the assets acquired or asset given up,
whichever is more clearly evident. Fixed assets acquired in exchange
for securities of the Company are recorded at the fair market value of
the assets or the fair market value of the securities issued, whichever
is more clearly evident. Fixed assets retired from active use and held
for sale are stated at the lower of their net book value and net
realisable value and are disclosed separately in the Balance Sheet.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
A.10 Intangible assets
Intangible assets are carried at cost less accumulated amortisation and
impairment losses, if any. The cost of an intangible asset comprises
its purchase price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing authorities), and
any directly attributable expenditure on making the asset ready for its
intended use and net of any trade discounts and rebates. Subsequent
expenditure on an intangible asset after its purchase / completion is
recognised as an expense when incurred unless it is probable that such
expenditure will enable the asset to generate future economic benefits
in excess of its originally assessed standards of performance and such
expenditure can be measured and attributed to the asset reliably, in
which case such expenditure is added to the cost of the asset.
A.11 Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date Foreign currency monetary items (other than derivative contracts)
of the Company and its net investment in non-integral foreign
operations outstanding at the Balance Sheet date are restated at the
year-end rates. In the case of integral operations, assets and
liabilities (other than non-monetary items), are translated at the
exchange rate prevailing on the Balance Sheet date. Non-monetary items
are carried at historical cost. Revenue and expenses are translated at
the average exchange rates prevailing during the year. Exchange
differences arising out of these translations are charged to the
Statement of Profitt and Loss.
Treatment of exchange differences
Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company and its
integral foreign operations are recognised as income or expense in the
Statement of Profit and Loss. The exchange differences on restatement
/ settlement of loans to non-integral foreign operations that are
considered as net investment in such operations are accumulated in a
"Foreign currency translation reserve" until disposal / recovery of the
net investment. The exchange differences arising on restatement /
settlement of long-term foreign currency monetary items are capitalised
as part of the depreciable fixed assets to which the monetary item
relates and depreciated over the remaining useful life of such assets
or amortised on settlement / over the maturity period of such items if
such items do not relate to acquisition of depreciable fixed assets.
The unamortised balance is carried in the Balance Sheet as "Foreign
currency monetary item translation difference account" net of the tax
effect thereon.
Accounting of forward contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortised over the
period of the contracts if such contracts relate to monetary items as
at the Balance Sheet date. Refer Notes 2.26 and 2.27 for accounting for
forward exchange contracts relating to firm commitments and highly
probable forecast transactions.
A.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 / subsidy will be received. Government grants whose
primary condition is that the Company should purchase, construct or
otherwise acquire capital assets are presented by deducting them from
the carrying value of the assets. The grant is recognised as income
over the life of a depreciable asset by way of a reduced depreciation
charge. Export benefits are accounted for in the year of exports
based on eligibility and when there is no uncertainty in receiving the
same.
Government grants in the nature of promoters' contribution like
investment subsidy, where no repayment is ordinarily expected in
respect thereof, are treated as capital reserve. Government grants in
the form of non-monetary assets, given at a concessional rate, are
recorded on the basis of their acquisition cost. In case the
non-monetary asset is given free of cost, the grant is recorded at a
nominal value. Other government grants and subsidies are recognised as
income over the periods necessary to match them with the costs for
which they are intended to compensate, on a systematic basis.
A.13 Investments
Long-term investments (excluding investment properties), are carried
individually at cost less provision for diminution, other than
temporary, in the value of such investments. Current investments are
carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and
duties. Investment properties are carried individually at cost less
accumulated depreciation and impairment, if any. Investment properties
are capitalised and depreciated (where applicable) in accordance with
the policy stated for Tangible Fixed Assets. Impairment of investment
property is determined in accordance with the policy stated for
Impairment of Assets.
A.14 Employee benefits
Employee benefits include provident fund, superannuation fund,
gratuity fund, compensated absences, long service awards and
post-employment medical benefits. Defined contribution plans
The Company's contribution to provident fund and superannuation fund
are considered as defined contribution plans and are charged as an
expense as they fall due based on the amount of contribution required
to be made. Defined benefit plans For defined benefit plans in the
form of gratuity fund and post-employment medical benefits, the cost
of providing benefits is determined using the Projected Unit Credit
method, with actuarial valuations being carried out at each Balance
Sheet date. Actuarial gains and losses are recognised in the Statement
of Profit and Loss in the period in which they occur. Past service
cost is recognised immediately to the extent that the benefits are
already vested and otherwise is amortised on a straight-line basis over
the average period until the benefits become vested. The retirement
benefit obligation recognised in the Balance Sheet represents the
present value of the defined benefit obligation as adjusted for
unrecognised past service cost, as reduced by the fair value of scheme
assets. Any asset resulting from this calculation is limited to past
service cost, plus the present value of available refunds and
reductions in future contributions to the schemes.
A.15 Employee share based payments
The Company has formulated Employee Stock Option Schemes (ESOS) in
accordance with the SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999. The Schemes provide for grant
of options to employees of the Company and its subsidiaries to acquire
equity shares of the Company that vest in a graded manner and that are
to be exercised within a specified period. In accordance with the SEBI
Guidelines; the excess, if any, of the closing market price on the day
prior to the grant of the options under ESOS over the exercise price is
amortised on a straight-line basis over the vesting period. [OR]
The Company has constituted an Employee Stock Option Plan - XXXX.
Employee Stock Options granted on or after 1 April, 2005 are accounted
under the 'Intrinsic Value Method' stated in the Guidance Note on
Employee Share Based Payments issued by the Institute of Chartered
Accountants of India.
A.16 Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation 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.
A.17 Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
Profitt/loss amounts are evaluated regularly by the executive
Management in deciding how to allocate resources and in assessing
performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment. Inter- segment revenue is accounted on the
basis of transactions which are primarily determined based on market /
fair value factors. Revenue, expenses, assets and liabilities which
relate to the Company as a whole and are not allocable to segments on
reasonable basis have been included under unallocated revenue /
expenses / assets / liabilities .
A.18 Leases
Where the Company as a lessor leases assets under finance leases, such
amounts are recognised as receivables at an amount equal to the net
investment in the lease and the finance income is recognised based on
a constant rate of return on the outstanding net investment. Assets
leased by the Company in its capacity as lessee where substantially all
the risks and rewards of ownership vest in the Company are classified
as finance leases. Such leases are capitalised at the inception of the
lease at the lower of the fair value and the present value of the
minimum lease payments and a liability is created for an equivalent
amount. Each lease rental paid is allocated between the liability and
the interest cost so as to obtain a constant periodic rate of interest
on the outstanding liability for each year. Lease arrangements where
the risks and rewards incidental to ownership of an asset substantially
vest with the lessor are recognised as operating leases. Lease rentals
under operating leases are recognised in the Statement of Profit and
Loss on a straight-line basis.
A.19 Earnings per share
Basic earnings per share is computed by dividing the Profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the profi
t / (loss) after tax (including the post tax effect of extraordinary
items, if any) as adjusted for dividend, interest and other charges to
expense or income relating to the dilutive potential equity shares, by
the weighted average number of equity shares considered for deriving
basic earnings per share and the weighted average number of equity
shares. which could have been issued on the conversion of all dilutive
potential equity shares. Potential equity shares are deemed to be
dilutive only if their conversion to equity shares would decrease the
net Profitt per share from continuing ordinary operations. Potential
dilutive equity shares are deemed to be converted as at the beginning
of the period, unless they have been issued at a later date. The
dilutive potential equity shares are adjusted for the proceeds
receivable had the shares been actually issued at fair value (i.e.
average market value of the outstanding shares). Dilutive potential
equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are
adjusted for share splits / reverse share splits and bonus shares, as
appropriate
A.20 Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961. Minimum Alternate Tax (MAT) paid in accordance with the tax
laws, which gives future economic benefits in the form of adjustment
to future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax.
Accordingly, MAT is recognised as an asset in the Balance Sheet when it
is probable that future economic benefit associated with it will flow
to the Company. Deferred tax is recognised on timing differences,
being the differences between the taxable income and the accounting
income that originate in one period and are capable of reversal in one
or more subsequent periods. Deferred tax is measured using the tax
rates and the tax laws enacted or substantially enacted as at the
reporting date. Deferred tax liabilities are recognised for all timing
differences. Deferred tax assets in respect of unabsorbed depreciation
and carry forward of losses are recognised only if there is virtual
certainty that there will be sufficient future taxable income
available to realise such assets. Deferred tax assets are recognised
for timing differences of other items only to the extent that
reasonable certainty exists that sufficient future taxable income will
be available against which these can be realised. Deferred tax assets
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
equity are recognised in equity and not in the Statement of Profit and
Loss.
A.21 Research and development expenses
Revenue expenditure pertaining to research is charged to the Statement
of Profit and Loss. Development costs of products are also charged to
the Statement of Profit and Loss unless a product's technological
feasibility has been established, in which case such expenditure is
capitalised. The amount capitalised comprises expenditure that can be
directly attributed or allocated on a reasonable and consistent basis
to creating, producing and making the asset ready for its intended use.
Fixed assets utilised for research and development are capitalised and
depreciated in accordance with the policies stated for Tangible Fixed
Assets and Intangible Assets.
A.22 Joint venture operations
The accounts of the Company reflect its share of the Assets,
Liabilities, Income and Expenditure of the Joint Venture Operations
which are accounted on the basis of the audited accounts of the Joint
Ventures on line-by-line basis with similar items in the Company's
accounts to the extent of the participating interest of the Company as
per the Joint Venture Agreements.
A.23 Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the
greater of the net selling price and their value in use. Value in use
is arrived at by discounting the future cash flows to their present
value based on an appropriate discount factor. When there is
indication that an impairment loss recognised for an asset in earlier
accounting periods no longer exists or may have decreased, such
reversal of impairment loss is recognised in the Statement of Profit
and Loss, except in case of revalued assets.
A.24 Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of
resources will be required to settle the obligation in respect of which
a reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
A.25 Provision for warranty
The estimated liability for product warranties is recorded when
products are sold. These estimates are established using historical
information on the nature, frequency and average cost of warranty
claims and management estimates regarding possible future incidence
based on corrective actions on product failures. The timing of outfl
ows will vary as and when warranty claim will arise - being typically
upto three years.
As per the terms of the contracts, the Company provides post-contract
services / warranty support to some of its customers. The Company
accounts for the post-contract support / provision for warranty on the
basis of the information available with the Management duly taking into
account the current and past technical estimates.
A.26 Share issues expenses
Share issue expenses and redemption premium are adjusted against the
Securities Premium Account as permissible under Section 78(2) of the
Companies Act, 1956, to the extent balance is available for utilisation
in the Securities Premium Account. The balance of share issue expenses
is carried as an asset and is amortised over a period of 5 years from
the date of the issue of shares.
A.27 Insurance claims
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that there is no uncertainty
in receiving the claims.
A.28 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 no
uncertainty in availing / utilising the credits.
Mar 31, 2014
A.1 Basis of accounting and 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 notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year.
A.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 are recognised in the periods in which
the results are known / materialise.
A.3 Inventories
Inventories are valued at the lower of cost (on FIFO /
weighted average basis) and the net realisable value after providing
for obsolescence and other losses, where considered necessary. Cost
includes all charges in bringing the goods to the point of sale,
including octroi and other levies, transit insurance and receiving
charges. Work-in-progress and finished goods include appropriate
proportion of overheads and, where applicable, excise duty.
A.4 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short- term balances (with an original maturity of
three months or less from the date of acquisition), highly liquid
investments that are readily convertible into known amounts of cash and
which are subject to insignificant risk of changes in value.
A.5 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.
A.6 Depreciation and amortisation
Depreciation and ammortisation have been provided on straight line
value and on written down value respectively at the rates specified in
Schedule XIV of Companies Act, 1956.
A.7 Revenue recognition Sale of goods
Sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers. Sales
include excise duty but exclude sales tax and value added tax.
Income from services
"Revenues from contracts priced on a time and material basis are
recognised when services are rendered and related costs are incurred.
Revenues from turnkey contracts, which are generally time bound fixed
price contracts, are recognised over the life of the contract using the
proportionate completion method, with contract costs determining the
degree of completion. Foreseeable losses on such contracts are
recognised when probable.
Revenues from maintenance contracts are recognised pro-rata over the
period of the contract." Annual Report 2013-2014 | 55
A.8 Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
A.9 Tangible fixed assets
"Fixed assets, are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets up
to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
adjusted to the cost of the respective assets and depreciated over the
remaining useful life of such assets. Machinery spares which can be
used only in connection with an item of fixed asset and whose use is
expected to be irregular are capitalised and depreciated over the
useful life of the principal item of the relevant assets. Subsequent
expenditure relating to fixed assets is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.Fixed
assets acquired and put to use for project purpose are capitalised and
depreciation thereon is included in the project cost till commissioning
of the project."
Fixed assets acquired in full or part exchange for another asset are
recorded at the fair market value or the net book value of the asset
given up, adjusted for any balancing cash consideration. Fair market
value is determined either for the assets acquired or asset given up,
whichever is more clearly evident. Fixed assets acquired in exchange
for securities of the Company are recorded at the fair market value of
the assets or the fair market value of the securities issued, whichever
is more clearly evident.
Fixed assets retired from active use and held for sale are stated at
the lower of their net book value and net realisable value and are
disclosed separately in the Balance Sheet.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
A.10 Intangible assets
Intangible assets are carried at cost less accumulated amortisation and
impairment losses, if any. The cost of an intangible asset comprises
its purchase price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing authorities), and
any
directly attributable expenditure on making the asset ready for its
intended use and net of any trade discounts and rebates. Subsequent
expenditure on an intangible asset after its purchase / completion is
recognised as an expense when incurred unless it is probable that such
expenditure will enable the asset to generate future economic benefits
in excess of its originally assessed standards of performance and such
expenditure can be measured and attributed to the asset reliably, in
which case such expenditure is added to the cost of the asset.
A.11 Foreign currency transactions and translations Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date
"Foreign currency monetary items (other than derivative contracts) of
the Company and its net investment in non-integral foreign operations
outstanding at the Balance Sheet date are restated at the year-end
rates.In the case of integral operations, assets and liabilities (other
than non-monetary items), are translated at the exchange rate
prevailing on the Balance Sheet date. Non-monetary items are carried at
historical cost. Revenue and expenses are translated at the average
exchange rates prevailing during the year. Exchange differences arising
out of these translations are charged to the Statement of Profit and
Loss."
Treatment of exchange differences
"Exchange differences arising on settlement / restatement of
short-term foreign currency monetary assets and liabilities of the
Company and its integral foreign operations are recognised as income or
expense in the Statement of Profit and Loss. The exchange differences
on restatement / settlement of loans to non-integral foreign operations
that are considered as net investment in such operations are
accumulated in a "Foreign currency translation reserve" until
disposal / recovery of the net investment.The exchange differences
arising on restatement / settlement of long-term foreign currency
monetary items are capitalised as part of the depreciable fixed assets
to which the monetary item relates and depreciated over the remaining
useful life of such assets or amortised on settlement / over the
maturity period of such items if such items do not relate to
acquisition of depreciable fixed assets. The unamortised balance is
carried in the
Balance Sheet as "Foreign currency monetary item translation
difference account" net of the tax effect thereon.
Accounting of forward contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortised over the
period of the contracts if such contracts relate to monetary items as
at the Balance Sheet date. Refer Notes 2.26 and 2.27 for accounting for
forward exchange contracts relating to firm commitments and highly
probable forecast transactions."
A.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 / subsidy will be received. Government grants
whose primary condition is that the Company should purchase, construct
or otherwise acquire capital assets are presented by deducting them
from the carrying value of the assets. The grant is recognised as
income over the life of a depreciable asset by way of a reduced
depreciation charge.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
"Government grants in the nature of promoters'' contribution like
investment subsidy, where no repayment is ordinarily expected in
respect thereof, are treated as capital reserve. Government grants in
the form of non-monetary assets, given at a concessional rate, are
recorded on the basis of their acquisition cost. In case the
non-monetary asset is given free of cost, the grant is recorded at a
nominal value.Other government grants and subsidies are recognised as
income over the periods necessary to match them with the costs for
which they are intended to compensate, on a systematic basis.
A.13 Investments
Long-term investments (excluding investment properties), are carried
individually at cost less provision for diminution, other than
temporary, in the value of such investments. Current investments are
carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and
duties. Investment properties are carried individually at cost less
accumulated depreciation and impairment, if any. Investment properties
are capitalised and depreciated (where applicable) in accordance with
the policy stated for Tangible
Fixed Assets. Impairment of investment property is determined in
accordance with the policy stated for Impairment of Assets."
A.14 Employee benefits
Employee benefits include provident fund, gratuity fund, compensated
absences, long service awards and post-employment medical benefits.
Defined contribution plans
The Company''s contribution to provident fund is considered as defined
contribution plans and are charged as an expense as they fall due based
on the amount of contribution required to be made.
Defined benefit plans
For defined benefit plans in the form of gratuity fund and
post-employment medical benefits, the cost of providing benefits is
determined using the Projected Unit Credit method, with actuarial
valuations being carried out at each Balance Sheet date. Actuarial
gains and losses are recognised in the Statement of Profit and Loss in
the period in which they occur. Past service cost is recognised
immediately to the extent that the benefits are already vested and
otherwise is amortised on a straight-line basis over the average period
until the benefits become vested. The retirement benefit obligation
recognised in the Balance Sheet represents the present value of the
defined benefit obligation as adjusted for unrecognised past service
cost, as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to past service cost, plus
the present value of available refunds and reductions in future
contributions to the schemes.
Short-term employee benefits
"The undiscounted amount of short-term employee benefits expected to
be paid in exchange for the services rendered by employees are
recognised during the year when the employees render the service. These
benefits include performance incentive and compensated absences which
are expected to occur within twelve months after the end of the period
in which the employee renders the related service. The cost of such
compensated absences is accounted as under :(a) in case of accumulated
compensated absences, when employees render the services that increase
their entitlement of future compensated absences; and(b) in case of
non-accumulating compensated absences, when the absences occur."
Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related
service are recognised as a liability at the present value of the
defined benefit obligation as at the Balance Sheet date less the fair
value of the plan assets out of which the obligations are expected to
be settled. Long Service Awards are recognised as a liability at the
present value of the defined benefit obligation as at the Balance Sheet
date.
A.15 Employee share based payments
The Company has formulated Employee Stock Option Schemes (ESOS) in
accordance with the SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999. The Schemes provide for grant
of options to employees of the Company and its subsidiaries to acquire
equity shares of the Company that vest in a graded manner and that are
to be exercised within a specified period. In accordance with the SEBI
Guidelines; the excess, if any, of the closing market price on the day
prior to the grant of the options under ESOS over the exercise price is
amortised on a straight-line basis over the vesting period.
A.16 Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation 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.
A.17 Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment.
Inter-segment revenue is accounted on the basis of transactions which
are primarily determined based on market / fair value factors.
Revenue, expenses, assets and liabilities which relate to the Company
as a whole and are not allocable to segments on reasonable basis have
been included under "unallocated revenue / expenses / assets /
liabilities".
A.18 Leases
"Where the Company as a lessor leases assets under finance leases,
such amounts are recognised as receivables at an amount equal to the
net investment in the lease and the finance income is recognised based
on a constant rate of return on the outstanding net investment.Assets
leased by the Company in its capacity as lessee where substantially all
the risks and rewards of ownership vest in the Company are classified
as finance leases. Such leases are capitalised at the inception of the
lease at the lower of the fair value and the present value of the
minimum lease payments and a liability is created for an equivalent
amount. Each lease rental paid is allocated between the liability and
the interest cost so as to obtain a constant periodic rate of interest
on the outstanding liability for each year.Lease arrangements where the
risks and rewards incidental to ownership of an asset substantially
vest with the lessor are recognised as operating leases. Lease rentals
under operating leases are recognised in the Statement of Profit and
Loss on a straight-line basis."
A.19 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the profit
/ (loss) after tax (including the post tax effect of extraordinary
items, if any) as adjusted for dividend, interest and other charges to
expense or income relating to the dilutive potential equity shares, by
the weighted average number of equity shares considered for deriving
basic earnings per share and the weighted average number of equity
shares which could have been issued on the conversion of all dilutive
potential equity shares. Potential equity shares are deemed to be
dilutive only if their conversion to equity shares would decrease the
net profit per share from continuing ordinary operations. Potential
dilutive equity shares are deemed to be converted as at the beginning
of the period, unless they have been issued at a later date. The
dilutive potential equity shares are adjusted for the proceeds
receivable had the shares been actually issued at fair value (i.e.
average market value of the outstanding shares). Dilutive potential
equity shares are determined independently for each
period presented. The number of equity shares and potentially dilutive
equity shares are adjusted for share splits / reverse share splits and
bonus shares, as appropriate.
A.20 Taxes on income
"Current tax is the amount of tax payable on the taxable income for
the year as determined in accordance with the provisions of the Income
Tax Act, 1961
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred
tax liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets 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 equity and not in the Statement of Profit and Loss.
A.21 Research and development expenses
Revenue expenditure pertaining to research is charged to the Statement
of Profit and Loss. Development costs of products are also charged to
the Statement of Profit and Loss unless a product''s technological
feasibility has been established, in which case such expenditure is
capitalised. The amount capitalised comprises expenditure that can be
directly attributed or allocated on a reasonable and consistent basis
to creating, producing and making the asset ready for its intended use.
Fixed
assets utilised for research and development are capitalised and
depreciated in accordance with the policies stated for Tangible Fixed
Assets and Intangible Assets.
A.22 Joint venture operations
The accounts of the Company reflect its share of the Assets,
Liabilities, Income and Expenditure of the Joint Venture Operations
which are accounted on the basis of the audited accounts of the Joint
Ventures on line-by-line basis with similar items in the Company''s
accounts to the extent of the participating interest of the Company as
per the Joint Venture Agreements.
A.23 Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss,
except in case of revalued assets.
A.24 Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
Mar 31, 2013
A.1 Basis of accounting and 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 notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year.
A.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 are recognised in the periods in which
the results are known / materialise.
cropetal Technologies Limited
A.3 Inventories
Inventories are valued at the lower of cost (on FIFO / weighted average
basis) and the net realisable value after providing for obsolescence
and other losses, where considered necessary. Cost includes all
charges in bringing the goods to the point of sale, including octroi
and other levies, transit insurance and receiving charges.
Work-in-progress and finished goods include appropriate proportion of
overheads and, where applicable, excise duty.
A.4 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known amounts of cash and which are
subject to insignificant risk of changes in value.
A.5 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.
A.6 Depreciation and amortisation
Depreciation and ammortisation have been provided on straight line
value and on written down value respectively at the rates specified in
Schedule XIV of Companies Act, 1956.
A.7 Revenue recognition
Sale of goods
Sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers. Sales
include excise duty but exclude sales tax and value added tax.
Income from services
"Revenues from contracts priced on a time and material basis are
recognised when services are rendered and related costs are incurred.
Revenues from turnkey contracts, which are generally time bound fixed
price contracts, are recognised over the life of the contract using the
proportionate completion method, with contract costs determining the
degree of completion. Foreseeable losses on such contracts are
recognised when probable.
Revenues from maintenance contracts are recognised pro-rata over the
period of the contract."
A.8 Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
A.9 Tangible fixed assets
"Fixed assets, are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets up
to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
adjusted to the cost of the respective assets and depreciated over the
remaining useful life of such assets. Machinery spares which can be
used only in connection with an item of fixed asset and whose use is
expected to be irregular are capitalised and depreciated over the
useful life of the principal item of the relevant assets. Subsequent
expenditure relating to fixed assets is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance.Fixed
assets acquired and put to use for project purpose are capitalised and
depreciation thereon is included in the project cost till commissioning
of the project."
Fixed assets acquired in full or part exchange for another asset are
recorded at the fair market value or the net book value of the asset
given up, adjusted for any balancing cash consideration. Fair market
value is determined either for the assets acquired or asset given up,
whichever is more clearly evident. Fixed assets acquired in exchange
for securities of the Company are recorded at the fair market value of
the assets or the fair market value of the securities issued, whichever
is more clearly evident.
Fixed assets retired from active use and held for sale are stated at
the lower of their net book value and net realisable value and are
disclosed separately in the Balance Sheet.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work-in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
A.10 Intangible assets
Intangible assets are carried at cost less accumulated amortisation and
impairment losses, if any. The cost of an intangible asset comprises
its purchase price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing authorities), and
any directly attributable expenditure on making the asset ready for its
intended use and net of any trade discounts and rebates. Subsequent
expenditure on an intangible asset after its purchase / completion is
recognised as an expense when incurred unless it is probable that such
expenditure will enable the asset to generate future economic benefits
in excess of its originally assessed standards of performance and such
expenditure can be measured and attributed to the asset reliably, in
which case such expenditure is added to the cost of the asset.
A.11 Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date "Foreign currency monetary items (other than derivative contracts)
of the Company and its net investment in non-integral foreign
operations outstanding at the Balance Sheet date are restated at the
year-end rates.In the case of integral operations, assets and
liabilities (other than non-monetary items), are translated at the
exchange rate prevailing on the Balance Sheet date. Non-monetary items
are carried at historical cost. Revenue and expenses are translated at
the average exchange rates prevailing during the year. Exchange
differences arising out of these translations are charged to the
Statement of Profit and Loss."
"Exchange differences arising on settlement / restatement of short-term
foreign currency monetary assets and liabilities of the Company and its
integral foreign operations are recognised as income or expense in the
Statement of Profit and Loss. The exchange differences on restatement
/ settlement of loans to non-integral foreign operations that are
considered as net investment in such operations are accumulated in a
"Foreign currency translation reserve" until disposal / recovery of the
net investment.The exchange differences arising on restatement /
settlement of long-term foreign currency monetary items are capitalised
as part of the depreciable fixed assets to which the monetary item
relates and depreciated over the remaining useful life of such assets
or amortised on settlement / over the maturity period of such items if
such items do not relate to acquisition of depreciable fixed assets.
The unamortised balance is carried in the Balance Sheet as ''Foreign
currency monetary item translation difference account'' net of the tax
effect thereon.
Accounting of forward contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortised over the
period of the contracts if such contracts relate to monetary items as
at the Balance Sheet date. Refer Notes 2.26 and 2.27 for accounting
for forward exchange contracts relating to firm commitments and highly
probable forecast transactions.''
A.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 / subsidy will be received. Government grants
whose primary condition is that the Company should purchase, construct
or otherwise acquire capital assets are presented by deducting them
from the carrying value of the assets. The grant is recognised as
income over the life of a depreciable asset by way of a reduced
depreciation charge.
Export benefits are accounted for in the year of exports based on
eligibility and when there is no uncertainty in receiving the same.
"Government grants in the nature of promoters'' contribution like
investment subsidy, where no repayment is ordinarily expected in
respect Petal Technologies Limited thereof, are treated as capital
reserve. Government grants in the form of non-monetary assets, given
at a concessional rate, are recorded on the basis of their acquisition
cost. In case the non-monetary asset is given free of cost, the grant
is recorded at a nominal value.Other government grants and subsidies
are recognised as income over the periods necessary to match them with
the costs for which they are intended to compensate, on a systematic
basis.
A.13 Investments
Long-term investments (excluding investment properties), are carried
individually at cost less provision for diminution, other than
temporary, in the value of such investments. Current investments are
carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and
duties. Investment properties are carried individually at cost less
accumulated depreciation and impairment, if any. Investment properties
are capitalised and depreciated (where applicable) in accordance with
the policy stated for Tangible Fixed Assets. Impairment of investment
property is determined in accordance with the policy stated for
Impairment of Assets."
A.14 Employee benefits
Employee benefits include provident fund, gratuity fund, compensated
absences, long service awards and post-employment medical benefits.
Defined contribution plans The Company''s contribution to provident fund
is considered as defined contribution plans and are charged as an
expense as they fall due based on the amount of contribution required
to be made.
Defined benefit plans
For defined benefit plans in the form of gratuity fund and
post-employment medical benefits, the cost of providing benefits is
determined using the Projected Unit Credit method, with actuarial
valuations being carried out at each Balance Sheet date. Actuarial
gains and losses are recognised in the Statement of Profit and Loss in
the period in which they occur. Past service cost is recognised
immediately to the extent that the benefits are already vested and
otherwise is amortised on a straight-line basis over the average period
until the benefits become vested. The retirement benefit obligation
recognised in the Balance Sheet represents the present value of the
defined benefit obligation as adjusted for unrecognised past service
cost, as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to past service cost, plus
the present value of available refunds and reductions in future
contributions to the schemes.
Short-term employee benefits "The undiscounted amount of short-term
employee benefits expected to be paid in exchange for the services
rendered by employees are recognised during the year when the employees
render the service. These benefits include performance incentive and
compensated absences which are expected to occur within twelve months
after the end of the period in which the employee renders the related
service. The cost of such compensated absences is accounted as under
:(a) in case of accumulated compensated absences, when employees render
the services that increase their entitlement of future compensated
absences; and(b) in case of non-accumulating compensated absences, when
the absences occur." Long-term employee benefits Compensated absences
which are not expected to occur within twelve months after the end of
the period in which the employee renders the related service are
recognised as a liability at the present value of the defined benefit
obligation as at the Balance Sheet date less the fair value of the plan
assets out of which the obligations are expected to be settled. Long
Service Awards are recognised as a liability at the present value of
the defined benefit obligation as at the Balance Sheet date.
A.15 Employee share based payments
The Company has formulated Employee Stock Option Schemes (ESOS) in
accordance with the SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999. The Schemes provide for grant
of options to employees of the Company and its subsidiaries to acquire
equity shares of the Company that vest in a graded manner and that are
to be exercised within a specified period. In accordance with the SEBI
Guidelines; the excess, if any, of the closing market price on the day
prior to the grant of the options under ESOS over the exercise price is
amortised on a straight-line basis over the vesting period. [OR] The
Company has constituted an Employee Stock Option Plan - XXXX. Employee
Stock Options granted on or after 1 April, 2005 are accounted under the
''Intrinsic Value Method stated in the Guidance Note on Employee Share
Based Payments issued by the Institute of Chartered Accountants of
India.
A.16 Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation 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.
A.17 Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment.
Inter-segment revenue is accounted on the basis of transactions which
are primarily determined based on market / fair value factors.
Revenue, expenses, assets and liabilities which relate to the Company
as a whole and are not allocable to segments on reasonable basis have
been included under ''unallocated revenue / expenses / assets /
liabilities''.
A.18 Leases
"Where the Company as a lessor leases assets under finance leases, such
amounts are recognised as receivables at an amount equal to the net
investment in the lease and the finance income is recognised based on a
constant rate of return on the outstanding net investment.Assets leased
by the Company in its capacity as lessee where substantially all the
risks and rewards of ownership vest in the Company are classified as
finance leases. Such leases are capitalised at the inception of the
lease at the lower of the fair value and the present value of the
minimum lease payments and a liability is created for an equivalent
amount. Each lease rental paid is allocated between the liability and
the interest cost so as to obtain a constant periodic rate of interest
on the outstanding liability for each year.Lease arrangements where the
risks and rewards incidental to ownership of an asset substantially
vest with the lessor are recognised as operating leases. Lease rentals
under operating leases are recognised in the Statement of Profit and
Loss on a straight-line basis."
A.19 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the profit
/ (loss) after tax (including the post tax effect of extraordinary
items, if any) as adjusted for dividend, interest and other charges to
expense or income relating to the dilutive potential equity shares, by
the weighted average number of equity shares considered for deriving
basic earnings per share and the weighted average number of equity
shares which could have been issued on the conversion of all dilutive
potential equity shares. Potential equity shares are deemed to be
dilutive only if their conversion to equity shares would decrease the
net profit per share from continuing ordinary operations. Potential
dilutive equity shares are deemed to be converted as at the beginning
of the period, unless they have been issued at a later date. The
dilutive potential equity shares are adjusted for the proceeds
receivable had the shares been actually issued at fair value (i.e.
average market value of the outstanding shares). Dilutive potential
equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are
adjusted for share splits / reverse share splits and bonus shares, as
appropriate.
A.20 Taxes on income
"Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961 tal Technologies Limited
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred
tax liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets 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 equity and not in the Statement of Profit and Loss.
A.21 Research and development expenses
Revenue expenditure pertaining to research is charged to the Statement
of Profit and Loss. Development costs of products are also charged to
the Statement of Profit and Loss unless a productÂs technological
feasibility has been established, in which case such expenditure is
capitalised. The amount capitalised comprises expenditure that can be
directly attributed or allocated on a reasonable and consistent basis
to creating, producing and making the asset ready for its intended use.
Fixed assets utilised for research and development are capitalised and
depreciated in accordance with the policies stated for Tangible Fixed
Assets and Intangible Assets.
A.22 Joint venture operations
The accounts of the Company reflect its share of the Assets,
Liabilities, Income and Expenditure of the Joint Venture Operations
hich are accounted on the basis of the audited accounts of the Joint
Ventures on line-by-line basis with similar items in the CompanyÂs
accounts to the extent of the participating interest of the Company as
per the Joint Venture Agreements.
A.23 Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss,
except in case of revalued assets.
A.24 Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
A.25 Provision for warranty
The estimated liability for product warranties is recorded when
products are sold. These estimates are established using historical
information on the nature, frequency and average cost of warranty
claims and management estimates regarding possible future incidence
based on corrective actions on product failures. The timing of
outflows will vary as and when warranty claim will arise - being
typically upto three years.
As per the terms of the contracts, the Company provides post-contract
services / warranty support to some of its customers. The Company
accounts for the post-contract support / provision for warranty on the
basis of the information available with the Management duly taking into
account the current and past technical estimates.
A.26 Share issues expenses
Share issue expenses and redemption premium are adjusted against the
Securities Premium Account as permissible under Section 78(2) of the
Companies Act, 1956, to the extent balance is available for utilisation
in the Securities Premium Account. The balance of share issue expenses
is carried as an asset and is amortised over a period of 5 years from
the date of the issue of shares.
A.27 Insurance claims
Insurance claims are accounted for on the basis of claims admitted /
expected to be admitted and to the extent that there is no uncertainty
in receiving the claims.
A.28 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 no
uncertainty in availing / utilising the credits.
Mar 31, 2012
1 Basis of accounting and 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 notified under
the Companies (Accounting Standards) Rules, 2006 (as amended) and the
relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on accrual basis under the historical
cost convention. The accounting policies adopted in the preparation of
the financial statements are consistent with those followed in the
previous year.
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 are recognised in the periods in which
the results are known/ materialise.
3 Inventories
Inventories are valued at the lower of cost (on FIFO / weighted average
basis) and the net realisable value after providing for obsolescence
and other losses, where considered necessary. Cost includes all charges
in bringing the goods to the point of sale, including octroi and other
levies, transit insurance and receiving charges. Work-in-progress and
finished goods include appropriate proportion of overheads and, where
applicable, excise duty.
4 Cash and cash equivalents (for purposes of Cash Flow Statement)
Cash comprises cash on hand and demand deposits with banks. Cash
equivalents are short-term balances (with an original maturity of three
months or less from the date of acquisition), highly liquid investments
that are readily convertible into known
amounts of cash and which are subject to insignificant risk of changes
in value.
5 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.
6 Depreciation and amortisation
Depreciation and ammortisation have been provided on written down value
at the rates specified in Schedule XIV of Companies Act, 1956.
7 Revenue recognition
Sale of goods
Sales are recognised, net of returns and trade discounts, on transfer
of significant risks and rewards of ownership to the buyer, which
generally coincides with the delivery of goods to customers. Sales
include excise duty but exclude sales tax and value added
Income from services
Revenues from contracts priced on a timeand material basis are
recognised when services are rendered and related costs are incurred.
Revenues from turnkey contracts, which are generally time bound fixed
price contracts, are recognised over the life of the contract using the
proportionate completion method, with contract costs determining the
degree of completion. Foreseeable losses on such contracts are
recognised when probable. Revenues from maintenance contracts are
recognised pro-rata over the period of the contract.
8 Other income
Interest income is accounted on accrual basis. Dividend income is
accounted for when the right to receive it is established.
9 Tangible fixed assets
Fixed assets, are carried at cost less accumulated depreciation and
impairment losses, if any. The cost of fixed assets includes interest
on borrowings attributable to acquisition of qualifying fixed assets up
to the date the asset is ready for its intended use and other
incidental expenses incurred up to that date. Exchange differences
arising on restatement / settlement of long-term foreign currency
borrowings relating to acquisition of depreciable fixed assets are
adjusted to the cost of the respective assets and depreciated over the
remaining useful life of such assets. Machinery spares which can be
used only in connection with an item of fixed asset and whose use is
expected to be irregular are capitalised and depreciated over the
useful life of the principal item of the relevant assets. Subsequent
expenditure relating to fixed assets is capitalised only if such
expenditure results in an increase in the future benefits from such
asset beyond its previously assessed standard of performance. Fixed
assets acquired and put to use for project purpose are capitalised and
depreciation thereon is included in the project cost till commissioning
of the project.
Fixed assets acquired in full or part exchange for another asset are
recorded at the fair market value or the net book value of the asset
given up, adjusted for any balancing cash consideration. Fair market
value is determined either for the assets acquired or asset given up,
whichever is more clearly evident. Fixed assets acquired in exchange
for securities of the Company are recorded at the fair market value of
the assets or the fair market value of the securities issued, whichever
is more clearly evident.
Fixed assets retired from active use and held for sale are stated at
the lower of their net book value and net realisable value and are
disclosed separately in the Balance Sheet.
Capital work-in-progress:
Projects under which assets are not ready for their intended use and
other capital work- in-progress are carried at cost, comprising direct
cost, related incidental expenses and attributable interest.
10 Intangible assets
Intangible assets are carried at cost less accumulated amortisation and
impairment losses, if any. The cost of an intangible asset comprises
its purchase price, including any import duties and other taxes (other
than those subsequently recoverable from the taxing authorities), and
any directly attributable expenditure on making the asset ready for its
intended use and net of any trade discounts and rebates. Subsequent
expenditure on an intangible asset after its purchase / completion is
recognised as an expense when incurred unless it is probable that such
expenditure will enable the asset to generate future economic benefits
in excess of its originally assessed standards of performance and such
expenditure can be measured and attributed to the asset reliably, in
which case such expenditure is added to the cost of the asset.
11 Foreign currency transactions and translations
Initial recognition
Transactions in foreign currencies entered into by the Company and its
integral foreign operations are accounted at the exchange rates
prevailing on the date of the transaction or at rates that closely
approximate the rate at the date of the transaction.
Measurement of foreign currency monetary items at the Balance Sheet
date Foreign currency monetary items (other than derivative contracts)
of the Company and its net investment in non-integral foreign
operations outstanding at the Balance Sheet date are restated at the
year-end rates.
In the case of integral operations, assets and liabilities (other than
non-monetary items), are translated at the exchange rate prevailing on
the Balance Sheet date. Non- monetary items are carried at historical
cost. Revenue and expenses are translated at the average exchange rates
prevailing during the year. Exchange differences arising out of these
translations are charged to the Statement of Profit and Loss.
Treatment of exchange differences
Exchange differences arising on settlement/restatement of short-term
foreign currency monetary assets and liabilities of the Company and its
integral foreign operations are recognised as income or expense in the
Statement of Profit and Loss. The exchange differences on
restatement/settlement of loans to non-integral foreign operations that
are considered as net investment in such operations are accumulated in
a "Foreign currency translation reserve" until disposal / recovery of
the net investment.
The exchange differences arising on restatement / settlement of
long-term foreign currency monetary items are capitalised as part of
the depreciable fixed assets to which the monetary item relates and
depreciated over the remaining useful life of such assets or amortised
on settlement / over the maturity period of such items if such items do
not relate to acquisition of depreciable fixed assets. The unamortised
balance is carried in the Balance Sheet as "Foreign currency monetary
item translation difference account" net of the tax effect thereon.
Accounting of forward contracts
Premium / discount on forward exchange contracts, which are not
intended for trading or speculation purposes, are amortised over the
period of the contracts if such contracts relate to monetary items as
at the Balance Sheet date.
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/ subsidy will be received. Government grants whose
primary condition is that the Company should purchase, construct or
otherwise acquire capital assets are presented by deducting them from
the carrying value of the assets. The grant is recognised as income
over the life of a depreciable asset by way of a reduced depreciation
charge. Export benefits are accounted for in the year of exports based
on eligibility and when there is no uncertainty in receiving the same.
Government grants in the nature of promoters' contribution like
investment subsidy, where no repayment is ordinarily expected in
respect thereof, are treated as capital reserve. Government grants in
the form of non-monetary assets, given at a concessional rate, are
recorded on the basis of their acquisition cost. In case the
non-monetary asset is given free of cost, the grant is recorded at a
nominal value.
Other government grants and subsidies are recognised as income over the
periods necessary to match them with the costs for which they are
intended to compensate, on a systematic basis.
13 Investments
Long-term investments (excluding investment properties), are carried
individually at cost less provision for diminution, other than
temporary, in the value of such investments. Current investments are
carried individually, at the lower of cost and fair value. Cost of
investments include acquisition charges such as brokerage, fees and
duties.
Investment properties are carried individually at cost less accumulated
depreciation and impairment, if any. Investment properties are
capitalised and depreciated (where applicable) in accordance with the
policy stated for Tangible Fixed Assets. Impairment of investment
property is determined in accordance with the policy stated for
Impairment of Assets.
14 Employee benefits
Employee benefits include provident fund, superannuation fund, gratuity
fund, compensated absences, long service awards and post-employment
medical benefits.
Defined contribution plans
The Company's contribution to provident fund and superannuation fund
are considered as defined contribution plans and are charged as an
expense as they fall due based on the amount of contribution required
to be made.
Defined benefit plans
For defined benefit plans in the form of gratuity fund and
post-employment medical benefits, the cost of providing benefits is
determined using the Projected Unit Credit method, with actuarial
valuations being carried out at each Balance Sheet date. Actuarial
gains and losses are recognised in the Statement of Profit and Loss in
the period in which they occur. Past service cost is recognised
immediately to the extent that the benefits are already vested and
otherwise is amortised on a straight- line basis over the average
period until the benefits become vested. The retirement benefit
obligation recognised in the Balance Sheet represents the present value
of the defined benefit obligation as adjusted for unrecognised past
service cost, as reduced by the fair value of scheme assets. Any asset
resulting from this calculation is limited to past service cost, plus
the present value of available refunds and reductions in future
contributions to the schemes.
Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be
paid in exchange for the services rendered by employees are recognised
during the year when the employees render the service. These benefits
include performance incentive and compensated absences which are
expected to occur within twelve months after the end of the period in
which the employee renders the related service. The cost of such
compensated absences is accounted as under:
(a) in case of accumulated compensated absences, when employees render
the services that increase their entitlement of future compensated
absences; and
(b) in case of non-accumulating compensated absences, when the absences
occur.
Long-term employee benefits
Compensated absences which are not expected to occur within twelve
months after the end of the period in which the employee renders the
related service are recognised as a liability at the present value of
the defined benefit obligation as at the Balance Sheet date less the
fair value of the plan assets out of which the obligations are expected
to be settled. Long Service Awards are recognised as a liability at the
present value of the defined benefit obligation as at the Balance Sheet
date.
15 Employee share based payments
The Employee Stock Option Schemes (ESOS) are to be formulated in
accordance with the SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999. The Schemes provide for grant
of options to employees of the Company and its subsidiaries to acquire
equity shares of the Company that vest in a graded manner and that are
to be exercised within a specified period. In accordance with the SEBI
Guidelines; the excess, if any, of the closing market price on the day
prior to the grant of the options under ESOS over the exercise price is
amortised on a
straight-line basis over the vesting period.
16 Borrowing costs
Borrowing costs include interest, amortisation of ancillary costs
incurred and exchange differences arising from foreign currency
borrowings to the extent they are regarded as an adjustment to the
interest cost. Costs in connection with the borrowing of funds to the
extent not directly related to the acquisition of qualifying assets are
charged to the Statement of Profit and Loss over the tenure of the
loan. Borrowing costs, allocated to and utilised for qualifying assets,
pertaining to the period from commencement of activities relating to
construction / development of the qualifying asset upto the date of
capitalisation of such asset is added to the cost of the assets.
Capitalisation 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.
17 Segment reporting
The Company identifies primary segments based on the dominant source,
nature of risks and returns and the internal organisation and
management structure. The operating segments are the segments for which
separate financial information is available and for which operating
profit/loss amounts are evaluated regularly by the executive Management
in deciding how to allocate resources and in assessing performance.
The accounting policies adopted for segment reporting are in line with
the accounting policies of the Company. Segment revenue, segment
expenses, segment assets and segment liabilities have been identified
to segments on the basis of their relationship to the operating
activities of the segment. Inter-segment revenue is accounted on the
basisof transactions which are primarilydetermined based on
market/fairvaluefactors. Revenue, expenses, assets and liabilities
which relate to the Company as a whole and are not allocable to
segments on reasonable basis have been included under "unallocated
revenue / expenses / assets / liabilities".
18 Leases
Where the Company as a lessor leases assets under finance leases, such
amounts are recognised as receivables at an amount equal to the net
investment in the lease and the finance income is recognised based on a
constant rate of return on the outstanding net investment.
Assets leased by the Company in its capacity as lessee where
substantially all the risks and rewards of ownership vest in the
Company are classified as finance leases. Such leases are capitalised
at the inception of the lease at the lower of the fair value and the
present value of the minimum lease payments and a liability is created
for an equivalent amount. Each lease rental paid is allocated between
the liability and the interest cost so as to obtain a constant periodic
rate of interest on the outstanding liability for each year.
Lease arrangements where the risks and rewards incidental to ownership
of an asset substantially vest with the lessor are recognised as
operating leases. Lease rentals under operating leases are recognised
in the Statement of Profit and Loss on a straight-line basis."
19 Earnings per share
Basic earnings per share is computed by dividing the profit / (loss)
after tax (including the post tax effect of extraordinary items, if
any) by the weighted average number of equity shares outstanding during
the year. Diluted earnings per share is computed by dividing the profit
/ (loss) after tax (including the post tax effect of extraordinary
items, if any) as adjusted for dividend, interest and other charges to
expense or income relatingtothedi I utive potential equity shares,
bythe weighted average number of equity shares considered for deriving
basic earnings per share and the weighted average number of equity
shares which could have been issued on the conversion of all dilutive
potential equity shares. Potential equity shares are deemed to be
dilutive only if their conversion to equity shares would decrease the
net profit per share from continuing ordinary operations. Potential
dilutive equity shares are deemed to be converted as at the beginning
of the period, unless they have been issued at a later date. The
dilutive potential equity shares are adjusted for the proceeds
receivable had the shares been actually issued at fair value (i.e.
average market value of the outstanding shares). Dilutive potential
equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are
adjusted for share splits / reverse share splits and bonus shares, as
appropriate.
20 Taxes on income
Current tax is the amount of tax payable on the taxable income for the
year as determined in accordance with the provisions of the Income Tax
Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which
gives future economic benefits in the form of adjustment to future
income tax liability, is considered as an asset if there is convincing
evidence that the Company will pay normal income tax. Accordingly, MAT
is recognised as an asset in the Balance Sheet when it is probable that
future economic benefit associated with it will flow to the Company.
Deferred tax is recognised on timing differences, being the differences
between the taxable income and the accounting income that originate in
one period and are capable of reversal in one or more subsequent
periods. Deferred tax is measured using the tax rates and the tax laws
enacted or substantially enacted as at the reporting date. Deferred
tax liabilities are recognised for all timing differences. Deferred tax
assets in respect of unabsorbed depreciation and carry forward of
losses are recognised only if there is virtual certainty that there
will be sufficient future taxable income available to realise such
assets. Deferred tax assets are recognised for timing differences of
other items only to the extent that reasonable certainty exists that
sufficient future taxable income will be available against which these
can be realised. Deferred tax assets 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
realisabiIity. "
Current and deferred tax relating to items directly recognised in
equity are recognised in equity and not in the Statement of Profit and
Loss.
21 Research and development expenses
Revenue expenditure pertaining to research is charged to the Statement
of Profit and Loss. Development costs of products are also charged to
the Statement of Profit and Loss unless a product's technological
feasibility has been established, in which case such expenditure is
capitalised. The amount capitalised comprises expenditure that can be
directly attributed or allocated on a reasonable and consistent basis
to creating, producing and making the asset ready for its intended use.
Fixed assets utilised for research and development are capitalised and
depreciated in accordance with the policies stated for Tangible Fixed
Assets and Intangible Assets.
22 Joint venture operations
The accounts of the Company reflect its share of the Assets,
Liabilities, Income and Expenditure of the Joint Venture Operations
which are accounted on the basis of the audited accounts of the Joint
Ventures on line-by-line basis with similar items in the Company's
accounts to the extent of the participating interest of the Company as
per the Joint Venture Agreements.
23 Impairment of assets
The carrying values of assets / cash generating units at each Balance
Sheet date are reviewed for impairment. If any indication of impairment
exists, the recoverable amount of such assets is estimated and
impairment is recognised, if the carrying amount of these assets
exceeds their recoverable amount. The recoverable amount is the greater
of the net selling price and their value in use. Value in use is
arrived at by discounting the future cash flows to their present value
based on an appropriate discount factor. When there is indication that
an impairment loss recognised for an asset in earlier accounting
periods no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss,
except in case of revalued assets.
24 Provisions and contingencies
A provision is recognised when the Company has a present obligation as
a result of past events and it is probable that an outflow of resources
will be required to settle the obligation in respect of which a
reliable estimate can be made. Provisions (excluding retirement
benefits) are not discounted to their present value and are determined
based on the best estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each Balance Sheet date and
adjusted to reflect the current best estimates. Contingent liabilities
are disclosed in the Notes.
25 Provision for warranty
The estimated liability for product warranties is recorded when
products are sold. These estimates are established using historical
information on the nature, frequency and average cost of warranty
claims and management estimates regarding possible future incidence
based on corrective actions on product failures. The timing of outflows
will vary as and when warranty claim will arise - being typically upto
three years.
As per the terms of the contracts, the Company provides post-contract
services / warranty support to some of its customers. The Company
accounts for the post- contract support / provision for warranty on the
basis of the information available with the Management duly taking into
account the current and past technical estimates.
26 Share issues expenses
Share issue expenses and redemption premium are adjusted against the
Securities Premium Account as permissible under Section 78(2) of the
Companies Act, 1956, to the extent balance is available for utilisation
in the Securities Premium Account. The balance of share issue expenses
is carried as an asset and is amortised over a period of 5 years from
the date of the issue of shares.
27 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 no
uncertainty in availing/ utilising the credits.
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