A Oneindia Venture
Click it and Unblock the Notifications
Accounting Policies of Bharat Dynamics Ltd. Company
Mar 31, 2025
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1.1 Compliance with Ind AS:
The financial statements comply in all material aspects with the Indian Accounting Standards (Ind AS) notified under Section
133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) rules, 2015], as amended from time
to time and other relevant provisions of the Act.
1.2 Historical cost convention:
The financial statements are prepared under historical cost basis, except for the following:
certain financial assets and liabilities (including derivative instruments) and contingent consideration that is measured at fair
value;
defined benefit plans - plan assets measured at fair value
1.3 Use of estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in India requires
management, where necessary, to make estimates and assumptions that affect the reported amounts of assets and
liabilities,disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised.
2. FOREIGN CURRENCY TRANSLATION
2.1 Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic
environment in which the Company operates (âthe functional currencyâ). The financial statements are presented in Indian
rupee (INR), which is Bharat Dynamics Limitedâs functional and presentation currency.
2.2 Transactions and Balances
i) Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of
the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are
recognized in profit and loss.
ii) Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at
the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are
reported as part of the fair value gain or loss.
iii) Liability for deferred payments (and receivable from Indian army and ordnance factory) including interest thereon, on
supplies/ services from the USSR (erstwhile) is set up at the rate of exchange notified by the Reserve Bank of India for
deferred payments including interest thereon under the protocol arrangements between the Government of India and
Government of Russia. The differences due to fluctuations in the rate of exchange are charged to revenue.
3. REVENUE RECOGNITION:
A. Revenue from Contract with Customers
(i) Revenue is recognized when (or as) the company satisfies a performance obligation.
(ii) Satisfaction of performance obligation over time
a. Revenue is recognised overtime where the transfer of control of goods or services take places over time by
measuring the progress towards complete satisfaction of that performance obligation, if one of the following
criteria is met:
⢠the companyâs performance entitles the customer to receive and consume the benefits simultaneously as
the company performs
⢠the companyâs performance creates or enhances an asset that the customer controls as the asset is created
or enhanced
⢠the companyâs performance does not create an asset with an alternative use to the company and the
company has an enforceable right to payment including a reasonable profit margin for performance
completed to date.
b. Progress made towards satisfying a performance obligation is assessed based on Input Method on the ratio of
actual costs incurred on the contract up to the reporting date to the estimated total costs expected to complete
the contract. If the outcome of the performance obligation cannot be estimated reliably and where it is probable
that the costs will be recovered, revenue is recognised to the extent of costs incurred.
c. In case of AMC contracts, where passage of time is the criteria for satisfaction of performance obligation, revenue
is recognised using the output method.
(iii) Satisfaction of performance obligation at a point in time
a. In respect of cases where the transfer of control does not take place over time, the company recognises the
revenue at a point in time when it satisfies the performance obligations.
b. The performance obligation is satisfied when the customer obtains control of the asset. The indicators for transfer
of control include the following:
⢠the company has transferred physical possession of the asset
⢠the customer has legal title to the asset
⢠the customer has accepted the asset
⢠when the company has a present right to payment for the asset
⢠The customer has the significant risks and rewards of ownership of the asset. The transfer of significant risks
and rewards ownership is assessed based on the Incoterms of the contracts.
Ex-Works contract - In case of Ex-works contract, revenue is recognised when the specified goods are unconditionally
appropriated to the contract after prior Inspection and acceptance, if required.
FOR Contracts - In the case of FOR contracts, revenue is recognised when the goods are handed over to the carrier
for transmission to the buyer after prior inspection and acceptance, if stipulated, and in the case of FOR destination
contracts, if there is a reasonable expectation of the goods reaching destination within the accounting period.
Bill and hold Sales:
Bill and hold sales is recognised when all the following criteria are met:
⢠the reason for the bill and hold sales is substantive
⢠the product is identified separately as belonging to the customer
⢠the product is currently ready for physical transfer to the customer
⢠the company does not have the ability to use the product or to direct it to another customer
(iv) Measurement
a. Revenue is recognized at the amount of the transaction price that is allocated to the performance obligation.
The transaction price is the amount of consideration to which the Company expects to be entitled in exchange
for transferring promised goods or services to a customer, excluding amount collected on behalf of third parties
and net of estimated liquidated damages.
Exchange rate variation and any other additional consideration isrecognised based on contractual terms of the
contract.
b. The companyâs obligation to replace or repair faulty goods under the standard warranty terms is recognized
as a provision and is not adjusted against transaction price as the customer does not have option to purchase
warranty seperately.
c. In case where the contracts involve multiple performance obligations, the company allocates the transaction
price to each performance obligation on the relative stand-alone selling price basis.
Bundled Contracts - In case of a Bundled contract, where separate fee for installation and commissioning or
any other separately identifiable component is not stipulated, the Company applies the recognition criteria to
separately identifiable components (sale of goods and installation and commissioning, etc.) of the transaction and
allocates the revenue to those separate components based on stand-alone selling price.
Multiple Elements - In cases where the installation and commissioning or any other separately identifiable
component is stipulated and price for the same agreed separately, the Company applies the recognition criteria
to separately identified components (sale of goods and installation and commissioning, etc.) of the transaction
and allocates the revenue to those separate components based on their stand-alone selling price.
d. If the stand-alone selling price is not available the company estimates the stand alone selling price.
(v) Significant financing component
Advances received towards execution of Defence related projects are not considered for determining significant
financing component since the objective is to protect the interest of the contracting parties.
In respect of other contracts, the existence of significant financing component is reviewed on a case to case basis.
(vi) Customer financed assets:
The Customer Financed Assets (CFA) are those assets cost of which is funded by the customer, fully or in part. Customer
may or may not obtain control over the CFA. The funding by customer is recognised as revenue synchronising it in line
with completion of performance obligations in accordance with contractual terms. The expenditure incurred by the
company is recognised as per GAAP.
a. Where the company has obtained control over the assets funded by customer:
The assets financed by customer are recognised initially at fair value. The corresponding revenue in respect of
a contract is recognised to the extent of executed quantity in proportion to the existing order quantity plus
additional quantity, if any, for which orders are anticipated as on the date of receipt of the contract from customer.
b. Where the company has not obtained control over the assets funded by customer:
The expenditure incurred in respect of assets funded by the customer is initially recognised as inventory and
revenue is recognised on transfer of control of the asset
B. Other Income:
Recognition of other income is as follows
i) Interest income:
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the
Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference
to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on
initial recognition.
ii) Dividend:
Dividend income is recognized when the Companyâs right to receive the payment is established.
4. GOVERNMENT GRANTS
4.1 Grants from the government are recognized at their fair value where there is reasonable assurance that grant will be
received and the Company will comply with all attached conditions.
4.2 Government grants relating to income are deferred and recognized in the profit and loss over the period necessary to match
them with the costs that they are intended to compensate and presented within other income.
4.3 Grants related to non-depreciable assets may also require the fulfilment of certain obligations and would then be recognised
in profit or loss over the periods that bear the cost of meeting the obligations.
4.4 Government Grants received either as subsidy or otherwise for acquisition of depreciable assets are accounted as deferred
income. If the grant/subsidy is absolute, amount corresponding to the depreciation is treated as income over the life of the
asset. If the grant/subsidy is attached with any conditions, such as repayment, income is accounted as per the terms of the
grant/subsidy.
5. INCOME TAX
5.1 The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the
applicable income tax rates adjusted by changes in deferred tax assets and liabilities attributable to temporary differences
and to unused tax losses.
5.2 Current tax:
The current income tax charge is calculated on the basis of tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company operates and generates taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
5.3 Deferred tax:
i) Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities
are not recognized if they arise from initial recognition of goodwill. Deferred income tax is also not accounted for if it
arises from the initial recognition of asset or liability in a transaction other than business combination that at the time
of the transaction affects neither accounting profit nor the taxable profit (tax loss). Deferred income tax is determined
using the tax rates (and laws) that have been enacted or substantively enacted at the end of the reporting period and
are expected to apply when the related deferred income tax assets is realized or the deferred income tax liability is
settled.
ii) Deferred tax assets are recognized for all deductible temporary differences and unused losses only if it is probable that
future taxable amounts will be available to utilize those temporary differences and losses. Deferred tax asset is also
recognised for the indexation benefit on land available for taxation purpose since it results in a temporary difference.
iii) Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are
offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize
the liability simultaneously.
iv) Current and deferred tax is recognized in profit or loss, except to the extent that it relates to the items recognized in
other comprehensive income or directly equity. In this case, the tax is also recognized in other comprehensive income
or directly equity, respectively.
6. LEASES
6.1 Company as a lessee:
Contracts with third party, which give the company the right of use in respect of an Asset, are accounted in line with the
provisions of Ind AS 116 - âLeasesâ if the recognition criteria as specified in the Accounting standard are met.
Lease payments associated with short term lease (term of twelve months or less) and lease in respect of low value assets
are charged off as expenses on straight line basis over lease term or other systematic basis, as applicable.
At commencement date, the value of âright of useâ is capitalised at the present value of outstanding lease payments plus
any initial direct cost and estimated cost, if any, of dismantling and removing the underlying asset.
Liability for lease is created for an amount equivalent to the present value of outstanding lease payments. Subsequent
measurement ,if any,is made using cost model.
Each lease payment is allocated between the liability created and finance cost. The finance cost is charged to the statement
of profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the
liability for each period.
The right of use asset is depreciated over the shorter of the assetâs useful life and the lease term on a straight line basis.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the
companyâs incremental borrowing rate.
Lease modifications, if any, are accounted as a separate lease if the recognition criteria specified in the standard are met.
6.2 Company as a Lessor:
Lease are classified as finance or operating leasebased on the recognition criteria specified in Ind AS 116 - Leases.
a) Finance Lease:
At commencement date, amount equivalent to the ânet investment in the leaseâ is presented as a receivable. The
implicit interest rate is used to measure the value of the ânet investment in Leaseâ
Each lease payment is allocated between the Receivable created and finance income. The finance income is recognised
in the statement of profit and loss over the lease period so as to reflect a constant periodic rate of return on the net
investment in lease.
The asset is tested for de-recognition and impairment requirements as per Ind AS 109- Financial Instruments.
Lease modifications, if any, are accounted as a separate lease if the recognition criteria specified in the standard are
met.
b) Operating lease:
The company recognises lease payments from operating leases as income on either a straight line basis or another
systematic basis, if required.
Lease modifications, if any, are accounted as a separate lease if the recognition criteria specified in the standard are
met.
A lease is classified at the inception date as a finance lease or operating lease.
7. INVENTORIES
7.1 Inventories are valued at lower of cost and net realizable value.The cost of raw material,components and stores are assigned
by using the actual weighted average cost formula and those in transit at cost to date.In the case of stock-in-trade and
work-in-progress,cost includes material,labour and related production overheads.
7.2 Stationery, uniforms, welfare consumables, medical and canteen stores are charged off to revenue at the time of receipt.
7.3 Raw-materials, Components, Construction Materials, Loose Tools and Stores and Spare Parts declared surplus/
unserviceable/ redundant are charged to revenue.
7.4 Provision for redundancy is made in respect of closing inventory of Raw materials and Components, Work in progress,
Finished Goods, Stores and spare parts,Loose toolsand Construction Materials non-moving for more than 5 years. Besides,
where necessary, adequate provision is made for redundancy of such inventory in respect of completed/ specific projects
and other surplus/ redundant materials pending transfer to salvage stores.
8. FINANCIALINSTRUMENTS
8.1 Financial Assets:
All financial assets are recognised on trade date when the purchase of a financial asset is under a contract whose term
requires delivery of the financial asset within the timeframe established by the market concerned. Financial assets are
initially measured at fair value, plus transaction costs, except for those financial assets which are classified as at fair value
through profit or loss
(FVTPL) at inception. All recognised financial assets are subsequently measured in their entirety at either amortized cost or
fair value.
i) Classification of financial assets:
The Company classifies its financial assets in the following measurement categories:
o those to be measured subsequently at fair value (either through other comprehensive income, or through profit
or loss), and
o those measured at amortised cost.
The classification depends on the entityâs business model for managing the financial assets and the contractual terms
of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive
income. For investments in debt instruments, this will depend on the business model in which the investment is held.
For investments in equity instruments, this will depend on whether the Company has made an irrevocable election
at the time of initial recognition to account for the equity investment at fair value through other comprehensive
income. The Company reclassifies debt investments when and only when its business model for managing those assets
changes.
ii) Measurement:
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at
fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash
flows are solely payment of principal and interest.
a) Debt instruments
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the
asset and the cash flow characteristics of the asset. The Company classifies its debt instruments as:
(a)(i) Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt
investment that is subsequently measured at amortised cost and is not part of a hedging relationship is
recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial
assets is included in finance income using the effective interest rate method.
(a)(ii) Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual
cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of
principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements
in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses,
interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the
financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from
equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is
included in other income using the effective interest rate method.
(a) (iii)Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are
measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently
measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or
loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which
it arises. Interest income from these financial assets is included in other income.
b) Equity instruments
(b) (i)The Company subsequently measures all equity investments at fair value. Where the Companyâs management
has elected to present fair value gains and losses on equity investments in other comprehensive income,
there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such
investments are recognised in profit or loss as other income when the Companyâs right to receive payments
is established.
(b)(ii) Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain/
(losses) in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity
investments measured at FVOCI are not reported separately from other changes in fair value.
(iii) 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 debt instruments. The impairment methodology applied depends on whether there has
been a significant increase in credit risk.
For trade receivables the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments,
which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Time barred dues from the government / government departments / government companies are generally not
considered as increase in credit risk of such financial asset.
(iv) Derecognition of financial assets
A financial asset is derecognized only when
- The Company has transferred the rights to receive cash flow from the financial asset or
- retains the contractual rights to receive the cash flows of the financial assets, but assumes a contractual obligation
to pay cash flows to one or more recipients
Where the company has transferred an asset, the Company evaluates whether it has transferred substantially all risks
and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized.
Where the company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership
of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset.
Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of
continuing involvement in the financial asset.
v) Trade receivables:
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. If collection is expect to be collected within a period of 12 months or less from the reporting date (or in the
normal operating cycle of the business if longer), they are classified as current assets otherwise as non-current assets.
Trade receivables are measured at their transaction price unless it contains a significant financing component in
accordance with Ind AS 115 (or when the entity applies the practical expedient) or pricing adjustments embedded in
the contract.
Loss allowance for expected life time credit loss is recognised on initial recognition.
8.2 Financial liabilities and equity instruments issued by the Company
Classification
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the
contractual arrangement.
i) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of
its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue
costs.
ii) Financial liabilities
Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest
expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net
carrying amount on initial recognition.
iii) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company. Trade and other payables are
presented as current liabilities if payment is due within 12 months after the reporting period otherwise as non-current.
They are recognized initially at their fair value and subsequently measured at amortized cost using the effective
interest method.
iv) Derivatives
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently
re-measured to their fair value at the end of each reporting period. The derivatives that are not designated as hedges
are accounted for at fair value through profit and loss and are included in other gains/ (losses).
a) Embedded derivatives
Derivatives embedded in a host contract that is an asset within the scope of Ind AS 109 are not separated.
Financial Assets with embedded derivatives are considered in their entirety when determining whether their cash
flows are solely payment of principal and interest.
Derivatives embedded in all other host contract are separated only if economic characteristics and risks of the
embedded derivatives are not closely related to the economic characteristics and risks of the host contract and
are measured at fair value through profit and loss. Embedded derivatives closely related to the host contract are
not separated.
b) Embedded foreign currency derivatives
Embedded foreign currency derivatives are not separated from the host contract if they are closely related. Such
embedded derivatives are closely related to the host contract, if the host contract is not leveraged, does not contain
any option feature and requires payments in one of the following currencies:
- The functional currency of any substantial party to that contract,
- The currency in which the price of the related good or service that is acquired or delivered is routinely denominated
in commercial transactions around the world,
- A currency that is commonly used in contracts to purchase or sell non-financial items in the economic environment
in which the transaction takes place (i.e. relatively liquid and stable currency)
Foreign currency embedded derivatives which do not meet the above criteria are separated and the derivative is
accounted for at fair value through profit and loss.
8.3 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally
enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the
asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events
and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy
of the Company or the counterparty.
9. CASH AND CASH EQUIVALENTS:
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held
at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank
overdrafts.
Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
10. FAIR VALUE MEASUREMENT
10.1 The Company measures certain financial instruments, such as derivatives and other items in its financial statements at fair
value at each balance sheet date.
10.2 All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within fair
value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2 - Inputs other than quoted prices included within 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 assets and liabilities that are not based on observable market data (unobservable inputs).
10.3 For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of nature,
characteristics and risks of the asset or liability and the level of the fair value hierarchy.
11. PROPERTY, PLANT AND EQUIPMENT
11.1 Measurement
i. Land is capitalised at cost to the Company. Development of land such as levelling, clearing and grading is capitalised
along with the cost of building in proportion to the land utilized for construction of buildings and rest of the development
expenditure is capitalised along with cost of land. Development expenditure incurred for the purpose of landscaping
or for any other purpose not connected with construction of any building is treated as cost of land.
ii. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical costs includes
expenditure that is directly attributable to the acquisition of items.
iii. Subsequent costs are included in the assetâs carrying amount and recognized as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Company and the cost
of the item can be measured reliably. The carrying amount of the component accounted for as a separate asset is
derecognized when replaced. All other repairs and maintenance are charged to profit and loss during the reporting
period in which they are incurred.
iv. Where the cost of a part of the asset is significant to the total cost of the asset and useful life of that significant part
is different from the useful life of the remaining asset, useful life of that significant part is determined separately and
the significant part is depreciated on straight line method over its estimated useful life.
11.2 Depreciation method, estimated useful life and residual value:
i. Depreciation is calculated using the straight line method to allocate their cost, net of residual values, over the estimated
useful life.
ii. The useful lives have been determined to be equal to those prescribed in Schedule II to the Companies Act; 2013.
iii. The assetsâ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
11.3 Disposal
Gains and losses on disposal are determined by comparing net sale proceeds with carrying amount. These are included in
statement of profit and loss.
12. INTANGIBLE ASSETS:
12.1 Licences
Separately acquired licences are shown at historical cost. They have a finite useful life and are subsequently carried at cost
less accumulated amortization and impairment losses.
12.2 Computer software
a) The cost of software (which is not an integral part of the related hardware) acquired for internal use and resulting in
significant future economic benefits-, is recognised as an Intangible Asset in the books of accounts when the same is
ready for use. Intangible Assets that are not yet ready for their intended use as at the Balance Sheet date are classified
as âIntangible Assets under Development.
b) Cost associated with maintaining of software programs are recognized as an expense as incurred.
c) Development costs that are directly attributable to the design and testing of identifiable and unique software products
controlled by the Company are recognized as intangible assets when the following criteria are met:
⢠It is technically feasible to complete the software so that it will be available for use
⢠Management intends to complete the software and use or sell it
⢠There is an ability to use or sell the software
⢠It can be demonstrated how the software will generate probable future economic benefits
⢠Adequate technical, financial and other resources to complete the development and to use or sell the software
are available, and
⢠The expenditure attributable to the software during its development can be reliably measured.
d) Directly attributable costs that are capitalized as part of the software include employee costs and an appropriate
portion of relevant overheads.
e) Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is
available for use.
12.3 Research and development
Research expenditure and development expenditure that do not meet the criteria in 12.2(c) above are recognized as
an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a
subsequent period.
In the event of the Company financed project(s) being foreclosed/ abandoned, the expenditure incurred up to the stage of
foreclosure/ abandonment is charged off to revenue in the year of foreclosure/ abandonment.
12.4 Amortization methods and periods
The Company amortizes intangible assets with a finite useful life using the straight-line method over the following periods:
Licences Useful Life/Production
Computer software 3 years
13. INVESTMENT PROPERTY:
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company,
is classified as investment property. Investment property is measured initially at its cost, including related transaction costs
and where applicable borrowing costs. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is
probable that future economic benefits associated with the expenditure will flow to the company and the cost of the item can be
measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is
replaced, the carrying amount of the replacedpart is derecognised.
14. NON-CURRENT ASSETS (OR DISPOSAL GROUPS) HELD FOR SALE ANDDISCONTINUED OPERATIONS:
14.1 Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured
at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets
arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically
exempt from this requirement.
14.2 An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) 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 (or disposal group),
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 (or disposal group) is recognised at the date of de-recognition.
14.3 Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are
classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for
sale continue to be recognised.
14.4 Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented
separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are
presented separately from other liabilities in the balance sheet.
14.5 A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that
represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to
dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The
results of discontinued operations are presented separately in the statement of profit and loss.
15. IMPAIRMENT OF ASSETS:
15.1 Intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment,
or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for
impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognized for the amount by which the assetâs carrying amount exceeds its recoverable amount.
15.2 The recoverable amount is the higher of an assetâs fair value less costs ofdisposal and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial
assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each
reporting period.
Mar 31, 2024
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1.1 Compliance with Ind AS:
The financial statements comply in all material aspects with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) rules, 2015], as amended from time to time and other relevant provisions of the Act.
1.2 Historical cost convention:
The financial statements are prepared under historical cost basis, except for the following:
certain financial assets and liabilities (including derivative instruments) and contingent consideration that is measured at fair value;
defined benefit plans - plan assets measured at fair value
1.3 Use of estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in India requires management, where necessary, to make estimates and assumptions that affect the reported amounts of assets and liabilities,disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised.
2. FOREIGN CURRENCY TRANSLATION
2.1 Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ). The financial statements are presented in Indian rupee (INR), which is Bharat Dynamics Limitedâs functional and presentation currency.
2.2 Transactions and Balances
i) Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognized in profit and loss.
ii) Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
iii) Liability for deferred payments (and receivable from Indian army and ordnance factory) including interest thereon, on supplies/ services from the USSR (erstwhile) is set up at the rate of exchange notified by the Reserve Bank of India for deferred payments including interest thereon under the protocol arrangements between the Government of India and Government of Russia. The differences due to fluctuations in the rate of exchange are charged to revenue.
3. REVENUE RECOGNITION:A. Revenue from Contract with Customers
(i) Revenue is recognized when (or as) the company satisfies a performance obligation.
(ii) Satisfaction of performance obligation over time
a. Revenue is recognised overtime where the transfer of control of goods or services take places over time by measuring the progress towards complete satisfaction of that performance obligation, if one of the following criteria is met:
⢠the companyâs performance entitles the customer to receive and consume the benefits simultaneously as the company performs
⢠the companyâs performance creates or enhances an asset that the customer controls as the asset is created or enhanced
⢠the companyâs performance does not create an asset with an alternative use to the company and the company has an enforceable right to payment including a reasonable profit margin for performance completed to date.
b. Progress made towards satisfying a performance obligation is assessed based on Input Method on the ratio of actual costs incurred on the contract up to the reporting date to the estimated total costs expected to complete the contract. If the outcome of the performance obligation cannot be estimated reliably and where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred.
c. In case of AMC contracts, where passage of time is the criteria for satisfaction of performance obligation, revenue is recognised using the output method.
(iii) Satisfaction of performance obligation at a point in time
a. In respect of cases where the transfer of control does not take place over time, the company recognises the revenue at a point in time when it satisfies the performance obligations.
b. The performance obligation is satisfied when the customer obtains control of the asset. The indicators for transfer of control include the following:
⢠the company has transferred physical possession of the asset
⢠the customer has legal title to the asset
⢠the customer has accepted the asset
⢠when the company has a present right to payment for the asset
⢠The customer has the significant risks and rewards of ownership of the asset. The transfer of significant risks and rewards ownership is assessed based on the Incoterms of the contracts.
Ex-Works contract - In case of Ex-works contract, revenue is recognised when the specified goods are unconditionally appropriated to the contract after prior Inspection and acceptance, if required.
FOR Contracts - In the case of FOR contracts, revenue is recognised when the goods are handed over to the carrier for transmission to the buyer after prior inspection and acceptance, if stipulated, and in the case of FOR destination contracts, if there is a reasonable expectation of the goods reaching destination within the accounting period.
Bill and hold sales is recognised when all the following criteria are met:
⢠the reason for the bill and hold sales is substantive
⢠the product is identified separately as belonging to the customer
⢠the product is currently ready for physical transfer to the customer
⢠the company does not have the ability to use the product or to direct it to another customer
a. Revenue is recognized at the amount of the transaction price that is allocated to the performance obligation.
The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amount collected on behalf of third parties and net of estimated liquidated damages.
Exchange rate variation and any other additional consideration isrecognised based on contractual terms of the contract.
b. The companyâs obligation to replace or repair faulty goods under the standard warranty terms is recognized as a provision and is not adjusted against transaction price as the customer does not have option to purchase warranty seperately.
c. In case where the contracts involve multiple performance obligations, the company allocates the transaction price to each performance obligation on the relative stand-alone selling price basis.
Bundled Contracts - In case of a Bundled contract, where separate fee for installation and commissioning or any other separately identifiable component is not stipulated, the Company applies the recognition criteria to separately identifiable components (sale of goods and installation and commissioning, etc.) of the transaction and allocates the revenue to those separate components based on stand-alone selling price.
Multiple Elements - In cases where the installation and commissioning or any other separately identifiable component is stipulated and price for the same agreed separately, the Company applies the recognition criteria to separately identified components (sale of goods and installation and commissioning, etc.) of the transaction and allocates the revenue to those separate components based on their stand-alone selling price.
d. If the stand-alone selling price is not available the company estimates the stand alone selling price.
(v) Significant financing component
Advances received towards execution of Defence related projects are not considered for determining significant financing component since the objective is to protect the interest of the contracting parties.
In respect of other contracts, the existence of significant financing component is reviewed on a case to case basis.
(vi) Customer financed assets:
The Customer Financed Assets (CFA) are those assets cost of which is funded by the customer, fully or in part. Customer '' may or may not obtain control over the CFA. The funding by customer is recognised as revenue synchronising it in line with completion of performance obligations in accordance with contractual terms. The expenditure incurred by the company is recognised as per GAAP.
a. Where the company has obtained control over the assets funded by customer:
The assets financed by customer are recognised initially at fair value. The corresponding revenue in respect of a contract is recognised to the extent of executed quantity in proportion to the existing order quantity plus additional quantity, if any, for which orders are anticipated as on the date of receipt of the contract from customer.
b. Where the company has not obtained control over the assets funded by customer:
The expenditure incurred in respect of assets funded by the customer is initially recognised as inventory and revenue is recognised on transfer of control of the asset
Recognition of other income is as follows
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
Dividend income is recognized when the Companyâs right to receive the payment is established.
4.1 Grants from the government are recognized at their fair value where there is reasonable assurance that grant will be received and the Company will comply with all attached conditions.
4.2 Government grants relating to income are deferred and recognized in the profit and loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.
4.3 Grants related to non-depreciable assets may also require the fulfilment of certain obligations and would then be recognised in profit or loss over the periods that bear the cost of meeting the obligations.
4.4 Government Grants received either as subsidy or otherwise for acquisition of depreciable assets are accounted as deferred income. If the grant/subsidy is absolute, amount corresponding to the depreciation is treated as income over the life of the asset. If the grant/subsidy is attached with any conditions, such as repayment, income is accounted as per the terms of the grant/subsidy.
5.1 The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rates adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
5.2 Current tax:
The current income tax charge is calculated on the basis of tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
5.3 Deferred tax:
i) Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from the initial recognition of asset or liability in a transaction other than business combination that at the time of the transaction affects neither accounting profit nor the taxable profit (tax loss). Deferred income tax is determined using the tax rates (and laws) that have been enacted or substantively enacted at the end of the reporting period and are expected to apply when the related deferred income tax assets is realized or the deferred income tax liability is settled.
ii) Deferred tax assets are recognized for all deductible temporary differences and unused losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses. Deferred tax asset is also recognised for the indexation benefit on land available for taxation purpose since it results in a temporary difference.
iii) Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the liability simultaneously.
iv) Current and deferred tax is recognized in profit or loss, except to the extent that it relates to the items recognized in other comprehensive income or directly equity. In this case, the tax is also recognized in other comprehensive income or directly equity, respectively.
6.1 Company as a lessee:
Contracts with third party, which give the company the right of use in respect of an Asset, are accounted in line with the provisions of Ind AS 116 - âLeasesâ if the recognition criteria as specified in the Accounting standard are met.
Lease payments associated with short term lease (term of twelve months or less) and lease in respect of low value assets are charged off as expenses on straight line basis over lease term or other systematic basis, as applicable.
At commencement date, the value of âright of useâ is capitalised at the present value of outstanding lease payments plus any initial direct cost and estimated cost, if any, of dismantling and removing the underlying asset.
Liability for lease is created for an amount equivalent to the present value of outstanding lease payments. Subsequent measurement ,if any,is made using cost model.
Each lease payment is allocated between the liability created and finance cost. The finance cost is charged to the statement of profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The right of use asset is depreciated over the shorter of the assetâs useful life and the lease term on a straight line basis.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the companyâs incremental borrowing rate.
Lease modifications, if any, are accounted as a separate lease if the recognition criteria specified in the standard are met.
6.2 Company as a Lessor:
Lease are classified as finance or operating leasebased on the recognition criteria specified in Ind AS 116 - Leases.
a) Finance Lease:
At commencement date, amount equivalent to the ânet investment in the leaseâ is presented as a receivable. The implicit interest rate is used to measure the value of the ânet investment in Leaseâ
Each lease payment is allocated between the Receivable created and finance income. The finance income is recognised in the statement of profit and loss over the lease period so as to reflect a constant periodic rate of return on the net investment in lease.
'' The asset is tested for de-recognition and impairment requirements as per Ind AS 109- Financial Instruments.
Lease modifications, if any, are accounted as a separate lease if the recognition criteria specified in the standard are met.
b) Operating lease:
The company recognises lease payments from operating leases as income on either a straight line basis or another systematic basis, if required.
Lease modifications, if any, are accounted as a separate lease if the recognition criteria specified in the standard are met.
A lease is classified at the inception date as a finance lease or operating lease.
7.1 Inventories are valued at lower of cost and net realizable value.The cost of raw material,components and stores are assigned by using the actual weighted average cost formula and those in transit at cost to date.In the case of stock-in-trade and work-in-progress,cost includes material,labour and related production overheads.
7.2 Stationery, uniforms, welfare consumables, medical and canteen stores are charged off to revenue at the time of receipt.
7.3 Raw-materials, Components, Construction Materials, Loose Tools and Stores and Spare Parts declared surplus/ unserviceable/ redundant are charged to revenue.
7.4 Provision for redundancy is made in respect of closing inventory of Raw materials and Components, Work in progress, Finished Goods, Stores and spare parts,Loose toolsand Construction Materials non-moving for more than 5 years. Besides, where necessary, adequate provision is made for redundancy of such inventory in respect of completed/ specific projects and other surplus/ redundant materials pending transfer to salvage stores.
8. FINANCIALINSTRUMENTS8.1 Financial Assets:
All financial assets are recognised on trade date when the purchase of a financial asset is under a contract whose term requires delivery of the financial asset within the timeframe established by the market concerned. Financial assets are initially measured at fair value, plus transaction costs, except for those financial assets which are classified as at fair value through profit or loss (FVTPL) at inception. All recognised financial assets are subsequently measured in their entirety at either amortized cost or fair value.
i) Classification of financial assets:
The Company classifies its financial assets in the following measurement categories:
o those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
o those measured at amortised cost.
The classification depends on the entityâs business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. The Company reclassifies debt investments when and only when its business model for managing those assets changes.
ii) Measurement:
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
a) Debt instruments
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. The Company classifies its debt instruments as:
(a)(i) Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
(a)(ii) Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in other income using the effective interest rate method.
(a)(iii) Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
b) Equity instruments
(b)(i) The Company subsequently measures all equity investments at fair value. Where the Companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Companyâs right to receive payments is established.
(b)(ii) Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain/(losses) in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
(iii) 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 debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Time barred dues from the government / government departments / government companies are generally not considered as increase in credit risk of such financial asset.
(iv) Derecognition of financial assets
A financial asset is derecognized only when
- The Company has transferred the rights to receive cash flow from the financial asset or
- retains the contractual rights to receive the cash flows of the financial assets, but assumes a contractual obligation to pay cash flows to one or more recipients
Where the company has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized.
Where the company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
v) Trade receivables:
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expect to be collected within a period of 12 months or less from the reporting date (or in the normal operating cycle of the business if longer), they are classified as current assets otherwise as non-current assets.
Trade receivables are measured at their transaction price unless it contains a significant financing component in accordance with Ind AS 115 (or when the entity applies the practical expedient) or pricing adjustments embedded in the contract.
Loss allowance for expected life time credit loss is recognised on initial recognition.
8.2 Financial liabilities and equity instruments issued by the Company
Classification
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
i) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
ii) Financial liabilities
Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
iii) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company. Trade and other payables are presented as current liabilities if payment is due within 12 months after the reporting period otherwise as non-current. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.
iv) Derivatives
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The derivatives that are not designated as hedges are accounted for at fair value through profit and loss and are included in other gains/ (losses).
a) Embedded derivatives
Derivatives embedded in a host contract that is an asset within the scope of Ind AS 109 are not separated. Financial Assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
'' Derivatives embedded in all other host contract are separated only if economic characteristics and risks of the
embedded derivatives are not closely related to the economic characteristics and risks of the host contract and are measured at fair value through profit and loss. Embedded derivatives closely related to the host contract are not separated.
b) Embedded foreign currency derivatives
Embedded foreign currency derivatives are not separated from the host contract if they are closely related. Such embedded derivatives are closely related to the host contract, if the host contract is not leveraged, does not contain any option feature and requires payments in one of the following currencies:
- The functional currency of any substantial party to that contract,
- The currency in which the price of the related good or service that is acquired or delivered is routinely denominated in commercial transactions around the world,
- A currency that is commonly used in contracts to purchase or sell non-financial items in the economic environment in which the transaction takes place (i.e. relatively liquid and stable currency)
Foreign currency embedded derivatives which do not meet the above criteria are separated and the derivative is accounted for at fair value through profit and loss.
8.3 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
10.1 The Company measures certain financial instruments, such as derivatives and other items in its financial statements at fair value at each balance sheet date.
10.2 All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2 - Inputs other than quoted prices included within 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 assets and liabilities that are not based on observable market data (unobservable inputs).
10.3 For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy.
11. PROPERTY, PLANT AND EQUIPMENT
11.1 Measurement
i. Land is capitalised at cost to the Company. Development of land such as levelling, clearing and grading is capitalised along with the cost of building in proportion to the land utilized for construction of buildings and rest of the development expenditure is capitalised along with cost of land. Development expenditure incurred for the purpose of landscaping or for any other purpose not connected with construction of any building is treated as cost of land.
ii. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical costs includes expenditure that is directly attributable to the acquisition of items.
iii. Subsequent costs are included in the assetâs carrying amount and recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred.
iv. Where the cost of a part of the asset is significant to the total cost of the asset and useful life of that significant part is different from the useful life of the remaining asset, useful life of that significant part is determined separately and the significant part is depreciated on straight line method over its estimated useful life.
11.2 Depreciation method, estimated useful life and residual value:
i. Depreciation is calculated using the straight line method to allocate their cost, net of residual values, over the estimated useful life.
ii. The useful lives have been determined to be equal to those prescribed in Schedule II to the Companies Act; 2013.
iii. The assetsâ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
11.3 Disposal
Gains and losses on disposal are determined by comparing net sale proceeds with carrying amount. These are included in statement of profit and loss.
12.1 Licences
Separately acquired licences are shown at historical cost. They have a finite useful life and are subsequently carried at cost less accumulated amortization and impairment losses.
12.2 Computer software
a) The cost of software (which is not an integral part of the related hardware) acquired for internal use and resulting in significant future economic benefits-, is recognised as an Intangible Asset in the books of accounts when the same is ready for use. Intangible Assets that are not yet ready for their intended use as at the Balance Sheet date are classified as âIntangible Assets under Development.
b) Cost associated with maintaining of software programs are recognized as an expense as incurred.
c) Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are recognized as intangible assets when the following criteria are met:
o It is technically feasible to complete the software so that it will be available for use
o Management intends to complete the software and use or sell it
o There is an ability to use or sell the software
o It can be demonstrated how the software will generate probable future economic benefits
o Adequate technical, financial and other resources to complete the development and to use or sell the software are available, and
o The expenditure attributable to the software during its development can be reliably measured.
d) Directly attributable costs that are capitalized as part of the software include employee costs and an appropriate portion of relevant overheads.
e) Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is available for use.
12.3 Research and development
Research expenditure and development expenditure that do not meet the criteria in 12.2(c) above are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.
In the event of the Company financed project(s) being foreclosed/ abandoned, the expenditure incurred up to the stage of foreclosure/ abandonment is charged off to revenue in the year of foreclosure/ abandonment.
12.4 Amortization methods and periods
The Company amortizes intangible assets with a finite useful life using the straight-line method over the following periods: Licences Useful Life/Production
Computer software 3 years
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replacedpart is derecognised.
14. NON-CURRENT ASSETS (OR DISPOSAL GROUPS) HELD FOR SALE ANDDISCONTINUED OPERATIONS:
14.1 Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.
14.2 An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) 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 (or disposal group), 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 (or disposal group) is recognised at the date of de-recognition.
14.3 Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.
14.4 Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.
14.5 A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit and loss.
15.1 Intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the assetâs carrying amount exceeds its recoverable amount.
15.2 The recoverable amount is the higher of an assetâs fair value less costs ofdisposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
16. PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES
16.1 Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.
16.2 Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
16.3 Provisions are measured at the present value of the managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provisions due to the passage of time is recognized as interest expense.
16.4 Warranty: Warranty on goods sold, wherever applicable, commences once the sale is complete and accordingly provision for such warranty is made. The period, terms and conditions of warranty as per the relevant contract are taken into consideration while determining the provision for such sales.
16.5 Provision for Onerous Contract:A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.
17.1 Short-term obligations
Liabilities for wages and salaries, including other monetary and non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employeesâ 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.
17.2 Other long term employee benefit obligations
The liability for vacation 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 as 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 obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognised 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.
17.3 Post-employment obligations
The Company operates the following post-employment schemes:
(a) Defined benefit plans such as Gratuity and contribution towards Provident Fund under the PF Act; and
(b) Defined contribution plans namely Retired Employee Medical Scheme (REMI)/Post Superannuation Medical Benefit (PSMB), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI) and Pension Scheme(s).
a) Defined benefit plans
The liability or assets recognized in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligations 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 denominated in INR 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.
Re-measurement gains and losses arising from experience adjustments and change in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.
b) Defined contribution plans
The Company pays contributions to trusts established as per local regulations and also to publicly administered funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
The Companyâs contribution paid/ payable to Company approved Retired Employee Medical Scheme (REMI)/Post superannuation Medical Benefit(PSMB), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI) and Pension Scheme are charged to revenue.
17.4 Termination Benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination benefits at the earlier of the following dates: (a) when the Company can no longer withdraw the offer of those benefits; and (b) when the entity recognizes costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefit are measured based on the number of employees expected to accept the offer. Termination Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.
Compensation paid to Employees under Voluntary Retirement Scheme (VRS) is charged to Statement of Profit and Loss in the year of retirement.
Equity shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
20.1 Basic earnings per share
Basic earnings per share is calculated by dividing:
The profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares
20.2 Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
> The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
> The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
Note 1 to 38 and Material Accounting Policies attached form part of accounts.
Mar 31, 2023
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1.1 Compliance with Ind AS:
The financial statements comply in all material aspects with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) rules, 2015], as amended from time to time and other relevant provisions of the Act.
1.2 Historical cost convention:
The financial statements are prepared under historical cost basis, except for the following:
certain financial assets and liabilities (including derivative instruments) and contingent consideration that is measured at fair value;
defined benefit plans - plan assets measured at fair value
1.3 Use of estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in India requires management, where necessary, to make estimates and assumptions that affect the reported amounts of assets and liabilities,disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised.
2. FOREIGN CURRENCY TRANSLATION
2.1 Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ). The financial statements are presented in Indian rupee (INR), which is Bharat Dynamics Limitedâs functional and presentation currency.
2.2 Transactions and Balances
i) Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognized in profit and loss.
ii) Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
iii) Liability for deferred payments (and receivable from Indian army and ordnance factory) including interest thereon, on supplies/ services from the USSR (erstwhile) is set up at the rate of exchange notified by the Reserve Bank of India for deferred payments including interest thereon under the protocol arrangements between the Government of India and Government of Russia. The differences due to fluctuations in the rate of exchange are charged to revenue.
3. REVENUE RECOGNITION:A. Revenue from Contract with Customers
(i) Revenue is recognized when (or as) the company satisfies a performance obligation.
(ii) Satisfaction of performance obligation over time
a. Revenue is recognised overtime where the transfer of control of goods or services take places over time by measuring the progress towards complete satisfaction of that performance obligation, if one of the following criteria is met:
⢠the companyâs performance entitles the customer to receive and consume the benefits simultaneously as the company performs
⢠the companyâs performance creates or enhances an asset that the customer controls as the asset is created or enhanced
⢠the companyâs performance does not create an asset with an alternative use to the company and the company has an enforceable right to payment including a reasonable profit margin for performance completed to date.
b. Progress made towards satisfying a performance obligation is assessed based on Input Method on the ratio of actual costs incurred on the contract up to the reporting date to the estimated total costs expected to complete the contract. If the outcome of the performance obligation cannot be estimated reliably and where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred.
c. In case of AMC contracts, where passage of time is the criteria for satisfaction of performance obligation, revenue is recognised using the output method.
(iii) Satisfaction of performance obligation at a point in time
a. In respect of cases where the transfer of control does not take place over time, the company recognises the revenue at a point in time when it satisfies the performance obligations.
b. The performance obligation is satisfied when the customer obtains control of the asset. The indicators for transfer of control include the following:
⢠the company has transferred physical possession of the asset
⢠the customer has legal title to the asset
⢠the customer has accepted the asset
⢠when the company has a present right to payment for the asset
⢠The customer has the significant risks and rewards of ownership of the asset. The transfer of significant risks and rewards ownership is assessed based on the Incoterms of the contracts.
Ex-Works contract - In case of Ex-works contract, revenue is recognised when the specified goods are unconditionally appropriated to the contract after prior Inspection and acceptance, if required.
FOR Contracts - In the case of FOR contracts, revenue is recognised when the goods are handed over to the carrier for transmission to the buyer after prior inspection and acceptance, if stipulated, and in the case of FOR destination contracts, if there is a reasonable expectation of the goods reaching destination within the accounting period.
Bill and hold sales is recognised when all the following criteria are met:
⢠the reason for the bill and hold sales is substantive
⢠the product is identified separately as belonging to the customer
⢠the product is currently ready for physical transfer to the customer
⢠the company does not have the ability to use the product or to direct it to another customer
a. Revenue is recognized at the amount of the transaction price that is allocated to the performance obligation.
The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amount collected on behalf of third parties and net of estimated liquidated damages.
Exchange rate variation and any other additional consideration is recognised based on contractual terms of the contract.
b. The companyâs obligation to replace or repair faulty goods under the standard warranty terms is recognized as a provision and is not adjusted against transaction price as the customer does not have option to purchase warranty seperately.
c. In case where the contracts involve multiple performance obligations, the company allocates the transaction price to each performance obligation on the relative stand-alone selling price basis.
Bundled Contracts - In case of a Bundled contract, where separate fee for installation and commissioning or any other separately identifiable component is not stipulated, the Company applies the recognition criteria to separately identifiable components (sale of goods and installation and commissioning, etc.) of the transaction and allocates the revenue to those separate components based on stand-alone selling price.
Multiple Elements - In cases where the installation and commissioning or any other separately identifiable component is stipulated and price for the same agreed separately, the Company applies the recognition criteria to separately identified components (sale of goods and installation and commissioning, etc.) of the transaction and allocates the revenue to those separate components based on their stand-alone selling price.
d. If the stand-alone selling price is not available the company estimates the stand alone selling price.
(v) Significant financing component
Advances received towards execution of Defence related projects are not considered for determining significant financing component since the objective is to protect the interest of the contracting parties.
In respect of other contracts, the existence of significant financing component is reviewed on a case to case basis.
(vi) Customer financed assets:
The Customer Financed Assets (CFA) are those assets cost of which is funded by the customer, fully or in part. Customer may or may not obtain control over the CFA. The funding by customer is recognised as revenue synchronising it in line with completion of performance obligations in accordance with contractual terms. The expenditure incurred by the company is recognised as per GAAP.
a. Where the company has obtained control over the assets funded by customer:
The assets financed by customer are recognised initially at fair value. The corresponding revenue in respect of a contract is recognised to the extent of executed quantity in proportion to the existing order quantity plus additional quantity, if any, for which orders are anticipated as on the date of receipt of the contract from customer.
b. Where the company has not obtained control over the assets funded by customer:
The expenditure incurred in respect of assets funded by the customer is initially recognised as inventory and revenue is recognised on transfer of control of the asset
Recognition of other income is as follows
i) interest income:
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
ii) Dividend:
Dividend income is recognized when the Companyâs right to receive the payment is established.
4. government grants
4.1 Grants from the government are recognized at their fair value where there is reasonable assurance that grant will be received and the Company will comply with all attached conditions.
4.2 Government grants relating to income are deferred and recognized in the profit and loss over the period necessary to match
them with the costs that they are intended to compensate and presented within other income.
4.3 Grants related to non-depreciable assets may also require the fulfilment of certain obligations and would then be recognised
in profit or loss over the periods that bear the cost of meeting the obligations.
4.4 Government Grants received either as subsidy or otherwise for acquisition of depreciable assets are accounted as deferred income. If the grant/subsidy is absolute, amount corresponding to the depreciation is treated as income over the life of the asset. If the grant/subsidy is attached with any conditions, such as repayment, income is accounted as per the terms of the grant/subsidy.
5.1 The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rates adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
5.2 Current tax:
The current income tax charge is calculated on the basis of tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
5.3 Deferred tax:
i) Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from the initial recognition of asset or liability in a transaction other than business combination that at the time of the transaction affects neither accounting profit nor the taxable profit (tax loss). Deferred income tax is determined using the tax rates (and laws) that have been enacted or substantively enacted at the end of the reporting period and are expected to apply when the related deferred income tax assets is realized or the deferred income tax liability is settled.
ii) Deferred tax assets are recognized for all deductible temporary differences and unused losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses. Deferred tax asset is also recognised for the indexation benefit on land available for taxation purpose since it results in a temporary difference.
iii) Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the liability simultaneously.
iv) Current and deferred tax is recognized in profit or loss, except to the extent that it relates to the items recognized in other comprehensive income or directly equity. In this case, the tax is also recognized in other comprehensive income or directly equity, respectively.
6.1 Company as a lessee:
Contracts with third party, which give the company the right of use in respect of an Asset, are accounted in line with the provisions of Ind AS 116 - âLeasesâ if the recognition criteria as specified in the Accounting standard are met.
Lease payments associated with short term lease (term of twelve months or less) and lease in respect of low value assets are charged off as expenses on straight line basis over lease term or other systematic basis, as applicable.
At commencement date, the value of âright of useâ is capitalised at the present value of outstanding lease payments plus any initial direct cost and estimated cost, if any, of dismantling and removing the underlying asset.
Liability for lease is created for an amount equivalent to the present value of outstanding lease payments. Subsequent measurement ,if any, is made using cost model.
Each lease payment is allocated between the liability created and finance cost. The finance cost is charged to the statement of profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The right of use asset is depreciated over the shorter of the assetâs useful life and the lease term on a straight line basis.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the companyâs incremental borrowing rate.
Lease modifications, if any, are accounted as a separate lease if the recognition criteria specified in the standard are met.
6.2 Company as a Lessor:
Lease are classified as finance or operating lease based on the recognition criteria specified in Ind AS 116 - Leases.
a) Finance Lease:
At commencement date, amount equivalent to the ânet investment in the leaseâ is presented as a receivable. The implicit interest rate is used to measure the value of the ânet investment in Leaseâ
Each lease payment is allocated between the Receivable created and finance income. The finance income is recognised in the statement of profit and loss over the lease period so as to reflect a constant periodic rate of return on the net investment in lease.
The asset is tested for de-recognition and impairment requirements as per Ind AS 109- Financial Instruments.
Lease modifications, if any, are accounted as a separate lease if the recognition criteria specified in the standard are met.
b) Operating lease:
The company recognises lease payments from operating leases as income on either a straight line basis or another systematic basis, if required.
Lease modifications, if any, are accounted as a separate lease if the recognition criteria specified in the standard are met.
A lease is classified at the inception date as a finance lease or operating lease. r INVENTORIES
7.1 Inventories are valued at lower of cost and net realizable value.The cost of raw material,components and stores are assigned by using the actual weighted average cost formula and those in transit at cost to date.In the case of stock-in-trade and work-in-progress,cost includes material,labour and related production overheads.
7.2 Stationery, uniforms, welfare consumables, medical and canteen stores are charged off to revenue at the time of receipt.
7.3 Raw-materials, Components, Construction Materials, Loose Tools and Stores and Spare Parts declared surplus/ unserviceable/ redundant are charged to revenue.
7.4 Provision for redundancy is made in respect of closing inventory of Raw materials and Components, Work in progress, Finished Goods, Stores and spare parts, Loose tools and Construction Materials non-moving for more than 5 years. Besides, where necessary, adequate provision is made for redundancy of such inventory in respect of completed/ specific projects and other surplus/ redundant materials pending transfer to salvage stores.
I FINANCIALINSTRUMENTS8.1 Financial Assets:
All financial assets are recognised on trade date when the purchase of a financial asset is under a contract whose term requires delivery of the financial asset within the timeframe established by the market concerned. Financial assets are initially measured at fair value, plus transaction costs, except for those financial assets which are classified as at fair value through profit or loss (FVTPL) at inception. All recognised financial assets are subsequently measured in their entirety at either amortized cost or fair value.
i) Classification of financial assets:
The Company classifies its financial assets in the following measurement categories:
o those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
o those measured at amortised cost.
The classification depends on the entityâs business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. The Company reclassifies debt investments when and only when its business model for managing those assets changes.
ii) Measurement:
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
a) Debt instruments
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the
asset and the cash flow characteristics of the asset. The Company classifies its debt instruments as:
(a)(i) Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
(a)(ii) Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in other income using the effective interest rate method.
(a) (iii) Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are
measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
b) Equity instruments
(b) (i) The Company subsequently measures all equity investments at fair value. Where the Companyâs management
has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Companyâs right to receive payments is established.
(b)(ii) Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain/ (losses) in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
(iii) 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 debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Time barred dues from the government / government departments / government companies are generally not considered as increase in credit risk of such financial asset.
(iv) Derecognition of financial assets
A financial asset is derecognized only when
- The Company has transferred the rights to receive cash flow from the financial asset or
- retains the contractual rights to receive the cash flows of the financial assets, but assumes a contractual obligation to pay cash flows to one or more recipients
Where the company has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized.
Where the company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
v) Trade receivables:
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expect to be collected within a period of 12 months or less from the reporting date (or in the normal operating cycle of the business if longer), they are classified as current assets otherwise as non-current assets.
Trade receivables are measured at their transaction price unless it contains a significant financing component in accordance with Ind AS 18 (or when the entity applies the practical expedient) or pricing adjustments embedded in the contract.
Loss allowance for expected life time credit loss is recognised on initial recognition.
8.2 Financial liabilities and equity instruments issued by the Company
Classification
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
i) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
ii) Financial liabilities
Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
iii) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company. Trade and other payables are presented as current liabilities if payment is due within 12 months after the reporting period otherwise as non-current. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.
iv) Derivatives
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The derivatives that are not designated as hedges are accounted for at fair value through profit and loss and are included in other gains/ (losses).
a) Embedded derivatives
Derivatives embedded in a host contract that is an asset within the scope of Ind AS 109 are not separated. Financial Assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Derivatives embedded in all other host contract are separated only if economic characteristics and risks of the embedded derivatives are not closely related to the economic characteristics and risks of the host contract and are measured at fair value through profit and loss. Embedded derivatives closely related to the host contract are not separated.
b) Embedded foreign currency derivatives
Embedded foreign currency derivatives are not separated from the host contract if they are closely related. Such embedded derivatives are closely related to the host contract, if the host contract is not leveraged, does not contain any option feature and requires payments in one of the following currencies:
- The functional currency of any substantial party to that contract,
- The currency in which the price of the related good or service that is acquired or delivered is routinely denominated in commercial transactions around the world,
- A currency that is commonly used in contracts to purchase or sell non-financial items in the economic environment in which the transaction takes place (i.e. relatively liquid and stable currency)
Foreign currency embedded derivatives which do not meet the above criteria are separated and the derivative is accounted for at fair value through profit and loss.
8.3 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
10. fair value measurement
10.1 The Company measures certain financial instruments, such as derivatives and other items in its financial statements at fair value at each balance sheet date.
10.2 All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2 - Inputs other than quoted prices included within 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 assets and liabilities that are not based on observable market data (unobservable inputs).
10.3 For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy.
11. PROPERTY, PLANT AND EQUIPMENT
11.1 Measurement
i. Land is capitalised at cost to the Company. Development of land such as levelling, clearing and grading is capitalised along with the cost of building in proportion to the land utilized for construction of buildings and rest of the development expenditure is capitalised along with cost of land. Development expenditure incurred for the purpose of landscaping or for any other purpose not connected with construction of any building is treated as cost of land.
ii. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical costs includes expenditure that is directly attributable to the acquisition of items.
iii. Subsequent costs are included in the assetâs carrying amount and recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred.
iv. Where the cost of a part of the asset is significant to the total cost of the asset and useful life of that significant part is different from the useful life of the remaining asset, useful life of that significant part is determined separately and the significant part is depreciated on straight line method over its estimated useful life.
11.2 Depreciation method, estimated useful life and residual value:
i. Depreciation is calculated using the straight line method to allocate their cost, net of residual values, over the estimated useful life.
ii. The useful lives have been determined to be equal to those prescribed in Schedule II to the Companies Act; 2013.
iii. The assetsâ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
11.3 Disposal
Gains and losses on disposal are determined by comparing net sale proceeds with carrying amount. These are included in statement of profit and loss.
12.1 Licences
Separately acquired licences are shown at historical cost. They have a finite useful life and are subsequently carried at cost less accumulated amortization and impairment losses.
12.2 Computer software
a) The cost of software (which is not an integral part of the related hardware) acquired for internal use and resulting in significant future economic benefits-, is recognised as an Intangible Asset in the books of accounts when the same is ready for use. Intangible Assets that are not yet ready for their intended use as at the Balance Sheet date are classified as âIntangible Assets under Development.
b) Cost associated with maintaining of software programs are recognized as an expense as incurred.
c) Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are recognized as intangible assets when the following criteria are met:
o It is technically feasible to complete the software so that it will be available for use
o Management intends to complete the software and use or sell it
o There is an ability to use or sell the software
o It can be demonstrated how the software will generate probable future economic benefits
o Adequate technical, financial and other resources to complete the development and to use or sell the software are available, and
o The expenditure attributable to the software during its development can be reliably measured.
d) Directly attributable costs that are capitalized as part of the software include employee costs and an appropriate portion of relevant overheads.
e) Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is available for use.
12.3 Research and development
Research expenditure and development expenditure that do not meet the criteria in 12.2(c) above are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.
In the event of the Company financed project(s) being foreclosed/ abandoned, the expenditure incurred up to the stage of foreclosure/ abandonment is charged off to revenue in the year of foreclosure/ abandonment.
12.4 Amortization methods and periods
The Company amortizes intangible assets with a finite useful life using the straight-line method over the following periods:
|
Licences |
Useful Life/Production |
|
Computer software |
3 years |
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.
14. NON-CURRENT ASSETS (OR DISPOSAL GROUPS) HELD FOR SALE AND DISCONTINUED OPERATIONS:
14.1 Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.
14.2 An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) 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 (or disposal group), 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 (or disposal group) is recognised at the date of de-recognition.
14.3 Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.
14.4 Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.
14.5 A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit and loss.
15.1 Intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the assetâs carrying amount exceeds its recoverable amount.
15.2 The recoverable amount is the higher of an assetâs fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Nonfinancial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
16. PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES
16.1 Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.
16.2 Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
16.3 Provisions are measured at the present value of the managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provisions due to the passage of time is recognized as interest expense.
16.4 Warranty: Warranty on goods sold, wherever applicable, commences once the sale is complete and accordingly provision for such warranty is made. The period, terms and conditions of warranty as per the relevant contract are taken into consideration while determining the provision for such sales.
16.5 Provision for Onerous Contract: A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.
17.1 Short-term obligations
Liabilities for wages and salaries, including other monetary and non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employeesâ 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.
17.2 Other long term employee benefit obligations
The liability for vacation 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 as 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 obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognised 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.
17.3 Post-employment obligations
The Company operates the following post-employment schemes:
(a) Defined benefit plans such as Gratuity and contribution towards Provident Fund under the PF Act; and
(b) Defined contribution plans namely Retired Employee Medical Scheme (REMI)/Post Superannuation Medical Benefit (PSMB), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI) and Pension Scheme(s).
a) Defined benefit plans
The liability or assets recognized in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligations 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 denominated in INR 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.
Re-measurement gains and losses arising from experience adjustments and change in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.
b) Defined contribution plans
The Company pays contributions to trusts established as per local regulations and also to publicly administered funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
The Companyâs contribution paid/ payable to Company approved Retired Employee Medical Scheme (REMI)/Post superannuation Medical Benefit(PSMB), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI) and Pension Scheme are charged to revenue.
17.4 Termination Benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination benefits at the earlier of the following dates: (a) when the Company can no longer withdraw the offer of those benefits; and (b) when the entity recognizes costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefit are measured based on the number of employees expected to accept the offer. Termination Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.
Compensation paid to Employees under Voluntary Retirement Scheme (VRS) is charged to Statement of Profit and Loss in the year of retirement.
Equity shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
20.1 Basic earnings per share
Basic earnings per share is calculated by dividing:
The profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares
20.2 Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
> The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
> The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
Note 1 to 38 and Accounting Policies attached form part of accounts.
Mar 31, 2022
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1.1 Compliance with Ind AS:
The financial statements comply in all material aspects with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) rules, 2015], as amended from time to time and other relevant provisions of the Act.
1.2 Historical cost convention:
Thefinancial statements are prepared under historical cost basis, except forthe following:
certain financial assets and liabilities (including derivative instruments) and contingent consideration that is measured at fair value;
defined benefit plans- plan assets measured at fair value
1.3 Use of estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in India requires management, where necessary, to make estimates and assumptions that affect the reported amounts of assets and liabilities,disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised.
2. FOREIGN CURRENCYTRANSLATION
2.1 Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (''the functional currency''). The financial statements are presented in Indian rupee (I NR), which is Bharat Dynamics Limited''s functional and presentation currency.
2.2 Transactions and Balances
i) Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognized in profit and loss.
ii) Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
iii) Liability for deferred payments (and receivable from Indian army and ordnance factory) including interest thereon, on supplies/ services from the USSR (erstwhile) is set up at the rate of exchange notified by the Reserve Bank of India for deferred payments including interest thereon under the protocol arrangements between the Government of India and Government of Russia. The differences due to fluctuations in the rate of exchange are charged to revenue.
3. REVENUE RECOGNITION:A. Revenue from Contract with Customers
(i) Revenue is recognized when (or as) the company satisfies a performance obligation.
(ii) Satisfaction of performance obligation overtime
a. Revenue is recognised overtime where the transfer of control of goods or services take places overtime by measuring the progress towards complete satisfaction of that performance obligation, if one of the following criteria is met:
⢠the company''s performance entitles the customer to receive and consume the benefits simultaneously as the company performs
⢠the company''s performance creates or enhances an asset that the customer controls as the asset is created or enhanced
⢠the company''s performance does not create an asset with an alternative use to the company and the company has an enforceable right to payment including a reasonable profit margin for performance completed to date.
b. Progress made towards satisfying a performance obligation is assessed based on Input Method on the ratio of actual costs incurred on the contract up to the reporting date to the estimated total costs expected to complete the contract. If the outcome of the performance obligation cannot be estimated reliably and where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred.
c. In case of AMC contracts, where passage of time is the criteria for satisfaction of performance obligation, revenue is recognised using the output method.
(iii) Satisfaction of performance obligation at a point in time
a. In respect of cases where the transfer of control does not take place over time, the company recognises the revenue at a point in time when it satisfies the performance obligations.
b. The performance obligation is satisfied when the customer obtains control of the asset. The indicators for transfer of control include the following:
⢠the company has transferred physical possession of the asset
⢠the customer has legal title to the asset
⢠the customer has accepted the asset
⢠when the company has a present right to payment for the asset
⢠The customer has the significant risks and rewards of ownership of the asset. The transfer of significant risks and rewards ownership is assessed based on the Incoterms of the contracts.
Ex-Works contract - In case of Ex-works contract, revenue is recognised when the specified goods are unconditionally appropriated to the contract after prior Inspection and acceptance, if required.
FOR Contracts - In the case of FOR contracts, revenue is recognised when the goods are handed over to the carrier for transmission to the buyer after prior inspection and acceptance, if stipulated, and in the case of FOR destination contracts, if there is a reasonable expectation of the goods reaching destination within the accounting period.
Bill and hold Sales:
Bill and hold sales is recognised when all the following criteria are met:
⢠the reason forthe bill and hold sales is substantive
⢠the product is identified separately as belonging to the customer
⢠the product is currently ready for physical transfer to the customer
⢠the company does not have the ability to use the product or to direct it to another customer
(iv) Measurement
a. Revenue is recognized at the amount of the transaction price that is allocated to the performance obligation.
The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amount collected on behalf of third parties and net of estimated liquidated damages.
Exchange rate variation and any other additional consideration is recognised based on contractual terms of the contract.
b. The company''s obligation to replace or repair faulty goods under the standard warranty terms is recognized as a provision and is not adjusted against transaction price as the customer does not have option to purchase warranty seperately.
c. In case where the contracts involve multiple performance obligations, the company allocates the transaction price to each performance obligation on the relative stand-alone selling price basis.
Bundled Contracts - In case of a Bundled contract, where separate fee for installation and commissioning or any other separately identifiable component is not stipulated, the Company applies the recognition criteria to separately identifiable components (sale of goods and installation and commissioning, etc.) of the transaction and allocates the revenue to those separate components based on stand-alone selling price.
Multiple Elements-In cases where the installation and commissioning or any other separately identifiable component is stipulated and price for the same agreed separately, the Company applies the recognition criteria to separately identified components (sale of goods and installation and commissioning, etc.) of the transaction and allocates the revenue to those separate components based on their stand-alone selling price.
d. If the stand-alone selling price is not available the company estimates the stand alone selling price.
(v) Significantfinancingcomponent
Advances received towards execution of Defence related projects are not considered for determining significant financing component since the objective is to protect the interest of the contracting parties.
In respect of other contracts, the existence of significant financing component is reviewed on a case to case basis.
(vi) Customerfinanced assets:
The assets financed by customers are recognized initially at fair value. The corresponding revenue is recognized in proportion to depreciation overthe life of the asset.
Recognition of other income is as follows
i) Interest income:
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset''s net carrying amount on initial recognition.
ii) Dividend:
Dividend income is recognized when the Company''s right to receive the payment is established.
4.1 Grants from the government are recognized at their fair value where there is reasonable assurance that grant will be received and the Company will comply with all attached conditions.
4.2 Government grants relating to income are deferred and recognized in the profit and loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.
4.3 Grants related to non-depreciable assets may also require the fulfilment of certain obligations and would then be recognised i n profit or loss overthe periods that bear the cost of meeting the obligations.
4.4 Government Grants received either as subsidy or otherwise for acquisition of depreciable assets are accounted as deferred income. If the grant/subsidy is absolute, amount corresponding to the depreciation is treated as income over the life of the asset. If the grant/subsidy is attached with any conditions, such as repayment, income is accounted as per the terms of the grant/subsidy.
5.1 The income tax expense or credit forthe period is the tax payable on the current period''s taxable income based on
the applicable income tax rates adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
5.2 Current tax:
The current income tax charge is calculated on the basis of tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
5.3 Deferred tax:
i) Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from the initial recognition of asset or liability in a transaction other than business combination that at the time of the transaction affects neither accounting profit nor the taxable profit (tax loss). Deferred income tax is determined using the tax rates (and laws) that have been enacted or substantively enacted at the end of the reporting period and are expected to apply when the related deferred income tax assets is realized or the deferred income tax liability is settled.
ii) Deferred tax assets are recognized for all deductible temporary differences and unused losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses. Deferred tax asset is also recognised for the indexation benefit on land available for taxation purpose since it results in a temporary difference.
iii) Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the liability simultaneously.
iv) Current and deferred tax is recognized in profit or loss, except to the extent that it relates to the items recognized in other comprehensive income or directly equity. In this case, the tax is also recognized in other comprehensive income or directly equity, respectively.
6. LEASES
6.1 Company as a lessee:
Contracts with third party, which give the company the right of use in respect of an Asset, are accounted in line with the provisions of Ind AS 116 - "Leases" if the recognition criteria as specified in the Accounting standard are met.
Lease payments associated with short term lease (term of twelve months or less) and lease in respect of low value assets are charged off as expenses on straight line basis over lease term or other systematic basis, as applicable.
At commencement date, the value of "right of use" is capitalised at the present value of outstanding lease payments plus any initial direct cost and estimated cost, if any, of dismantling and removing the underlying asset.
Liability for lease is created for an amount equivalent to the present value of outstanding lease payments. Subsequent measurement,if any, is made using cost model.
Each lease payment is allocated between the liability created and finance cost. The finance cost is charged to the statement of profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The right of use asset is depreciated over the shorter of the assetâs useful life and the lease term on a straight line basis.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the company''s incremental borrowing rate.
Lease modifications, if any, are accounted as a separate lease if the recognition criteria specified in the standard are met.
6.2 Company as a Lessor:
Lease are classified asfinance or operating lease based on the recognition criteria specified in Ind AS 116- Leases.
a) Finance Lease:
At commencement date, amount equivalent to the "net investment in the lease" is presented as a receivable. The implicit interest rate is used to measure the value of the "net investment in Lease"
Each lease payment is allocated between the Receivable created and finance income. The finance income is recognised in the statement of profit and loss over the lease period so as to reflect a constant periodic rate of return on the net investment in lease.
The asset is tested for de-recognition and impairment requirements as per Ind AS 109- Financial Instruments.
Lease modifications, if any, are accounted as a separate lease if the recognition criteria specified in the standard are met.
b) Operating lease:
The company recognises lease payments from operating leases as income on either a straight line basis or another systematic basis, if required.
Lease modifications, if any, are accounted as a separate lease if the recognition criteria specified in the standard are met.
A lease is classified atthe inception date as a finance lease or operating lease.
7.1 Inventories are valued at lower of cost and net realizable value.The cost of raw material,components and stores are assigned by using the actual weighted average cost formula and those in transit at cost to date.ln the case of stock-in-trade and work-in-progress,cost includes material,labour and related production overheads.
7.2 Stationery, uniforms, welfare consumables, medical and canteen stores are charged off to revenue atthe time of receipt.
7.3 Raw-materials, Components, Construction Materials, Loose Tools and Stores and Spare Parts declared surplus/ unserviceable/ redundant are charged to revenue.
7.4 Provision for redundancy is made in respect of closing inventory of Raw materials and Components, Work in progress. Finished Goods, Stores and spare parts. Loose tools and Construction Materials non-moving for more than 5 years. Besides, where necessary, adequate provision is made for redundancy of such inventory in respect of completed/specific projects and other surplus/redundant materials pending transferto salvage stores.
8. FINANCIAL INSTRUMENTS8.1 Financial Assets:
All financial assets are recognised on trade date when the purchase of a financial asset is under a contract whose term requires delivery of the financial asset within the timeframe established by the market concerned. Financial assets are initially measured at fair value, plus transaction costs, except for those financial assets which are classified as at fair value through profit or loss (FVTPL) at inception. All recognised financial assets are subsequently measured in their entirety at either amortized cost or fair value.
i) Classification of financial assets:
The Company classifies its financial assets in thefollowing measurement categories:
o those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
o those measured at amortised cost.
The classification depends on the entity''s business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive
income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. The Company reclassifies debt investments when and only when its business model for managing those assets changes.
ii) Measurement:
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
a) Debt instruments
Subsequent measurement of debt instruments depends on the Company''s business model for managing
the asset and the cash flow characteristics of the asset. The Company classifies its debt instruments as:
(a) (i) Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
(a) (ii) Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets'' cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in other income using the effective interest rate method.
(a) (iii) Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI
are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
b) Equity instruments
(b) (i) The Company subsequently measures all equity investments at fair value. Where the Company''s
management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Company''s right to receive payments is established.
(b) (ii) Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain/(losses) in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes infairvalue.
(iii) 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 debt instruments. The impairment methodology
applied depends on whetherthere has been a significant increase in credit risk.
For trade receivables the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Time barred dues from the government / government departments / government companies are generally not considered as increase in credit risk of such financial asset.
(iv) Derecognition of financial assets
Afinancial asset is derecognized only when
- The Company has transferred the rights to receive cash flow from the financial asset or
- retains the contractual rights to receive the cash flows of the financial assets, but assumes a contractual obligation to pay cash flows to one or more recipients
Where the company has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized.
Where the company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
v) Trade receivables:
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expect to be collected within a period of 12 months or less from the reporting date (or in the normal operating cycle of the business if longer), they are classified as current assets otherwise as non-current assets.
Trade receivables are measured at their transaction price unless it contains a significant financing component in accordance with Ind AS 18 (or when the entity applies the practical expedient) or pricing adjustments embedded in the contract.
Loss allowance for expected life time credit loss is recognised on initial recognition.
8.2 Financial liabilities and equity instruments issued by the Company
Classification
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
i) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
ii) Financial liabilities
Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
iii) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company. Trade and other
payables are presented as current liabilities if payment is due within 12 months after the reporting period otherwise as non-current. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.
iv) Derivatives
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The derivatives that are not designated as hedges are accounted for at fair value through profit and loss and are included in other gains/(losses).
a) Embedded derivatives
Derivatives embedded in a host contract that is an asset within the scope of Ind AS 109 are not separated. Financial Assets with embedded derivatives are considered in their entirety when determining whethertheir cash flows are solely payment of principal and interest.
Derivatives embedded in all other host contract are separated only if economic characteristics and risks of the embedded derivatives are not closely related to the economic characteristics and risks of the host contract and are measured at fair value through profit and loss. Embedded derivatives closely related to the host contract are not separated.
b) Embedded foreign currency derivatives
Embedded foreign currency derivatives are not separated from the host contract if they are closely related. Such embedded derivatives are closely related to the host contract, if the host contract is not leveraged, does not contain any option feature and requires payments in one of the following currencies:
- Thefunctional currency of any substantial party to that contract,
- The currency in which the price of the related good or service that is acquired or delivered is routinely denominated in commercial transactions around the world,
- A currency that is commonly used in contracts to purchase or sell non-financial items in the economic environment in which the transaction takes place (i.e. relatively liquid and stable currency)
Foreign currency embedded derivatives which do not meet the above criteria are separated and the derivative is accounted for at fair value through profit and loss.
8.3 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counter party.
9. CASH AND CASH EQUIVALENTS:
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
10. FAIR VALUE MEASUREMENT
10.1 The Company measures certain financial instruments, such as derivatives and other items in its financial statements at fair value at each balance sheet date.
10.2 All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1-Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2-Inputs otherthan quoted prices included within level 1 that are observable forthe asset or liability, either directly (i.e. as prices) or indirectly (i.e. Derived from prices).
Level 3-Inputs forthe assets and liabilities that are not based on observable market data (unobservable inputs).
10.3 Forthe purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of nature, characteristics and risks of the asset or liability and the level of thefair value hierarchy.
11. PROPERTY, PLANT AND EQUIPMENT
11.1 Measurement
i. Land is capitalised at cost to the Company. Development of land such as levelling, clearing and grading is capitalised along with the cost of building in proportion to the land utilized for construction of buildings and rest of the development expenditure is capitalised along with cost of land. Development expenditure incurred for the purpose of landscaping or for any other purpose not connected with construction of any building is treated as cost of land.
ii. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical costs includes expenditure that is directly attributable to the acquisition of items.
iii. Subsequent costs are included in the asset''s carrying amount and recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred.
iv. Where the cost of a part of the asset is significant to the total cost of the asset and useful life of that significant part is different from the useful life of the remaining asset, useful life of that significant part is determined separately and the significant part is depreciated on straight line method over its estimated useful life.
11.2 Depreciation method, estimated useful life and residual value:
i. Depreciation is calculated using the straight line method to allocate their cost, net of residual values, over the estimated useful life.
ii. The useful lives have been determined to be equal to those prescribed in Schedule 11 to the Companies Act; 2013.
iii. The assets'' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
11.3 Disposal
Gains and losses on disposal are determined by comparing net sale proceeds with carrying amount. These are included in statement of profit and loss.
12.1 Licences
Separately acquired licences are shown at historical cost. They have a finite useful life and are subsequently carried at cost less accumulated amortization and impairment losses.
12.2 Computer software
a) The cost of software (which is not an integral part of the related hardware) acquired for internal use and resulting in significant future economic benefits-, is recognised as an Intangible Asset in the books of accounts when the same is ready for use. Intangible Assets that are not yet ready for their intended use as at the Balance Sheet date are classified as "Intangible Assets under Development.
b) Cost associated with maintaining of software programs are recognized as an expense as incurred.
c) Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are recognized as intangible assets when the following criteria are met:
o It is technically feasible to complete the software so that it will beavailableforuse
o Management intendstocompletethesoftwareand useorsell it
o There is an ability to use or sell the software
o It can be demonstrated how the software will generate probable future economic benefits o Adequate technical, financial and other resources to complete the development and to use or sell the software are available, and
o The expenditure attributable to the software during its development can be reliably measured.
d) Directly attributable costs that are capitalized as part of the software include employee costs and an appropriate portion of relevant overheads.
e) Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is available for use.
12.3 Research and development
Research expenditure and development expenditure that do not meet the criteria in 12.2(c) above are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.
In the event of the Company financed project(s) being foreclosed/ abandoned, the expenditure incurred up to the stage of foreclosure/ abandonment is charged off to revenue in the year of foreclosure/abandonment.
12.4 Amortization methods and periods
The Company amortizes intangible assets with a finite useful life using the straight-line method over the following periods:
Licences UsefulLife/Production
Computersoftware 3years
L3. INVESTMENT PROPERTY:
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the asset''s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.
L4. NON-CURRENT ASSETS (OR DISPOSAL GROUPS) HELD FOR SALE AND DISCONTINUED OPERATIONS:
14.1 Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.
14.2 An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) 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 (or disposal group), but not in excess of any cumulative impairment loss previously recognised. Again or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of de-recognition.
14.3 Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.
14.4 Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.
14.5 A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit and loss.
15.1 Intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset''s carrying amount exceeds its recoverable amount.
15.2 The recoverable amount is the higher of an asset''s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
16. PROVISIONS, CONTINGENT ASSETS ANDCONTINGENTLIABILITIES
16.1 Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized forfuture operating losses.
16.2 Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
16.3 Provisions are measured at the present value of the management''s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provisions due to the passage of time is recognized as interest expense.
16.4 Warranty: Warranty on goods sold, wherever applicable, commences once the sale is complete and accordingly provision for such warranty is made. The period, terms and conditions of warranty as per the relevant contract are taken into consideration while determining the provision for such sales.
16.5 Provision for Onerous Contract: A provision for onerous contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.
17.1 Short-term obligations
Liabilities for wages and salaries, including other monetary and non-monetary benefits that are expected to be settled wholly within 12 months afterthe end of the period in which the employees renderthe related service are recognized 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.
17.2 Other longterm employee benefit obligations
The liability for vacation 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 as 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 obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognised 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.
17.3 Post-employment obligations
The Company operates thefollowing post-employment schemes:
(a) Defined benefit plans such as Gratuity and contribution towards Provident Fund under the PF Act; and
(b) Defined contribution plans namely Retired Employee Medical Scheme (REMI)/Post Superannuation Medical Benefit (PSMB), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI) and Pension Scheme(s).
a) Defined benefit plans
The liability or assets recognized in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligations 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 denominated in INR 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.
Re-measurement gains and losses arising from experience adjustments and change in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.
b) Defined contribution plans
The Company pays contributions to trusts established as per local regulations and also to publicly administered funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
The Company''s contribution paid/ payable to Company approved Retired Employee Medical Scheme (REMI)/Post superannuation Medical Benefit(PSMB), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI) and Pension Scheme are charged to revenue.
17.4 Termination Benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination benefits at the earlier of the following dates: (a) when the Company can no longer withdraw the offer of those benefits; and (b) when the entity recognizes costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefit are measured based on the number of employees expected to accept the offer. Termination Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.
Compensation paid to Employees under Voluntary Retirement Scheme (VRS) is charged to Statement of Profit and Loss in the year of retirement.
18. CONTRIBUTED EQUITY
Equity shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
19. DIVIDENDS
Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
20.1 Basicearningspershare
Basic earnings per share is calculated by dividing:
The profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares
20.2 Diluted earnings pershare
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
⢠The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
⢠The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
Note 1 to 38 and Accounting Policies attached form part of accounts.
Mar 31, 2018
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1.1 Compliance with Ind AS:
The financial statements comply in all material aspects with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) rules, 2015], as amended from time to time and other relevant provisions of the Act.
1.2 Historical cost convention:
The financial statements are prepared under historical cost basis, except for the following:
certain financial assets and liabilities (including derivative instruments) and contingent consideration that is measured at fair value;
defined benefit plans - plan assets measured at fair value
1.3 Use of estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in India requires management, where necessary, to make estimates and assumptions that affect the reported amounts of assets and liabilities,disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised.
2. FOREIGN CURRENCY TRANSLATION
2.1 Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (âthe functional currencyâ). The financial statements are presented in Indian rupee (INR), which is Bharat Dynamics Limitedâs functional and presentation currency.
2.2 Transactions and Balances
i) Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognized in profit and loss.
ii) Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
iii) Liability for deferred payments (and receivable from Indian army and ordnance factory) including interest thereon, on supplies/services from the USSR (erstwhile) is set up at the rate of exchange notified by the Reserve Bank of India for deferred payments including interest thereon under the protocol arrangements between the Government of India and Government of Russia. The differences due to fluctuations in the rate of exchange are charged to revenue.
3. REVENUERECOGNITION
3.1 Sale of goods:
i) Timing of recognition:
The Company recognizes revenue from sale of goods when titles to the goods have been passed on to the customer as per the terms of contract, at which time all the following conditions are satisfied:
a) the Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
b) the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
c) the amount of revenue can be measured reliably;
d) it is probable that the economic benefits associated with the transaction will flow to the Company; and
d) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
ii) Sales on bill and hold basis:
Revenue is recognised when specified goods are unconditionally appropriated to the contract after prior Inspection and acceptance, if required and once the following conditions are met:
a) The title is transferred as per the contractual terms
b) It is probable that delivery will take place;
c) The item is on hand, identified and ready for delivery to the buyer at the time when the sale is recognized;
d) The delivery is deferred based on contractual terms; and
e) The usual payment terms apply
iii) Ex-works Contract:
In case of ex-works contracts revenue is recognised when specified goods are unconditionally appropriated to the contract after prior inspection and acceptance, if required.
iv) FOR Contract:
In the case of FOR contracts sale is recognised when the goods are handed over to the carrier for transmission to the buyer after prior inspection and acceptance, if stipulated by the contract.
In the case of FOR destination contracts revenue is recognised once the goods reach the destination.
v) Multiple elements:
In cases where the installation and commissioning or any other separately identifiable component is stipulated and price for the same agreed separately, the Company applies the recognition criteria to separately identifiable components of the transaction and allocates the revenue to those separate components.
In case of a bundled contract, where separate fee for installation and commissioning or any other separately identifiable component is not stipulated, the Company applies the recognition criteria to separately
identifiable components of the transaction and allocates the revenue to those separate components based their relative fair values.
vi) Customer financed assets:
The assets received from customers free of cost are recognized initially at fair value. The corresponding revenue will be recognised as follows:
- If only one service is identified, the entity shall recognize revenue when the service is performed
- If more than one separately identifiable service is identified, the fair value of the total consideration received or receivable for the agreement is allocated to each service and the recognition criteria are then applied to each service
- If an ongoing service is identified as part of the agreement, the period over which revenue shall be recognised for that service is generally determined by the terms of the agreement with the customer
vii) Measurement of revenue:
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty, and net of returns, trade allowance, rebates, but exclusive of value added taxes, service tax, goods and service tax and amounts collected on behalf of third parties.
viii) Construction contract:
Contract revenue includes initial amount agreed in the contract and any variation in contract work, claims and incentive payments, to the extent it is probable that they will result in revenue and can be measured reliably. Contract revenue is recognized in proportion to the stage of completion of the contract. Stage of completion is assessed based on ratio of actuals costs incurred on the contract up to the reporting date to the estimated total costs expected to complete the contract.
If the outcome cannot be estimated reliably and where it is probable that the costs will be recovered, revenue is recognized to the extent costs incurred. An expected loss on construction contract is recognized as an expense immediately when it is probable that the total contract costs will exceed the total contract revenue.
3.2 Sale of services:
i) Timing of recognition:
Revenue from services is recognised in the accounting period in which the end of the reporting period as a proportion of the total services to be provided (percentage of completion method).
ii) Measurement of revenue:
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.
iii) Price escalation:
In case of contracts where additional considerations is to be determined and approved by the customers, such additional revenue is recognized on receipt of confirmation from customer(s). Where break up prices of sub units are not provided for, the same are estimated.
iv) Interest income:
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
v) Dividend:
Dividend income is recognized when the Companyâs right to receive the payment is established.
4. GOVERNMENT GRANTS
4.1 Grants from the government are recognized at their fair value where there is reasonable assurance that grant will be received and the Company will comply with all attached conditions.
4.2 Government grants relating to income are deferred and recognized in the profit and loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.
4.3 Grants related to non-depreciable assets may also require the fulfilment of certain obligations and would then be recognised in profit or loss over the periods that bear the cost of meeting the obligations.
4.4 Government Grants received either as subsidy or otherwise for acquisition of depreciable assets are accounted as deferred income. If the grant/subsidy is absolute, amount corresponding to the depreciation is treated as income over the life of the asset. If the grant/subsidy is attached with any conditions, such as repayment, income is accounted as per the terms of the grant/subsidy.
5. INCOME TAX
5.1 The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rates adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
5.2 Current tax:
The current income tax charge is calculated on the basis of tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
5.3 Deferred tax:
i) Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from the initial recognition of asset or liability in a transaction other than business combination that at the time of the transaction affects neither accounting profit nor the taxable profit (tax loss). Deferred income tax is determined using the tax rates (and laws) that have been enacted or substantively enacted at the end of the reporting period and are expected to apply when the related deferred income tax assets is realized or the deferred income tax liability is settled.
ii) Deferred tax assets are recognized for all deductible temporary differences and unused losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses. Deferred tax asset is also recognised for the indexation benefit on land available for taxation purpose since it results in a temporary difference.
iii) Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the liability simultaneously.
iv) Current and deferred tax is recognized in profit or loss, except to the extent that it relates to the items recognized in other comprehensive income or directly equity. In this case, the tax is also recognized in other comprehensive income or directly equity, respectively.
6. LEASES
A lease is classified at the inception date as a finance lease or operating lease.
6.1 As a lessee
i) Leases of property, plant and equipment where the Company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the leaseâs inception at the fair value of the leased property or, if lower, the present value of minimum lease payments. The corresponding rental obligations, net of finance charges, are included in the borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and the finance cost. The finance cost is charged to the profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of liability for each period.
ii) Leases in which a significant portion of risks and rewards of ownership are not transferred to the Company as a lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight line basis over the period of lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary costs increases.
6.2 As a lessor
Lease income from operating leases where the Company is a lessor is recognized in income on a straight line basis over the lease term unless the receipts are structured to increase in line withexpected general inflation to compensate for the expected inflationary costs increases. The respective leased assets are included in the balance sheet based on their nature.
7. INVENTORIES
7.1 Inventories are valued at lower of cost and net realizable value.The cost of raw material,components and stores are assigned by using the actual weighted average cost formula and those in transit at cost to date.In the case of stock-in-trade and work-in-progress,cost includes material,labour and related production overheads.
7.2 Stationery, uniforms, welfare consumables, medical and canteen stores are charged off to revenue at the time of receipt.
7.3 Raw-materials, Components, Construction Materials, Loose Tools and Stores and Spare Parts declared surplus/ unserviceable/ redundant are charged to revenue.
7.4 Provision for redundancy is made in respect of closing inventory of Raw materials and Components, and Construction Materials non-moving for more than 5 years. Besides, where necessary, adequate provision is made for redundancy of such inventory in respect of completed/ specific projects and other surplus/ redundant materials pending transfer to salvage stores.
8. FINANCIALINSTRUMENTS
8.1 Financial Assets:
All financial assets are recognised on trade date when the purchase of a financial asset is under a contract whose term requires delivery of the financial asset within the timeframe established by the market concerned. Financial assets are initially measured at fair value, plus transaction costs, except for those financial assets which are classified as at fair value through profit or loss (FVTPL) at inception. All recognised financial assets are subsequently measured in their entirety at either amortized cost or fair value.
i) Classification of financial assets:
The Company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
- those measured at amortised cost.
The classification depends on the entityâs business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. The Company reclassifies debt investments when and only when its business model for managing those assets changes.
ii) Measurement:
At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
a) Debt instruments
Subsequent measurement of debt instruments depends on the Companyâs business model for managing the asset and the cash flow characteristics of the asset. The Company classifies its debt instruments as:
(a)(i) Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
(a)(ii) Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assetsâ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in other income using the effective interest rate method.
(a)(iii) Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other gains/(losses) in the period in which it arises. Interest income from these financial assets is included in other income.
b) Equity instruments
(b)(i) The Company subsequently measures all equity investments at fair value. Where the Companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Companyâs right to receive payments is established.
(b)(ii) Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain/(losses) in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
(iii) 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 debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Time barred dues from the government / government departments / government companies are generally not considered as increase in credit risk of such financial asset.
(iv) Derecognition of financial assets
A financial asset is derecognized only when
- The Company has transferred the rights to receive cash flow from the financial asset or
- retains the contractual rights to receive the cash flows of the financial assets, but assumes a contractual obligation to pay cash flows to one or more recipients Where the entity has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
v) Trade receivables:
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If collection is expect to be collected within a period of 12 months or less from the reporting date (or in the normal operating cycle of the business if longer), they are classified as current assets otherwise as non-current assets.
Trade receivables are measured at their transaction price unless it contains a significant financing component in accordance with Ind AS 18 (or when the entity applies the practical expedient) or pricing adjustments embedded in the contract.
Loss allowance for expected life time credit loss is recognised on initial recognition.
8.2 Financial liabilities and equity instruments issued by the Company
Classification
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
i) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
ii) Financial liabilities
Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
iii) Trade and other payables
These amounts represent liabilities for goods and services provided to the Company. Trade and other payables are presented as current liabilities if payment is due within 12 months after the reporting period otherwise as non-current. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.
iv) Derivatives
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The derivatives that are not designated as hedges are accounted for at fair value through profit and loss and are included in other gains/ (losses).
a) Embedded derivatives
Derivatives embedded in a host contract that is an asset within the scope of Ind AS 109 are not separated. Financial Assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Derivatives embedded in all other host contract are separated only if economic characteristics and risks of the embedded derivatives are not closely related to the economic characteristics and risks of the host contract and are measured at fair value through profit and loss. Embedded derivatives closely related to the host contract are not separated.
b) Embedded foreign currency derivatives Embedded foreign currency derivatives are not separated from the host contract if they are closely related. Such embedded derivatives are closely related to the host contract, if the host contract is not leveraged, does not contain any option feature and requires payments in one of the following currencies:
- The functional currency of any substantial party to that contract,
- The currency in which the price of the related good or service that is acquired or delivered is routinely denominated in commercial transactions around the world,
- A currency that is commonly used in contracts to purchase or sell non-financial items in the economic environment in which the transaction takes place (i.e. relatively liquid and stable currency)
Foreign currency embedded derivatives which do not meet the above criteria are separated and the derivative is accounted for at fair value through profit and loss.
8.3 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
9. CASH AND CASH EQUIVALENTS:
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
10. FAIR VALUE MEASUREMENT
10.1 The Company measures certain financial instruments, such as derivatives and other items in its financial statements at fair value at each balance sheet date.
10.2 All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2 - Inputs other than quoted prices included within 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 assets and liabilities that are not based on observable market data (unobservable inputs).
10.3 For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy.
11. PROPERTY, PLANT AND EQUIPMENT
11.1 Measurement
i) Land is capitalised at cost to the Company. Development of land such as levelling, clearing and grading is capitalised along with the cost of building in proportion to the land utilized for construction of buildings and rest of the development expenditure is capitalised along with cost of land. Development expenditure incurred for the purpose of landscaping or for any other purpose not connected with construction of any building is treated as cost of land.
ii) All other items of property, plant and equipment are stated at historical cost less depreciation. Historical costs includes expenditure that is directly attributable to the acquisition of items.
iii) Subsequent costs are included in the assetâs carrying amount and recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred.
iv) Where the cost of a part of the asset is significant to the total cost of the asset and useful life o the part is different from the useful life of the remaining asset, useful life of that significant part is determined separately and the significant part is depreciated on straight line method over its estimated useful life.
11.2 Depreciation method, estimated useful life and residual value:
i) Depreciation is calculated using the straight line method to allocate their cost, net of residual values, over the estimated useful life.
ii) The useful lives have been determined to be equal to those prescribed in Schedule II to the Companies Act; 2013.
iii) The assetsâ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
11.3 Disposal
Gains and losses on disposal are determined by comparing net sale proceeds with carrying amount. These are included in statement of profit and loss.
12. INTANGIBLE ASSETS:
12.1 Licences
Separately acquired licences are shown at historical cost. They have a finite useful life and are subsequently carried at cost less accumulated amortization and impairment losses.
12.2 Computer software
a) The cost of software (which is not an integral part of the related hardware) acquired for internal use and resulting in significant future economic benefits-, is recognised as an Intangible Asset in the books of accounts when the same is ready for use. Intangible Assets that are not yet ready for their intended use as at the Balance Sheet date are classified as âIntangible Assets under Development.
b) Cost associated with maintaining of software programs are recognized as an expense as incurred.
c) Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are recognized as intangible assets when the following criteria are met:
- It is technically feasible to complete the software so that it will be available for use
- Management intends to complete the software and use or sell it
- There is an ability to use or sell the software
- It can be demonstrated how the software will generate probable future economic benefits
- Adequate technical, financial and other resources to complete the development and to use or sell the software are available, and
- The expenditure attributable to the software during its development can be reliably measured.
d) Directly attributable costs that are capitalized as part of the software include employee costs and an appropriate portion of relevant overheads.
e) Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is available for use.
12.3 Research and development
Research expenditure and development expenditure that do not meet the criteria in 12.2(c) above are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.
In the event of the Company financed project(s) being foreclosed/ abandoned, the expenditure incurred up to the stage of foreclosure/ abandonment is charged off to revenue in the year of foreclosure/ abandonment.
12.4 Amortization methods and periods
The Company amortizes intangible assets with a finite useful life using the straight-line method over the following periods:
13. INVESTMENT PROPERTY:
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replacedpart is derecognised.
14. NON-CURRENT ASSETS (OR DISPOSAL GROUPS) HELD FOR SALE ANDDISCONTINUED OPERATIONS:
14.1 Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.
14.2 An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) 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 (or disposal group), 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 noncurrent asset (or disposal group) is recognised at the date of de-recognition.
14.3 Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.
14.4 Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.
14.5 A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit and loss.
15. IMPAIRMENT OF ASSETS:
15.1 Intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the assetâs carrying amount exceeds its recoverable amount.
15.2 The recoverable amount is the higher of an assetâs fair value less costs ofdisposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
16. PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES
16.1 Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.
16.2 Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provisions is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
16.3 Provisions are measured at the present value of the managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provisions due to the passage of time is recognized as interest expense.
16.4 Warranty: Warranty on goods sold, wherever applicable, commences once the sale is complete and accordingly provision for such warranty is made. The period, terms and conditions of warranty as per the relevant contract are taken into consideration while determining the provision for such sales.
16.5 Liquidated damages:
In case due date and actual date of supply of goods/ services fall in the same accounting period, Liquidated Damages (LD) is accounted for the period of delay, if any, as per the contractual terms.
In case of slippage of delivery schedule, provision in respect of LD is recognized on such slippage for the period of delay between the due date of supply of goods/ services as per the contractual terms and the expected date of supply of the said goods/ services.
Contingent Liabilities and Contingent Assets are not recognized but are disclosed in the notes.
17. EMPLOYEE BENEFITS
17.1 Short-term obligations
Liabilities for wages and salaries, including other monetary and non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employeesâ 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.
17.2 Other long term employee benefit obligations
The liability for vacation 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 as 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 obligation. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognised 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.
17.3 Post-employment obligations
The Company operates the following post-employment schemes:
a) Defined benefit plans such as Gratuity and contribution towards Provident Fund under the PF Act; and
b) Defined contribution plans namely Retired Employee Medical Scheme (REMI)/Post Superannuation Medical Benefit (PSMB), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI) and Pension Scheme(s).
a) Defined benefit plans
The liability or assets recognized in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligations 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 denominated in INR 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.
Re-measurement gains and losses arising from experience adjustments and change in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.
b) Defined contribution plans
The Company pays contributions to trusts established as per local regulations and also to publicly administered funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
The Companyâs contribution paid/ payable to Company approved Retired Employee Medical Scheme (REMI)/ Post superannuation Medical Benefit(PSMB), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI) and Pension Scheme are charged to revenue.
17.4 Termination Benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognizes termination benefits at the earlier of the following dates:
(a) when the Company can no longer withdraw the offer of those benefits; and (b) when the entity recognizes costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefit are measured based on the number of employees expected to accept the offer. Termination Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.
Compensation paid to Employees under Voluntary Retirement Scheme (VRS) is charged to Statement of Profit and Loss in the year of retirement.
18. CONTRIBUTED EQUITY
Equity shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
19. DIVIDENDS
Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.
20. EARNINGS PER SHARE
20.1 Basic earnings per share
Basic earnings per share is calculated by dividing:
The profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares
20.2 Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
- The after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and
- The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
Mar 31, 2017
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
1.1 Compliance with Ind AS:
The financial statements comply in all material aspects with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) rules, 2015], as amended from time to time and other relevant provisions of the Act.
1.2 Historical cost convention:
The financial statements are prepared under historical cost basis, except for the following:
certain financial assets and liabilities (including derivative instruments) and contingent consideration that is measured at fairvalue;
defined benefit plans - plan assets measured at fairvalue
1.3 Use of estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in India requires management, where necessary, to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised.
2.1 Functional and presentation currency
Items included in the financial statements of the company are measured using the currency of the primary economic environment in which the company operates (âthe functional currency1). The financial statements are presented in Indian rupee (INR), which is Bharat Dynamics Limitedâs functional and presentation currency.
2.2 Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognized in profit and loss.
Non-monetary items that are measured at fairvalue in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.
Liability for deferred payments (and receivable from Indian army and ordnance factory) including interest thereon, on supplies/ services from the USSR (erstwhile) is set up at the rate of exchange notified by the Reserve Bank of India for deferred payments including interest thereon under the protocol arrangements between the Government of India and Government of
Russia. The differences due to fluctuations in the rate of exchange are charged to revenue.
3. REVENUE RECOGNITION
Sale of goods:
Timing of recognition:
The Company recognizes revenue from sale of goods when titles to the goods have been passed on to the customer as per the terms of contract, at which time all the following conditions are satisfied:
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.
Sales on bill and hold basis:
Revenue is recognised when specified goods are unconditionally appropriated to the contract after prior Inspection and acceptance, if required and once the following conditions are met:
a. The title is transferred as per the contractual terms
b. It is probable that delivery will take place;
c. The item is on hand, identified and ready for delivery to the buyer at the time when the sale is recognized;
d. The delivery is deferred based on contractual terms; and
e. The usual payment terms apply Ex-works Contract:
In case of ex-works contracts revenue is recognised when specified goods are unconditionally appropriated to the contract after prior inspection and acceptance, if required.
FOR Contract:
In the case of FOR contracts sale is recognised when the goods are handed over to the carrier for transmission to the buyer after prior inspection and acceptance, if stipulated by the contract.
In the case of FOR destination contracts revenue is recognised once the goods reach the destination.
Multiple elements:
In cases where the installation and commissioning or any other separately identifiable component is stipulated and price for the same agreed separately, the company applies the recognition criteria to separately identifiable components of the transaction and allocates the revenue to those separate components.
In case of a bundled contract, where separate fee for installation and commissioning or any other separately identifiable component is not stipulated, the company applies the recognition criteria to separately identifiable components of the transaction and allocates the revenue to those separate components based their relative fair values.
Customer financed assets:
The assets received from customers free of cost are recognized initially at fair value. The corresponding revenue will be recognised as follows:
If only one service is identified, the entity shall recognize revenue when the service is performed if more than one separately identifiable service is identified, the fair value of the total consideration received or receivable for the agreement is allocated to each service and the recognition criteria are then applied to each service
If an ongoing service is identified as part of the agreement, the period over which revenue shall be recognised for that service is generally determined by the terms of the ag reement with the customer
Measurement of revenue:
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are inclusive of excise duty, but net of returns, trade allowance, rebates, value added taxes, service tax and amounts collected on behalf of third parties.
Construction contract:
Contract revenue includes initial amount agreed in the contract and any variation in contract work, claims and incentive payments, to the extent it is probable that they will result in revenue and can be measured reliably. Contract revenue is recognized in proportion to the stage of completion of the contract. Stage of completion is assessed based on ratio of actuals costs incurred on the contract up to the reporting date to the estimated total costs expected to complete the contract.
If the outcome cannot be estimated reliably and where it is probable that the costs will be recovered, revenue is recognized to the extent costs incurred. An expected loss on construction contract is recognized as an expense immediately when it is probable that the total contract costs will exceed the total contract revenue.
Sale of services:
Timing of recognition:
Revenue from services is recognised in the accounting period in which the end of the reporting period as a proportion of the total services to be provided (percentage of completion method).
Measurement of revenue:
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.
Price escalation:
In case of contracts where additional considerations is to be determined and approved by the customers, such additional revenue is recognized on receipt of confirmation from customer(s). Where break up prices of sub units are not provided for, the same are estimated.
Interest income:
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assetâs net carrying amount on initial recognition.
Dividend:
Dividend income is recognized when the Companyâs right to receive the payment is established.
4. GOVERNMENT GRANTS
Grants from the government are recognized at their fair value where there is reasonable assurance that grant will be received and the company will comply with all attached conditions.
Government grants relating to income are deferred and recognized in the profit and loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.
Grants related to non-depreciable assets may also require the fulfilment of certain obligations and would then be recognised in profit or loss over the periods that bear the cost of meeting the obligations.
5. INCOME TAX
The income tax expense or credit for the period is the tax payable on the current periodâs taxable income based on the applicable income tax rates adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.
Current tax:
The current income tax charge is calculated on the basis of tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax:
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from the initial recognition of asset or liability in a transaction other than business combination that at the time of the transaction affects neither accounting profit nor the taxable profit (tax loss). Deferred income tax is determined using the tax rates (and laws) that have been enacted or substantively enacted at the end of the reporting period and are expected to apply when the related deferred income tax assets is realized or the deferred income tax liability is settled.
Deferred tax assets are recognized for all deductible temporary differences and unused losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses. Deferred tax asset is also recognised for the indexation benefit on land available for taxation purpose since it results in a temporary difference.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the liability simultaneously.
Current and deferred tax is recognized in profit or loss, except to the extent that it relates to the items recognized in other comprehensive income or directly equity. In this case, the tax is also recognized in other comprehensive income or directly equity, respectively.
6. LEASES
A lease is classified at the inception date as a finance lease or operating lease.
As a lessee
Leases of property, plant and equipment where the company, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the leaseâs inception at the fairvalue of the leased property or, if lower, the present value of minimum lease payments. The corresponding rental obligations, net of finance charges, are included in the borrowings or other financial liabilities as appropriate. Each lease payment is allocated between the liability and the finance cost. The finance cost is charged to the profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of liability for each period.
Leases in which a significant portion of risks and rewards of ownership are not transferred to the company as a lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight line basis over the period of lease unless the payments are structured to increase in line with expected general inflation to compensate for the lessorâs expected inflationary costs increases.
As a lessor
Lease income from operating leases where the company is a lessor is recognized in income on a straight line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary costs increases. The respective leased assets are included in the balance sheet based on their nature.
7. INVENTORIES
7.1 Inventories are valued at lower of cost and net realizable value.The cost of raw material,components and stores are assigned by using the actual weighted average cost formula and those in transit at cost to date.In the case of stock-in-trade and work-in-progress,cost includes material, labour and related production overheads.
7.2 Stationery, uniforms, welfare consumables, medical and canteen stores are charged off to revenue at the time of receipt.
7.3 Raw-materials, Components, Construction Materials, Loose Tools and Stores and Spare Parts declared surplus/ unserviceable / redundant are charged to revenue.
7.4 Provision for redundancy is made in respect of closing inventory of Raw materials and Components, and Construction Materials non-moving for more than 5 years. Besides, where necessary, adequate provision is made for redundancy of such inventory in respect of completed/ specific projects and other surplus/ redundant materials pending transfer to salvage stores.
8. FINANCIAL INSTRUMENTS
Financial Assets:
All financial assets are recognised on trade date when the purchase of a financial asset is under a contract whose term requires delivery of the financial asset within the timeframe established by the market concerned. Financial assets are initially measured at fair value, plus transaction costs, except for those financial assets which are classified as at fair value through profit or loss (FVTPL) at inception. All recognised financial assets are subsequently measured in their entirety at either amortized cost or fair value.
i) Classification of financial assets:
The company classifies its financial assets in the following measurement categories:
- those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss) and
- those measured at amortised cost.
The classification depends on the entityâs business model for managing the financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income. The company reclassifies debt investments when and only when its business model for managing those assets changes.
ii) Measurement:
At initial recognition, the company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
a) Debt instruments-
Subsequent measurement of debt instruments depends on the companyâs business model for managing the asset and the cash flow characteristics of the asset. The company classifies its debt instruments as:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a debt investment that is subsequently measured at amortised cost and is not part of a hedging relationship is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is included in finance income using the effective interest rate method.
b) Equity instruments-
The company subsequently measures all equity investments at fair value. Where the companyâs management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the companyâs right to receive payments is established.
Changes in the fair value of financial assets at fair value through profit or loss are recognised in other gain/(losses) in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fairvalue.
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 debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables the company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
Time barred dues from the government/ government departments/government companies are generally not considered as increase in credit risk of such financial asset.
Derecognition of financial assets
A financial asset is derecognized only when
- The company has transferred the rights to receive cash flow from the financial asset or
- retains the contractual rights to receive the cash flows of the financial assets but assumes a contractual obligation to pay cash flows to one or more recipients
Where the entity has transferred an asset, the company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognized.
Where the entity has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the company has not retained control of the financial asset. Where the company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
Trade receivables;
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. If the amount is expected to be collected within a period of 12 months or less from the reporting date (or in the normal operating cycle of the business if longer), they are classified as current assets otherwise as non-current assets.
Trade receivables are measured at their transaction price unless it contains a significant financing component in accordance with Ind AS 18 (or when the entity applies the practical expedient) or pricing adjustments embedded in the contract.
Loss allowance for expected life time credit loss is recognised on initial recognition.
Financial liabilities and equity instruments issued by the Company
Classification
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.
a) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.
b) Financial liabilities
Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Company. Trade and other payables are presented as current liabilities if payment is due within 12 months after the reporting period otherwise as non-current. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.
Derivatives
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The derivatives that are not designated as hedges are accounted for at fair value through profit and loss and are included in other gains/ (losses).
a) Embedded derivatives
Derivatives embedded in a host contract that is an asset within the scope of Ind AS 109 are not separated. Financial Assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Derivatives embedded in all other host contract are separated only if economic characteristics and risks of the embedded derivatives are not closely related to the economic characteristics and risks of the host contract and are measured at fair value through profit and loss. Embedded derivatives closely related to the host contract are not separated.
b) Embedded foreign currency derivatives
Embedded foreign currency derivatives are not separated from the host contract if they are closely related. Such embedded derivatives are closely related to the host contract, if the host contract is not leveraged, does not contain any option feature and requires payments in one of the following currencies:
- The functional currency of any substantial party to that contract,
- The currency in which the price of the related good or service that is acquired or delivered is routinely denominated in commercial transactions around the world,
- A currency that is commonly used in contracts to purchase or sell non-financial items in the economic environment in which the transaction takes place (i.e. relatively liquid and stable currency)
Foreign currency embedded derivatives which do not meet the above criteria are separated and the derivative is accounted for at fair value through profit and loss.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
9. CASH AND CASH EQUIVALENTS:
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.
10. FAIR VALUE MEASUREMENT
The company measures certain financial instruments, such as derivatives and other items in its financial statements at fair value at each balance sheet date.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2 - Inputs other than quoted prices included within 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 assets and liabilities that are not based on observable market data (unobservable inputs).
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy.
11. PROPERTY, PLANT AND EQUIPMENT
11.1 Measurement
Land is capitalised at cost to the Company. Development of land such as levelling, clearing and grading is capitalised along with the cost of building in proportion to the land utilized for construction of buildings and rest of the development expenditure is capitalised along with cost of land. Development expenditure incurred for the purpose of landscaping or for any other purpose not connected with construction of any building is treated as cost of land.
All other items of property, plant and equipment are stated at historical cost less depreciation. Historical costs includes expenditure that is directly attributable to the acquisition of items.
Subsequent costs are included in the assetâs carrying amount and recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. The carrying amount of the component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred.
Where the cost of a part of the asset is significant to the total cost of the asset and useful life of the part is different from the useful life of the remaining asset, useful life of that significant part is determined separately and the significant part is depreciated on straight line method over its estimated useful life.
11.2 Depreciation method, estimated useful life and residual value:
Depreciation is calculated using the straight line method to allocate their cost, net of residual values, over the estimated useful life.
The useful lives have been determined to be equal to those prescribed in Schedule II to the Companies Act, 2013.
The assetsâ residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting period.
11.3 Disposal
Gains and losses on disposal are determined by comparing net sale proceeds with carrying amount. These are included in statement of profit and loss.
12. INTANGIBLE ASSETS:
12.1 Licences
Separately acquired licences are shown at historical cost. They have a finite useful life and are subsequently carried at cost less accumulated amortization and impairment losses.
12.2 Computer software
a) The cost of software (which is not an integral part of the related hardware) acquired for internal use and resulting in significant future economic benefits is recognised as an Intangible Asset in the books of accounts when the same is ready for use. Intangible Assets that are not yet ready for their intended use as at the Balance Sheet date are classified as âIntangible Assets under Development.
b) Cost associated with maintaining of software programs are recognized as an expense as incurred.
c) Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the company are recognized as intangible assets when the following criteria are met:
- It is technically feasible to complete the software so that it will be available for use
- Management intends to complete the software and use or sell it
- There is an ability to use or sell the software
- It can be demonstrated how the software will generate probable future economic benefits
- Adequate technical, financial and other resources to complete the development and to use or sell the software are available and
- The expenditure attributable to the software during its development can be reliably measured.
Directly attributable costs that are capitalized as part of the software include employee costs and an appropriate portion of relevant overheads.
Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is available for use.
12.3 Research and development
Research expenditure and development expenditure that do not meet the criteria in
12.2 (c) above are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.
In the event of the Company financed project(s) being foreclosed/ abandoned, the expenditure incurred up to the stage of foreclosure/ abandonment is charged off to revenue in the year of foreclosure/ abandonment.
12.4 Amortization methods and periods
The Company amortizes intangible assets with a finite useful life using the straight-line method over the following periods:
Licences Useful Life/Production
Computer software 3 years
13 INVESTMENT PROPERTY:
Property that is held for long-term rental yields or for capital appreciation or both and that is not occupied by the company, is classified as investment property. Investment property is measured initially at its cost including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the assetâs carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.
14. NON-CURRENT ASSETS (OR DISPOSAL GROUPS) HELD FOR SALE AND DISCONTINUED OPERATIONS:
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and contractual rights under insurance contracts, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) 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 (or disposal group) 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 (or disposal group) is recognised at the date of de-recognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations is part of a single co-ordinated plan to dispose of such a line of business or area of operations or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit and loss.
15. IMPAIRMENT OF ASSETS:
Intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the assetâs carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an assetâs fairvalue less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
16. PROVISIONS, CONTINGENT ASSETS AND CONTINGENT LIABILITIES
Provisions are recognized when the company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the managementâs best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provisions due to the passage of time is recognized as interest expense.
Warranty:
Warranty on goods sold, wherever applicable, commences once the sale is complete and accordingly provision for such warranty is made. The period, terms and conditions of warranty as per the relevant contract are taken into consideration while determining the provision for such sales.
Liquidated damages:
In case due date and actual date of supply of goods/ services fall in the same accounting period, Liquidated Damages (LD) is accounted for the period of delay, if any, as per the contractual terms.
In case of slippage of delivery schedule, provision in respect of LD is recognized on such slippage for the period of delay between the due date of supply of goods/ services as per the contractual terms and the expected date of supply of the said goods/ services.
Contingent Liabilities and Contingent Assets are not recognized but are disclosed in the notes.
17. EMPLOYEE BENEFITS
17.1 Short-term obligations
Liabilities for wages and salaries, including other monetary and non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognized in respect of employeesâ 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.
17.2 Other long term employee benefit obligations
The liability for vacation 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 as 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 obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised 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.
17.3 Post-employment obligations
The Company operates the following postemployment schemes:
(a) Defined benefit plans such as Gratuity and contribution towards Provident Fund under the PF Act; and
(b) Defined contribution plans namely Retired Employee Medical Scheme (REMI)/Post Superannuation Medical Benefit (PSMB), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI) and Pension Scheme(s).
Defined benefit plans
The liability or assets recognized in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligations 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 denominated in INR 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 fairvalue of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.
Re-measurement gains and losses arising from experience adjustments and change in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service cost.
Defined contribution plans
The Company pays contributions to trusts established as per local regulations and also to publicly administered funds as per local regulations. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
The Companyâs contribution paid/ payable to company approved Retired Employee Medical Scheme (RE M I) / P o s t Superannuation Medical Benefit(PSMB), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI) and Pension Scheme are charged to revenue.
17.4 Termination Benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The company recognizes termination benefits at the earlier of the following dates: (a) when the company can no longer withdraw the offer of those benefits and (b) when the entity recognizes costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefit are measured based on the number of employees expected to accept the offer. Termination Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.
Compensation paid to Employees under Voluntary Retirement Scheme (VRS) is charged to Statement of Profit and Loss in the year of retirement.
18. CONTRIBUTED EQUITY
Equity shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
19. DIVIDENDS
Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period
20. EARNINGS PER SHARE
20.1 Basic earnings per share
Basic earnings per share is calculated by dividing:
The profit attributable to owners of the Company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares
20.2 Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
- The after income tax effect of interest and other financing costs associated with dilutive potential equity shares and
- The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
Mar 31, 2014
1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
The Financial Statements are prepared under the accrual basis and at historical cost unless otherwise stated and in accordance with the Generally Accepted Accounting Principles (GAAP) in India and the provisions of the Companies Act, 1956.
2. FIXED ASSETS:
2.1 Land is capitalized at cost to the Company. Development of land such as levelling, clearing and grading is capitalized along with the cost of Building in proportion to the land utilized for construction of Buildings and rest of the development expenditure is capitalized along with cost of land. Development expenditure incurred for the purpose of landscaping or for any other purpose not connected with construction of any building is treated as the cost of land.
2.2 Fixed Assets acquired with financial assistance/subsidy from outside agencies either wholly or partly are taken in the books at net cost to the Company. Assets transferred free of cost by Government are taken at nominal value.
2.3 Plant, Machinery & Equipment, Fixtures & Office Furniture and Equipment costing individually Rs. 5,000/- and below are depreciated fully in the year of purchase. Minor civil works including additions, alterations, etc., costing individually Rs. 50,000/- and below, not resulting in additional floor space and internal partitions costing individually Rs. 50,000/- and below are charged to Revenue. Where the cost of such partitions exceeds Rs. 50,000/-, they are depreciated within a period of 5 years or the lease period of the premises, whichever is less.
2.4 Material items retired from active use are retained in the books at the lower of their net book value and net realizable value till they are disposed off. They are eliminated from the books on disposal. The entire excess of sale proceeds over the net book value of Fixed Assets is credited to the Statement of Profit and Loss.
2.5 Expenditure on re-conditioning, re-sitting and re-layout of Machinery and Equipment is not capitalised.
2.6 Cost of the initial pack of spares obtained along with the procurement of Plant, Machinery and Equipment is capitalised and depreciated in the same manner as Plant & Machinery.
2.7 Premium paid on Leasehold Land is initially Capitalised and amortised over 10 years or the lease period whichever is less.
3. INTANGIBLE ASSETS:
3.1 The expenditure incurred on General Research and Development is charged to revenue in the year of incurrence. Development Expenditure financed by the Company and expenses incurred thereon on specific projects where the technical feasibility of the products has been demonstrated and the Company intends to produce and market the products are capitalised for amortisation over production in future years. In the event of the Company financed project(s) being foreclosed/ abandoned, the expenditure incurred up to the stage of foreclosure/ abandonment is charged off to revenue in the year of foreclosure/abandonment.
3.2 Expenditure on training personnel/ foreign techniciansâ fees and expenses and other preproduction expenses, etc., specific to projects/products in the nature of Development Expenditure is amortised over production/ sales and to the extent not amortised, is carried forward.
3.3 Software internally developed/ acquired from an outside source for internal use, costing individually Rs. 1.00 Lakh and above and which is not an integral part of the related hardware, is recognized as an intangible asset in the Books of Account and is amortised over a period of three years, on straight line method. Amortisation commences when the asset is available for use.
4. TOOLS AND EQUIPMENT:
Expenditure on special purpose tools, jigs and fixtures including specific to projects/ products is initially capitalised for amortisation over production/ sales and to the extent not amortised is carried forward as an Asset. In-house Manufactured tools are capitalized at cost or realizable value whichever is less. Expenditure on maintenance, re-work, re-conditioning, periodical inspection, referencing of tooling, replenishing of cutting tools and work of similar nature is charged to revenue.
5. IMPAIRMENT OF ASSETS:
The carrying amount of assets on the date of Balance Sheet is assessed and if the estimated recoverable amount is found less than the carrying amount, the impairment loss is recognized and provided.
6. INVESTMENTS:
6.1 Current investments are carried in the financial statements at the lower of cost and fair value determined on an individual investment basis.
6.2 Long-term investments are carried in the financial statements at cost. However, provision is made for diminution of permanent nature in the value of investment.
7. DEFERRED DEBTS:
Unpaid installment payments together with interest thereon under deferred payment terms for the cost of imported material and tooling content/ DRE of the equipment/products sold are accounted as Deferred Debts from the customer and are recovered as and when the installments and interest thereon are paid.
8. INVENTORIES:
8.1 Inventories are valued at lower of cost and net realizable value. The cost of raw material, components and stores are assigned by using the actual weighted average cost formula and those in transit at cost to date. In the case of stock-in-trade and work-in-progress, cost includes material, labour and related production overheads.
8.2 Miscellaneous Stores is valued at estimated realizable value.
8.3 Stationery, uniforms, welfare consumables, medical and canteen stores are charged off to revenue at the time of receipt.
8.4 Raw-materials, Components, Construction Materials, Loose Tools and Stores and Spare Parts declared surplus/ unserviceable/ redundant are charged to revenue.
8.5 Materials issued from main stores and lying unused at the end of the year are not brought back to stores.
8.6 Provision for redundancy is made in respect of closing inventory of Raw- materials and Components, Stores and Spare parts, Construction Materials and Loose Tools non-moving for more than 5 years. Besides, where necessary, adequate provision is made for redundancy of such inventory in respect of completed/ specific projects and other surplus/ redundant materials pending transfer to salvage stores.
9. TRADE RECEIVABLES:
Disputed/ time-barred debts from the Government departments are not treated as Doubtful Debts.
10. CLAIMS ON SUPPLIERS/ UNDERWRITERS /CARRIERS/OTHERS:
Claims on Suppliers /Customers / Underwriters/ Carriers / others towards loss/ damages are accounted when claims are preferred. Disputed/ time barred claims due from the Government Departments are not treated as doubtful claims.
11. CONVERSION OF FOREIGN CURRENCY:
Liability for deferred payments including interest thereon, on supplies/ services from the USSR (erstwhile) is set up at the rate of exchange notified by the Reserve Bank of India, for deferred payments including interest thereon under the protocol arrangements between the Government of India and Government of Russia. In the case of other currencies, liability is set up at the ruling rate of exchange as on the date of Balance Sheet. The differences due to fluctuations in the rate of exchange are charged to revenue. In case of capital items, adjustments are made to the cost of the asset.
12. PROVISION FOR CURRENT AND DEFERREDTAX:
Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income Tax Act,1961. Deferred tax resulting from âtiming differencesâ between taxable and accounting income is accounted for using the tax rates and laws that are enacted or substantively enacted as on the Balance Sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a virtual certainty that the asset will be realized in future.
13. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
A provision is recognized when the company has a present obligation as a result of past event, and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect current best estimates. Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the Financial Statements.
14. WARRANTY:
Warranty on goods sold, wherever applicable, commences on setting up of sales and accordingly provision for such warranty is made. The period and terms / conditions of warranty shall be as per the relevant contract.
15. SALES:
15.1 In the case of products requiring proof tests, sale is accounted for, on the basis of quantity accepted after Proof Tests.
15.2 In the case of all other products, sale is accounted for, on the basis of acceptance/ actual despatch.
15.3 Where Sale Prices are not established, sales are set up on provisional basis at prices likely to be realized.
15.4 Sale value excludes Sales Tax/ VAT but includes Excise Duty and Service Tax.
15.5 a) Contract Revenue in respect of Construction Contracts undertaken for Customers is recognised by reference to the stage of completion of the contract activity at the reporting date of the financial statements on the basis of percentage of completion method.
b) The stage of completion of contracts is measured by reference to the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs for each contract.
c) Since the outcome of such a contract can be estimated reliably only on achieving certain progress, revenue is recognised only after a minimum of 25% work is completed.
d) An expected loss on construction contract is recognised as an expense immediately when it is probable that the total contract costs will exceed the total contract revenue.
e) As the Revenue is recognised on proportionate basis a provision for contingencies equal to 30% of the surplus of revenue over costs is made during the execution of contract, which is to be reversed on the completion of the contract.
15.6 a) In case due date and actual date of supply of goods/ services fall in the same accounting period, Liquidated Damages (LD) is accounted for the period of delay, if any, as per the contractual terms.
b) In case of slippage of delivery schedule, provision in respect of LD is recognised on such slippage for the period of delay between the due date of supply of goods/ services as per the contractual terms and the expected date of supply of the said goods/services.
16. EMPLOYEE BENEFITS
Short-term Employee Benefits:
16.1 Short-term employee benefits such as salaries, wages and short-term compensated absences are recognised as an expense at the undiscounted amount in the Statement of Profit and Loss of the year in which the related service is rendered.
Defined Contribution Plans:
16.2 The Companyâs contribution paid/ payable to company approved Retired Employee Medical Scheme (REMI), Death Relief Fund (DRF), Employee State Insurance Scheme (ESI), contribution towards Provident Fund under the PF Act and Pension Scheme are charged to revenue.
Defined Benefit Plans:
16.3 The Companyâs Gratuity, Leave Salary Schemes are Defined Benefit Plans. The present value of the obligation towards Gratuity is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each estimated future cash flows. Actuarial gains and losses are recognized in Statement of Profit and Loss.
16.4 The present value of obligation towards Leave Salary is provided on Actuarial basis. Actuarial gains and losses are recognized in Statement of Profit and Loss.
16.5 Compensation paid to Employees under Voluntary Retirement Scheme (VRS) is charged to Statement of Profit and Loss in the year of retirement.
17. DEPRECIATION:
Depreciation on Fixed Assets is charged on âStraight Lineâ method. The rate of depreciation is derived by spreading the cost of the asset over its expected life, except in the case of township buildings, where the rate adopted is as per the guidelines issued by the Department of Public Enterprises. Depreciation is calculated on and from 01 Apr 1991 on all additions made from the date the asset is put to use/brought on charge. Rates of depreciation prescribed in Schedule XIV of the Companies Act, 1956, are not adopted. The rates adopted are not less than those prescribed in the said Schedule.
18. UNDER/OVER ABSORPTION OF COSTS:
Adjustment is not made for under/ over absorption of labour and overhead costs on jobs, if the extent of under/ over recovery in a year does not exceed 0.5% of such costs.
Note 1 to 28 and Accounting Policies attached form part of accounts.
Disclaimer: This is 3rd Party content/feed, viewers are requested to use their discretion and conduct proper diligence before investing, GoodReturns does not take any liability on the genuineness and correctness of the information in this article
More Information on Bharat Dynamics Ltd.
-
Bharat Dynamics Ltd. Tools
- Bulk Deals
- Block Deals
-
Bharat Dynamics Ltd. Company Details
- Company Profile
- Company History
- Management Team
- Capital Structure
- Product Mix
- Banker/Auditor/Registrar
-
Company History
- BSE Price History
- NSE Price History
-
Bharat Dynamics Ltd. Key Financial Ratios
- Ratios
-
Bharat Dynamics Ltd. Results
- Quarterly Results
- Half Yearly Results
- Nine Months Results
- Annual Results
-
Bharat Dynamics Ltd. Financial Data
- Audited Results
- Cash Flow
- Balance Sheet
-
Bharat Dynamics Ltd. Reports
- Accounting Policies
- Auditors Report
- Directors Report
- Notes To Account
-
Bharat Dynamics Ltd. Corporate Announcements
- Book Closure
- Dividend
- Board Meetings
-
FY26 Market Review: Inside Nifty-Sensex's Sharpest Yearly Crash Since COVID; What's Next For Investors? -
Intraday Stocks To Buy Today, March 27: Top Picks By Anand James of Geojit Investments On Friday -
Indian equities open higher as Nifty tops 23,100 and Sensex climbs over 700 points -
Intraday Stocks To Buy Today, March 25: Top Picks By Anand James of Geojit Investments On Wednesday
-
Stock Market Today: Nifty Closes Near 23,000, Sensex Up 1.8%: IndiGo, L&T, Eternal, Asian Paints Top Gainers -
Steel Stock Gains 5.14% On Getting NCLT Nod For Key Merger; Do You Own? -
Stock Market Opens Strong: Nifty Up 1.5%, Sensex Rallies 1,516 Pts; Rupee Recovers as Trump Delays Iran Strike -
D-Street Mayhem: Rs 15 Lakh Cr Wiped Out As Nifty-Sensex Close 2.5% Lower, Rupee In Free-Fall Amid Iran-US War -
Indian equities outlook today as Bank Nifty remains weak and Nifty tests support -
Stock Market Crash: Sensex, Nifty Hit 1-Year Low; How US-Israel-Iran War Wiped Out Rs 4,753,333 Crore -
Intraday Stocks To Buy Today, March 23: Top Picks By Anand James of Geojit Investments On Monday
-
Nifty, Sensex Down 8% Amid Iran-US War, Crude Oil At Sky High: How Past Geopolitical Crises Have Shaped Market -
Stock Market Weekly Wrap: Sensex, Nifty End In Green Amid Iran-US War, Crude Surge, Rupee Slide -
Nifty Falls as Global Cues Persist and Gulf Tensions Weigh on Indian Markets -
Intraday Stocks To Buy Today, March 20: Top Picks By Anand James of Geojit Investments On Friday
-
Nifty, Sensex Stage Sharp Rebound After Biggest Crash; IT Stocks in Green | Why Is Stock Market Rising Today?
-
Block for 8 hours
-
Block for 12 hours
-
Block for 24 hours
-
Don't block
Sign in with Google- Male
- Female
- Others
- Under 18
- 18 to 25
- 26 to 35
- 36 to 45
- 45 to 55
- 55+