Accounting Policies of Balaji Amines Ltd. Company
Mar 31, 2023
1 SIGNIFICANT ACOUNTING POLICIES & OTHER INFORMATION1.1 Corporate Information
Balaji Amines Limited (BAL) is a Public Limited company incorporated in India under the provisions of the Companies Act 2013. The Company''s registered office is located at Balaji Towers, No.9/1A/1, Hotgi Road, Aasara Chowk, Solapur, Maharastra - 413224. The equity shares of BAL are listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE), in India. BAL is engaged in manufacturing of speciality chemicals, aliphatics amines and derivatives. BAL has four manufacturing facilities, three plants at Tuljapur and Chincholi in Maharashtra and one at Medak, Telangana. BAL owns a Five Star Hotel in Solapur, Maharashtra.
1.2 Basis of preparation and measurement
(i) Statement of compliance & Basis of preparation
The financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time, notified under section 133 of the Companies Act, 2013, ("Act") and other relevant provisions of the Act.
The financial statements have been prepared on a going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires change in accounting policy hitherto in use.
The financial statements were approved for issue by the Board of Directors on May 20, 2023.
(ii) Functional and presentation currency
These financial statements are presented in Indian Rupees (INR), which is also the Company''s functional currency. All financial information presented in Indian rupees have been rounded-off to two decimal places to the nearest lakh except share data or as otherwise stated.
The financial statements have been prepared on the historical cost basis except for the following items:
- Certain financial assets and liabilities: Measured at fair value
- Net defined benefit (asset)/ liability: Fair value of plan assets less present value of defined benefit obligations
- Borrowings : Amortised cost using effective interest rate method
(iv) Use of estimates and judgments
In preparation of the financial statements, the Company makes judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and the associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and the underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.
The areas involving significant judgements and estimates are estimation of useful lives of property, plant and equipment and intangible assets, impairment of property, plant and equipment and intangible assets, provision for employee benefits and other provisions, contingent liabilities and recoverability of deferred tax assets."
Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes:
- Determining an asset''s expected useful life and the expected residual value at the end of its life;
- Impairment of financial assets;
- Measurement of defined benefit obligations: key actuarial assumptions;
- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources;
- Recognition of tax expense including deferred tax
Company accounting polices and disclosures require measurement of fair value for both financial and non-financial assets.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability or
- In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
Further information about the assumptions made in measuring fair values is included Note 41 - Financial instruments
(v) Current and non-current classification:
The Schedule III to the Act requires assets and liabilities to be classified as either current or non-current. The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is classified as a current when:
- it is expected to be realized in, or is intended for sale or consumption in, the Company''s normal operating
cycle;
- it is expected to be realized within twelve months from the reporting date;
- it is held primarily for the purposes of being traded; or
- is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.
All other assets are classified as non current Liabilities
A liability is classified as a current when:
- it is expected to be realized in, or is intended for sale or consumption in, the Company''s normal operating cycle;
- it is due to be settled within twelve months from the reporting date;
- it is held primarily for the purposes of being traded;
- Deferred tax assets/liabilities are classified as non-current.
- the Company does not have an unconditional right to defer settlement of liability for at least twelve months from the reporting date.
All other liabilities are classified as non-current. Operating Cycle
Operating cycle is the time between the acquisition of assets for processing and realisation in cash or cash equivalents. The Company has ascertained its operating cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.
1.3 Summary of significant accounting policies A Revenue recognition
(i) Revenue from Amines Division Revenue from contract with customers
Revenue is recognised when the performance obligations have been satisfied, which is once control of the goods is transferred from the Company to the customer.
Revenue related to the sale of goods is recognised when the product is delivered to the destination specified by the customer, and the customer has gained control through their ability to direct the use of and obtain substantially all the benefits from the asset.
Revenue is measured based on consideration specified in the contract with a customer which is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates and excludes amounts collected on behalf of third parties.
(ii) Revenue from Hotel Division
Rooms, Food and Beverage and Banquets: Revenue is recognised at the transaction price that is allocated to the performance obligation. Revenue includes room revenue, food and beverage sale and banquet services which is recognised once the rooms are occupied, food and beverages are sold and banquet services have been provided as per the contract with the customer. Advance, if any, received against room bookings are treated as a liability pending finalization of bill / provision of services.
Space and shop rentals: Rentals basically consists of rental revenue earned from letting of spaces for retails and office at the properties. These contracts for rentals are generally of short-term in nature. Revenue is recognised in the period in which services are being rendered.
(iii) Recognition of interest income, dividend income and export benefits
Interest income is recognized on accrual basis taking into account the amount outstanding and rate applicable.
Rental income from investment properties is recognised on a straight line basis over the term of the relevant leases.
Dividend income is recognised when the right to receive the income is established.
Export benefit entitlements are recognized in the statement of profit and loss, when right to receive such entitlement is established as per terms of the relevant scheme in respect of exports made and where there is no significant uncertainty regarding compliance with the terms and conditions of such scheme.
Pending export obligation is recognised and disclosed as non-current liability in the Balance Sheet and transferred to the Statement of Profit and Loss upon satisfaction of obligation and where there is no significant uncertainty regarding compliance with the terms and conditions of such scheme.
B Property, plant and equipment (PPE)
Property, plant and equipment acquired by the company are carried at acquisition cost less accumulated depreciation and accumulated impairment losses, if any. The acquisition cost for this purpose includes the purchase price (net of duties and taxes which are recoverable in future) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use.
Subsequent costs are included in the asset''s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to statement of profit and loss during the reporting period in which they are incurred.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from its use.
Difference between the sales proceeds and the carrying amount of the asset is recognized in the statement of profit and loss. The catalyst is an asset that facilitates the process that increases the future economic benefits and output efficiency expected from the plant.
Land allotted by MIDC on long lease basis is treated as "Lease Hold Land" on the basis of possession leaser from MIDC (the Lessor), The one-time lump sum premium paid at the time of allotment is amortized over the period of the lease. i.e. 99-year lease for Unit III and 95-year lease for Unit IV.
C Capital work-in-progress
Capital work-in-progress is carried at cost less impairment loss, if any. It comprises of property, plant and equipment that are not yet ready for their intended use at the reporting date.
D Research and Development
Revenue expenditure on research is charged to Statement of profit and loss in the year in which it is incurred.
Development Expenditure incurred on development of new processes or products which are expected to generate future economic benefits, are treated as Intangible Assets and are amortized in accordance with estimated useful life.
Other development expenses are charged to the Statement of profit and loss in the year in which they are incurred.
E Investment Property
Investment property are the properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost model which is in accordance with Ind AS 40.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no further economic benefits expected from disposal. Any gain or loss arising on derecognition of the property is included in profit or loss in the period in which the property is derecognised.
Depreciation on building is provided over it''s useful life of 30 years using the Straight Line Method.
F Depreciation and Amortisation
Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation is recognised so as to write off the cost of assets (other than freehold land and properties under construction) less their residual values over their useful lives, using straight-line method as per the useful life prescribed in Schedule Il to the Companies Act, 2013.
The Company reviews the residual value, useful lives and depreciation method annually and, if expectations differ from previous estimates, the change is accounted for as a change in accounting estimate on a prospective basis. An asset''s carrying amount written down immediately to its recoverable amount
if the asset''s carrying amount is greater than its estimated recoverable amount.
Catalyst is depreciated over the useful life estimated by Management.
G Government grants and subsidies
Grants from the government are recognised where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions.
As a Lessee:
The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the company assesses whether:
(1) The Contract involves the use of an identified asset;
(2) The Company has substantially all the economic benefits from use of the asset through the period of the lease and
(3) The Company has the right to direct the use of the asset.
The Company recognizes a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease. Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives.
They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the balance lease term of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of the leases. Lease liabilities are re-measured with a corresponding adjustment to the related right of use asset if the company changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset shall be separately presented in the Balance Sheet and lease payments shall be classified as financing cash flows.
Leases for which the Company is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
Operating lease - Rentals payable under operating leases are charged to the statement of profit and loss on a straight line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are utilised.
Short-term employee benefits
Wages and salaries, including non-monetary benefits that are expected to be settled within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees'' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.
Defined benefit plan - Gratuity obligation
The liability or assets recognized in the balance sheet in respect of gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss. The gratuity liability is covered through a recognized Gratuity Fund managed by Life Insurance Corporation of India and the contributions made under the scheme are charged to Statement of Profit and Loss.
Defined benefit plan - Other long-term employee benefit obligations
The liabilities for earned leave is not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligations. Remeasurements as a result of the experience adjustments and changes in actuarial assumptions are recognized in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
Contributions to post employment benefit plans in the form of provident funs, employee state insurance scheme and pension scheme as per regulations are charged as an expense on accrual basis when employees have rendered the service. The Company has no further payment obligations once the contributions have been paid.
Accounting treatment in respect of deferred taxation and current tax is in accordance with Indian Accounting Standard 12 (Ind AS 12) - "Income Taxes"
Tax expense for the year comprises current and deferred tax.
Current Tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income-tax Act, 1961 and other applicable tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary differences arise from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
Tax relating to items recognized directly in equity or other comprehensive income is recognised in equity or other comprehensive income and not in the Statement of Profit and Loss.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they are related to income taxes levied by the same tax authority, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
K Inventories
Raw materials, packing materials, stores and spares, and other consumables are valued at cost or net realizable value, whichever is lower. Cost comprises of basic cost (net of GST, if any) and other costs incurred in bringing them to their respective present location and condition. Cost is determined on a First-in-First Out basis.
Work-in-Progress and finished goods are valued at cost or net realizable value, whichever is lower. Cost includes all direct costs and a proportion of other fixed manufacturing overheads based on normal operating capacity. Cost is determined on a Weighted Average basis.
Food & Beverages:
Groceries and beverages are valued at cost which is determined on weighted average basis.
L Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of not more than three months, which are subject to an insignificant risk of changes in value.
M Borrowing Costs
Borrowing costs are interest and other costs that an entity incurs in connection with the borrowing of funds.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for the intended use or sale.
Investment income earned if any on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing cost eligible for capitalization. Other borrowings costs are expensed in the period in which they are incurred.
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."
N Foreign Currency Transactions
The financial statements of the Company are presented in Indian rupees, which is the functional currency of the Company and the presentation currency for the financial statements.
Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Foreign currency monetary assets and liabilities such as cash, receivables, payables, etc., are translated at year end exchange rates. Exchange differences arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise.
(i) . Impairment of financial instruments
The Company assesses at each reporting date whether a financial asset (or a group of financial assets) such as investments, trade receivables, advances and security deposits held at amortised cost and financial assets that are measured at fair value through other comprehensive income are tested for impairment based on evidence or information that is available without undue cost or effort. Expected credit losses are assessed and loss allowances recognised if the credit quality of the financial asset has deteriorated significantly since initial recognition.
(ii) Impairment of non-financial assets
Impairment loss, if any, is provided to the extent, the carrying amount of assets or cash generating units exceed their recoverable amount. Recoverable amount is higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset or cash generating unit and from its disposal at the end of its useful life. Impairment losses recognised in prior years are reversed when there is an indication that the impairment losses recognised no longer exist or have decreased. Such reversals are recognised as an increase in carrying amounts of assets to the extent that it does not exceed the carrying amounts that would have been determined (net of amortization or depreciation) had no impairment loss been recognised in previous years.
Basic Earnings Per Share (''EPS'') is computed by dividing the net profit attributable to the equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the net profit by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless issued at a later date. In computing diluted earnings per share, only potential equity
shares that are dilutive and that either reduces earnings per share or increases loss per share are included. The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for the share splits.
Q Financial instruments
A financial instrument is any contract that gives rise to a Financial Asset of one entity and Financial liability or equity instrument of another entity.
(i) Initial measurement and recognition
Financial assets and financial liabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument. A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
(ii) Classification and subsequent measurement Financial assets
All financial assets except Trade receivables are initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.
(ii) Subsequent measurement
For the purpose of subsequent measurement, financial assets are categorised as under:
- amortised cost;
- Fair Value through Other Comprehensive Income (FVOCI) - equity investment; or
- Fair Value Through Profit or Loss (FVTPL)
Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Company changes its business model for managing financial assets.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
- the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment''s fair value in OCI (designated as FVOCI - equity investment). This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.
Financial assets at amortised cost : ''These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
Equity investments at FVOCI: ''These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are not reclassified to profit or loss.
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in statement of profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in statement of profit or loss.
Derecognition - Financial assets
A Financial asset is primarily derecognised when the right to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.
If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.
Derecognition - Financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expired.
The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.
Financial Instruments Offsetting
Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if there is a currently and legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
R Provisions, Contingent liabilities and Contingent assets
The Company recognises provisions when there is present obligation as a result of past event and it is probable that there will be an outflow of resources and reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Unwinding of the discount is recognised in the Statement of Profit and Loss as a finance cost. Provisions are reviewed at each reporting date and are adjusted to the reflect the current best estimate.
A present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent Liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company. Contingent assets are not recognized in financial statements since this may result in the recognition of income that may never be realised.
S Standards issued but not effective
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31,2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:
Ind AS 1 - Presentation of Financial Statements -This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies.
The effective date for adoption of this amendment is annual periods beginning on or after April1, 2023. The Company has evaluated the amendment and the impact of the amendment is insignificant in the standalone financial statements.
Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors -This amendment has introduced a definition of ''accounting estimates'' and included amendments to Ind AS8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1,2023. The Company has evaluated the amendment and there is no impact on its standalone financial statements.
Ind AS 12 - Income Taxes-This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after April1,2023.The Companyhas evaluated the amendment and there is no impact on its standalone financial statements.
Mar 31, 2022
1 Reporting Entity
Pioneer Embroideries Limited referred to as "the Company" is domiciled in India. The Company''s registered office is at Unit 101B, 1st Floor, Abhishek Premises, Plot No. C5-6, Dalia Industrial Estate, Off. New Link Road, Andheri (West), Mumbai-400 058. The Company is a manufacturer of Special Polyester Filament Yarn (SPFY), Embroidery & Lace Products. It has four manufacturing units located at Kala-amb (Himachal Pradesh) for SPFY and Sarigam (Gujarat), Naroli (Daman & Nagar Haveli), Coimbatore (Tamilnadu) for Embroidery and Laces.
These financial statements were authorised for issue by the Board of Directors in their meeting held on 27th May, 2022.
2 Significant Accounting Policies
The Company has consistently applied the following accounting policies to all periods presented in the financial statements.
The standalone financial statements of the Company comply in all material aspects with Indian Accounting Standards ("Ind AS") as prescribed under section 133 of the Companies Act, 2013 ("the Act"), as notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) (Amendment) Rules, 2016 and other accounting principles generally accepted in India.
Accounting Policies have been consistently applied except where a newly issued accounting standards is initially adopted or a revision to an existing accounting standard required a change in the accounting policy hitherto in use.
The financial statements have been prepared under the historical cost convention on accrual basis and the following items, which are measured on following basis on each reporting date:
- Certain financial assets and liabilities that is measured at fair value.
- Defined benefit liability/(assets): present value of defined benefit obligation less fair value of plan assets.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company take into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the company can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2.3 Functional and Presentation Currency
These financial statements are presented in Indian National Rupee (''INR''), which is the Company''s functional currency. All amounts have been rounded to the nearest lakhs, unless otherwise indicated.
2.4 Use of Judgements and Estimates
In preparing these financial statements, management has made judgements, estimates and assumptions that affect the application of the company''s accounting policies and the reported amounts of
assets, liabilities, income and expenses. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
Information about the judgements made in applying accounting policies that have the most significant effects on the amounts recognised in the financial statements have been given below:
- Classification of leases into finance and operating lease.
- Classification of financial assets: assessment of business model within which the assets are held and assessment of whether the contractual terms of the financial asset are solely payments of principal and interest on the principal amount outstanding.
Assumptions and Estimation Uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the financial statements for the every period ended is included below:
- Measurement of defined benefit obligations: key actuarial assumptions;
- Recognition of deferred tax assets: availability of future taxable profit against which carry-forward tax losses can be used;
- Impairment test: key assumptions underlying recoverable amounts;
- Useful life and residual value of Property, Plant and Equipment;
- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources;
- Impairment of financial assets: key assumptions used in estimating recoverable cash flows.
2.5 Classification of Assets and Liabilities as Current and Non-Current
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset/liabilities is treated as current when it is:
- Expected to be realised/settled (liabilities) or intended to be sold or consumed in normal operating cycle;
- Held primarily for the purpose of trading;
- Expected to be realised/settled within twelve months after the reporting period, or
- Cash and Cash equivalents unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period or there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other assets/liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets/liabilities.
The operating cycle is the time between the acquisition of the assets for processing and their realisation in cash and cash equivalents.
2.6 Property, Plant and Equipment (Fixed Assets)Recognition and Measurement
Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment loss , if any. The cost of assets comprises of purchase price and directly attributable cost of bringing the assets to working condition for its intended use including borrowing cost and incidental expenditure during construction incurred upto the date when the assets are ready to use. Capital work in progress includes cost of assets at sites, construction expenditure and interest on the funds deployed less any impairment loss, if any.
If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as a separate items (major components) of property, plant and equipment. Any gain on disposal of property, plant and equipment is recognised in Statement of Profit and loss.
Subsequent expenditure is capitalised only if it is probable that there is an increase in the future economic benefits associated with the expenditure will flow to the Company.
Depreciation on property, plant & equipment is calculated on Straight Line Method using the rates arrived at on the basis of estimated useful lives given in Schedule II of the Companies Act, 2013.
Depreciation on additions to or on disposal of assets is calculated on pro-rata basis. Leasehold land is being amortised over the period of lease tenure. Right of use assets is amortised over the lease period or estimated useful life whichever is less. Additions on rented premises are being amortised over the period of rent agreement.
Depreciation methods, useful lives and residual values are reviewed in each financial year end and changes, if any, are accounted for prospectively.
Individual assets costing below ''5,000 are fully depreciated in the year of purchase.
Expenditure incurred during the construction period, including all expenditure direct and indirect expenses, incidental and related to construction, is carried forward and on completion, the costs are allocated to the respective property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between net disposal proceeds and the carrying amount of the asset and is recognised in the Statement of Profit and Loss.
Intangible Assets (Other than Goodwill) acquired separately are stated at cost less accumulated amortization and impairment loss, if any. Intangible assets are amortized on straight line method basis over the estimated useful life. Estimated useful life of the Software is considered as 10 years.
Amortisation methods, useful lives and residual values are reviewed in each financial year end and changes, if any, are accounted for prospectively.
An intangible asset is de-recognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset are recognised in the Statement of Profit and Loss when the asset is derecognised.
2.8 Non-current Assets held for Sale
Non-current assets are classified as held-for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use.
Such assets are generally measured at the lower of their carrying amount and fair value less costs to sell. An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised at the date of de-recognition.
Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortised or depreciated.
2.9 Impairment of Non-financial Assets
At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication on impairment. If any such indication exists, then the recoverable amount of assets is estimated.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or Cash Generating Unit (CGUs).
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment loss in respect of assets other than goodwill is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised in prior years. A reversal of impairment loss is recognised immediately in the Statement of Profit & Loss.
Borrowing costs directly attributable to the acquisition, construction of qualifying assets are capitalised as part of the cost of such assets upto the assets are substantially ready for their intended use. All other borrowing costs are recognised in the statement of profit and loss in the period in which they are incurred.
The loan origination costs directly attributable to the acquisition of borrowings (e.g. loan processing fee, upfront fee) are amortised on the basis of the Effective Interest Rate (EIR) method over the term of the loan.
All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.
2.11 Foreign Currency Transactions
Transactions in foreign currencies are recorded by the Company at their respective functional currency at the exchange rates prevailing at the date of the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currency are translated to the functional currency at the exchange rates prevailing at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in the Statement of Profit and Loss with the exception of the following:
- exchange differences on foreign currency borrowings included in the borrowing cost when they are regarded as an adjustment to interest costs on those foreign currency borrowings;
Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates at the date of initial transactions. Nonmonetary items measure at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.
2.12 Employee BenefitsShort term employee benefits
Short-term employee benefits are expensed in the year in which the related services are provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Employee benefits in the form of Provident Fund are defined as contribution plan and charged as expenses during the period in which the employees perform the services.
For defined benefit retirement, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using yield of government bonds.
The effect of the remeasurement changes (comprising actuarial gains and losses) to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in other equity and will not be reclassified to the Statement of Profit and Loss. Past service cost is recognised in the Statement of Profit and Loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
⢠service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
⢠net interest expense or income; and
⢠remeasurement
The Company presents the first two components of defined benefit costs in the Statement of Profit and Loss in the line item employee benefits expense.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Company''s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
Other long-term employee benefits
The Company has long term employment benefit plans i.e. accumulated leave. Accumulated leave is encashed to eligible employees at the time of retirement. The liability for accumulated leave, which is a defined benefit scheme, is provided based on actuarial valuation as at the Balance Sheet date, based on Projected Unit Credit Method, carried out by an independent actuary.
The Company recognises revenue from sale of goods when;
i) the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
ii) the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
iii) the amount of revenue can be measured reliably;
iv) it is probable that the economic benefits associated with the transaction will flow to the Company; and
v) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue (other than sale of goods) is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Claim on insurance companies, interest and others, where quantum of accrual cannot be ascertained with reasonable certainty, are accounted for on acceptance basis.
Revenue represents net value of goods and services provided to customers after deducting for certain incentives including, but not limited to discounts, volume rebates, incentive programs etc. Sales exclude Goods and Services Tax.
Interest other than interest on overdue debts from customers, is recognised on time proportion basis.
Dividends are recognised at the time the right to receive payment is established.
Inventories are valued at lower of cost and net realisable value except waste/scrap which is valued at net realisable value. Cost of finished goods and stock in process is determined by taking cost of purchases, material consumed, labour and related overheads. Cost of raw materials and stores & spare parts is computed on weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and to make the sale.
2.15 Provisions, Contingent Liabilities and Contingent Assets
Based on the best estimate provisions are recognized when there is a present obligation (legal or constructive) as a result of a past event and it is probable ("more likely than not") that it is required to settle the obligation, and a reliable estimate can be made of the amount of the obligation at reporting date.
A contingent liability is a possible obligation that arises from a past event, with the resolution of the contingency dependent on uncertain future events, or a present obligation where no outflow is probable. Major contingent liabilities are disclosed in the financial statements unless the possibility of an outflow of economic resources is remote.
Contingent assets are not recognized in the financial statements but disclosed, where an inflow of economic benefit is probable.
2.16 Measurement of Fair Valuea) Financial instruments
The estimated fair value of the Company''s financial instruments is based on market prices and valuation techniques. Valuations are made with the objective to include relevant factors that market participants would consider in setting a price, and to apply accepted economic and financial methodologies for the pricing of financial instruments. References for less active markets are carefully reviewed to establish relevant and comparable data.
b) Marketable and non-marketable equity securities Fair value for quoted securities is based on quoted market prices as of the reporting date. Fair value for unquoted securities is calculated based on commonly accepted valuation techniques utilizing significant unobservable data, primarily cash flow based models. If fair value cannot be measured reliably unlisted shares are recognized at cost.
2.17 Financial Instrumentsa. Financial AssetsInitial recognition and measurement
All financial assets are recognised initially at fair value, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
The Company classifies its financial assets as subsequently measured at either amortised cost or fair value depending on the company''s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets.
Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met:
- it is held within a business model whose objective is to hold assets in order to collect contractual cash flows.
- the contractual terms of the financial asset represent contractual cash flows that are solely payments of principal and interest.
After initial measurement, such financial assets are subsequently measured at amortised cost using the Effective Interest Rate (''EIR'') method. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance income in the Statement of Profit and Loss. The losses arising from impairment are recognised in the Statement of Profit and Loss.
Financial assets at fair value through Other Comprehensive Income (FVOCI)
Financial assets with contractual cash flow characteristics that are solely payments of principal and interest and held in a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets are classified to be measured at FVOCI.
Financial assets at fair value through profit and loss (FVTPL)
Any Financial assets, which does not meet the criteria for categorization as at amortized cost or as FVOCI, is classified as at FVTPL.
In addition, the company may elect to classify a Financial assets, which otherwise meets amortized cost or FVOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch'').
Financial assets included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.
All equity instruments in scope of Ind AS 109 are measured at fair value. On initial recognition an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in fair value in OCI. This election is made on an investment-by-investment basis.
All other Financial Instruments are classified as measured at FVTPL.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the company''s balance sheet) when:
- The rights to receive cash flows from the asset have expired, or
- The company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the company has transferred substantially all the risks and rewards of the asset, or (b) the company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the company continues to recognize the transferred asset to the extent of the company''s continuing involvement. In that case, the company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the company could be required to repay.
On derecognition of a financial asset, the difference between the carrying amount of the asset (or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the consideration received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that had been recognised in OCI is recognised in the Statement of Profit and Loss.
Impairment of financial assets
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
With regard to trade receivable, the Company applies the simplified approach as permitted by Ind AS 109, Financial Instruments, which requires expected lifetime losses to be recognised from the initial recognition of the trade receivables.
b. Financial liabilitiesInitial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, amortised cost, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of amortised cost, net of directly attributable transaction costs.
The measurement of financial liabilities depends on their classification, as described below:
Financial Liabilities measured at amortised cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the Statement of Profit and Loss.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit and loss include financial liabilities designated upon initial recognition as at fair value through profit and loss.
Gains or losses on liabilities held for trading are recognised in the Statement of Profit and Loss.
Financial liabilities designated upon initial recognition at fair value through profit and loss are designated as such
at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied. For liabilities designated as FVTPL, fair value gains/ losses attributable to changes in own credit risk are recognized in OCI. These gains/ loss are not subsequently transferred to the Statement of Profit and Loss. However, the Company may transfer the cumulative gain or loss within equity. All other changes in fair value of such liability are recognised in the Statement of Profit and Loss.
Derecognition of financial liabilities
The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expired.
Income tax expense comprises current and deferred tax. It is recognised in the Statement of Profit and Loss except to the extent that it relates to items recognised directly in Equity or in Other Comprehensive Income.
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax assets and liabilities are offset only if, the Company:
a) Has a legally enforceable right to set off the recognised amounts; and
b) Intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent it is probable that taxable profits will be available against which those deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.
Minimum Alternative Tax (MAT) is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of credit to the Statement of Profit and Loss and included in deferred tax assets. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal income tax during the specified period.
2.19 LeasesThe Company as lessor
Leases for which the Company is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as finance lease. All other leases are classified as operating leases.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised
on a straight-line basis over the lease term.
The Company assesses whether a contract is or contains a lease, at inception of the contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the lease term, unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. Contingent and variable rentals are recognized as expense in the periods in which they are incurred.
The lease payments that are not paid at the commencement date are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee''s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
Lease payments included in the measurement of the lease liability comprise:
⢠Fixed lease payments (including in-substance fixed payments) payable during the lease term and under reasonably certain extension options, less any lease incentives;
⢠Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
⢠The amount expected to be payable by the lessee under residual value guarantees;
⢠The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
⢠Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.
The lease liability is presented as a separate line in the Balance Sheet.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Company remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
⢠The lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
⢠A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
The ROU assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Whenever the company incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under Ind AS 37- Provisions, Contingent Liabilities and Contingent Assets. The costs are included in the related right-of-use asset.
ROU assets are depreciated over the shorter period of the lease term and useful life of the underlying asset. If the company is reasonably certain to
exercise a purchase option, the right-of-use asset is depreciated over the underlying asset''s useful life. The depreciation starts at the commencement date of the lease.
The ROU assets are not presented as a separate line in the Balance Sheet but presented below similar owned assets as a separate line in the PPE note under "Notes forming part of the Financial Statement".
The Company applies Ind AS 36- Impairment of Assets to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as per its accounting policy on ''property, plant and equipment''.
As a practical expedient, Ind AS 116 permits a lessee not to separate non-lease components when bifurcation of the payments is not available between the two components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has used this practical expedient.
Extension and termination options are included in many of the leases. In determining the lease term the management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option.
2.20 Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.
For the purposes of the Cash Flow Statement, cash and cash equivalents is as defined above, net of outstanding bank overdrafts. In the balance sheet, bank overdrafts are shown within borrowings in current liabilities.
2.21 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The board of directors of the Company has been identified as being the chief operating decision maker by the Management of the
Company. The Business activity of the company falls within one business segment viz "Textile".
2.22 Standards issued but not yet effective
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 23, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, as below:
Ind AS 103 - Reference to Conceptual Framework
- The amendments specify that to qualify for recognition as part of applying the acquisition method, the identifiable assets acquired and liabilities assumed must meet the definitions of assets and liabilities in the Conceptual Framework for Financial Reporting under Indian Accounting Standards (Conceptual Framework) issued by the Institute of Chartered Accountants of India at the acquisition date. These changes do not significantly change the requirements of Ind AS 103. The Company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 16 - Property Plant and equipment - The
amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted
from the directly attributable costs considered as part of cost of an item of property, plant, and equipment. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2022. The Company has evaluated the amendment and there is no impact on its financial statements.
Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets - The amendment specifies that the ''cost of fulfilling'' a contract comprises the ''costs that relate directly to the contract''. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The amendment is essentially a clarification and the Company does not expect the amendment to have any significant impact in its financial statements.
Ind AS 109 - Annual Improvements to Ind AS (2021) - The amendment clarifies which fees an entity includes when it applies the ''10 percent'' test of Ind AS 109 in assessing whether to derecognise a financial liability. The Company does not expect the amendment to have any significant impact in its financial statements.
Mar 31, 2019
Note 1: Significant Accounting Policies and Other Information I. Company Overview
Balaji Amines Limited (BAL) is a public limited company incorporated and domiciled in India. The Registered office of BAL is situated in Solapur, Maharashtra, India. the equity shares of BAL are listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), in India. BAL is engaged in the business of manufacture and sale of Speciality Chemicals, Aliphatic Amines and derivatives. Bal has its two manufacturing facilities / plants at Tuljapur and Chincholi in Maharashtra and one at Medak, Telangana. BAL owns a Five Star Hotel in Solapur, Maharashtra. BAL mainly operates in two segments i.e., Speciality Chemicals and Amines and Hotel. In addition to the said two primary. Main divisions BAL also has CFL lamps facility at Medak, Telangana which was acquired vide amalgamation of Balaji Greentech Products Limited with BAL in the FY 2017-18.
II. Compliance with Indian Accounting Standards
1. The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) as notified under section 133 of the Companies Act, 2013 (the Act), read with Companies (Indian Accounting Standard) Rules 2015. The company has uniformly applied all the applicable accounting policies during the periods presented.
2. The company had adopted Ind AS for the first time in accordance with Ind AS 101, First Time Adoption of Indian Accounting Standards in the year ended March 31, 2018, i.e., the immediately preceding year.
III. Reporting Currency
The Financial statements are presented in Indian Rupees which is also the functional and presentation currency of the company and all amounts are rounded off to nearest rupee.
IV. Overall Considerations
The financial statements have been prepared using significant accounting policies that are in effect as at March 31, 2019 as presented in detail hereunder.
V. Accounting Policies and Other Information 1. System of Accounting:
i. The company follows mercantile system of accounting and recognizes income and expenditure on accrual basis.
ii. The financial statements have been prepared in all material respects with Indian Accounting Standards as relevant and notified by the Central Government.
iii. The financial statements are prepared as a going concern and on historical cost basis except for certain financial assets and liabilities that are measured at fair value where mandated or required by the relevant Indian Accounting Standard.
2. Revenue recognition:
i. Revenues are generally recognized in all material aspects in accordance with Ind AS 115.
ii. Sale of goods is recognized at the point of dispatch of goods to customers, i.e. when the substantial rights of ownership and risks are passed on to the customers. Gross sale is exclusive of GST.
iii. Income from guest accommodation in respect of hotel division is recognized on day to day basis after the guests checks-in. Discounts if any in this regard are accounted upon final conclusion of the bill with the guests. Advance, if any, received against room bookings are treated as a liability pending finalization of bill / provision of services.
iv. Income from sale of Food & Beverages is recognized at the point of serving of these items to the guests. The income stated is exclusive of Taxes.
v. Dividends from investment are recognized as income of the year in which the same are declared by in the investee company.
vi. Interest income is recognized on accrual basis taking into account the amount outstanding and rate applicable.
3. Property, plant and equipment:
Property, plant and equipment acquired by the company are reported at acquisition value. The acquisition cost for this purpose includes the purchase price (net of duties and taxes which are recoverable in future) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use. Interest during construction period up to the date of commencement of operations, indirect project expenditure and trial run expenditure (net of trial run income, if any) incurred in respect of projects under implementation are capitalized to the asset constructed / created. Spares and tools that are not in the nature of ''Property, Plant & Equipment'' are treated as part of inventories. The costs incurred for the repairs and maintenance of these assets are charged to revenue.
The cost of assets under construction as on the Balance Sheet date, are classified under the head "capital work in progress" and will be capitalized as and when put to use.
Land allotted by MIDC on long lease basis is treated as "Lease Hold Land" on the basis of possession letter from MIDC (the Lessor), pending execution of lease agreement. The one-time lump sum premium paid at the time of allotment is amortized over the period of the 95-year lease. The lease amortization relating to the period prior to the commencement of commercial operations on the land so allotted will be capitalized as part of ''indirect project expenditure''. In respect of the land allotted in an earlier year the company has amortized the lease premium for the earlier years in the current year. The amount pertaining to the earlier year debited to the current year statement of profit and loss is Rs.27.82 lakhs.
4. Depreciation
Depreciation / amortization on fixed assets is provided on straight line method in accordance with Schedule II of the Companies Act, 2013 in respect of the remaining useful life. The management estimates the useful lives of the assets based on the indicative life span prescribed in Schedule II of the Companies Act, 2013. The useful life of the assets and their respective residual values are reviewed at the end of each financial year and adjusted accordingly.
5. Investments: Investments are stated at cost of acquisition.
6. Inventories:
a) Finished goods are valued at lower of cost or Net Realizable Value. Cost for this purpose is arrived at on Absorption Costing basis.
b) Stock in process/plant is valued at cost.
c) Stock of raw materials, Stores and Spares and packing materials are valued at cost. Cost for this purpose, does not include duties/taxes that are recoverable in future.
d) Food & Beverages:
1. Groceries: Groceries are valued at cost arrived at on weighted average basis.
2. Beverages: Valued at cost.
7. Trade Receivables
Trade receivables are stated at the recoverable values. Assessment is made on a periodical basis to assess the credit risk in respect of the credit extended to the customers and adjustments are carried out where necessary and found expedient. Provision, if any, made for the doubtful debts is charged to revenue.
8. Staff Benefits:
a. Provident Fund Contributions are accounted on accrual basis.
b. To cover the benefits payable to the employees on retirement, the company has subscribed to a policy of Group Gratuity Scheme of Life Insurance Corporation of India. All contributions made towards the policy premiums are charged to revenue.
9. Research and Development:
Revenue expenditure on research and development is charged to Statement of profit and loss in the year in which it is incurred. Capital expenditure on research and development is treated at par with other comparable tangible assets and depreciated accordingly.
10. Tax expense:
Accounting treatment in respect of deferred taxation and current tax is in accordance with Indian Accounting Standard 12 (Ind AS 12) - "Income Taxes"
11. Borrowing Costs:
Interest and other costs in respect of borrowings for expansion / additional fixed investments including R&D projects are capitalized to such investments. Borrowing costs relating to period after the commencement of operations of these projects are charged to revenue.
12. Foreign Currency Transactions:
Foreign Exchange Transactions are recorded at pre-determined standard exchange rates which are reviewed periodically. Gains or losses arising out of such periodic revisions of such standard rates and also on realization/settlement are accounted for accordingly. No effect is determined in respect of the repayment and balances in respect of Foreign Currency Loans as the same are paid out of the Foreign Exchange earnings through the Exchange Earners Foreign Currency Accounts in respective currencies.
13. Impairment of Assets:
The carrying amounts of assets are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal / external factors. An impairment loss will be recognized wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the asset''s net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value using the weighted average cost of capital. In carrying out such exercise, due effect is given to the requirements of Schedule II of the Companies Act, 2013.
14. Earnings Per Share (EPS):
This is calculated by dividing the net profit after tax (PAT) for the period attributable to equity shareholders, by number of shares outstanding at the end of the year. In case there are any changes in the equity during the year, EPS would be calculated on the weighted average number of shares outstanding during the period including adjustments of bonus issue, if any.
15. Corporate Social Responsibility
The company computes the amount required to be spent on Corporate Social Responsibility in accordance with the provisions of Section 135 of the Companies Act, 2013. The amounts are spent on the eligible projects prescribed under Schedule VII of the Act. Provision is made in the books for the amounts unspent, if any and if material, and the same is carried forward to be spent in the subsequent year. During the year ended March 31, 2019 the company has spent the required amount. Hence there are no unspent amounts on this account.
16. Contingent Liabilities :
Disputed demands: Under the Income Tax Act, 1961: Rs.17.60 Lakhs (relating to Assessment Year 2013-14) Rs.231.08 Lakhs (relating to Assessment Year 2014-15) and Rs.9.25 Lakhs (relating to Assessment Year 2016-17) in respect of additions made in assessment under section 143(3) of the Income Tax Act, 1961 and disputed in appellate proceedings. The appeals are pending before the First Appellate Authority, Pune. The company has deposited an amount of Rs.81.15 lakhs against the aforementioned demands and obtained stay of collection of the balance disputed demand till disposal of the first appeals. The above referred tax payments are grouped under the head "Other Current Assets"
17. Dividends
Dividends are accounted for as an outflow from the accumulated profits in the year in which the same are declared and paid out.
18. Amounts recoverable from employees
The company has an arrangement with the supplier of coal for supply of coal in specified consignments on a periodic basis. Few consignments aggregating to the value of Rs.31.71 lakhs have been misappropriated, while in transit, by 2 employees of the company during the year ended March 31, 2015. The services of the said employees have been terminated in that year itself and legal action against initiated on these employees including action for the recovery of the above-mentioned amounts. Pending recovery, the amounts are shown under short term advances.
19. Expenditure on Corporate Social Responsibility (CSR):
The company has incurred an expenditure of Rs.263.02 Lakhs (Previous Year Rs.189.04 Lakhs) on Corporate Social Responsibility initiatives in accordance with the provisions of Section 135 of the Companies Act, 2013. The details of the projects on which the amounts are expended by the company on Corporate Social Responsibility are given in Note.31 Other expenses, item (f).
20. Segment Reporting:
The company operates in three segments viz., (a) Amines & Specialty Chemicals, (b) Hotel segment and (c) CFL Lamps. There is no geographical segment as the company operates only in India.
Mar 31, 2018
Note 1: Significant Accounting Policies and other disclosures - Standalone Financial Statements:
I. Company Overview
Balaji Amines Limited (''BAL'') is a Public Limited company incorporated and Domiciled in India, having its registered office at Solapur, Maharashtra, India. BAL has its primary listing on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), in India.
BAL is engaged in the business of manufacture and sale of Speciality Chemicals, Aliphatic Amines and derivatives. BAL has primarily two divisions / segments viz., Amines Division and Hotel Division. Amines and speciality chemicals are manufactured at its three facilities located at Tuljapur & Chincholi in Maharashtra and at Medak in Telangana State. BAL owns a Five Star Hotel at Solapur, Maharashtra.
During the year 2017-18 the subsidiaries viz. Bhagyanagar Chemicals Limited (100%) and Balaji Greentech Products Limited (66%) were amalgamated with BAL. As a result, BAL now operates in the area of manufacture of CFL Lamps which was the activity of Balaji Greentech Products Limited. The complete manufacturing facility of Bhagyanagar Chemicals Limited was already on long lease with BAL.
II. Compliance with Indian Accounting Standards
1. The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) as notified under section 133 of the Companies Act 2013 (the Act), read with Companies (Indian Accounting Standard) Rules 2015. The company has uniformly applied all the applicable accounting policies during the periods presented.
2. The financial statements up to and for the period ended March 31, 2017 were prepared in accordance with the Companies (Accounting Standards) Rules 2006, notified under section 133 of the Act. The company has adopted all the Ind AS standard and the adoption was carried out in accordance with Ind AS 101, First Time Adoption of Indian Accounting Standards. The transition was carried out from Indian Accounting Principles Generally Accepted in India as prescribed under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.
3. Year ended March 31, 2018 is the first time of adoption of Ind AS. Accordingly the opening Balance Sheet of the company as at April 01, 2016 is presented, based on which the Balance Sheets of March 31, 2017 and March 31, 2018 are prepared under Ind AS. In preparing the said Balance Sheets the company has opted for the exemptions given in Ind AS 101 for first time adoption of Ind AS.
III. Overall Considerations
1. The financial statements have been prepared using significant accounting policies that are in effect as at March 31, 2018 as presented in detail hereunder.
In accordance with Ind AS 101, "First Time Adoption of Indian Accounting Standards", the company presents Balance Sheets for three years, Statement of Profit and Loss and Cash Flows for two years, and related notes including comparative information for all these statements.
IV. Accounting Policies and Other Information
1. System of Accounting:
i. The company follows mercantile system of accounting and recognizes income and expenditure on accrual basis.
ii. The financial statements have been prepared in all material respects with Indian Accounting Standards as relevant and notified by the Central Government.
iii. The financial statements are prepared as a going concern and on historical cost basis except for certain financial assets and liabilities that are measured at fair value.
2. Revenue recognition:
I. Sale of goods is recognized at the point of dispatch of goods to customers, i.e. when the substantial rights of ownership and risks are passed on to the customers. Gross sale is inclusive of Excise Duty and is net of Value Added Tax/ Sales Tax, till June 30,2017. Sales effected on and from July 01,2017 are exclusive of GST.
ii. The gross income in respect of the amalgamating companies in respect of which amalgamation has been effected during the year is accounted for in accordance with the terms of sanction of the scheme of amalgamation by the Hon''ble NCLT and as per AppendixC of Ind AS 103.
iii. Income from guest accommodation in respect of hotel division is recognized on day to day basis after the guests checks-in. Discounts if any in this regard are accounted upon final conclusion of the bill with the guests. Advance, if any, received against room bookings are treated as a liability pending finalization of bill / provision of services.
iv. Income from sale of Food & Beverages is recognized at the point of serving of these items to the guests. The income stated is exclusive of Taxes.
v. Dividends from investment are recognized as income of the year in which the same are declared by in the investee company.
vi. Interest income is recognized on accrual basis taking into account the amount outstanding and rate applicable.
3. Property, plant and equipment:
Property, plant and equipment acquired by the company are reported at acquisition value. The acquisition cost for this purpose includes the purchase price (net of duties and taxes which are recoverable in future) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use. Interest during construction period up to the date of commencement of operations, indirect project expenditure and trial run expenditure (net of trial run income, if any) incurred in respect of projects under implementation are capitalized to the asset constructed / created. Spares and tools that are not in the nature of ''Property, Plant & Equipment'' are treated as part of inventories. The costs incurred for the repairs and maintenance of these assets are charged to revenue.
The cost of assets under construction as on the Balance Sheet date, are classified under the head "capital work in progress" and will be capitalized as and when put to use.
4. Depreciation
Depreciation / amortization on fixed assets is provided on straight line method in accordance with Schedule II of the Companies Act, 2013 in respect of the remaining useful life. The management estimates the useful lives of the assets based on the indicative lifespan prescribed in Schedule II of the Companies Act, 2013. The useful life of the assets and their respective residual values are reviewed at the end of each financial year and adjusted accordingly.
5.1nvestments:
Investments are stated at cost of acquisition.
6. Amalgamation Effect:
During the year the subsidiaries of the company viz., Balaji Greentech Products Limited (company''s holding 66%) and Bhagyanagar Chemicals Limited (company''s holding 100%) have been amalgamated with the company as per the scheme of amalgamation sanctioned by the Hon''ble NCLT, Mumbai. The amalgamation has been given effect to in the financial statements for the current year and the same has been carried out in accordance with the manner prescribed under Ind AS 103, Business Combinations / AS 14 Accounting for Amalgamations. Accordingly, the balance of the reserves / debit balances as at April 01, 2016 and the accretions / deletions thereto up to March 31, 2017 have been adjusted to the opening balance of General Reserves. The operations for the financial year 2017-18 have been treated as the operations of Balaji Amines Limited
The company has, during the current year acquired controlling interest (55%) in Balaji Specialty Chemicals Private Limited. This investment is stated at cost of acquisition.
7. Inventories:
a) Finished goods are valued at lower of cost or Net Realizable Value. Cost for this purpose is arrived at on Absorption Costing basis.
b) Stock in process/plant is valued at cost.
c) Stock of raw materials, Stores and Spares and packing materials are valued at cost. Cost for this purpose, does not include duties/taxes that are recoverable in future.
d) Food & Beverages:
1. Groceries: Groceries are valued at cost arrived at on weighted average basis.
2. Beverages: Valued at cost.
8. Trade Receivables
Trade receivables are stated at the recoverable values. Assessment is made on a periodical basis to assess the credit risk in respect of the credit extended to the customers and adjustments are carried out where necessary and found expedient. Provision, if any, made for the doubtful debts is charged to revenue.
9. Staff Benefits:
a. Provident Fund Contributions are accounted on accrual basis.
b. To cover the benefits payable to the employees on retirement, the company has subscribed to a policy of Group Gratuity Scheme of Life Insurance Corporation of India. All contributions made towards the policy premiums are charged to revenue.
10. Research and Development:
Revenue expenditure on research and development is charged to Statement of profit and loss in the year in which it is incurred. Capital expenditure on research and development is treated at par with other fixed assets and depreciated accordingly.
11. Tax expense:
Accounting treatment in respect of deferred taxation and current tax is in accordance with Indian Accounting Standard 12 (Ind AS 12) - "Income Taxes"
12. Borrowing Costs:
Interest and other costs in respect of borrowing for expansion / additional fixed investments including R & D projects are capitalized to such investments. Borrowing costs relating to period after the commencement of operations of these projects are charged to revenue.
13. Foreign Currency Transactions:
Foreign Exchange Transactions are recorded at pre-determined standard exchange rates which are review periodically. Gains or losses arising out of such periodic revisions of such standard rates and also on realization/settlement are accounted for accordingly. No effect is determined in respect of the repayment and balances in respect of Foreige Currency Loans as the same are paid out of the Foreign Exchange earnings through the Exchange Earners Foreign Currency Accounts in respective currencies.
14. Impairment of Assets:
The carrying amounts of assets are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal/external factors. An impairment loss will be recognized wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the asset''s net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value using the weighted average cost of capital. In carrying out such exercise, due effect is given to the requirements of Schedule II of the Companies Act, 2013.
15. Earnings Per Share (EPS):
This is calculated by dividing the net profit after tax (PAT) for the period attributable to equity shareholders, by number of shares outstanding at the end of the year. In case there are any changes in the equity during the year, EPS would be calculated on the weighted average number of shares outstanding during the period including adjustments of bonus issue, if any.
16. Corporate Social Responsibility
The company computes the amount required to be spent on Corporate Social Responsibility in accordance with the provisions of Section 135 of the Companies Act, 2013. The amounts are spent on the eligible projects prescribed under Schedule VII of the Act. Provision is made in the books for the amounts unspent, if any and if material, and the same is carried forward to be spent in the subsequent year. During the year ended March 31,2017 the company has spent the required amount. Hence there are no unspent amounts on this account.
17. Contingent Liabilities:
Disputed demands : Under the Income Tax Act, 1961: Rs.17.60 Lakhs (relating to Assessment Year 2013-14) and Rs.231.08 Lakhs (relating to Assessment Year 2014-15) in respect of additions made in assessment under section 143(3) of the Income Tax Act, 1961 and disputed in appellate proceedings. The appeals are pending before the Commissioner of Income Tax (Appeals) 7 Pune. The company has deposited an amount of Rs.2.64 Lakhs and Rs.34.66 Lakhs respectively against the said demands and obtained stay of collection of the balance disputed demand till disposal of the appeal. Further a refund relating to earlier years amounting to Rs.42.00 Lakhs has been adjusted to the aforementioned demands. The above referred tax payments are grouped under the head "Other Current Assets"
18. Proposed Dividends:
Proposed dividends on equity shares are subject to approval at the annual general meeting and are not recognized as a liability (including DDT thereon) as at 31 March 2018. In respect of the first-time application of Ind AS, the provision for dividend made in the earlieryears (Including DDT thereon) have been reversed to balance of Profit & Loss Account.
19. Amounts recoverable from employees:
The company has an arrangement with the supplier of coal for supply of coal in specified consignments on a periodic basis. Few consignments aggregating to the value of Rs.31.71 lacs have been misappropriated, while in transit, by 2 employees of the company during the year ended March 31, 2015. The services of the said employees have been terminated in that year itself and legal action against initiated on these employees including action for the recovery of the above-mentioned amounts. Pending recovery, the amounts are shown under short term advances.
20. Segment Reporting:
The company operates in three segments viz., (a) Amines & Speciality Chemicals, (b) Hotel segment and (c) CFL Lamps (newly acquired through amalgamation in the current year). There is no geographical segment as the company operates only in India.
The above companies were subsidiaries in the earlier year. These companies have been amalgamated with Balaji Amines Limited during the year 2017-18. The amalgamation has been given effect to in the current year, in line with the recommendations of Appendix C to Ind AS 103 ''Business Combinations''. The effect of amalgamation has been adjusted against the opening balance of General Reserves of the company.
During the year 2017-18, the company has invested, in Balaji Speciality Chemicals Limited to the extent of 55% of the total paid up capital of the said company, the valuation of which is based on an independent valuation report. This investment is carried at cost of acquisition. This being the first year of investment no fair value measurement is undertaken. This company is considered as subsidiary for the purpose of presentation of consolidated financial statements.
e. Restriction on disbursement of Dividend : As part of the general terms & conditions in respect of borrowings from Banks, prior permission should be taken from the lending Banks before distribution of dividend. Similarly, the term lenders have imposed a condition that, no dividend shall be declared in the event of default in the scheduled repayment of instalment.
f. During the five years immediately preceding the current financial year, the company has not issued any shares without payment being received in cash, nor issued any bonus shares. Neither did the company buy back any shares during the said period.
g. The company has only one class of shares i.e. Equity Shares.
h. Terms and rights attached to equity shares.
The company has only one class of equity shares having par value of INR 2 per share. The Company declares and pays dividends in Indian Rupees. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Mar 31, 2017
NOTES FORMING PART OF STANDALONE FINANCIAL STATEMENTS
1. Accounting Policies and Other Information
A. Significant accounting policies I. System of Accounting:
i. The company follows mercantile system of accounting and recognizes income and expenditure on accrual basis.
ii. The financial statements have been prepared in all material respects with Accounting Standards as relevant and notified by the Central Government.
iii. The financial statements are prepared on historical cost basis and as a going concern.
2. Revenue recognition:
i. Sale of goods is recognized at the point of dispatch of goods to customers. Gross sale is inclusive of Excise Duty and is net of Value Added Tax / Sales Tax.
ii. Income from guest accommodation in respect of hotel division is recognized on day to day basis after the guests checks-in. Discounts if any in this regard are accounted upon final conclusion of the bill with the guests. Advance, if any, received against room bookings are treated as a liability pending finalization of bill / provision of services.
iii. Income from sale of Food & Beverages is recognized at the point of serving of these items to the guests. The income stated is exclusive of Sales Tax, Luxury Tax and Service Tax.
iv. Dividends from investment are recognized as income of the year in which the same are declared by in the investee company.
3. Tangible Fixed Assets and Depreciation:
Tangible Fixed Assets acquired by the company are reported at acquisition value, with deductions for accumulated depreciation and impairment losses, if any.
The acquisition cost for this purpose includes the purchase price (net of duties and taxes which are recoverable in future) and expenses directly attributable to the asset to bring it to the site and in the working condition for its intended use.
Interest during construction period up to the date of commencement of operations, indirect project expenditure and trial run expenditure (net of trial run income, if any) incurred in respect of projects under implementation are capitalized to the asset constructed / created.
Depreciation is provided in accordance with Schedule II of the Companies Act, 20I3 in respect of the remaining useful life.
Spares and tools that are not in the nature of "Property" as defined / explained in Accounting Standard 10 "(AS 10) ''Property, Plant & Equipment'' are treated as part of inventories
4. Investments:
Investments are stated at cost. The amalgamation of both its subsidiaries viz., Bhagyanagar Chemicals Limited and Balaji Greentech Products Limited with Balaji Amines Limited has been approved by all the three companies and applications have been made to appropriate authorities for approval / sanction of the same. Pending sanction of said amalgamation, no effect is given to the diminution in the value in these investments. The said investments are stated at cost and the effect of the diminution will be adjusted in the process of giving effect to amalgamation in accordance with AS - I4 Accounting for Amalgamations.
The said subsidiaries are considered as going concerns till the final sanction of the Amalgamation referred to above.
5. Inventories:
a) Finished goods are valued at lower of cost or Net Realizable Value. Cost for this purpose is arrived at on Absorption Costing basis. Excise duty is included in valuation of stocks of finished goods at the end of the year.
b) Stock in process/plant is valued at cost.
c) Stock of raw materials, Stores and Spares and packing materials are valued at cost. Cost for this purpose, does not include duties/taxes that are recoverable in future.
d) Food & Beverages:
1. Groceries: Groceries is valued at cost arrived at on weighted average basis.
2. Beverages:Valued at cost.
6. Staff Benefits:
a. Provident Fund Contributions are accounted on accrual basis.
b. To cover the benefits payable to the employees on retirement, the company has subscribed to a policy of Group Gratuity Scheme of Life Insurance Corporation of India. All contributions made towards the policy premiums are charged to revenue.
7. Research and Development:
Revenue expenditure on research and development is charged to Statement of profit and loss in the year in which it is incurred. Capital expenditure on research and development is treated at par with other fixed assets and depreciated accordingly.
8. Deferred Taxation:
Accounting treatment in respect of deferred taxation is in accordance with Accounting Standard 22 - "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India.
9. Sales Tax Benefits:
Eligible sales tax benefits accruing to the company are accounted for in the year in which the final assessment by the concerned authorities is completed.
10. Borrowing Costs:
Interest and other costs in respect of borrowings for expansion / additional fixed investments including R & D projects are capitalized to such investments. Borrowing costs relating to period after the commencement of operations of these projects are charged to revenue.
11. Foreign Currency Transactions:
Foreign Exchange Transactions are recorded at pre-determined standard exchange rates which are reviewed periodically. Gains or losses arising out of such periodic revisions of such standard rates and also on realization/settlement are accounted for accordingly. No effect is determined in respect of the repayment and balances in respect of Foreign Currency Loans as the same are paid out of the Foreign Exchange earnings through the Exchange Earners Foreign Currency Accounts in respective currencies.
12. Impairment of Assets:
The carrying amounts of assets are reviewed at each Balance Sheet date, if there is any indication of impairment based on internal / external factors. An impairment loss will be recognized wherever the carrying amount of an asset exceeds its estimated recoverable amount. The recoverable amount is greater of the asset''s net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to the present value using the weighted average cost of capital. In carrying out such exercise, due effect is given to the requirements of Schedule II of the Companies Act, 20l3.
13. Corporate Social Responsibility
The company computes the amount required to be spent on Corporate Social Responsibility in accordance with the provisions of Section l35 of the Companies Act, 20l3.The amounts are spent on the eligible projects prescribed under Schedule VII of the Act. Provision is made in the books for the amounts unspent, if any and if material, and the same is carried forward to be spent in the subsequent year. During the year ended March 3l, 20l7 the company has spent the required amount. Hence there are no unspent amounts on this account.
Mar 31, 2015
(1) System of Accounting:
i. The company follows mercantile system of accounting and recognizes
income and expenditure on accrual basis.
ii. The financial statements have been prepared in all material
respects with Accounting Standards as relevant and notified by the
Central Government.
iii. The financial statements are prepared on historical cost basis and
as a going concern.
(2) Revenue recognition :
i. Sale of goods is recognized at the point of dispatch of goods to
customers. Gross sale is inclusive of Excise Duty and is net of Value
Added Tax / Sales Tax.
ii. Income from guest accommodation in respect of hotel division is
recognized on day to day basis after the guests checks-in. Discounts if
any in this regard are accounted upon final conclusion of the bill with
the guests. Any advance received in respect of the same is treated as a
liability pending finalization of bill / provision of services and
income from sale of Food & Beverages is recognized at the point of
serving of these items to the guests. The income stated is exclusive of
Sales Tax, Luxury Tax and Service Tax.
iii. Dividends from investment are recognized as income of the year in
which the same are declared by in the investee company.
(3) Tangible Fixed Assets and Depreciation :
Tangible Fixed Assets acquired by the company are reported at
acquisition value, with deductions for accumulated depreciation and
impairment losses, if any.
The acquisition cost for this purpose includes the purchase price (net
of duties and taxes which are recoverable in future) and expenses
directly attributable to the asset to bring it to the site and in the
working condition for its intended use.
Where the construction or development of any such asset requiring time
to set up for its intended use, is funded by borrowings, the
corresponding borrowing costs are capitalized up to the date when the
asset is ready for its intended use.
The interest during construction period, indirect project expenditure
and trial run expenditure (net of trial run income) incurred in respect
of projects under implementation are capitalized to the asset created.
Depreciation is provided in accordance with Schedule II of the
Companies Act, 2013 in respect of the remaining useful life of the
asset as far as the existing assets are concerned. In respect of
additions, depreciation is provided on the basis of the useful life of
the assets as prescribed by Schedule II of Companies Act, 2013.
During the year the company had carried out technical evaluation of the
useful life of the existing assets and applied the method of
depreciation as prescribed by Schedule II of the Companies Act, 2013.
The adjustment as a result of the re-computation is made to the opening
balance of profit and loss account.
(4) Investments: Investments are stated at cost.
(5) Inventories:
a) Finished goods are valued at lower of cost or Net Realizable Value.
Cost for this purpose is arrived at on Absorption costing basis. Excise
duty is included in valuation of finished goods.
b) Stock in process/plant is valued at cost.
c) Stock of raw materials, Stores and Spares and packing materials are
valued at cost. Cost for this purpose, does not include duties/taxes
that are recoverable in future.
d) Food & Beverages :
1. Groceries : Groceries is valued at cost arrived at on weighted
average basis.
2. Beverages : Valued at cost.
(6) Staff Benefits :
a. Provident Fund Contributions are accounted on accrual basis.
b. The company has taken a policy of Group Gratuity Scheme of Life
Insurance Corporation of India. All contributions made are charged to
revenue.
(7) Research and Development:
Revenue expenditure on research and development is charged to Statement
of profit and loss in the year in which it is incurred. Capital
expenditure on research and development is treated at par with fixed
assets and depreciated as such.
(8) Deferred Taxation :
Accounting treatment in respect of deferred taxation is in accordance
with Accounting Standard 22 - "Accounting for Taxes on Income" issued
by the Institute of Chartered Accountants of India.
(9) Sales Tax Benefits:
Shortfall / increase in sales tax benefits accruing to the company are
accounted for in the year in which the final assessment by the
concerned authorities is completed.
(10) Borrowing Costs:
Costs in respect of borrowings for the purpose of expansion /
additional fixed investments including R & D projects are capitalized
to such investments.
Borrowing costs relating to period after the commencement of operations
of the project are charged to revenue.
(11) Foreign Currency Transactions:
Foreign Exchange Transactions are recorded at pre-determined standard
exchange rates which are reviewed periodically. Gains or losses arising
out of such periodic revisions of such standard rates and also on
realization / settlement are accounted for accordingly.
(12) Impairment of Assets :
The carrying amounts of assets are reviewed at each Balance Sheet date,
if there is any indication of impairment based on internal / external
factors. An impairment loss will be recognized wherever the carrying
amount of an asset exceeds its estimated recoverable amount. The
recoverable amount is greater of the asset's net selling price and
value in use. In assessing the value in use, the estimated future cash
flows are discounted to the present value using the weighted average
cost of capital. In carrying out such exercise, due effect is given to
the requirements of Schedule II to Companies Act, 2013.
(13) Corporate Social Responsibility:
The company computes the amount required to be spent on Corporate
Social Responsibility in accordance with the provisions of Section 135
of the Companies Act, 2013. The amounts are spent on the eligible
projects prescribed under Schedule VII of the Act. Provision is made in
the books for the amounts unspent, if material and the same is carried
forward to be spent in the subsequent year.
Mar 31, 2014
(A) System of Accounting:
i. The company follows mercantile system of accounting and recognizes
income and expenditure on accrual basis.
ii. The financial statements have been prepared in all material
respects with Accounting Standards as relevant and notified by the
Central Government.
iii. The financial statements are prepared on historical cost basis and
as a going concern.
(B) Revenue recognition :
i. Sale of goods is recognized at the point of dispatch of goods to
customers. Gross sale is inclusive of Excise Duty and is net of Value
Added Tax / Sales Tax.
ii. Income from guest accommodation in respect of hotel division is
recognized on day to day basis after the guests checks-in. Discounts if
any in this regard are accounted upon final conclusion of the bill with
the guests. Any advance received in respect of the same is treated as a
liability pending finalization of bill / provision of services and
income from sale of Food & Beverages is recognized at the point of
serving of these items to the guests. The income stated is exclusive of
Sales Tax, Luxury Tax and Service Tax.
iii. Dividends from investment are recognized as income of the year in
which the same are declared by in the investee company.
(C) Tangible Fixed Assets and Depreciation :
Tangible Fixed Assets acquired by the company are reported at
acquisition value, with deductions for accumulated depreciation and
impairment losses, if any. The acquisition cost for this purpose
includes the purchase price (net of duties and taxes which are
recoverable in future) and expenses directly attributable to the asset
to bring it to the site and in the working condition for its intended
use. Where the construction or development of any such asset requiring
time to set up for its intended use, is funded by borrowings, the
corresponding borrowing costs are capitalized up to the date when the
asset is ready for its intended use.
The interest during construction period, indirect project expenditure
and trial run expenditure (net of trial run income) incurred till the
date of declaration of commercial operations in respect of hotel
division are capitalized pro-rata to the building and plant & machinery
of hotel division. Depreciation is provided on a straight-line basis
at rates and in the manner specified in schedule XIV to the Companies
Act, 1956, unless the use of a higher rate or an accelerated charge is
justified through technical estimates.
(D) Investments: Investments are stated at cost.
(E) Inventories:
a) Finished goods are valued at lower of cost or Net Realizable Value.
Cost for this purpose is arrived at on Absorption costing basis. Excise
duty is included in valuation of finished goods.
b) Stock in process/plant is valued at cost.
c) Stock of raw materials, Stores and Spares and packing materials are
valued at cost. Cost for this purpose, does not include duties/taxes
that are recoverable in future.
d) Food & Beverages :
1. Groceries : Groceries is valued at cost arrived at on weighted
average basis.
2. Beverages : Valued at cost.
(F) Staff Benefits :
a. Provident Fund Contributions are accounted on accrual basis.
b. The company has taken a policy of Group Gratuity Scheme of Life
Insurance Corporation of India. All contributions made are charged to
revenue.
(G) Research and Development:
Revenue expenditure on research and development is charged to Statement
of profit and loss in the year in which it is incurred. Capital
expenditure on research and development is treated at par with fixed
assets and depreciated as such.
(H) Deferred Taxation :
Accounting treatment in respect of deferred taxation is in accordance
with Accounting Standard 22 -"Accounting for Taxes on Income" issued by
the Institute of Chartered Accountants of India.
(I) Sales Tax Benefits:
Shortfall / increase in sales tax benefits accruing to the company are
accounted for in the year in which the final assessment by the
concerned authorities is completed.
(J) Borrowing Costs:
Costs in respect of borrowings for the purpose of expansion /
additional fixed investments including R & D projects are capitalized
to such investments. Borrowing costs relating to period after the
commencement of operations of the project are charged to revenue.
(K) Foreign Currency Transactions:
Foreign Exchange Transactions are recorded at pre-determined standard
exchange rates which are reviewed periodically. Gains or losses arising
out of such periodic revisions of such standard rates and also on
realization are accounted for accordingly.
(L) Impairment of Assets :
The carrying amounts of assets are reviewed at each Balance Sheet date,
if there is any indication of impairment based on internal / external
factors. An impairment loss will be recognized wherever the carrying
amount of an asset exceeds its estimated recoverable amount. The
recoverable amount is greater of the asset''s net selling price and
value in use. In assessing the value in use, the estimated future cash
flows are discounted to the present value using the weighted average
cost of capital.
(M) Segment Reporting :
During the year the company started commercial operations in respect of
its hotel division at Solapur, Maharashtra. Accordingly the company now
operates in two segments viz., Amines & Speciality Chemicals segment
and Hotel segment.
Mar 31, 2012
(A) System of Accounting:
i. The company follows mercantile system of accounting and recognises
income and expenditure on accrual basis.
ii. The financial statements have been prepared in all material
respects with accounting standards as notified in the Companies
(Accounting Standards) Rules, 2006 and relevant provisions of the
Companies Act, 1956.
iii. Financial statements are prepared on historical cost basis and as
a going concern.
(B) Revenue Recognition:
Sale of goods is recognised at the point of despatch of goods to
customers. Gross sales are inclusive of excise duty and net of value
added tax / sales tax.
(C) Tangible Fixed Assets and Depreciation:
Tangible Fixed Assets acquired by the company are reported at
acquisition value, with deductions for accumulated depreciation and
impairment losses, if any. v
The acquisition cost includes the purchase price (excluding refundable
taxes) and expenses directly attributable to the asset to bring it to
the site and in the working condition for its intended use.
Where the construction or development of any such asset requiring time
to set up for its intended use, is funded by borrowings, the
corresponding borrowing costs are capitalised up to the date when the
asset is ready for its intended use.
Depreciation is provided on a straight-line basis at rates and in the
manner specified in schedule XIV to the Companies Act, 1956, unless the
use of a higher rate or an accelerated charge is justified through
technical estimates.
(D) Investments:
Investments are stated at cost.
(E) Inventories:
a) Finished goods including stock of R & D products are valued at lower
of cost or Net Realizable Value. Cost for this purpose is arrived at
on Absorption costing basis. Excise duty is included in valuation of
finished goods.
b) Stock in process/plant is valued at cost.
c) Stock of raw materials. Stores and Spares and packing materials are
valued at cost for these purpose is net of duties/taxes are recoverable
in future.
IF) Staff Benefits:
a) Provident Fund Contributions are accounted on accrual basis.
b) The company has taken a policy of Group Gratuity Scheme of Life
Insurance Corporation of India. All contributions made are charged to
revenue.
(G) Research and Development:
Revenue expenditure on research and development is charged to Statement
of profit and loss in the year in which it is incurred. Capital
expenditure on research and development is treated at par with fixed
assets and depreciated as such.
(H) Deferred Taxation:
Accounting treatment in respect of deferred taxation is in accordance
with Accounting Standard 22 - "Accounting for Taxes on Income" issued
by the Institute of Chartered Accountants of India.
(I) Sales Tax Benefits:
Shortfall / increase in sales tax benefits accruing to the company are
accounted for in the year in which the final assessment by the
concerned authorities is completed.
(J) Borrowing Costs:
Costs in respect of borrowings for the purpose of expansion /
additional fixed investments including R&D projects are capitalized to
such investments.
(K) Foreign Currency Transactions:
Foreign Exchange Transactions are recorded at pre-determined standard
exchange rates which are reviewed periodically. Gains or losses arising
out of such periodic revisions of such standard rates and also on
realization are accounted for accordingly.
(L) Impairment of Assets:
The carrying amounts of assets are reviewed at each Balance Sheet date,
if there is any indication of impairment based on internal / external
factors. An impairment loss will be recognized wherever the carrying
amount of an asset exceeds its estimated recoverable amount. The
recoverable amount is greater of the asset's net selling price and
value in use. In assessing the value in use, the estimated future cash
flows are discounted to the present value using the weighted average
cost of capital. .
(M) Segment Reporting:
The company's Hotel Division at Solapur is under construction and is
yet to start commercial operations. Segment reporting in respect of
these streams of revenues and investments will be made from the year of
commencement of operations of this division. The amount invested in
construction so far is included in Capital Work in Progress.
Mar 31, 2010
(A) Accounting convention: The accompanying financial statements are
prepared in accordance with historical cost convention.
(B) Fixed Assets and Depreciation: Fixed assets are valued at cost less
depreciation provided on straight line basis at the rates and in the
manner specified in Schedule XIV to the Companies Act, 1956. In respect
of additions made during the year, depreciation is provided on pro-rata
basis. The Company has a system of determining impairment of Assets.
The losses arising on such determination, if any, are recognized in the
Profit & Loss account.
(C) Investments: Investments are stated at cost.
(D) Inventories: a) Finished goods including R & D products are
valued at lower of cost or Net Realizable Value. Cost for this purpose
is arrived at on Absorption costing basis.
b) Stock in process/plant is valued at cost.
c) Stock of raw materials, Stores and Spares and packing materials are
valued at cost.
(E) Staff Benefits :
a) Provident Fund Contributions are accounted on accrual basis.
b) The company has taken a policy of Group Gratuity Scheme of
LIC. All contributions made are charged to revenue.
(F) Research and
Development: Revenue expenditure on research and development is charged
to profit and loss account in the year in which it is incurred. Capital
expenditure on research and development is treated at par with fixed
assets and depreciated as such.
(G) Deferred Taxation: Accounting
treatment in respect of deferred taxation is in accordance with
Accounting Standard 22 - "Accounting for Taxes on Income" issued by the
Institute of Chartered Accountants of India.
(H) Sales Tax Benefits:
Shortfall / increase in sales tax benefits accruing to the company are
accounted for in the year in which the final assessment by the
concerned authorities is completed.
(I) Borrowing Costs: Costs in respect of borrowings for the purpose
of expansion / additional fixed investments including R & D projects
are capitalized to such investments.
(J) Foreign Currency Transactions: Foreign Exchange
Transactions are recorded at pre-determined standard exchange rates
which are reviewed periodically. Gains or losses arising out of such
periodic revisions of such standard rates and also on realization are
accounted for accordingly.
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